Every year, Euromonitor International identifies top 10 consumer trends that are expected to gain traction in the year ahead. These trends provide insight into changing consumer values, exploring how consumer behavior is shifting and causing disruption for businesses globally. For 2021 Euromonitor highlights sustainability as the most important trend: consumers now demand that companies care beyond revenue and become more purpose driven. Consumers value protecting the health of society and the planet. And this expectation is not fading away any time soon.
This is a major shift, and a very welcome one. We, the people, finally want to save our planet and make it a nicer place to live on for generations to come. And we want everyone to contribute. We want not only companies to operate in a sustainable manner, but we also want to buy products and services that are good for us, the planet and the economy as a whole. This is a tall order for any business aiming to serve consumers, SMEs and soon also large corporates. But it is an especially tall order for the financial services industry as they have been given a dual role both as an actor and as a subject.
The ESG rules mandate banks to evaluate the sustainability of their corporate clients before granting funding. The more sustainable the client is, the lower the cost of money will be. Many banks are already offering ESG investing like mutual funds where environmental, social and governance factors play a role alongside financial indicators. These are going to be instrumental in forcing every company around to do more than greenwashing. This is the stick.
But the real question remains: could financial services themselves be purpose driven and sustainable? How do financial service providers today reply to the growing consumer need and sustainability trend? How does all this show is the services financial service providers offer? And above all: are financial service providers willing to finally reconsider their business models in order to become fair or ethical?
These are not easy questions and there are no easy answers. Financial inclusion is a big topic even within Europe where majority of SMEs and freelancers are underbanked just like most immigrants. Inclusion might be the hardest topic the financial services industry needs to solve on their sustainability journey. But it is not the only one as understanding customer needs, wants and desires are essential for all innovation. When 69% of consumer globally say they care about sustainability, everyone should listen. Innovation within financial services has for a long time been all about digital, open banking and other stuff that I believe to be mainstream. The next big thing is already here and we, the people, are telling it loud. This is the carrot.
Luckily a few, smart Fintechs have already understood that doing good can also be good business and is definitely is a goldmine for innovation. Tomorrow in Germany offers a sustainable bank account. Their offering is built around the fact that banks use the money deposited in bank accounts to invest. This is ok apart from the fact that banks may invest in industries that damage people and the planet like coal and weapons. Tomorrow is investing the deposited funds only in sustainable projects and demonstrating the effects to it’s customers e.g. in the number of saved trees. Tomato pay in The UK enables businesses and sole traders to receive payments from their customers in the most affordable way, instantly into a bank account, without card minimum fees and chargebacks. This is a more fair and ethical way to receive money. This changes the business model for card issues, acquirers and many Fintechs, which have relied heavily on interchange fees. I could not be happier - but do expect the empire to strike back.
This is the beginning of a great journey. Both the stick and the carrot are already here. I believe that sustainability will be the biggest disruption in financial services, and hopefully in many other industries as well. Businesses that are purpose driven and good for us all, will prevail. This feels good in sooo many ways!
Needless to say, delighted to serve everyone brave enough to be on this journey.
