In This Article
- Why is trust so important in banking?
- What is purpose-driven banking?
- Where is purpose-driven banking needed the most?
- What are some essential points for creating purpose-driven banking?
- Transform core business models:
- Focus on creating a proper strategy:
- Aligning the firm's culture:
- Play on your core competencies:
- Make it local:
“Does my bank really have my best interests in mind?” That’s a question every person around the globe has asked themselves at least once, if not more. And the reason for it is simple. With so much uncertainty going around, everyone wants an added layer of security to make sure that their interests are protected. And the first thing they look to is their bank. And since banks are sitting on basically somebody’s life savings, they are expected to keep their client’s best interests in mind.
In the wake of the COVID crisis, things have changed. We can no longer go back to the same values, lifestyles, and norms we once swore by. And that includes banks. In the last few months, banks have started advocating for trust in banking practices. But, Why?
Why is trust so important in banking?
In today’s world, trust is a commodity that needs to be earned. And the banking industry is no different. Banks want to earn customers’ trust, and consumers want to give it to them to have peace of mind, but things are not quite adding up. Despite the clients’ interest in handing over their risks, they still have doubts. And that’s because banks are not fully transparent. With data breaches and hacking cases becoming an everyday occurrence, it has become difficult to picture the future for the consumer. The ambiguity breeds fear, causing customers to lose faith in the banks. And the only way to combat this is by engaging with your customers and assuring them that you have their best interests in mind. This is where-purpose driven banking comes in.
What is purpose-driven banking?
Purpose Driven Banking is the authentic and transparent approach banks take to managing their clients’ finances by always keeping their best interests in mind. The main objective is to build strong relationships and foster loyalty amongst clients. Banks that advocate for purpose-driven banking don’t dive deep into the numbers. Instead of focusing on profit generation, they try to foster trust and loyalty amongst their customers.
Where is purpose-driven banking needed the most?
Purpose-driven banking isn’t a concept limited to specific regions or countries alone. The lack of trust in banking is a global problem and needs immediate attention from banks worldwide. With so many financial institutions failing to keep their promises, it is high time to bring transparency and authenticity into the system.
The COVID crisis has shown us that the small and medium scale industries are at a massive risk. A simple change in consumer spending patterns can permanently ruin their business, and they want an added layer of security. The same can be said for non-profit charities and social enterprises. These businesses are at a massive risk of economic downturns. This is where purpose-driven banking shines. Knowing that your bank wants nothing but the best for you allows people to open up to their banking agents and seek financial information that enables them to make the right decision. In the long run, this can go a long way in revitalizing the economy and fostering several enterprises.
What are some essential points for creating purpose-driven banking?
When it comes to creating purpose-driven banking, there are a few things that you need to consider.
Transform core business models:
Change doesn’t happen overnight; it takes time and effort. But that is not an excuse to avoid change. And the first change should occur within core business models. Core business models are how a bank thinks, acts, and should act in all situations. As long as the core business models remain the same, no amount of advocacy and window dressing will allow a bank to harness the power of purpose-driven banking.
Focus on creating a proper strategy:
Strategy is how you plan to reach your goals. And, if there are no formal strategies in place, nothing can help banks adopt purpose-driven banking.
Aligning the firm's culture:
A bank is an extension of the people who work in it. And, if there are no proper alignments between your company’s culture and purpose-driven banking, you will run into problems sooner or later.
Play on your core competencies:
Every bank provides similar services, but does that mean every bank is the same? Probably not. Each bank excels in some parts of its operation and ensuring that your core competency aligns with purpose-driven banking is an excellent way to get things started.
Make it local:
A global movement is great, but that doesn’t give you a free pass on local issues. People are more likely to open up when they feel like their banks are concerned about their well-being and the well-being of their societies and local communities.
We know it’s tough sustaining a massive change through your entire organization. But if banks want to survive in this post-COVID era, they need to start thinking about their clients more than ever. They need to start listening and following regulations and laws, but most importantly, banks need to adopt purpose-driven banking practices.