At a glance
- The first climate banking platform in the MENA region has been launched by Mashreq
- It offers personalised insights for customers into the environmental impact of their purchases
- Mashreq’s partnership with Visa and Ecolytiq taps into the growing demand for climate-minded banking initiatives
Consumer decisions and behaviours are responsible for the majority of direct and indirect global emissions, according to climate fintech Ecolytiq’s 2022 Impact Report. As consumers increasingly look to adopt sustainable behaviours, banks can be at the forefront of driving them.
Mashreq has announced the roll-out of a new climate banking platform — the first of its kind in the UAE and wider Middle East region. Partnering with Visa and Ecolytiq, Mashreq looks to drive a shift in behaviour towards more sustainable choices by offering customers insights about the environmental impact of their purchases.
Ecolytiq overlays carbon emissions calculations onto consumers’ transaction data. With carbon footprint analytics, the platform then personalises insights to educate customers and encourage climate action.
Using transaction data in this way helps to build customers’ understanding about how to reduce their carbon footprint, says David Lais, Ecolytiq’s CEO and co-founder, driving “simple but effective behavioural change”.
Mr Lais says education and engagement lie at the core of helping consumers align their values with financial choices to reduce the ‘intention-action gap’: the difference between what consumers would like to do and what they actually do.
Insights embedded into banking experience
The current ecosystem for promoting conscious consumerism remains underdeveloped. Mashreq looks to improve this through directing capital flows and offering customers solutions “beyond the realm of financing”, according to Fernando Morillo, Mashreq’s group head of retail banking.
Ecolytiq analyses customers’ transaction data and “translates” it into a carbon dioxide number to improve carbon literacy and give consumers a measurable understanding of their carbon footprint, Mr Lais says. “That’s the common language we want to speak in terms of impact.”
Details could include CO2 output based on customers’ restaurant use, shopping habits or bills. This is contextualised, for example, with country-wide data, to demonstrate how the transactions compare and to encourage “long-term behavioural changes”, Mr Lais says.
This is not designed to blame customers, he adds, but to bring transparency and give consumers the choice to act on it.
Embedded within the banking experience, touchpoint frequency and customers’ competency for engagement is developed. Delivering awareness and education through banking applications also increases the potential for scale, Mr Lais says.
Mr Morillo says banks need these types of solutions to “connect the dots between large customer bases and specific climate solutions to support customers with”.
“Looking at individual responsibility for specific emissions is completely different from being aware that the world is creating these emissions,” he adds.
Climate platforms offer a business advantage
Of 4500 surveyed global consumers, 70% would choose a bank with “purpose over profits”, with more than half willing to pay a premium for financial services that help the environment, according to banking and financial services platform Mambu.
The rise of the sustainable consumer is a growing segment offering banks opportunities to serve consumers in a different way, according to Stephen King, vice president for Visa’s sustainability solutions.
Applying advanced analytics to payment data can make it easier for banks to determine how interested and engaged consumers are with sustainable topics, products and services.
Identifying sustainability-minded consumers via banking transaction data, banks can offer timely, personalised financing. For example, transaction data can identify consumers with the propensity to invest in solar panels or a heat pump, Mr Lais says.
“This is a business decision for banks. Mashreq being first in the region will be a competitive advantage,” Mr King says.
Most consumers — particularly the younger generation — are looking for help, he adds; banks can “connect the dots” to implement the information consumers are looking for.
“The switch in mindset is also a business opportunity. And that’s where to scale the opportunity. If it sits on the side, it will never get the scale needed to go at the speed required. It must be integrated into the heart of how businesses operate,” Mr King says.
As well as supporting customers with climate banking features, Mashreq is working to become the “leanest operator” in the market through the reduction of its own wastages and emissions. “As a bank, we are intermediaries and we have to act on all fronts.”
Sustainable transformation relies on consumer habits and preferences, Mr Lais says. “That’s why we must put banks at the centre of this — small habits are a very powerful tool.”
