By: Ruby Walia, Mobiquity
The ethical imperative to leave a healthy planet to future generations makes it necessary to look at banks’ sustainability efforts against a broad canvas of how banking products and services, customer lifestyles and expectations, and technology are evolving.
For over 500 years, retail banking followed a model of building branches in high foot-traffic areas and waiting for customers to show up. That model worked when alternatives to in-person services were fewer, customers had different expectations, and environmental concerns were minimal or not even a consideration.
The new digital lifestyle, where smartphones act as a “remote control” to everyday experiences, has changed customers’ expectations about how banks should serve them. Customers now prefer to access banking services where and when it’s most convenient for them; that could be at home, in the doctor’s waiting room, or any place when they have a few minutes of time. When they do this, customers are essentially serving themselves.
The “self-serve” model has many benefits; customers find it quicker and more convenient and banks need less staff in branches and call centers to attend to customers. Because the self-serve model particularly applies to simpler transactional activity like paying bills and checking balances, it frees up bank staff to help customers with more complex, higher value services. It reduces the environmental impact; customers don’t have to travel to branches and banks can reduce the size and number of branches. And it reduces a bank’s operating cost.
Customers are also increasingly adopting newly invented digital products like robo-advisors and BNPL financing that technology enabled in recent years. When a bank, historically a consumer’s primary financial services provider, doesn’t offer such products, customers adopt offerings from competitors. Oftentimes, that’s a fintech startup or a large technology company that’s eager to get into financial services. These technology-enabled products are usually more environmentally friendly; an obvious example is Venmo versus paper-based checks.
This narrative has focused on Consumer Banking, but these same paradigm shifts are taking place in other customer segments. The same technologies that are enabling new capabilities and efficiencies in Consumer Banking are doing it at scale in Corporate Banking, Wealth Management, Brokerage, etc. And they are achieving the same benefits of customer convenience, competitive advantage, and cost savings, along with improved sustainability.
Sustainability related initiatives have often failed to attract sufficient boardroom support, in all sectors, not just banking, because their benefits are seen by some as unproven, intangible, or far off in the future. Even if the benefits to future generations seem distant, the immediate benefits of meeting contemporary customer expectations, competing effectively with non-traditional technology-based competitors, and lowering current operating costs should be evident and compelling to banks.