Banks Need to Navigate Their Societal Responsibility or Risk Becoming Obsolete
COVID-19 has irrevocably changed banking. According to the consumer body Which?, around 4,000 banks and building societies have announced branch closures since 2015, and this process has accelerated due to shifting customer expectations in lockdown. Banks including Santander, M&S and HSBC, among others, have been forced to close in-person branch banking options across the UK, as digital banking continues to grow in popularity.
In this context, financial inclusion and issues of corporate social responsibility have come to the fore. For example, banks and financial institutions, such as HSBC, have been helping to improve the lives of homeless people by opening bank accounts for the most vulnerable in society with no fixed address or photo ID.
Investing to help vulnerable customers makes sense, both from a business and societal perspective. Not only does it help to support the bank’s changing role in society by improving financial inclusion and access to finance, it also opens up new customer opportunities and markets.
Generating positive change is a win-win for traditional and challenger banks, and the COVID-19 pandemic has forced the industry to reevaluate its role in society. Many banks are now refocusing their efforts on how they can better support their customers through difficult times championing corporate social responsibility, financial inclusion and sustainability.
Revolut beating the competition to the punch
Banks and financial institutions exist to serve the community, and financial inclusion is an important part of this societal role.
Revolut is leading by example with its launch of a limited edition, glow-in-the-dark debit card in partnership with Anthony Joshua, supporting independent UK boxing gyms. The glow-in-the-dark card will no doubt be used as bragging rights for those making use of the UK’s nightlife once lockdown lifts. Meanwhile, the launch of the card touches on a serious issue around underfunding in physical education and the impact of COVID-19 on independent sporting venues in the UK.
For every limited edition Anthony Joshua card, Revolut is donating £1,000 to support boxing clubs in England and Scotland, to tackle this issue and raise much-needed funds for these facilities.
This initiative demonstrates the role of banking providers in the local community, transitioning from beyond a ‘normal’ bank to provisioning banking services for the greater good.
Democratising banking to drive new revenue opportunities
As we move towards an increasingly digital world, the future of banking and its role in society continues to evolve. As a result, the ‘bank of the future’ needs to use technologies and a seamless customer experience, while adopting a greater interest in societal challenges.
Corporate social responsibility, financial inclusion and sustainability are no longer things customers overlook when choosing who to bank with. According to a survey of UK banking customers by Market Forces, 80% said they were not aware that their bank was investing in fossil fuels, and more than one in ten would be ‘very likely’ to switch banks as a result. It’s clear that growing awareness of issues such as sustainability and financial inclusion are going to change customer behaviours and attitudes in the future. For banks and financial institutions, embracing this will help to drive new revenue opportunities while retaining existing customers.
Companies like Revolut, through their partnership with UK boxing gyms, and HSBC, with their banking support for the homeless, show how the bank’s role is changing, and those who continue to ignore the importance of CSR, ESG and financial inclusion strategies will be left behind.
The bank of the future
For banks to prepare for financial inclusion they need to consider that not everyone will go digital. So, how will banks stop vulnerable and older customers falling through the cracks?
A community hub model, where multiple banks can provide banking services to customers in a collaborative retail space, will support financial inclusion. The model will provide face-to-face contact for those who cannot, or may not want to use digital services as well as those who do. Indeed, shared bank branches will offer counter services run by the Post Office where customers with any bank will be able to deposit cheques, pay bills and withdraw cash.
The bank of the future will be one that leverages the benefits technology brings, bridging the physical and digital customer journeys, to attract and retain customers by removing frictions with a human touch point. Ensuring that the human-centric banking experience goes beyond just banking and supports customers in innovative ways.