In a world that is pressed with numerous challenges, access to capital and funds is key to transforming societies. Banks and financial institutions are in a unique position to bring about this catalytic impact by deciding not just where the capital is allocated but to be more responsive by placing the needs of people and communities at the forefront. But is this possible? And if yes would the financial trade-offs be profitable?
To explore these questions and understand the promise that values-based banking holds, Enclude, a capital advisory services firm, hosted an informative and engaging Roundtable on Sustainable Banking which was held in Atlanta, USA in April 2018. The Roundtable saw the participation of stakeholders from the financial sector, nonprofits and social impact advisory organisations who brought to the table their experiences and reflected on the need to build a financial system that is resilient and beneficial to the society.
No discussion on values-based banking is complete without highlighting the business case that underpins the success of this model. It was here that the session threw light on the study conducted by The Global Alliance for Banking on Values (GABV). The Global Alliance for Banking on Values is an independent network of banking leaders from around the world committed to advancing positive change in the banking sector. As part of the study, the report highlights the ways in which banks and financial institutions support communities and enterprises. While on the one hand this helps drive social and environmental change, on the other hand it also creates a robust financial system by delivering steady returns on financial investments. The report shows how banks supporting the real economy are not only less volatile and more resilient but have a better lending capacity in terms of making investments in businesses and enterprises that work towards creating social impact.
A classic example discussed was the work undertaken by Southern Bancorp, one of the largest community development banks in the United States of America. Darrin Williams, the CEO of Southern Bancorp who was part of the panel, in his discussion with Laurie Spengler, the President and CEO of Enclude, shared with the participants how they have been successful in enhancing financial inclusion by delivering innovative financial products to the underserved communities in the Mid-South.
What really stood out for me in the entire discussion was the element of proximity that is linked to sustainable or values-based banking. By placing the needs of the communities they serve in the center, real economy focused banks in a way establish a direct relationship with their clients and work towards developing innovative financial products and services that are best suited to meet their requirements. But what is also encouraging is how together with proximity, transparency is an important aspect of socially responsible investments as the impact created is measurable and visible. This enhances citizen participation and calls for a more inclusive system by bringing a wider community of people and businesses under its fold.
Maybe it’s time to think where your money spends the night, as where you bank really matters!