The green revolution: How Company-Specific Data is Transforming Sustainability in Digital Banking

Consumers July 2, 2024 Rafael Cifuentes, Amy Ingram, Magdalena Chullmir

In today’s market, retail banks must rapidly adapt to meet customer needs and ensure a positive experience. In the sustainability realm, this is no different.

Consumers, especially younger generations, care about the planet and they want banks that feel the same. In the UK, 62% of individuals aged 18-34 have expressed a desire for more information about their carbon footprint to reduce their environmental impact¹. Furthermore, Generation Z and millennials also rank climate change as one of their top concerns, second only to the cost of living.

Given that younger generations represent a pivotal audience for the future (as shown in the graph below), retail banks seeking to attract and retain this segment should prioritize sustainability in their offerings. As a result, both traditional retail banks and first-generation neobanks are integrating sustainability features into their services. This enables them to provide customers with relevant sustainability information based on their daily habits, thereby enhancing user satisfaction and loyalty.

New generations are becoming the critical mass of customers

However, the majority of existing solutions lack the key features to enhance customer engagement. In order to fulfill customer expectations today, these solutions should strive to integrate sustainability data and information taking companies, partners and customer preferences and lifestyles into account, revolutionizing the way consumers interact with their banking apps and client portals.

Adding granularity to meet customers demand

Increasingly, customers are seeking carbon insights in their banking applications and banks are responding to this demand. A common way of integrating sustainability insights is by using bank data to inform users how their transactions contribute to global warming by measuring the quantity of greenhouse gasses associated with their purchases. Commonly, this is done by using high-level industry averages (e.g., using one industry average to calculate the carbon footprint associated with all purchases at grocery stores). 

However, industry and category averages fail to address meaningful nuances that greatly impact the environmental intensity of a given transaction. For example, electricity usage contributes significantly to a company’s carbon footprint. Factors such as relocating operations to countries with more efficient energy grids or integrating more renewable energy into the supply chain can reduce the carbon footprint. Specific companies are in charge of making such choices, affecting their energy mix and efficiency in the process. So, adding company-specific information enables people to make better-informed decisions and holds companies accountable for their practices. As more people gain access to company-specific data and incorporate it into their decision-making, it will create incentives for companies to reduce their carbon footprints. 

ING Spain is an early mover in identifying this need, and has chosen to integrate company-specific sustainability data into the banking experience in collaboration with Clarity AI

Ángela Sánchez Vignote, Head of Payments and Accounts at ING Spain said: “With this partnership, we take a very important step in our commitment to contributing to the sustainable progress of our customers. Sustainability is a priority for us, and this new tool will not only provide a better experience for our customers but will also contribute positively to their financial health.”

Soon, all ING customers will have access to information on their carbon footprint, taking into account the companies driving the footprint behind their purchases, which will better equip them to make informed purchasing decisions.

Strategies to differentiate sustainable brands for consumers

Company-level assessments are not only important for granularity purposes, as in the case of carbon footprint solutions, but they also meet a growing consumer need and unlock other engagement avenues for retail banks. As competition in the retail banking space grows, retail banks are looking for ways to differentiate their offerings, and sustainability is a key lever to build on, especially for upcoming generations.

Consumer preferences are shifting towards purpose-driven and sustainable brands. In fact, 44% of consumers globally are now more inclined to support brands with a clear commitment to sustainability². This inclination stems from a desire to make a positive impact and align their purchases with their values.

Delving deeper into the sustainability practices of the companies behind products or services offers consumers a holistic perspective. This comprehensive examination extends beyond factors related solely to natural resources; it also encompasses crucial considerations such as gender equality policies, supply chain practices, and more. By embracing a multifaceted approach to sustainability, retail banks can better resonate with the values and priorities of today’s conscientious consumers.

For example, based on Clarity AI´s database of more than 70,000 publicly-traded companies worldwide, a top 10 fashion company globally is among the Top 2% for usage of renewable energy in the fashion industry. However, it ranks low for treatment of workers along its supply chain. Sustainability is a multi-faceted topic and it is important to integrate data across different dimensions to understand a company’s performance holistically. 

Introducing sustainability metrics such as badges showcasing  a company’s sustainability at company level not only empowers consumers but also opens up unique opportunities for gamification in banking. Banks could decide to reward customers who support top-performing sustainability companies across various critical areas, including gender equality and emissions reduction. Such initiatives contribute to fostering a more sustainable economy while aligning with the evolving preferences of environmentally conscious consumers.

Clarity AI: Driving Change in Sustainability through Personalization

By leveraging a sustainability database comprising data from over 70,000 companies worldwide, 180+ industry and country-level variations, and more than 300 sustainability metrics at company level, Clarity AI empowers retail banks to align with customer expectations and craft sustainable strategies.

Thanks to Clarity AI´s Retail Banking Sustainability Tech Kit, retail banks gain enhanced granularity in environmental footprints, personalized lifestyle adjustments tailored to individual consumer behavior and preferences, as well as gamification elements for engaging user experiences. 

Consumers can also make informed choices and embrace sustainable lifestyles. Through personalized lifestyle tips tailored to individual spending habits and preferences, consumers can reinforce their commitment to sustainability, whether it’s adopting a low-meat diet or opting for second-hand clothing to reduce waste.

In conclusion, harnessing more granular and comprehensive sustainability data translates to more meaningful data points and interactions with customers, unlocking new opportunities for retail banks in their journey to attract and retain sustainability-minded customers. This heightened level of insight enables banks to offer targeted products and services that resonate with the values and priorities of their environmentally conscious customer base, ultimately strengthening customer relationships and driving sustainable growth.

¹The Youth Cares – Youth Preference for Sustainable Banks

²Supply chain trends 2023. Shopify

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