For banks around the world, leveraging an eco-mindset is becoming increasingly crucial as consumers consider their role in environmentally damaging CO2 emissions and climate change. As challenger banks, such as Starling and Monzo, drive up social initiatives and commit to net-zero pledges, more traditional banks are shifting their public perception of climate change and making investments in greener services.
by Dr Carsten Wengel, Head of Global Sales & Distribution in the Card & Digital Payments Business, Giesecke+Devrient
In fact, the latest research by YouGov finds that 58% of consumers in the USA and 57% in the UK are now willing to spend more on sustainability in the banking sector. Banks are a mirror of the societies they serve, and as a result, they need to decide if they want to be the driver of or driven by the global trend of sustainability. But how best can they achieve this, and which methods can they adopt to win the eco-conscious consumer?
Sustainable banking cards for a sustainable consumer
Over the recent years, more consumers have come to realise their purchasing decisions have the power to impact positive change. As such, they now expect sustainable offerings from any company they engage with. This includes banks too, with consumers increasingly demanding their banks’ support to help them shift to more sustainable payment practices. One way to meet this growing demand is for banks to introduce sustainable banking cards.
Despite a common misconception, banking cards can in fact be environmentally-friendly. They can be made of climate-friendly materials such as renewable plant fibres that are entirely compostable under industrial conditions. Even though the material has similar characteristics and strength to petrol-based plastic, it is nothing like it as no additional greenhouse gases are released during the combustion process. Compared to the production of conventional cards, sustainable banking cards can save up energy and harmful gas emissions of as much as 68%. This can significantly reduce their impact on the planet considering the volumes produced each year.
With 91% of the world’s plastic not yet recycled, sustainable banking cards can also have their bodies made entirely of recycled PVC, driving the circular economy and taking appropriate steps to end planned obsolescence. A smarter use – or re-use – of materials can help reduce waste and pressures on the environment whilst stimulating innovation and boosting economic growth.
It’s not just the physical banking card, however, that should be put through a sustainability check and replacement. Every new card requires a PIN which is often sent to consumers by post, creating more paper waste. Banks should therefore consider an eco-friendlier alternative – a digital way to send PINs. For example, by a text message, QR code or provide secure access to new PIN via the app and multi-factor authentication.
Such a step towards sustainability can not only be life-saving for our planet, but it can also act as a powerful business tool for banks. In the hands of customers, sustainable banking cards can create a successful brand multiplier effect and help reinforce the bank’s mission, purpose and commitment to becoming more environmentally friendly. Customers will naturally become advocates of sustainable lifestyle banking, helping traditional institutions stand out with their eco-offerings amongst fierce competition.
Joint efforts needed to reduce climate impact
The fight against climate change does not have to be a lonely one for financial services institutions. To ensure greater results and a real impact, banks and fintechs should create fruitful partnerships and in a joint effort, satisfy consumer demand for more sustainable means of payments and offerings. Together they could develop and promote new services that calculate how much CO2 a consumer contributes each time they buy something.
Through an API, for example, banks could integrate such calculations into their digital wallets, which would analyse all types of transactions a consumer completes each month and showcase their carbon footprint through a visual dashboard. This could not only help consumers become better informed but also prompt them to make changes. Sweden-based company Doconomy is one fintech that has been making progress in this area, giving its customers more transparency on how their decisions impact the planet, encouraging them to change their behaviour and practices into more sustainable ones.
Taking the learnings and innovations that fintechs are pioneering, traditional commercial banks should follow their footsteps and build a more sustainable financial services ecosystem in which knowledge and best practice are shared regularly. It is apparent that banks need to become partners, or even drivers of change, however, they can only achieve that with the support of other, more experienced financial institutions to create a strong, reliable and transparent environmental initiative. It could be that through introducing concrete, climate-positive policies in the near future, banks and fintechs will be more encouraged to collaborate and form such a crucial ecosystem, meeting consumer needs for sustainable banking practices and ultimately achieving the international environmental and global warming goals.
Achieving a climate-friendly banking future
Fuelled by consumer demand for a green value proposition, traditional banks have started waking up to the need to act positively when it comes to payment sustainability. Through the introduction of sustainable banking cards, leveraging technology to raise greater carbon footprint awareness amongst consumers and joint actions between all financial ecosystem players, the industry can foster a greener future and make a real, positive difference for generations to come. As banks look to become more competitive and innovative, ensuring sustainable products and services could not only be life-saving for the planet, but also a new, profitable avenue worth exploring.