In an era where the urgency of climate change is impossible to ignore, the world is searching for sustainable solutions. In this pursuit, one sector that holds immense potential for positive change is banking. Could artificial intelligence (AI) be the key to not only transforming the financial landscape but also accelerating our journey towards a greener, more sustainable future? The answer is a resounding ‘yes’ but that ‘yes’ comes with a caveat: ‘if we’re smart enough to harness its full potential…’
On the cusp of an AI revolution, banks around the world can utilise AI to revolutionise their services and provide tech-enabled environmentally conscious banking solutions. This isn't just a catchy idea; it's a practical and forward-thinking strategy that can help banks meet consumer demand, build loyalty and establish trust, drive adoption of their sustainable/green loans and meet regulation requirements.
Global consciousness around climate change has shifted. Understanding the climate impact of one's spending has evolved from being merely 'good to know' to something customers now actively demand and the ability to align their spending with their environmental and social values is fast becoming a hygiene factor for banks.
Our CEO, Ben Glesiner, put it this way in his recent blog post: “Banks and accounting innovators have woken up to the fact that helping customers manage their carbon footprint can re-engage unengaged customers; cement customer loyalty; and help to shape their customer proposition - all of which helps secure a commercial advantage in an increasingly competitive banking landscape."
What’s more, results suggest that Cogo users are more likely to recommend their bank to family and friends, and one bank’s users have reported a 4.2/5 satisfaction rating—the highest rating for any feature introduced by the bank. Available statistics indicate that 37% of users of the carbon footprinting feature commit to climate actions suggested for them; with an average dwell time of 4-6mins. Plus, a third of engaged users are Gen Z/Millennials, helping to future-proof a bank’s user base.
How can banks rise to this challenge and change the game in favour of sustainability? The answer lies in AI. Artificial intelligence offers several ways to empower banks to become beacons of sustainability.
Globally, most banks are already on a journey to reduce their operational emissions. Carbon footprint management tools empower banks to bring customers, who collectively have at least 100 times the footprint of the bank, on the journey to deliver planet-saving action at scale, with bottom-line benefits.
AI is foundational to these tools in a number of ways:
To run successful and accurate enough carbon measurement for an individual, household, or business, you need to know what area of spending a transaction is in. AI could help to identify and assign the correct category (based on analysing a merchant's website) before assigning an Emissions Factor.
Importantly, with Open Banking, we can start providing access to individuals to use their data for things such as carbon tracking; and banks who provide carbon footprinting functionality in-app will avoid seeing their customers go elsewhere for this type of support.
Cogo currently presents a ‘next best action’ for a business to take based on their emissions profile for the sector they’re in. AI would make it easier to present the most suitable climate action that would drive the most significant reduction in emissions (which is most achievable and manageable over a long period of time) based on the success of other businesses like yours. AI could also help motivate an individual or business to adopt an action by analysing large sets of previously adopted behaviours and the most successful drivers/nudges behind them.
For banks, this is where they can close the loop by promoting sustainable products and services. In this way, AI can also be a powerful tool in creating personalised ‘friction points’ that use cues/notifications to drive more sustainable choices in the same way that leading retailers use these to drive over-consumption.
Incorporating AI into banking practices isn't just a futuristic vision; it's a practical necessity. Banks that leverage AI to enable customers to make conscious spending decisions will gain a significant competitive advantage.
It's time for a transformation in how our money works. Cogo invites banks to champion this change, seize their first-mover advantage, and pave the way for a brighter, more sustainable future that uses AI to unlock a sustainable revolution in banking.