Analysis from global consultancy partnership Kearney has found that for almost half of consumers, environmental and social issues are a very important factor when choosing their banking provider. One in four European consumers (24%) are likely to switch if their bank is not engaged in ESG issues.
Responsible investing in particular was the most important ESG topic. 41% of respondents surveyed wanted the reassurance that the funds they invested in would not support companies that produced weapons or polluted the environment, or factories that disrespected safety standards and human rights.
In the UK, over one in five customers (22%) would likely switch to a bank with higher ESG priorities, whilst almost 30% of consumers in Poland, Romania, Spain and Italy reported the same sentiment. Beyond responsible investments, consumers were mostly concerned with climate change (34%), consumer and human rights (34%), and business transparency and accountability (31%), across all countries surveyed.
In terms of age demographic, 18-24-year-olds are almost twice as likely to switch banks compared to those aged 55 and over, with 30% reporting that they would switch for these reasons compared to 18% of the older group. Examining the data from the opposite perspective, only 17% of the younger demographic reported that they were not at all likely to switch over ESG concerns, compared to 31% of those 55 and above.
Simon Kent, Partner and Global Head of Financial Services at Kearney, comments: “Banking is still a sector with a low number of switchers compared to telecoms or utilities, but that doesn’t mean that banks should become complacent. Consumers are actively looking to engage with companies and brands that align to their values, so it’s important that banks take action.
Our research unsurprisingly shows that consumers are likely to be more loyal if they are aware of their bank’s ethical activities, but currently, only an average of 40% know what their bank is doing in these areas. There is a considerable opportunity for improvement in customer communications and engagement on this topic to demonstrate a bank’s commitment and aspirations towards supporting and undertaking ESG initiatives more clearly.
ESG concerns are not only here to stay but will increasingly drive customer behaviour in the future, and retail banks must be at the forefront.”