Report: More retail banks focus on sustainability

According to a new report from the Boston Consulting Group, more retail banks have responded to concerns about climate change by integrating sustainability into their digital transformation programs.

About 75% of retail banks plan to increase spending on environmental, social and governance initiatives, BCG said in a statement, and nearly 20% plan to significantly increase spending. BCG released the findings of the report “Global Retail Banking 2022: Meaning and Sustainability.”

The global study found that 25% of retail banks identified ESG as a priority area for their digital transformation, and 38% of retail banks said ESG was among the key criteria considered when selecting and prioritizing digital transformation initiatives.

And nearly half of retail banks are primarily focused on environmental sustainability issues, BCG said, including reducing office energy use.

BCG sees opportunities for increased revenue related to sustainability initiatives.

“Sustainability has moved up the priority list for all stakeholders, making it the next frontier of competitive advantage for retail banks and a pillar of future growth,” said BCG Partner Thorsten Brackert. and director and co-author of the report, in the release. “In addition to promoting sustainable behaviors among customers, ESG-related products could generate significant returns for retail banks. A 20% ESG-related share of new retail banking revenue over the next five years, for example, would translate to a share of around 10% of total retail banking revenue – i.e. around $300 billion – in 2025.”

BCG also highlighted that customer confidence in their banks has increased since the start of the pandemic, with an additional 20% saying their confidence has increased, according to the 2021 Retail Banking Consumer Sentiment Survey. of BCG. BCG said that across all sectors, 73% of consumers have changed their environmentally-related shopping habits, and almost all Millennials have some interest in sustainable investing.

BCG has also identified opportunities for sustainable products, including green mortgages, which offer discounts to buyers and builders of energy-efficient properties. Everyday banking relationships can also be used to help customers lead environmentally responsible and ethical lives, BCG said, noting that in the US and UK nearly 90% of consumers want brands help them become more environmentally friendly.

“Retail banks have a critical role to play as societies and their institutions address social and environmental challenges,” said Sam Stewart, BCG’s Global Retail Banking Segment Leader and co-author of the report, in the press release. “As they contemplate a reoriented future, retail banks must ask themselves some existential questions: what will our customers be looking for beyond simple financial products and services in the coming years? And how can we align our business goals with meeting those needs before our competitors do it first? »

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