Paul Holland, CEO of Beyond Encryption
Sustainability has recently become a central part of the corporate agenda, and the financial sector is no exception. With growing pressure to reduce their carbon footprint and address climate change, banks are under scrutiny from stakeholders and consumers alike. In fact, research shows that nearly three-quarters of consumers are more likely to choose a bank with a strong social and environmental impact—making sustainability not just a boardroom consideration, but a key driver of customer choice and loyalty.
Beyond meeting consumer expectations, sustainability offers banks a strategic opportunity to reduce costs, improve customer experiences, and transform their operations for long-term success. But where should they begin, and what tangible benefits can this transformation deliver?
Paving the way to a sustainable banking future
Banks must start to look at areas within their business where they can reduce their carbon impact, especially when you consider that the average savings account alone can contribute up to 2.3 tCO2. However, there is a noticeable lack of urgency among banks in addressing this issue—with a new report revealing that at the current state of progress, only 16% of financial institutions will reach Net Zero by 2050. This lack of progress highlights the need for banks to take immediate, actionable steps to reduce their emissions across all areas of operation.
One way that banks can begin to cut their carbon footprints is by switching from legacy postal communications to secure digital alternatives. The average letter alone emits up to 29 grams of CO2 from both direct and indirect emissions. For banks that send thousands, if not millions, of letters every year—a switch to paperless communications would allow banks to make great strides on their journey to becoming more sustainable.Banks can also reduce their carbon outputs by automating their “Know Your Customer” (KYC) process, which requires consumers to provide physical documentation to verify their identity before permitting them to open a bank account. This process is a key component of mitigating fraud and helping to keep consumers safe. However, the pandemic revealed that there is a strong need for a digitised KYC process, as it drove a shift in criminal behaviour and in the way that financial institutions communicate with their customers.
Banks should look to replace paper-heavy, outdated KYC processes with seamless, digital-first solutions. This will reduce printing and post emissions by eliminating the need for physical documentation and manual checks. Financial institutions can take this one step further by adding a layer of automation to the document review and screening processes. This would also help to cut KYC processes down from weeks long to minutes long—which will unlock a new level of customer service.
To ensure that all sustainability initiatives remain on track, banks must invest in ESG reporting. This can be done cost-effectively by leveraging smart devices to measure energy efficiency, as well as track areas where more sustainable practices are required. This will help banks greatly reduce their carbon footprint and will allow these institutions to keep up the required momentum to reach their targets.
Turning over a new leaf in banking
Whilst helping banks to meet the demands of eco-conscious consumers by reducing their carbon footprints, going green also allows banks to unlock both operational and customer benefits.
Banks that switch from legacy postal communications to secure digital alternatives will be aligning their communications with their customers’ preferences—with research from Ofcom revealing that 50% of consumers no longer want to receive bank letters. This shows that carbon-heavy processes no longer win consumers’ favour, and by aligning with customers’ preferences, banks will greatly improve customer experience. This is more important than ever before in helping banks deliver the experiences consumers expect, especially with studies revealing that banks are losing 20% of customers due to poor customer experience.
By switching to digital alternatives, banks will also unlock a range of cost-saving benefits. With each letter costing up to £1.65 to post, banks will be able to save money with this transition. It may seem like a small win, but for banks like HSBC which has around 40 million customers, the cost-saving potential is huge.
Digital communications are also a much more effective way of communicating with customers. With the average letter taking a few days to arrive, banks can reduce friction when communicating with customers by sharing information directly to their inboxes.
Banks that automate their KYC processes by transitioning to digital alternatives will also unlock a wide range of benefits. Automated KYC processes will be much more accurate than manual reviews and will eliminate the need for multiple checks or reprocessing, allowing banks to save time and resources. This will also shorten onboarding timelines from weeks to just minutes, which will improve customer satisfaction and allow them to start their journey the right way. Finally, these automated processes will help banks boost their scalability, allowing them to onboard new customers at scale by removing the time-sensitive, manual processes that weigh them down and stunt their growth.
With environmental responsibility increasingly influencing consumer behaviour, banks have a unique opportunity to lead the charge toward a more sustainable financial future. By embracing digital-first practices, banks can shrink their carbon footprint while reaping significant operational and customer benefits. This shift isn’t just a strategic business decision—it’s a crucial move toward building trust and aligning with the values of eco-conscious consumers.
