Financial Products That Combine The Innovation and Purpose: The Choice of Conscious Consumers

An increasing number of consumers look for products that enable them to make a difference and contribute to sustainability. Banks and fintech companies can address this need with innovation.

Humanity has been consuming unconsciously for too long. We live in a world where every action meets a consequence, and every decision builds the future. On the continuum of decisions of millions, our common future is being created every day. How bright is this future? While predictions aren’t very positive from the environmental perspective, there is always a place for change and action. Finance is the power driving many aspects of human and the planet’s life, and it’s the primary area where innovation can be deployed to create better social and environmental outcomes.

Amid the rise of the overall ESG awareness, sustainable finance is gaining momentum. This concept refers to financial services that meet the concern about climate change, social empowerment, and sustainable development in general. Modern consumers make more socially and environmentally conscious financial decisions and want their money to meet their values. Financial companies and banks can address this new need by creating new financial products that foster the transition of a low-carbon and circular economy and contribute to building a sustainable future.

Green deposit accounts

Banks can offer green deposit accounts to their commercial clients who want to see their money serve sustainable development goals and be used in socially and environmentally responsible initiatives. For example, MUFG Union Bank offers green deposit accounts with the following purposes: solar, wind, and tidal power, municipal waste recycling, aquatic biodiversity preservation, sustainable water, and waste management, package development using recycled materials. The basic idea of all these deposit options is nearly the same: the funds placed in a green deposit account will only be loaned out for initiatives with ESG focus, and sustainable mission and practices. Such accounts can provide a steady funding stream to green projects, which is expected for the years ahead.

‘Sustainable’ credit cards

Bank and financial companies can issue credit cards that reward consumers for their financial decisions that contribute to sustainability. These reward programs often allow donating cashback or reward points to sustainable initiatives and projects. An affinity card or direct-donation card enables a so-called “set-it-and-forget-it” donating method that involves automatically donating a part of your purchases to the organization you choose. 

Affinity cards are cards co-branded with a specific non-profit organization, and allow you to donate to this organization after every purchase. Also, banks can promote a green lifestyle by producing cards from recycled plastics. A great example of a “sustainable card” is an affinity card offered by the Bank of America. It allows consumers to make donations to the World Wildlife Fund, an organization that works to conserve endangered species. 

Democratized investment models

The lack of awareness of investment options, minimum deposit requirements, and insufficient knowledge hampers the financial growth of many people because they simply don’t consider investing as a wealth-building opportunity. Financial and fintech companies (like Acorns and Stash) develop digital platforms to give consumers with limited funds access to a wider spectrum of investment products by pooling their capital. With the aim to increase financial literacy, they also create a comprehensive knowledge base to support their customers with the necessary information and help them make better investment decisions. Limited deposits secure investments into complex asset classes, such as real estate, hedge funds, and IPOs, which commonly require a substantial minimum investment.

Impact checking account

Your choices reflect your values, and your bank should too. Driven by the mission to support socially and environmentally conscious consumers, new green and community banks provide an opportunity to open an impact checking account that enables you to invest in the future of your family and your community. An impact account allows estimating the consumer’s carbon footprint based on transactional data, provides personalized budgeting advice and keeps an account holder up-to-date with community-building and non-profit initiatives. 

In particular, it provides the actual information about all local community initiatives, opportunities to contribute to sustainability with donations to non-profit organizations, and updates on social and environmental issues. Impact accounts help assess budget requirements based on consumer’s personal behavioral data to reallocate any cash surplus to higher-earning deposits. 

Conversational banking

This is a new concept in financial services that refers to banking activities powered by conversational artificial intelligence. Conversational banking uses assistive cognitive chatbots to empower users to manage their financial life by voice or simple text commands, seek personalized AI advice on budgeting, saving, and investing, and keep consumers on track with their money goals. All sustainable financial activities, including regular updates about local social initiatives, ESG investing, mindful spending, and budgeting, can be made conversationally. 

Conversational AI makes financial services more accessible for people, assists them in making socially responsible financial decisions, helps them get out of debt by providing intelligent budgeting tools, and enables more efficient money management in general. One of the pioneers in the space is a San Francisco-based fintech startup Hennii that created a financial assistant powered by conversational AI. The team makes its input in sustainable finance by integrating its cognitive bot into sustainable banking and green investing experiences.

SMB banking platform

Another financial product gaining traction today is an SMB banking platform. It is a digital platform for financial institutions that caters to purpose-driven small and medium-sized businesses. In addition to impact-oriented financial products, an SMB banking platform provides effective business tools and support in managing accounts of different types, consolidating balances, managing invoices, and assessing or implementing social and economic initiatives (for example, carbon footprint offsetting). These platforms allow clients to benchmark their performance and get business advice on improving or scaling their impact on sustainability issues. Moreover, an SMB banking platform can bring together the community of like-minded businesses, suppliers, and consumers and serve as an advocacy platform for sustainability.

Consolidating efforts on both sides of the banking experience 

Sustainable finance is a path to a better future, and everyone can participate in it. Humans on both sides of the financial experience (financial companies and consumers) can make a difference. These innovative financial products are examples of how financial companies can integrate ESG criteria into the banking experience and meet the increasing consumer need — to make their input into a sustainable future.