A bank with a purpose.
A few decades ago, that may have sounded like an oxymoron. Nowadays, it seems more and more people are taking it seriously. The banking world is feeling the pressure of going from a shareholder focus to a customer focus, and personally, I think it’s only a good thing.
What is a purpose driven bank?
I first discovered the term “purpose driven banking” in one of Chris Skinner’s articles, where he discusses what a purpose driven bank is and what that means for the future. He argues that banks need purpose in order to attract talent, and that banks need to shift from being socially useless to socially useful. Why? Because if not they’ll lose customers.
This is what happened in the 2008 crisis – people felt betrayed and cheated by the banks, and that spurred entrepreneurs to take things into their own hands and build what they wanted: a bank driven by vision and purpose, instead of a bank driven by bonuses and shareholders (Chris’ wording).
Financial institutions were thought to exist for one reason only: to make money. In an article on the purpose driven banker, Lisa McLeod explains that this creates unhealthy scenarios. When the conversation focuses on targets and quotas with no mention of customer impact, the team views customers as a transaction. As she puts it “customers exist for us”. This creates a problem, because then teams cannot create a “competitive differentiation of emotional engagement” to acquire customers. This creates other problems such as high turnover, low customer satisfaction and in the case of Wells Fargo, a big *ss fine. Wells Fargo bank tellers were creating fake bank accounts just to meet their quotas and not get fired, which resulted in a cool $3 billion fine 😳.
The research shows that organisations with a real purpose – something McLeod calls a Noble Purpose -outperform organisations that focus solely on metrics in every way possible. A company that is focused on improving the lives’ of clients and sends a more human and compelling message encourages the team to go their extra mile for clients, and therefore grow their business. This changes everything about a company: the employees’ attitude, the customers, and of course, the finances.
A purpose driven bank is a bank that incorporates doing good with making money. Doing good, as Skinner puts it, is doing good for the planet, for our children, and for the future. It’s not as idealistic as it sounds, and actually it’s much easier than it seems. The hard part is being willing to shift the mentality.
How to create purpose
“Employee motivation”, “appraisals”, “performance metrics” – these are all attempts to create purpose, but if you look closely, they are all transactional in nature. This is what Mr Quinn and Mr Thakor say in a Harvard Business Review article are a few steps to create purpose within an organisation:
1. Discover the purpose
Easier said than done, I know. But the good news is that you don’t need to invent a whole new other purpose. As Quinn and Thakor explain, the higher purpose already exists, and it just needs to be discovered through empathy. This means going through the workforce and asking every one of them questions about their purpose and why they care about what they do. Once you ask everyone, look for common threads.
This empathy in turn creates a common story – the story of your brand and of your business. And as anyone who reads Mint Studios will know, I’m a big fan of stories to build trust. If you’re a big bank like RBS (or should I say NatWest? 😛), that means asking everyone from the bank tellers to the high level executives about their “desire to have a positive impact on society”. If you’re a 5 person team, same thing: what is everyone’s common purpose?
2. Work on authenticity
Actions are louder than words, we know that. This means that if you have a purpose but do the opposite, people smell it from a mile away. So what this step means, essentially, is that your actions need to reflect what you say. If you really do care about “helping people get healthier”, make life easier for them (I’m looking at you Big Insurance Company).
Employees, consumers, even directors recognize hypocrisy when it’s there, so make sure your purpose is reflected in the way you treat employees, customers, through your tone of voice, your company habits, your rituals, everything. One company that goes far and beyond to do this is 11FS – check out their social media and website and you’ll know what I’m talking about.
3. Make authenticity constant
Following on from the last point: you don’t promote authenticity for a year and then call it quits. Authenticity must be ingrained in every employee, message and channel. Leaders need to be constantly communicating the company’s purpose, constantly reminding people why they do what they do and how their organisation helps people. As Quinn and Thakor say: “When a leader communicates the purpose with authenticity and constancy, employees recognize his or her commitment, begin to believe in the purpose themselves, and reorient”.
4. Connect people to purpose
Once everyone is aware of their own purpose and is getting bombarded constantly about authenticity and the company’s purpose, leaders need to help employees translate that into actions. The ones interacting with customers on a daily basis are the ones that reveal what the culture of the company is like. Employees are the ones that drive the process, so they are the most important ones to also drive the culture. I cover some examples below, but the actions could be something as simple as prompt and caring customer service (looking at you N26), or even replying to comments on social media.
Examples of customer experience over customer sales in Fintech
Challenger banks and Fintechs are working towards purpose driven banking. Monzo has an entire webpage dedicated to it. Tide has a Social Squad dedicated to building the team. Gravity Payments set the minimum employee salary to $70,000.
Let me share my personal experience as an example: My Starling Euro account had some technical difficulties a few weeks ago and I was accidentally put into an overdraft. I was slightly annoyed but didn’t think much of it. When I got back home in Edinburgh, there was a huge hamper waiting for me in the house. It had cheese, lemonade, chocolate, a cake, and much more. Inside was a message saying “sorry for the technical difficulties with your Euro account”. I was slightly stunned. No high street bank would ever do that for me. Starling Bank managed to turn a slight failure from their part into big +1 love from a customer!
It’s working. We’re hearing people saying that they “love their bank”. We’re seeing people publish interactions with their bank on social media (see Cleo’s Instagram). I’m following a guy on Twitter who’s every second tweet is about how much he loves his challenger bank (and no, he’s not being paid).
The result? Fintechs are making more money through customer retention rather than sales. The metrics are now: “what does the customer need and how can we upsell?” rather than “how many individual sales should we be making?”. Tools such as data driven innovation can help Fintechs and other companies improve customer experience.
Purpose driven banking is already happening around us. It’s about genuinely doing good, it’s about giving a purpose to employees, to customers, and even to shareholders. With purpose driven banking, Fintechs can help genuinely change people’s lives, whether it’s the customer or the employee. Fintech is about money with a purpose. And it’s one of the main reasons I love working in this industry so much.
I do a lot of research for all the articles I write and never take full credit for the content. This article was written based on the following research:
