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What is the purpose of a bank?

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It’s a simple question: what is the purpose of a bank? However, the answers I get are often missing the mark, imho. I get answers like to fund business, to finance progress, to support government, to keep economies stable, to manage risk, to build communities, to allow people to be secure, to enable trade and more. These answers are all true but, for me, the heart of banking’s purpose is to make societies better.

This all harks back to 2008 and the financial crisis when a lot of banking was accused of being socially useless (something I blogged about in depth ten years ago) and have lost their moral compass. The fact is that a lot of banks lose that compass because power corrupts, and money is power. This is why banks should keep a clear purpose for their existence in mind as, if they do not, they will invest in things that destroy the world, decay societies and corrupt individuals. It is a tough balance to keep and a hard line to walk. However, if governments are serious about regulating financial institutions, then the regulators should focus upon this question: are our financial institutions making our society better?

When you think of the issues in the world today: trade tariff tensions, escalating arms rattling, the climate emergency, wildfires, floods … too many more to name, then most of this harks back to humanities abuse of our resources for profit and trade. If banks enable profit and trade, which they do, then they must ask whether they are doing this responsibly.

Now, I’m not saying that a bank should divert all of their policies away from fossil fuel firms, frackers and other reprehensible tasks. But they do need a guiding light to follow to avoid damaging societies and resources. This struck me when I wrote up the recent interview with Santander’s Executive Chairman Ana Botin. When asked why she doesn’t just stop funding fossil fuel firms, her response was:

“That wouldn’t be responsible. We cannot just cut the energy off in Poland, where a lot of the economy is still powered by coal. But we did announce, and we are one of the big banks in Poland, that we are not going to finance any new coal projects. You have to find a sensible balance between transforming and supporting our customers. We have a mission to help people and customers prosper in a sustainable way.”

This illustrates that balance and hard line. You have to continue to support businesses that may be causing societal and environmental issues, but you can change that support to be more responsible. For every project a fossil fuel firm engages with, they need to have a renewables project that offsets an equal amount of emissions for example. This is important as it still stuns me that a third of all of the carbon emissions that have damaged our planet over the past fifty years are generated by just 20 companies.

Unfortunately the biggest culprit is the Saudi Arabian firm Saudi Aramco who went public in December 2019 and saw the biggest IPO in history. The IPO raised $25.6 billion and valued the firm at $1.7 trillion, making it the most valuable firm in the world ahead of the likes of Amazon, Apple and Alibaba.

Investors invest for profit, not for the planet, society or communities. Bankers play a pivotal role in this battle and if they start to agree with my statement that a bank’s purpose is to make society better, they can influence investors and funds to do the same.

Some actually do get this but today, as we start a new decade, they get it in the heartline but not in the headline. They know that we should be more stakeholder focused but, when it comes to your own personal bonus and lifestyle, you don’t change it. You still take the profit, fly the flight, burn the fire and ignore the dire.

Something’s got to change …


Something's Got to Change by Josh Wilson

I'm thirsty, God I'm thirsty from drinking what destroys me
I'm pouring poison in my cup
I'm hungry, God I'm hungry consuming what controls me
Somehow it never fills me up

We all want to find something to pass the time
But that could never be enough

Everybody says we're all so different
But everybody knows we're all the same
We're all trying to find a pill to numb the pain
Something's got to change

Do you remember when you had so much hope within you?
It lingers deep inside you still
The more of us we swallow, the more we become hollow
Until we don't know how to feel

We all want to find something to satisfy
But we could never be enough

Everybody says we're all so different
But everybody knows we're all the same
We're all trying to find a pill to numb the pain
Something's got to change

When everything we say and take just leads to war and hate
We only pass the blame, sedate the pain and move along
But something feels so wrong, so deep inside, so hard to hide
So desperately we try and try and come to find
That we are not what we've been looking for

I can't believe I'm hearing people say that all is well
I think it's time we all admit we have no good within ourselves
'Cause we are not okay, we're not alright and we need to pray for help
Forgive us for our pride, oh God, oh God please save us from ourselves

'Cause everybody says we're all so different
But everybody knows we're all the same
We're all trying to find a pill to numb the pain
Something's got to change

So God help us
Something's got to change

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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