Three key steps that can put banks ahead in the sustainability revolution
There’s been a fundamental shift towards more green-conscious habits in many parts of society – from cutting back on the amount of plastic and taking public transport when possible to choosing brands that use sustainable materials and offer ethically manufactured goods. This change in consumer behaviour is not just having a positive impact on the environment, but also on business operations.
Every day we hear about the degree of harm that single use plastic such as bags and straws cause on our oceans, but what about the plastic that we carry every day with us in our wallets? Statistic from the UK Card Association suggests that there are over 164 million payment cards in circulation in the UK, the vast majority of which are made from non-biodegradable plastic such as polyvinyl chloride (PVC), which contributes to harmful landfill waste. With debit card payments being the most popular way to pay in the UK, it’s essential that the cards that we use are environmentally-friendly.
So how can banks address this challenge and develop a card lifecycle strategy that encourages sustainable banking?
Fintech is already an innately sustainable alternative to the traditional finance sector, removing the reliance on paper statements and physical bank branches by instead allowing people to manage their finances using digital technology. But that’s not to say that traditional financial institutions aren’t taking steps to be more sustainable too. Banks, for example, are improving their environmental credentials by setting targets that will help them hit their United Nations Sustainable Development Goals – such as the UN Principles for Responsible Banking that officially launched this September.
There are three key steps in which brands can achieve this, including adopting sustainable technology, processes and products which can deliver a substantial reduction of carbon footprint.
Moving away from paper
Introducing processes that accelerate dematerialisation is a good starting point. These include reducing the excessive and unnecessary volume of printed documents such as personalised card carriers, inserts and PIN mailers as well as paper products associated with delivering and activating cards, sharing information with cardholders and providing issuers with reporting solutions. By allowing card holders to use digital technologies to manage their finances, banks and other payment providers are providing a sustainable alternative to paper statements and physical bank branches.
Moving from paper to digital is also critical for more seamless customer experience. Currently, customers need to wait at least two – three working days to receive their PIN for their new debit/ credit cards which could cause a lot of friction for the end user. Luckily there are better alternatives today. For instance, a PIN code can be delivered instantaneously via a banking app, banking website or via SMS. This not only provides customers
with innovative, more seamless experience, but it also allows banks to reduce their carbon footprint.
Using sustainable materials and partnering with green suppliers
From big fashion brands such as H&M who currently sources 35% of its materials from recycled materials and aims to use only sustainably sourced products by 2030, to furniture giants like IKEA who sources 100% of its cotton from farms that meet the Better Cotton standards, companies from different industries are making a step change into adopting more sustainable materials to manufacture their products.
Banks are not an exception. For example, Triodos has been working with Gemalto, a Thales company, to become one of only a few UK banks to provide eco-friendly debit cards to its customers. These cards are created from a plastic substitute called polylactic acid (PLA), which is made from renewable sources such as plant leaves and corn, making it biodegradable, recyclable and non-toxic if incinerated. The materials make the card compatible with magstripe, contact and dual interface card technologies.
Eco-design is also an important consideration at every stage of the card-making process, from product conception to re-engineering. This includes the product’s environmental impact such as resource consumption and emissions during manufacturing as well as waste and end-of-life disposal.
Ultimately, working with sustainable materials and green suppliers can have a profound impact on the environment if it is adopted on a large scale.
Providing customer insight about their carbon footprint
Although today’s conscious consumers are driven by environmental concerns when making purchases, they often struggle to understand their carbon footprint. After all, consumers can have only so much visibility over the impact of that they spend their money on. However, banks and financial services companies can provide a helping hand by giving customers more insight into how their spending habits are affecting the environment.
For example, Swedish company Doconomy has rolled out a free and easy-to-use mobile banking service that lets users track, understand and reduce their CO2 footprints through carbon offsetting. The firm’s aim is to inspire a change in behaviour and a reduction in unsustainable consumption and carbon emissions. Doconomy has also worked with Gemalto to provide customers with an eco-friendly debit card made from a sustainable plastic substitute, connected to a mobile app that allows users to measure their carbon footprint from every purchase.
We are also working with clients to help them achieve these goals by providing a “carbon offset” solution, among other things, which provides financial support to energy-saving and renewable energy programs. The goal is to generate carbon credits to compensate greenhouse gas emissions generated by card production.
Advancements in technology and sustainable products have made it possible for banks choose more eco-friendly card lifecycle management strategies, and therefore to offer green alternatives to plastic debit cards. And the benefits of doing this are huge! This not just helps financial institutions raise their brand profile with consumer and business customers, but more importantly, it contributes to lowering carbon emissions and plastic waste.
By Howard Berg, SVP & MD Gemalto UK&I, a Thales company