The Future of Green Banking is Bright
If you follow bank stocks, you might have heard the recent news that some of the largest banks in the country are planning to raise their dividends for shareholders and buy back more shares to prop up their stock price. Instead of reinvesting in programs to benefit the community and the environment, these banks are aiming to reward executives and insiders who own boatloads of shares. Does this news mean we are returning to the days of selfish and reckless banking?
The American taxpayer, and consumers in general, won’t let that happen. The day and age of responsible banking from more ethical banks is here to stay. It might not happen overnight, but the momentum gained in the last couple of years in reeling in out-of-control banks is too strong to go away. People expect more from their banks today. The disdain for unethical and irresponsible banking also coincides with the emergence of technological innovation and eco-friendly banking. This confluence of new banking ideals is being called green banking and is being led by a number of small banks and technology startups. Here’s what to look for in green banking in the near future:
Banks that care about sustainable, ethical banking
In the wake of the financial crisis that left Americans tired of banks charging high fees and making bad loans, a new breed of banks is emerging. Banks with a social conscience. Banks that apply principles of sustainability and responsibility to their business model, products and operations. A great examples of this new wave of “green banking” is the recent launch in the Chicago area of GreenChoice Bank.
GreenChoice Bank bought Family Federal Savings of Illinois, a brick-and-mortar bank with an over 100-year history, in 2010. Since then, two branches were retrofitted and a sustainability principle was applied from top-to-bottom at the bank. Steve Sherman, the COO of GreenChoice Bank thinks this is just the start. He envisions his bank as serving as an example of what can be done if innovation and entrepreneurship are applied in the banking industry. Instead of trying to copy the larger banks in the Chicago area, his bank is setting an example of what is possible in banking.
For consumers this shift towards green banking means that more deposit and loan products will be available through online and mobile banking. It also means better deposit rates on CDs, money market accounts and savings accounts. Green banks should also have lower fees and give rate reductions on loans going towards energy-efficient projects. If you are a customer of a green bank you will also see their sustainability principles demonstrated in their buildings, operations and lending principles. This is banking beyond pure profit.
Another important aspect of green banking is the involvement and outreach from the individual banks to their local community. This is where a bank can make a real difference. For example, in Chicago GreenChoice Bank supports the Green Festival in Chicago and the Foresight Sustainable Business Alliance. Other banks like New Resource Bank in San Franciso and Wainwright Bank in Boston have made commitments to local environment projects.
Doesn’t this sound like the type of banks you would like to keep you on money on deposit with?
Mobile banking and mobile payments
In many parts of the world, mobile banking provides a solution to the problem of bringing financial services to the rural poor. Countries like India, China and Bangladesh have put more resources into developing mobile infrastructure than improving landlines. The environmental benefit of a push towards more mobile banking is enormous, but there is also a societal benefit. For instance, in India banking initiatives launched by State Bank of India (SBI) have enabled millions of Indians to use their mobile phones to bank in areas where there are no branch offices. The unbanked or underbanked living in rural areas now have the ability to tap into many of the same resources as people living in metropolitan areas. Even more important, mobile banking is proving to be one answer in the fight against poverty.
Helen DeBorg is a market analyst who covers mobile banking for RFPconnect.com in the United Kingdom. She notes the importance of mobile communication in the recent uprisings against repressive governments in North Africa. It would appear that the reliance on mobile devices will only increase in these countries and that mobile banking will continue to spread. In a strange paradox, a country with some of the most advanced technology in the world, the United States, has been slower to adopt mobile banking. That is starting to change this year with the popularity of the iPhone and iPad, but the U.S. still lags Asia and Europe. Commenting on the implementation of mobile banking in the U.S., Helen Deborg stated:
“I think U.S. is a country of contrasts where internet and mobile banking coexist in constant arms race. The highly developed and sophisticated technology market of the U.S. underrated importance of mobile banking considering it as a small fry not worth spending much of time and effort. The picture has changed recently. For example research by Nielsen Company shows that mobile payment and banking services as a whole have enjoyed 129 percent growth in the U.S. for the last two years. Mobile banking in US is positioned to grow even more because of greater footprint it may give reaching out all levels of the society.”
Beyond using a smartphone to check bank account balances and transfer money, a whole new revolution has started in the payments world. Mobile technology has now advanced far enough that mobile payments, once a dream of the past, is now a reality. The market to process payments by phones is about to see a huge amount of competition between all the big players like PayPal, Google, Apple, credit companies and major banks. Even startups like, Square, are capturing the attention of the public and investors as more innovative payments solutions come to the market almost daily.
For consumers, using mobile payments is about convenience and the ability to pay-it-green. It goes with saying that paying for our coffee, newspaper or taxi ride by swiping our phone makes life easier. It isn’t that far off that smartphones could actually replacing you wallet or purse that is stuffed with credit and debit cards! Encryption and security actually make it a safe payment alternative.
Mobile payments is also a green solution that helps the environment. Every time we pay a will without using paper, mail and human processing, we save natural resources.
Banking across borders
As green banking morphs and starts to become a real movement, look for more countries to join the bandwagon. Large multinational banks like ING Direct and HSBC Bank have the ability to really accelerate the green banking movement by changing their products, philosophy and drive to sustainability across borders. First, online banking, and now, mobile banking, has empowered the consumer to make informed banking decisions. This will not change, it will get more advanced. As more countries adopt mobile banking, online banking and sustainability; green banks will be the leaders.
Don’t get left behind, find a green bank today.