Financial Services
As lenders in the socio-economic system, banks are uniquely positioned to drive positive change. If they deny funding for nuclear weapons, fossil fuels, such decisions can have far-reaching ramifications. There is so much change banks can bring in if they shift their focus to sustainable profiting.
Alisha: Hello listeners, this is Alisha; thank you for tuning in to yet another exciting and informative podcast from us at Infosys BPM. Today, we are discussing about the how banks can lead a sustainability charter by leveraging technology for better tomorrow. And to talk about this, we have here with us, Sourav Ghosh, Senior Industry Principal – Financial Services. Welcome Sourav. How are you?
Sourav: I’m doing good, Alisha. Thank you for having me. How are you doing yourself?
Alisha: I’m doing good too, Sourav. Thank you for asking.
We all know that the idea of sustainability has been gaining momentum in recent times. In your opinion, how are banks able to lead the sustainability charter for a better tomorrow?
Sourav: Yes, Alisha, the concept of sustainability is big nowadays. Historically, this idea has never achieved the kind of progress and relevance that it is experiencing today.
We’ve made great strides in leveraging technology to create a world of material comforts. Yet, this progress has not been cheap. Our world is grappling with climate action failure, debt crisis, the asset bubble burst, geopolitical conflicts, and nuclear weapons. So, you might think, what’s the significance of these in the area of banking? I would say, almost everything.
I will give an example. Sixty of the world’s largest commercial and investment banks have collectively put $3.8 trillion into fossil fuels from 2016 to 2020. You can imagine that this is not a positive impact on our environment and sustainability objectives.
As lenders in the socio-economic system, banks are uniquely positioned to drive positive change. If they deny funding for nuclear weapons, fossil fuels, such decisions can have far-reaching ramifications. There is so much change banks can bring in if they shift their focus to sustainable profiting.
Alisha: That’s really a radical thought process, Sourav. Banks definitely have this enormous power to influence global change.
In your experience, what is a good example of banks laying the foundation for a sustainable future?
Sourav: Yes, as you rightly said, banks can definitely bring in a global transformation if they focus on sustainable profiting. An interesting example of this is a US-based fintech company called Aspiration. They withhold support for the coal and oil industry, and they actively promote carbon offset programs to their customers.
Today, global consumers, employees, and regulators believe that banks should embrace an ESG commitment. According to World Economic Forum’s “Bridging Digital and Environmental Goals playbook,” there is a 2.5 times greater likelihood of success for organizations that link digital with sustainable transformation than those that don’t.
Alisha: I agree, banks should play the role of sustainability accelerators.
Also, I believe digital interventions are effective in achieving this. How in your opinion would a digital transformation of banking will help in their sustainability initiatives?
Sourav: Yes, digital transformation can play a significant role here. It can bring great improvements in efficiency, agility, and profitability, and can completely alter how they are perceived by investors and stakeholders.
The fast movers who have done early problem identification and integration of digital solutions have seen key benefits. As an example, check out the Green Credit Management System for Huzhou bank, which offers technology-led green lending. It leverages smart green labels, calculation of socio-environmental benefits, and early environmental risk warning systems.
Financial transaction chains, carbon footprint monitoring, social impact assessment, intelligent automation, and the usage of modern technologies like artificial intelligence, machine learning, blockchain, etc., can lay the foundation for greener operations, financial inclusion, and social gains.
Alisha: I agree, Sourav. Modern technologies can definitely fast-track sustainability objectives.
We would like to thank you for coming to this podcast and sharing your views on sustainable banking.
Sourav: Thank you, Alisha; it was a pleasure. Indeed, sustainability is a business necessity. Due to the sheer amount of money transactions daily, banks may have a larger ownership in sustainability. However, due to the interconnectedness of systems and companies, everyone also has a role to play in this.
Alisha: Absolutely, Sourav!
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