The power of purpose in financial services
Financial services play an important role in our lives, from the day to day management of our living expenses, to financing family homes, planning for the future, and providing security. These are not insignificant undertakings and with the provision of financial services, comes great responsibility. For this sector in particular, a shift towards more purposeful business cannot come too soon.
Since the 2008 financial crisis, the deficit in consumer trust in the financial services industry has deepened and cynicism amongst consumers is rife. Regulation has of course been put in place to attempt to prevent future crises, however the opportunity to go above and beyond, to make consumers proud to be associated with a brand, and to make a difference in an industry long regarded as murky at best when it comes to ‘doing good’, is real and ongoing.
Purpose is about doing business for good – delivering a profit while also delivering real value amongst customers, employees, stakeholders and the wider society in which the business operates. When articulated and executed effectively, purpose is a true differentiator, it becomes the strategic and moral compass for the business, informing why that business exists, what it stands for and how it operates.
Some of the newer players in the financial services sector have entered the market with a clear sense of purpose. Starling Bank’s commitment to “doing the right thing” is woven into the way the bank interacts with customers. The recent #makemoneyequal campaign encouraging financial institutions to address women and men in the same way when it comes to money is a powerful execution of this purpose.
Similarly, Monzo is committed to “building a new kind of bank… by treating you fairly and being totally transparent we can make banking better.” Through its digital-first, community-led approach Monzo is actively pursuing a transparent relationship with customers. In terms of purpose, Monzo openly acknowledges that the first step in building a socially impactful company is to deliver a profit to sustain future operations for both customers and communities. The results are yet to be seen.
SunTrust Bank, the seventh-largest bank in the US, is a purpose-driven company committed to “lighting the way to financial well-being for the people, businesses, and communities it serves.” One of a series of initiatives launched by SunTrust is the ‘onUp’ movement, aimed at helping people move from financial stress to confidence, driven by the insight that financial insecurity is a major cause of anxiety in the US. Offering information and support on managing money, the movement has more than 4.5 million participants, and has driven customer growth. Interestingly, the recent announcement of SunTrust’s proposed merger with BB&T has been challenged by stakeholders on the ways in which the company’s purpose and culture ambitions will continue to be met in the event of the merger.
As an industry with one of the largest median pay gaps in the UK, financial services has a lot to prove in terms of how it is addressing the critical issues of today – gender equality, diversity and inclusion, sustainability and addressing poverty – as well as treating customers with the respect and honesty they deserve.
The financial services industry will always play a central role in our lives, so ensuring that organisations are purpose-driven in terms of how they do business, the culture within the business, and the vision for sustaining both society and the ongoing success of that business are critical to the future of individual organisations, and the industry as a whole.
We know that purpose-driven companies evolve faster than competitors. Powerful ambassadors such as Larry Fink, CEO of BlackRock are strongly advocating this approach as essential for business, and imperative for society.
“To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all their stakeholders, including shareholders, employees, customers and they communities in which they operate.”
Larry Fink, CEO BlackRock
Now is the time to act.
Get in touch or find out more about our purpose communications team here.