Financial news

As financial technology continues to evolve, and as banking becomes more ’embedded’ in the lives of consumers and in businesses’ value chains, people are also becoming increasingly conscious of the choices they are making – bringing banks’ values and climate credentials into question.

Around one in four (24 per cent) European consumers would switch providers if their banks do not engage in climate or ‘ESG’ issues, according to research from Kearney. Many expect Gen Z to continue to drive this shift, armed with a long-term investing approach and an appetite for ethical and sustainable banking options. Three out of five (61 per cent) banking customers in the UK also want their banking provider to do more to create a ‘positive, social and environmental’ impact.

As people put more weight on the importance of being climate-conscious when it comes to banking and investments, banks across the globe are taking notice.

Almost three-quarters (73 per cent) of banks are expected to offer more sustainable banking propositions in the next five years, in response to increasing customer centricity, according to the new Economist Impact report released by the SaaS cloud banking solution provider Temenos, which surveyed 300 banking executives globally.

Furthermore, 37 per cent of banks are investing in low-carbon technologies and decarbonisation start-ups, with an additional 31 per cent of banks pursuing sustainability strategies which reduce emissions in both their supply chains and internal operations.

Sustainable investment on the rise

This shift in consumer sentiment has translated to an increase in sustainable investment. Seventy-four per cent of banks are looking to invest in environmentally friendly projects in the next five years, while 64 per cent are considering diverting capital from carbon-intensive industries.

Kalliopi Chioti, chief marketing and ESG officer at Temenos, discussed the importance of embracing emerging technologies for banks: “Evolving consumer preferences are putting immense pressure on banks to operate according to a clear set of values, and are actively moulding banks’ agendas and strategies.

“Whether it’s by using artificial intelligence to align investment strategies with clients’ values, or reducing their carbon footprint through economies of scale on cloud solutions, technology can be a powerful ally for banks on this journey.”

As banks look to reduce their carbon footprint, they are also increasingly moving operations to the public cloud, with over half (51 per cent) of respondents agreeing that banks will no longer own any private data centres in the next five years.