Financial Services

Australians want banks to support sustainability

Tales Sian Lopes

Navigating the future of finance in the changing landscape of banking

Australians are increasingly concerned about sustainability and social responsibility - particularly the younger generation (those aged 18-28 years). They are now looking for a more ethical and environmental commitment from their banks and believe that banks should contribute towards climate change.

Publicis Sapient Customer Banking Report 2024 found that 75 percent of Australians support banks that are committed to green initiatives and provide green products - this rises to 84 percent among 29-44 year olds and 87 percent among 18-28 year olds.

Traditionally, banks have been more focussed on helping large corporates in their transition towards sustainability, but they now should consider consumers’ and smaller businesses’ value propositions.

Building green value propositions

The main reason that inspires people to work with banks committed to green initiatives is that "It’s the right thing to do - I want to support it" (36 percent). Customers also feel a personal connection to these issues and appreciate when banks share their values and support issues that are important to them. Nearly one fourth of Australians (24 percent) say that by working with a green-focussed bank, they "feel part of the solution".

Banks need to develop green products, especially for younger generations. Millennials and Gen Z, as they age, will form a much larger percentage of banks’ customer base. There’s an opportunity for banks to stay ahead of the curve with strategic offerings for the future.

Prepared to pay for green

A significant finding is that many respondents have a strong preference for green products and that they are prepared to pay for access to socially responsible banking products.

Overall, 40 percent said they would be willing, but this rises to more than half for Australians under 45 years (58 percent for those aged 18-28 years, and 54 percent for those aged 29-44 years). While this sentiment is strongest among younger people, one in ten over-65s would pay more.

However, this sentiment will decrease over time as green products become the norm. They will eventually be seen as a basic expectation for any reputable bank, and no longer as a premium worth paying extra. Currently, 47 percent believe they "should not cost more". Sustainable and environmentally conscious products must be built now to meet this future baseline.

Behaving green

It’s important that banks don’t just try to look green, but actually behave in greener ways. They must also address consumer scepticism around "greenwashing" and to provide tangible evidence of commitment to sustainability, ensuring that green banking products genuinely contribute to environmental goals. The overwhelming sentiment shown particularly by younger generations towards sustainability must influence longer-term strategy for banks.

Green initiatives and products are no longer just trends, they are here to stay. They will be supported and expected by future generations of customers. Banks must innovate with new products and business models, elevating customer experiences and improving business performances to stay ahead of the curve as ESG becomes status quo. The green horizon presents an opportunity for banks to think beyond existing products and provide green services that directly support customers’ sustainability ambitions.