Banks should take advantage of the current lockdown to shift focus away from immediate income to sustainability to secure a share of from the rise of the next generation.
Individuals aged 18 to 34 years are 40 percent more likely to view «supporting environmental and ethical causes» as the most important attribute of financial services providers, according to a 2020 survey by GlobalData. This is in addition to the fact that millennials and Gen-Z have already dominated the consumer market, accounting for 75 percent of all accounts and purchases.
«To align with their own beliefs, consumers are demanding faster, cheaper, more convenient ways of managing their finances as they want the brands of the products they buy,» said Katherine Long, retail banking analyst at GlobalData.
Fulfilling the Prophecy
Just a few years ago, fund distributors were grappling with the issues of marketing investment funds based on strategies that take into non-financial factors related to social, environmental and governance risk. This was an especially relevant matter due to concerns about relative performance especially to those that are more indifferent or strict pragmatists.
This is no longer the case, according to GlobalData, which claimed that «ethical funds» have outperformed «non-ethical funds» in 2019, the last three years and the last five years.
«ESG funds have also proved more resistant to COVID-19 market shocks, with Bloomberg showing them falling on average half as much as non-ESG funds during the COVID-19 crisis, on part due to their non-dependence on the oil sector,» Long added.
