They invest customer funds only in projects resulting in a social, ecological or cultural added value. The approach proposed by social-ecological banks may be unusual, but it is extremely well received by consumers. As a result, the four banks active in this segment in Germany—EthikBank, GLS Bank, Triodos Bank and UmweltBank—enjoy continuous growth. Last year alone, their customer volume, i.e. the sum of customer deposits and lending, prospectively increased by around 16 percent to more than 8 billion euros. From the start of the financial crisis in 2008 to the end of 2013, the number of customers more than doubled to almost 310,000. The fact that the interest rates offered by these banks do not exceed the market average does not matter. As sustainability is important to the customers, the investment policy of the banks gives them a “social return on investment” that is of similar value to them as interest earned on their deposits.
With regard to their acceptance in social media, sustainable banks do not have to shy away from comparisons. Here, the high level of transparency that the banks ensure for their customers and the general public obviously pays. For example, when you relate the number of “likes” given to social-ecological banks on Facebook to the number of customers you get a ratio of 1 to 6. This value is significantly above the overall average for all retail banks operating in Germany that are present on Facebook: recently, it stood at only one “like” per 200 bank customers.
The social banking trend is not a purely German phenomenon but can also be observed abroad. Internationally, 25 sustainable banks from all over the world with combined total assets of more than 70 billion US dollars joined the Global Alliance for Banking on Values. Moreover, new initiatives focusing on sustainability and transparency regularly crop up, such as the Bank für Gemeinwohl planned in Austria that is to become the first alternative bank of the country.
And how will social banking develop in Germany? Further growth is expected to be strong. The market potential required exists and according to a zeb study around 16 million people are appreciative of the offering of social-ecological banks. However, they are not yet widely known, even among predisposed consumers who, for example, have already bought organic food as a matter of course for a long time. As there are increasing media reports on social-ecological banks, their increasing visibility will also result in more demand. Because these banks also broaden their service portfolio, these efforts will naturally also ensure that more and more retail customers consider them to be a viable principal banking option.
Eventually, this trend also affects banks that used to take a “conventional” approach because, in the long term, they run the risk of losing sustainability-minded customers—who are frequently rather affluent—if they cannot offer them appropriate services. In a recently announced project Volksbank Bühl demonstrates how that could be done: The bank’s customers are to be able to determine the purpose for which their savings deposits are used, e.g. for energy-efficiency modernization in the region.