NEW YORK–A new analysis suggests financial institution leaders should use the coronavirus lockdown to reflect on their strategies by refocusing on sustainability including environmental, social, and governance (ESG).
According to GlobalData, the largest driver of sustainability is the rise of Millennial and Gen-Z buying power in financial services, two generational cohorts that will soon comprise 75% of all accounts and purchases. GlobalData noted its 2020 Banking and Payments survey has found that 18–34-year-olds are 40% more likely on average to say that ‘supporting environmental and ethical causes’ is the most important attribute in a financial services firm.
“To align with their own beliefs, consumers are demanding faster, cheaper, more convenient ways of managing their finances as they want the brands of the products they buy,” said Katherine Long, retail banking analyst at GlobalData.
In what GlobalData called a rare moment of positivity, Dutch lender Bunq revealed that its SuperGreen card has seen growth of 250% per day since its launch four months ago. Through a scheme designed to plant a tree for every $109.80 spent, Bunq customers are expected to have planted 144,000 trees with around $15.6 million spending, with Bunq now partnering with Mastercard to offer its SuperGreen card across Europe.
A ‘Deep Look’
“GlobalData’s ESG thematic research has taken a deep look into the opportunities that ESG practices can give financial services,” the company said. “One of those has been the fund industry: ethical funds, for example, have grown increasingly, having outperformed non-ethical funds over the course of 2019, the last three years, and the last five years.”
GlobalData added ethical funds are also popular with the industry itself, with funds able to charge premium fees for ethical funds due to their market novelty.