The alchemy of purpose: Exploring how Australian banks can mobilise participation to rebuild consumer trust
November 24, 2021
We are witnessing a major shift towards building businesses with purpose. For many large organisations, this has evolved beyond corporate social responsibility to business transformation and the need for a redefinition of business models, practices and culture. Purpose joined Capgemini in February 2020, bolstering the capabilities of teams that are working closely with senior executives and boards, to envision and build what’s next for their organization. Placing a positive contribution to society at the core of what they do, rethinking their commitment to Sustainable Development Goals, and committing to strong action on climate change, are the new imperatives for a sustainable business in the coming years.
Banks and financial institutions both globally and in Australia have suffered from a deficit of trust and loss of faith since the Global Financial Crisis of 2008. The 2017 Hayne Royal Commission into financial services and banking has since exacerbated this deficit of trust which continues to persist, with events such as COVID-19 furthering the problem and altering the way in which we conceive concepts such as trust.
Trust, in the context of societal actors, now depends on an actor’s ability to understand, mobilise and channel the participatory energy of society. This participatory energy has increasingly guided (and is guided by) the larger forces that are shaping our societies as we grapple with wicked problems like climate change and societal inequity. Society’s conception of trust has changed and the lack of equity-based governance and transparency is guiding consumer trust away from brands that do not live their values. We only have to look at the backlash the financial sector faced when they aligned with the Adani coal mining project in Queensland. Ideals like a duty of care towards future generations are taking root in the popular imagination and moving power away from large institutions like banks that rely on widespread trust to enable their business.
Our research into why purpose-led organizations are winning consumers’ hearts, shows that consumers have high expectations of what it means to be purpose-led, with 78% of respondents agreeing that companies have a larger role to play in society and nearly three quarters (74%) of consumers believing that private organizations can do more than they are currently doing to help society. If an organisation is only talking the talk, consumers now have ways to assess those claims and relinquish their trust if organisational actions don’t match up to rhetoric.
When asked how they perceive organisations that support anti-racism measures, 57% of consumers agreed that only organisations that had actively fought against racism within their workplace could be trusted.¹ This suggests that organisations that are consistent in their purpose-related actions see greater consumer engagement.
In a similar vein, our research shows that customers and employees are paying more attention to ESG criteria and this translates to greater loyalty and trust. At least 60% of consumers expect brands they favour and use to support social and environmental issues.
- Customers perceive sustainability as a crucial differentiator for the brand value of their choice.
- Customers are increasingly ditching products that have violated environmental norms.
- Being sustainable helps your organisation be regarded positively.
While financial services and banks have used environmental, social and governance (ESG) reporting as a way to address their deficit of trust, consumer demand is shifting towards purpose-driven brands. Between 2020 and 2021, the demand for ethical investment options in Australia rose by a whopping 34%. As more investors entered the markets, the shift has been significant and tangible with ethical investment providers Australian Ethical seeing a $2 billion in additional investment since last year. We see it in the marketing and the messaging but the question is if the organisation is applying the same values internally.
So, how are the Australian Banks performing?
We wanted to assess more effectively how Australian banks are setting a clear purpose and driving social impact commensurate with their market power. We analysed the four largest banks, and a couple of smaller banks for contrast, for an assessment of maturity and evidence of good performance, along the following dimensions.
Purpose Definition: We found that purpose statements are often quite broad without a specific definition of key terms such as ‘wellbeing’, ‘success’ or ‘community’.
Activation: The supporting strategy is often spread thin across many themes without a clear statement of what the business truly stands for or an indication about how the strategy will achieve real-world impact. We also noticed that the strategic intent hasn’t sufficiently reflected in all enabling dimensions,² including products & services, operations and employee engagement.
Delivery: Execution is largely the responsibility of a small ESG group or similar without engagement of employees across different departments. Employees do not necessarily see engagement at scale supported by cultural change.
Community Centred: We also found that there was limited involvement of community and partners in developing and implementing programs, thus foregoing the opportunity of amplifying and sustaining the impact the banks were hoping to achieve.
Guiding your organisation
Organisations often define an overarching vision or purpose statement that is meant to guide the way they navigate the world. While organisations may commit to addressing issues like marriage equality, drive workforce diversity and inclusion and clearly identify and address negative externalities, in the 2020s, this is the bare minimum they are expected to do. A purpose statement is meant to be a declaration of intent in terms of the overall change the organisation hopes to drive in the world through its employees and stakeholders, as well as through the power that they hold in society and government.
Banks wield power differently to most organisations in the world because they serve organisations, institutions and people at the same time. They have the ability to restrict and define the nature of the activities they fund. They command workforces who can engage with their clients on a personal level. This unique position lets them engage with the systemic issues but also lets them communicate with and work with large communities of people.
With a clear statement, a strong strategy and engagement of affected communities, employees and stakeholders – banks can take the first steps to gain back consumer trust. Something which, despite feeble attempts, doesn’t seem to be happening with our largest banks.
How to accelerate your journey
To begin with, do you have a solid foundation? Have you clearly defined the building blocks of your purpose, why that’s important to your business and how your input will drive towards tangible impact.
From there, it is about understanding how you work in an alliance with other stakeholders and convince them of the necessity for change. It is about ensuring your employees are committed to your purpose goals and understand how they can enable your organisation to achieve these goals. It is about you engaging with communities meaningfully and respectfully to understand and further their goals as opposed to engaging just enough to further your own goals.
To the leaders at Australia’s biggest banks: What kind of change do you want to create in the world, and how are you going to make it happen?
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