The world is dependent on global finance working towards a fairer financial system for people, the environment and culture with a focus on sustainability, climate change and social justice. This July at The Fintech Times we are putting the spotlight on ethical finance/ethical banking, including environmentally and socially-conscious practices.
Perceptions of ethical finance have varied and changed over the years. For some, ethical banking is a green campaign taking a stand on environmental concerns. For others it is about increasing access to affordable and appropriate financial products and services.
Today we share insight from across the industry on that very subject: what is ethical banking?
Let’s begin with the thoughts of Anna Krotova, director of sustainability at cloud-native core banking platform Mambu.
For Krotova, who is charged with setting Mambu’s corporate sustainability and ESG strategy, the term ethical banking is a broad term, typically used to describe banks that operate based on a set of principles that are used to govern and guide how they make investment decisions.
She says: “Sustainability and responsibility towards society and the environment is at the core of these principles. Ethical banking, done genuinely and rigorously, ensures that capital is invested in a socially and environmentally responsible way, aligned with the ethical values of customers and the broader context of sustainable development.”
Climate engagement fintech ecolytiq enables banks and other financial institutions to give their customers transparency on how their spending behaviour affects the climate through a software solution that offers impact offsetting and sustainable investing as tools for climate action.
Its co-founder and CPO, David Lais, believes “banking is in transition”. He says: “It’s becoming clearer that, with each investment, banks have a direct impact on the environment and their community.
“Ethical banking is the principal understanding that banks have a considerable influence on our society and that their actions need to align with social, environmental and ethical standards.
“To acknowledge climate change and still invest in fossil fuels presents an ethical dilemma – one that many banks are grappling with today.”
Leaf Global Fintech
Next we hear from Nat Robinson, CEO at Leaf Global Fintech, which provides accessible financial services for primarily refugees, migrants and the unbanked through blockchain technology from its UK base at Sci-Tech Daresbury, the science and innovation campus near Liverpool.
He tells The Fintech Times: “Ethical banking is where banks (or other financial institutions) incorporate social responsibility into their regular practices and initiatives.
“We see an ethical bank as one that is committed to creating social or environmental good without exclusive focus on profit. This also means a bank cannot fund activities that will harm people or the environment.”
James Wilkinson co-founded car financing marketplace Zuto with the mission of matching people to a finance package that’s right for them and transforming the car finance experience with “simplicity and integrity”. He thinks ethical banking is all about fairness.
The CEO says: “From our perspective ethical banking is about ensuring operations and processes within an organisation are fair to all – stakeholders- customers, employees and local communities, as well as the environment.
“Looking specifically at the car finance industry – it has, historically, suffered from an image problem, sometimes seen as being plagued by bad practice and unfair lending rates. At Zuto we want to change this and bring trust and transparency to the market, changing it for the better.”
Over to Krzysztof Grzeszczuk, senior innovation consultant at Netguru, a software company working with fintech startups, scale-ups and large financial corporations on innovative digital products and services with a mission of ‘building an inclusive and sustainable economy’.
For Grzeszczuk, ethical banking is “what banking should be in the first place”.
He says: “Ethical banking takes into account the bank’s impact on society and the environment. A decision to adjust a financing policy translates directly into what types of world-impacting investments will be funded.”