73% of banks are expected to offer more sustainable banking propositions in the next five years, in response to increasing customer-centricity. This is according to a new Economist Impact report for Temenos, which surveyed 300 banking executives globally. The report, titled: ‘Byte-sized banking: Can banks create a true ecosystem with embedded finance?’ highlights key findings on ESG.

As banking becomes more “embedded” in consumers’ lives and businesses’ value chains, there is growing public attention directed towards banks’ values and climate credentials.

24% of European consumers are likely to switch providers if their bank is not engaged in ESG issues. Generation Z is expected to continue to drive this shift, armed with a long-term investing approach and an appetite for ethical and sustainable banking options. 61% of banking customers in the UK said they want their banking provider to do more to create a positive, social and environmental impact.

Banks looking to invest in environmentally friendly projects

As a result, 37% of banks are investing in low-carbon technologies and decarbonisation start-ups, with an additional 31% of banks pursuing sustainability strategies which reduce emissions in both their supply chains and internal operations.

These shifts in consumer sentiment have translated to an increase in sustainable investment. 74% of banks are looking to invest in environmentally friendly projects in the next five years, while 64% are considering diverting capital from carbon-intensive industries.

As banks look to reduce their carbon footprint, they are also increasingly moving operations to the public cloud, with over half agreeing that banks will no longer own any private data centres in the next five years.

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Kalliopi Chioti, Chief marketing and ESG officer, Temenos, said: “Evolving consumer preferences are putting immense pressure on banks to operate according to a clear set of values, and are actively moulding banks’ agendas and strategies. Whether it’s by using artificial intelligence to align investment strategies with clients’ values, or reducing their carbon footprint through economies of scale on cloud solutions, technology can be a powerful ally for banks on this journey.”