NEW YORK (MainStreet) – When banks really do put customers first, what do their bottom lines look like? According to one study, it's better for banks to put their customers' financial interests before their own.
That’s the main target of a report by the Global Alliance for Banking on Values, a Vancouver, Canada-based global banking advocacy group that bills itself as “an independent network of banks using finance to deliver sustainable development for unserved people, communities and the environment.”
Essentially, the group’s findings support the idea of kinder, softer banking, if such a thing even exists. Of course, it’s important to note that the GABV approaches the topic of banking greed with a predetermined stance, so readers need to take what the group says with a grain of salt.
But that doesn’t mean you shouldn’t hear the group out, especially when it shines a much-needed spotlight on the topic of sustainable banking, where financial institutions “base their decisions first and foremost on the needs of people,” as the GABV notes.
The organization’s study, funded by the Rockefeller Foundation, ranked the performance of 17 “values-based” banks with 29 of the world’s biggest and most profitable banks between 2007 and 2010.
What did the report find? Essentially, placing people before profits, as the sustainable corporate mantra goes, can actually pay off for banks – and for customers.
Some highlights from the study include the following:
Thus, the message from GABV member banks is hardly surprising.
“This report shows that doing good is beneficial for banks not just in a theoretical and ethical sense, but also financially, when measured against conventional benchmarks such as the financial bottom line,” said Peter Blom, GABV chair and CEO of Triodos Bank, Europe’s largest sustainable bank, in an official statement. “The findings are crucial for a global banking industry which has tremendous potential to affect positive change through its ability to lend money to finance entrepreneurs and stimulate local economies.”
GABV has one self-serving but likely important marketing point. If big banks ignore the tenets held by the GABV member banks, they could risk losing business to banks that start offering more “value-based services” like granting more loans or going easier on consumer fees.
If that happens, sit back and watch the larger banks grow more sustainable, too. For now, though, don’t hold your breath.
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