By: Anna Krotova, Director of Sustainability at Mambu
The sustainability transition is altering our way of life. Over the years, sustainability has gradually shifted the way we travel, purchase and consume. Living a sustainable lifestyle is a topic of increasing importance, to the point where it has entered the financial sector.
As a result, there is an increasing need for sustainable banking choices. Banks must align their products with individuals who pursue goals that are purpose-driven in order to appeal to the ethical motivations of their customers.
Mambu’s new report, ‘Is the grass greener on the sustainable side?’ takes a deeper look into this. The results of the survey of 6,000 consumers about their opinions on green finance show that more sustainable financial services are becoming more and more in demand.
The time for change is now
Over three-quarters (84%) of surveyed customers globally said they are more satisfied with green financial services compared to traditional banking services, and globally 60% said they would like every financial service they use to be sustainable. Last year, The Global Sustainability Study 2021 found that 85% of consumers have already shifted their purchase behaviour to become more sustainable in the past five years.
Demand from consumers for sustainable banking offerings is rising, and it won’t be slowing down anytime soon. Further supporting this, our recent report The financial tribes you need to know showed that 58% of global consumers are willing to pay a premium for financial services that help the environment and local communities. In addition to this, (48%) of consumers stated that the availability of green financial services has become more important in the last five years. This figure rises to over half (59%) where consumers, as a whole, believe that green banking will become mainstream in the future.
Communicating to consumers effectively
We often hear that ‘communication is key’, and this couldn’t be more true when it comes to messaging about sustainability. Over two thirds (67%) of global consumers think their current bank is guilty of ‘greenwashing’. This leads to consumer distrust of the banks’ sustainability statements and claims, and bears the risk of them disengaging with the green finance agenda altogether.
Importantly, consumers are seeking a balance between the time and effort banks spend on producing statements vs time and effort they spend on real – meaningful and impactful – action.
A key finding here is that only 24% of global consumers said they would like banks to attain a recognised mark of commitment to sustainability certified by an independent third party. Even fewer consumers care for banks publicly ranking themselves against a sustainability index and only 37% know what climate pledges their financial institution has committed to.
Consumers want to be educated on their bank’s sustainable efforts during the onboarding process – 42% of consumers globally agreed that this is how and when they’d prefer to be informed of a bank’s green practices. The report also found that a further 42% of people globally said they would like banks to create incentives or loyalty programmes for customers that reward them for making financial decisions that support the sustainability transition.
Consumers want their voices to be heard
We don’t often see consumers being offered the chance to participate in the conversation when it comes to financial services. Usually, decisions on how money is invested and what products are being offered are ultimately made by the bank themselves. However, this could all be about to change, seeing as the majority of global consumers would like to have a say on how and where financial institutions spend their money so that these investments align with their personal values.
Consumers also want a direct say on the types of green financial products and services their financial institution is offering them. Mambu’s findings showed that the top two most sought-after products globally were sustainable credit and debit cards and green savings accounts. Green mortgages came in at third, with 31% of global consumers wanting these as well.
What can we anticipate for the future of financial services?
If banks want to facilitate an effective and meaningful transition to green finance they need to invest in consumer education and dialogue. Despite some consumers understanding the terms ‘green’ and ‘ethical’ finance, only 41% of global consumers are familiar with the terms.
Increased demand globally for financial institutions to offer green banking services and better communicate about their availability and differences, shows that the industry must put greater emphasis on understanding consumer expectations and needs around green banking products and services. By tapping into this demand, banks can not only help their customers in the transition to green finance but will also gain valuable consumer insights.
Moving forward, financial services can do more at embracing stakeholder dialogue. Customers should be given a seat at the product table and a vote on how their money is invested once they have been fully informed, and educated about ethical and green finance. There has never been a better time to cater to the demands of the conscious consumer while making a positive impact.
Read more in the complete report: Is the grass greener on the sustainable side?