Banks and fintechs are using technology to help their customers make more climate-friendly choices. They grant green loans, help consumers understand the impact of their transactions and encourage them to spend more environmentally friendly.
Climate awareness can attract young customers in particular: according to the Simon-Kucher Global Sustainability Study in 2021, 39% of Gen Z and 42% of Gen Y are willing to pay a premium for sustainability. Research and advisory firm Forrester found that Gen Z and Millennials who live in cities and have college or higher degrees are most likely to seek out green banking products — and make brand decisions based on in part on environmental considerations concerning the company or the product. The theme of the green bank is also topical with the passage the Inflation Reduction Act, which encourages energy-efficient home renovations and the purchase of electric and hybrid vehicles.
Another motive for banks is to restore reputation.
“Many big banks are getting criticized for their investment purchases and backing big oil,” said Ariana-Michele Moore, retail banking and payments adviser at Aite-Novarica Group. “At the end of the day, banks would be better off partnering with companies and passing on their solution.”
She prefers tools that help consumers make better decisions up front, rather than compensating after the fact, but these are still useful for building awareness.
“Deposit banks are going to be interested in solutions that drive the consumer to their apps and websites, so the more functionality they can add, the better,” Moore said. “Banks are supposed to be the trusted source of information. They can help educate consumers to make better decisions.”
Here are five ways banks and fintechs are using technology to help customers live more sustainable lives, plus a look at what might happen in the future.
