During the past few decades, there has been a conflciting debate on the responsibilities of businesses, and our roles in society. A large focus has been placed on the role of banks, whose power is derived from the vast concentration of capital they oversee.
The stereotype of banking has been seared into our minds by our experience of various recessions and financial crises. What started as a facilitator for the development of societies and economies, has become a money machine driven by short term gains and profit maximization at all costs. This image has been been further accentuated by the popularization of cultural and cinematic figures like ‘Gordon Gekko’ (the central character in the film Wall Street) or Jordan Belfort (real-life author, speaker, former stockbroker and convicted felon, who was the basis for the film The Wolf of Wall Street), who come to symbolize all that is wrong with the global financial system. But our collective image of banking doesn’t have to remain this way.
Back in the 1970’s the ‘banker of the poor’ appeared. Bangladeshi entrepreneur and Nobel laureate Muhammed Yunus started questioning and using money in a totally different way to actually take people, and especially women, out of poverty – instead of making them hostages of the system. In the decades that followed, various successful initiatives started popping up around the world and we see that in some countries a strong cooperative banking system remains.
A lot has been achieved, but in many instances, innovation has been lagging behind. However, the rapid emergence of fintechs and neobanks has begun to show us what can be achieved in the industry with even a little technological disruption.
Using purpose-driven banking to accelerate your impact
First, you must question what it is you are really trying to achieve. What is your company vision and is there intentionality to drive some specific impact towards stakeholders? Do you want to bridge social inequalities and increase representation of a certain group? Do you want to create a meaningful impact on the climate, or perhaps set a better example with innovative governance standards? Constantly asking yourself these questions will ensure you have a clear sense of who you are as a company and what it is you need to target to reach those goals.
Your values should also inform you on what kind of partnerships and relationships you want to have in place. Coherence will make your business much more robust.
What happens to your finances is one of the most important areas you should look into. For example, the banking partner you choose is important because their name and business operations become closely tied to your funds and information. You can’t allow your partners to use funds or information in a way which runs contrary to your values and goals.
Questions to consider
Make an assessment of the platforms you use as a company and question what they are doing at large. Are they putting their money where their mouth is? Are they supporting the industries you believe in? Are they trying to challenge the various issues we face as a society or just use the opportunities to leverage profits? Does your bank support key initiatives or create policies which direct its business purposefully? Are they aiming for a net zero target or have they hired a truly diverse leadership team? Do they donate a portion of profits to charities or social enterprises? Or are they perhaps simply navigating the status quo which brought us to the current state of emergency, and green washing their operations?
The questions above provide a broad indication of the kinds of information one should look for when choosing financial partners. But here a few more direct points that might bring immediate clarity to the topic:
- What is the deposit policy of your bank? What kind of industries are being financed by it?
- What kind of investment options are offered to you and can you see the kind of assets there are?
- Is there any kind of impact or ESG screening conducted to become a client?
- What public commitments have they made and are they holding themselves accountable for those (i.e. Paris Agreement and Principles of Responsible Investing)?
- Does your employee pensions scheme offer sustainable financial instruments for people to choose?
With any hope, this process will begin to push you in the right direction and make you start to question your own values and the values of those you have close relationships with.