Consumers rarely switch their banking providers, but a growing concern for the environment and other ‘ethical’ factors may drive a surge, according to a survey.
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For almost half of consumers, environmental and social issues are a very important factor when choosing their banking provider and one in four European consumers (24 per cent) are likely to switch if their bank is not engaged in ‘ESG’ issues, according to a recent survey.
ESG stands for Environmental, Social and Governance. It has become a powerful force in the world of asset management, prompting companies to disclose statistics on a wide range of factors from carbon emissions to gender pay differences.
In the survey, part of research from management consulting firm Kearney, which surveyed attitudes towards retail banking among Europeans, responsible investing in particular was the most important ESG topic. Just under half (41 per cent) of respondents surveyed wanted the reassurance that the funds they invested in would not support companies that produced weapons or polluted the environment or factories that disrespected safety standards and human rights.
In the UK, over one in five customers (22 per cent) would likely switch to a bank with higher ESG priorities, whilst almost 30 per cent of consumers in Poland, Romania, Spain and Italy reported the same sentiment.
Younger people, those aged 18-24, are almost twice as likely to switch banks compared to those aged 55 and over with 30 per cent reporting that they would switch for ESG easons compared to 18 per cent of those aged 55.
Simon Kent, Partner and Global Head of Financial Services at Kearney, said while banking is still a sector with low number of switchers compared to telecoms or utilities, banks should become complacent.
“Consumers are actively looking to engage with companies and brands that align to their values, so it’s important that banks take action. Our research unsurprisingly shows that consumers are likely to be more loyal if they are aware of their bank’s ethical activities, but currently, only an average of 40 per cent know what their bank is doing in these areas. There is a considerable opportunity for improvement in customer communications and engagement on this topic to demonstrate a bank’s commitment and aspirations towards supporting and undertaking ESG initiatives more clearly.”
“ESG concerns are not only here to stay but will increasingly drive customer behaviour in the future, and retail banks must be at the forefront.”