The advancement of technology has transformed many industries and institutions. Financial insti...
Our decision making is shaped and guided by purpose. Purpose gives us clarity on our work and drives us forward. In banking also purpose is as critical a factor as in any other industry. In this article, we shall have a brief overview of Purpose Driven Banking.
Many customers are doubtful about whether the banks have their best interests at heart. As per Accenture, Purpose-driven banking is an authentic, transparent effort to help the customers to manage their finances wisely and effectively even if it requires the bank to offer advice that may not immediately bring money to the bank.
It is a way of building strong relationships, and by building it and assisting the customers in increasing their wealth as trusted advisors, banks profit from improved retention and revenue growth.
The main objective of this form of banking is that banks must authentically and consistently work to put their customers at first priority regardless of the fact that this approach brings them an immediate advantage or not.
The customers trust their banks to take care of their transactions and their data, but they are reluctant to put their interests first. It becomes even more complicated when these customers slip into overdraft or manage their money unwisely. Sometimes they are penalized instead of being assisted by banks.
It’s vital that the banks restore customer trust because regulators and new digital transformation in banking are accumulating on these bad revenues that amount to 5% of banks’ total income. It’s also vital because new advisory offerings are one of the most promising sources of revenue, but if the element of trust is missing, then they will find no buyers.
In major research conducted by Accenture, a quantitative survey was held where it polled 14,900 retail banking customers in 12 key markets on their financial habits and attitudes. An analysis was also done on the revenue uplift that incumbent banks in these markets can expect. As per the research, it was found that 43% of the customers trust their banks to take care of their long term financial well being. 14% of the consumers turned to their bank when a major life event affected their finances.
The Financial Impact on Industries due to the Covid-19 pandemic has caused a significant hit on the economy across the globe, and it has highlighted the shortcoming of many economies. Small and Medium size businesses are the lifeblood of the economy. However, these are also vulnerable to shifts in consumer spending and economic turmoil.
While this owes to their size of the business, it is also the result of the system in which these businesses are less likely to secure lines of credit and loans even in stable times- steps that will help to ensure resilience in bad times.
Likewise, non-profit charities and social enterprises are key players in community building, providing essential services and paths to solve complex challenges. Yet the sector, that heavily depends on donors and grants from the government is already witnessing a significant shortfall in funding because of the pandemic and the closure of such organizations will be felt by the vulnerable communities that depend on the services provided by them.
The financial institutions post the Covid-19 pandemic must look to build resilience into the economy by assisting the businesses, organizations, and communities at heart.
There are six main pointers for building a banking firm driven by purpose. These are as follows:
Transform core business models for efficiency and the enhancement of the experience with immediate effect with a view to growing market share.
The focus must be on the strategy to expand service offerings with a view to cover aspects like financial advice etc.
Brand alignment with a purpose must be seen as genuine, and it must be part of the firm’s culture where it is backed with genuine initiatives that allow the employees to get involved and make a difference. A sense of purpose must build from inside out else it won’t feel authentic.
It’s essential that a bank identifies the things that sets it apart and find a way to use that power for good. There is a core competency with each bank that must be used to empower the customers and bring a change to the financial world.
Banks can tap into their employees’ passion and interest on a local level to drive change and instill purpose.
Building and sustaining a purpose driven brand is not a small task. It requires support from the organization where the executives need to believe in it, and employees need to engage in it.
Creating a purpose driven brand shall empower your institution’s customers as well as the employees. It will facilitate in making a massive difference to the financial institution and to the world.