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Becoming a Green Bank - Interview with Neeta Wadia

Mon, 22 Jan 2024

Rik Coeckelbergs Founder and CEO The Banking Scene

Becoming a Green Bank Sopra featured2

Following up on a recent article about sustainability in IT, I had the honour of sitting down with Neetu Wadia, Chief Marketing Officer at Sopra Banking Software, to discuss this in deeper detail. Neetu recently wrote an article on “How to become a Green Bank” herself.

"How to Become a Green Bank" differs significantly from the traditional approach of banks looking at sustainability. Why should banks look not only at their balance sheet but also at their core when considering the Green Deal?

Banks today are probably shifting away from the traditional approach for many reasons. They understand a broader perspective is needed. In the last few years, more and more banks have started focusing on sustainability. While it was on the radar in the past, it was not the key focus, but today, that is changing.

If I look at the EU alone, it aims to achieve climate neutrality by 2050. This comes with a lot of policies, a lot of obligations, and different steps to try and enforce the same. This is making sustainability become mainstream for most of the banks internally. So, from a bank's perspective, it's not just the balance sheet but also the core that is affected by these regulations and policies.

Individual bankers or people within the organisation are becoming more socially aware and more involved in the environmental impact and what's happening worldwide. They're concerned about their kids, families, and the people around them. And possibly the most crucial reason to rethink the core of the bank as well is that customers are becoming just as aware. Customers are becoming more selective and start to refuse to work with a bank that is not eco-friendly or at least moving towards being more sustainable in their actions. So, it's a three-pronged reason why banks now look at sustainability more holistically.

I even think of a fourth one: the employees, who all have to contribute, and as the commitment is being supported organisation-wide. Those not directly involved in the Green Deal may start thinking about how to contribute.

You're right. It's the employees as well. And there is a huge pressure internally to have them involved. As you said, it's not just linked to saving paper; it’s way more than that. There are so many things that one needs to take into account. So yes, there are four reasons why any bank would start being more aware, more conscientious and follow the different areas they could work in.

In a recent poll on LinkedIn, in my group Innovation in Payments, I asked for today’s biggest trend in payments. 11% of the 333 voters said sustainability. Does this relatively low number come as a surprise to you?

It doesn't surprise me, to be honest. As I mentioned, people are starting to be aware, and the first and most obvious targets to become more sustainable were the trees, the usage of paper, and the fact that by killing a lot of the environment, we're not helping ourselves. You're adding to the carbon footprint, you're causing huge damage in the long run, and, of course, the global impact as well. So, a lot of people today still tend to associate climate change, global warming, and sustainability with only paper, and they don't look at the fact that there are various other factors which are as important. This knowledge probably needs to trickle down to not just the policymakers and decision-makers but down to, people like you and me, people on the streets, to our children. And for them to realise what it really, really involves.

In another poll, I asked for the best way to reduce the payment footprint. I think the conclusions are equally valid for bank operations. In general, 54% shared “killing papers from the process”. I said it is equally valid for a bank because, for example, I have all-digital statements, but many contracts, etc., are huge books of paper. As much as that's likely true, it is definitely a good step to reduce the carbon footprint, but much more can be done in the digital process, isn’t it?

No, absolutely. Paper is just one, but the reality is that there are many things we can do. Today, the service for managing payments, whether online or at a shop, requires leveraging the internet and POS devices, both of which carry a huge impact in terms of a carbon footprint. The servers where data is stored are massive and have a big impact as well. So, really, it's important to do many different steps if someone wants to be more sustainably effective in the payments industry.

Firstly, they need to think about sustainability by design. Where you're trying to start with, for example, contactless payment, which many of the banks and financial entities have started doing, allowing more e-invoices, e-receipts, etc. Then that follows through that, you must be sure that you're keeping energy efficient data servers, because those e-invoices, those e-receipts still have an impact. You may reduce your carbon footprint to a certain extent with e-invoices, but you need to look at it differently.

Then, of course, you've got to have many more regulations to make the payments more sustainable in terms of what's being done. That means you need to build a network where both parties in a payment cycle, whether the acquiring or the issuers, are involved in the same circle of efficiency and sustainability. If one person is doing it, and it's not applicable or accepted by others, you still have the same problem. There are a lot of technology providers supporting it. Linking blockchain could be one of the ways that people can streamline a lot of the processes. So, many different steps can be taken. But the first thing is to start thinking sustainable by design, which is your very first step to get going on this.

Sustainability by design brings us immediately to the next question. Green Coding, a new trend by IBM, is defined as: “environmentally sustainable computing practice that seeks to minimise the energy involved in processing lines of code and, in turn, help organisations reduce overall energy consumption”.

Is this already something that Sopra Banking Software is currently embracing?

We are partners with IBM and have been reviewing the offerings that IBM has put in place. We're currently at the point at which we are doing our homework to see what we need to embrace. Because we are talking about more than one IT environment. Going back to the conversation of sustainability by design, from our point of view, we need to look at multiple factors. What kind of tools can help in the coding? What kind of environment do we actually launch to host our solutions in? Given that we have solutions which are in the cloud, it means we're also reviewing with other partners, which is the better way of doing it so that we can offer a solution to our end customers, which, in this case, is the banks and financial entities.

That will enable them to be better. It's a journey we've started almost two years ago. It's not an easy one. We have a lot of products, which means we must look at the impact of each of them. We have existing customers and new customers, so it is a journey. And it's a journey that we have begun, but we still have a distance to get there.

Can you give me other practical examples for the readers to become greener banks? Something I haven't talked about just yet.

I think the first thing is for any of our customers to become a greener bank, they need to do a basic audit of what they're doing first if they haven't done an audit to see where you're at, whether in terms of your energy consumption, your water consumption, or paper consumption. Even the most basic monitoring and audit will help to understand and measure the carbon footprint, which is probably the very first step that any bank needs to take to figure out how to become greener.

And then, of course, beyond that is, like we've discussed right now, reducing the use of paper and looking at more electronic solutions. Today, there are many companies that are coming up with a lot more ecologically friendly options. And it's important to be able to use those, limiting the amount of time people spend in an office, because of the amount of electricity consumption that comes in. Looking at vendors that are actually more focused on reducing the carbon footprint.

These are just some of the things that banks can do over and above their actual software, seeing that the software itself is a lot greener in its space, even in terms of the kind of messaging it's giving to its end clients. There are many different areas that you're looking at. It starts with monitoring; it starts with inward-looking and then looks at how you do it outwardly. So, for most banks to become greener, there are many steps.

Bunq, in a commendable move, has contributed to the planting of three million trees on behalf of its customers. Additionally, the bank provides eco-friendly subscription options, featuring a sustainable account designed to assist users in achieving carbon neutrality within a span of two years.

In a similar vein, Triodos Bank focuses on funding sustainable enterprises and upholds a commitment to transparency by publicly disclosing comprehensive details of all organisations it supports.

Regarding technological approaches, embracing open banking through cloud-based solutions emerges as a viable strategy for banks aiming to adopt more environmentally friendly practices. A report from the International Data Corporation (IDC) highlights this shift as a pathway toward greener banking operations.

It's a journey. But it's one that if they don't start today, we won't get the results we're trying to get in the very near future because we're already running out of time.

Read Neetu Wadia’s article on “How to Become a Green Bank” to learn more.

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