Your money matters and it is important for you to know what your bank does with it
Your money can do more than buy you things. And consumers are increasingly demanding that financial providers take steps to make sure it does. According to a study by Deloitte about Millennial attitudes, 87 per cent of them think that the success of a business should be judged on more than just its financial performance.
As individuals, the money that goes in and out of our accounts is one of our most powerful assets and we can use it for social good. We just need to put a little thought into where and how we keep it.
We’re all getting attuned to ethical and organic products being available in our shopping centres and supermarkets. These are grown or produced in more ethical ways and by companies that are increasingly rigorous about the supply chain. Money is a crucial part of that supply chain.
It’s one of the reasons that ethical banking is emerging as a critical force. Ethical finance can be powerful in the retail area, offering consumers the transparency they seek from an industry that has been tainted by scepticism. It can also offer better approaches to risk sharing. But the investment side of such banking – what goes on behind the scenes – also seeks to abide by ethical principles, avoiding industries it perceives as harmful, and eschewing high-risk investments.
In the Middle East – and in other places around the world – such value-based finance has been present for decades and goes by a more familiar name, Islamic finance.
Yet the label “Islamic” often leaves consumers wondering how Islamic and conventional banking can co-exist in one bank.
I have noticed that consumers sometimes feel that Islamic finance is just a label, that interest is charged by another name, that fees are too high, that customer service is poor, that consumers who seek help to abide by their faith values are, in fact, exploited. But change is already underway.
A board members of the Islamic Development Bank states that they have to “think wider in terms of customer appeal.” And the key question is: “Why monopolise the concept [Islamic finance] and keep calling it only Islamic?”
What is eye opening is that Muslims are increasingly attracted to Islamic finance, due to its ethical principles and its transparent fee structures.
Islamic banks are realising that they must focus on the service, quality and transparency and deliver more than just the name “Islamic”. But there’s a huge amount more that needs to be done.
The industry’s growing self-awareness comes at a time when consumers are becoming aware that they can take control of their money. What we as consumers can do is ask our banks about their ethical stance.
Banks can be social institutions that play an important role in the life of local and global communities. In fact, we should fully expect the organisations to live up to our economic aspirations and play a part in the financial health of our societies. It’s your money – make sure the bank does with it what you want.