Sphere-Innovation-Leadership

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Innovation leadership incommunity banking

by Shelly Schwieso

2009-06

How much value aretrendsetting banks placing

on innovation, and whats

been their return?

ould you like paperless savingsand checking accounts to go

with that green mortgage? Per-

haps a latte at your local banks

coffee bar followed by an investing class?

Banks across the world are redefining the

culture of banking in order to form lasting

relationships with todays conscious cus-

tomer. Does your bank stand out as a bea-

con of hope in a battered industryor do

you trust that banking as usual will carry you

safely through the present economic down-turn?

Definite trends are sweeping across the

global and local banking world. Leading

everything is the increasing demand for a

customer experience aligned with social and

technological innovations.

Now that consumers have been awak-

ened by the financial services crisis to really

think about their banking relationships, there

is no better time than the present to win

them over. There is an opportunity to move

from the banking traditions of the past into a

new era of banking where innovation and

the customer experience will win market

share. As in all chaos there is opportunity,

and banks that recognize the need to make

innovation a part of their strategy can win at

at every level.

Two fundamentals can no longer be ig-

nored: Corporate Social Responsibility

(CSR) and Socially Responsible Investing(SRI). CSR and SRI both used to be cutting

edge phenomena reserved for the progres-

sive corners of Europe or the liberal,

Patagonia-clad San Franciscan. No more.

Ethical banking is here to stay.

W


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At home and abroad, ethical banking is

attracting conscious and discerning custom-

ers who want to know how their money is

being put to work for the environment and

the community. Ethical banking has the po-

tential to become as common as hybridcars. Virtually non-existent just 10 years

ago, the CSR vehicle is now driving toward

the mainstream.

YES Bank, India

Consider YES Bank in Mumbai, India.

The bank operates in what they term a

Sustainability Zone where wider economic,

environmental and social objectives are met

by supporting businesses that not only pro-

mote financial growth but also enhance so-

cial and environmental causes.

YES Bank has a vision to champion re-

sponsible banking in India and insists that

the concepts of CSR and Sustainability are

embedded in the DNA of the organization

and integrated in its Business Focus. The

bank continues to differentiate itself in the

marketplace based on a strong sustainabil-

ity mandate and to build in flexibility and

openness as part of its core strategy. YESBank is actively engaged with global thought

leadership forums like: The Clinton Global

Initiative (CGI), Triple Bottom Line Investing

(TBLI), The Tallberg Forum. In addition, YES

Bank has recently become the first Indian

Bank to become a signatory with the United

Nations Environment Program. The banks

innovative strategy has proven successful;

YES Bank boasts a ROE of 28.4 percent

and a ROA of 2.8, at a time when banks

across the world are challenged on theirprofits and reputation alike.

The growing importance of environ-

mental and social issues in investment

means that banks need to develop a portfo-

lio of services that reflect new market reali-

ties such as those presented by the Kyoto

Protocol and carbon credits, said CEO

Rana Kapoor in a 2005 press release. This

is an exceptional opportunity to buildorgan-

izational and sectoral competitiveness

through structured sustainable finance and

advisory investment solutions."

Triodos Bank, Netherlands

Turning to Europe, we find Triodos Bank

Europes leading ethical bank. Established

in 1980 in The Netherlands, with a UK office

following in 1995, Triodos Bank aims to

make money work for positive social, envi-

ronmental and cultural change. Triodos of-

fers a range of banking services for social

businesses, charities and groups along with

a variety of savings accounts for individuals.

Triodos Bank has taken a firm stance that it

will only lend money to organizations and

businesses pursuing positive social, envi-

ronmental and cultural goals.

Triodos Bank is a public bank with thou-

sands of customers and shareholders. The

banks principles and independence are

guaranteed through a special share-holding

trust that protects the social and environ-

mental aims of the bank. It is currently the

only bank in the UK to publish details ofevery loan it makes, so savers know exactly

where their money is being used.

Although the banks lending policies

may seem extreme to some, the bank con-

tinues to do well in spite of a gloomy econ-

omy. At the height of the crisis, Triodos in-

creased its deposit base by 15 percent in

just two months. And overall, while many

mainstream banks are worth only a fraction

of their value from a year ago, Triodos grew

by 25 percent in 2008. Only by applying sustainability princi-

ples will mainstream banks make the mar-

gins they need to deliver healthy, effective

and key banking services, said Triodos

Head of Business Banking, Bevis Watts, in

the online magazine Green Futures. De-

spite the financialcrisis, the world isnt short

Sphere/Advice for Bankers Innovation Leadership 2
http://www.forumforthefuture.org/greenfutures/articles/triodoshttp://www.btsadvisors.com/pdf/yes_bank.pdfhttp://www.btsadvisors.com/pdf/yes_bank.pdfhttp://www.forumforthefuture.org/greenfutures/articles/triodoshttp://www.forumforthefuture.org/greenfutures/articles/triodoshttp://www.btsadvisors.com/pdf/yes_bank.pdfhttp://www.btsadvisors.com/pdf/yes_bank.pdf


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of money: we just have to make better use

of it.

Umpqua Bank, United States

A little closer to home we find Oregon

based Umpqua Bank, which at first glancecould be mistaken for a local caf or com-

munity center. Umpqua integrates its

branches into established neighborhoods

and provides visitors with an engaging

space to browse local merchandise, enjoy a

cup of coffee, do yoga and learn about

community events and resources and, of

course, do their banking. The bank even

has its own ice-cream truck driving around

giving out free treats in the surrounding

community.

Umpqua Bank is the only Oregon-based

company that has made Fortune Maga-

zines 100 Best Companies To Work list for

the past three years in a row. Oregons

CEOs have also named Umpqua Bank

Oregons Most Admired Financial Services

Company. The kudos dont end there, how-

ever. Umpqua Bank has also recently made

the Companies that Care honor roll as one

of only 41 companies nationwide. The bank has successfully created an

upbeat culture that excites employees and

customers alike. Each employee receives

40 hours of paid volunteer time to work with

youth, education and community develop-

ment organizations. Community giving ef-

forts to non-profits top $1.3 million and as-

sociates log over 22,000 hours of Connect

Volunteer participation.

But Umpqua is certainly not all about

community work and yoga. It has imple-mented some smart and simple banking

tools to make the customers life easier: for

example, a unique e-SwitchKit integrated

into their bank website. The kit allows cus-

tomers to open an account, set up online

banking and move bill pay records seam-

lessly online. The bank has introduced

GreenStreet Lending in connection with En-

ergy Trust of Oregon. Low-interest financing

options help small businesses and home-

owners invest in energy efficient and cost-

saving energy projects. Umpqua also cre-

ated an eco-banking division so larger com-panies can explore opportunities to de-

crease their carbon footprint by making sus-

tainable improvements.

Umpqua recently received a Bank Inno-

vation Award 2009 for marketing their Wish

Upon a Star charitable program. The pro-

gram grants holiday wishes to those in

need. By focusing on service, Umpqua is

creating a profound and very much

customer-focused marketing dynamic. The

executive vice president of the Wish Upona Star program, Lani Hayward, summed up

the banks philosophy in an article on the

Business Pundit blog:

If you lead with service, the sales will

follow, and continues, We eliminate the

chore from banking. Unlike most banks,

where customers have to wait in roped-

off lines to get to someone who can

handle their specific banking needs, all

of Umpquas Universal Associates are

trained to handle each customers bank-

ing needs. As a result of this model, we

have low employee turnover, high cus-

tomer loyalty, and two times the average

products per household.

What more can banks offer?

We also need to look beyond the imme-

diate banking landscape to capture trendsthat have taken hold with customers. Take

mint.com for example. Its a free websitethat aggregates all of a customers financial

accounts in one central portal. The site has

established relationships with hundreds of

major banks and financial institutions ena-

bling them to track and analyze a cus-

http://www.tradingmarkets.com/.site/news/Stock%2520News/2076865/http://www.tradingmarkets.com/.site/news/Stock%2520News/2076865/http://money.cnn.com/magazines/fortune/bestcompanies/2009/snapshots/34.htmlhttp://www.mint.com/http://www.businesspundit.com/fortune-100-company-interview-umpqua-bank-serves-up-a-lifestyle/http://www.bankinnovation.net/profiles/blogs/the-envelope-pleasehttp://www.greenstreetloan.com/http://www.mint.com/http://www.mint.com/http://www.businesspundit.com/fortune-100-company-interview-umpqua-bank-serves-up-a-lifestyle/http://www.businesspundit.com/fortune-100-company-interview-umpqua-bank-serves-up-a-lifestyle/http://www.bankinnovation.net/profiles/blogs/the-envelope-pleasehttp://www.bankinnovation.net/profiles/blogs/the-envelope-pleasehttp://www.bankinnovation.net/profiles/blogs/the-envelope-pleasehttp://www.bankinnovation.net/profiles/blogs/the-envelope-pleasehttp://www.greenstreetloan.com/http://www.greenstreetloan.com/http://www.tradingmarkets.com/.site/news/Stock%2520News/2076865/http://www.tradingmarkets.com/.site/news/Stock%2520News/2076865/http://www.tradingmarkets.com/.site/news/Stock%2520News/2076865/http://www.tradingmarkets.com/.site/news/Stock%2520News/2076865/http://money.cnn.com/magazines/fortune/bestcompanies/2009/snapshots/34.htmlhttp://money.cnn.com/magazines/fortune/bestcompanies/2009/snapshots/34.html


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tomers spending and help him or her

budget and understand where their money

is going. Like Umpqua, Mint.com also has a

iPhone application so you can watch your

budget on the go.

Mint.com already has 850,000 subscrib-

ers. The question is, clearly, What are they

not getting from their banks?

Could your bank be providing a similar

consolidating service so your customer does

not have to go to a third party to get this

level of overview?

Conclusion

The changing financial landscape has

pushed the notion of ethical banking to the

forefront of market trends. Seizing on oppor-

tunity in a chaotic environment, high-

performing financial institutions around the

globe have taken the lead in deploying and

marketing socially responsible policies, in-

novative offerings and approachable envi-

ronments to win market share.

Shelly Schwiesois the president of Sphere LLC.Sphere advises bankers on renewing their value

proposition in a time of great change in the in-dustry. More:sphereadvice.com

http://sphereadvice.com/http://sphereadvice.com/

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