I guess my discussions of purpose-driven banking are growing. Maybe I just picked up the vibe or created it, but more and more I’m seeing bank CEO’s talking about purpose.
Tom Blomfield, CEO and co-founder of Monzo, in Wired magazine:
“Why do companies even exist? What are we here for? We have to be profitable and sustainable. But you also need to think about our impact on society and environment. If we don’t do that, we make a bunch of profit and screw everything else up”, says Tom Blomfield, the chief executive of challenger bank Monzo. “I think the best businesses find something that’s really positive for society and the environment and individual customers, and generates a really healthy, sustainable profit.”
Alison Rose, the new CEO of RBS which is changing its name to NatWest Group, also announced an end to fossil fuel funding as she builds a new purpose-led bank. In a speech this month, she stated:
“We are setting out a new commitment to be a purpose-led organisation. An organisation that will champion potential, helping people, families and businesses to thrive.
“Now, I know a lot of businesses talk about having a purpose. I want to tell you what being purpose-led means for me personally, and what it will mean for the future of the bank. Purpose is thinking about business in a much wider sense than before. It is about our role in – and connection to – society.
“So, for me, purpose has to be the driving force in all we do. It is about making sure that in how I lead, I’m thinking about the wider positive impact that we can have on all our stakeholders when we are making decisions.”
In making that announcement she also promised to cut funding fossil fuel firms that are not aligned with the Paris Climate Accord and to convert the bank to be fully carbon neutral by 2025.
“Ralph explains how it all starts with a purpose, and how ING is putting its purpose into action with a differentiating customer experience on mobile devices. But our purpose is much broader than simply a focus on customers, it also speaks to ING’s role in society. Ralph highlights that ING’s commitment to acting in alignment with the Paris Agreement on Climate Change is all about the influence we can have on our clients and their activities. Finally, he explains the new way of working, managing and planning that is necessary to keep up with fast-paced change.”
Even Jamie Dimon gets in on the act, with the Business Roundtable announcing stakeholder focus, rather than shareholder focus.
Nevertheless, I’m always watching with my cynical eye on the actions, not words. Are these companies really delivering their promise. I expect that ING, Monzo and RBS/NatWest are serious about being purpose-driven but, when it comes down to doing a deal that delivers shareholder return or rejecting said deal and making a loss for the year … do the principles still stand?
It’s a question that Co-operative Bank has been grappling with for years. They’ve been an ethical bank for as long as I can remember …
“At The Co-operative Bank, we have always been driven by something different: an ethical approach to banking. It’s why we were the first UK high street bank to introduce a customer-led Ethical Policy – a policy that’s been shaped by over 320,000 customer responses since 1992.
“In 2017, we marked the 25th anniversary of our Ethical Policy. We have worked together to tackle the things that matter to you. From climate change to human rights. And while a lot has changed in that time, we’re as committed as ever to:
- Listen and care about what matters to you.
- Make sure that your money is being used for good.
- Campaign for what you think is right.”
But this is the bank that almost died, had a boss who lacked the ‘fitness and propriety’ required to work in financial services, and needed a huge shake-up. Add on to all of this that their ethical stance didn’t grown much market share or differentiate them from the banking pack, and you wonder how much customers really care about purpose-driven banking? Maybe just make it a marketing campaign, and don’t bother really committing to the actions that go with the words.