{"id":1178,"date":"2023-04-28T00:15:49","date_gmt":"2023-04-28T04:15:49","guid":{"rendered":"https:\/\/ifintechworld.com\/banking\/banks-needs-to-address-the-mental-health-crisis\/"},"modified":"2023-04-28T00:15:50","modified_gmt":"2023-04-28T04:15:50","slug":"banks-needs-to-address-the-mental-health-crisis","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=1178","title":{"rendered":"Banks Needs To Address The Mental Health Crisis"},"content":{"rendered":"
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OBSERVATIONS FROM THE FINTECH SNARK TANK<\/h2>\n

Banks\u2019 attempts to steer clear of taking positions on controversial social issues like mental health, climate change, and ESG may be hurting their ability to acquire and retain customers according to new research.<\/p>\n

Banks Get Questionable Advice on Social Issues<\/h2>\n

If banks are confused by the advice they get on social issues, it\u2019s understandable.<\/p>\n

On one hand, Boston Consulting Group claimed banks are \u201cuniquely positioned to have a broad and sizable impact on many social challenges\u201d and asserted, \u201cthere is a clear business case for creating solutions to address social issues, including access to new markets, improved financial performance and cost of capital, ability to attract talent, and reduced reputational and regulatory risk.\u201d<\/p>\n

On the other hand, Senator Pat Toomey, the senior Republican on the Senate Banking Committee, accused banks of taking \u201cinappropriately\u201d liberal positions on social issues that \u201charm America.\u201d Toomey argued banks are \u201cout of bounds when they weigh in on non-banking issues like guns and abortion.\u201d<\/p>\n

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BCG\u2019s analysis is suspect, however, because it compared the performance of banks it considered to be \u201cleaders\u201d based on sustainability scores rom MSCI. The \u201cclear business case\u201d isn\u2019t that clear because: 1) there are more social issues than just environmental sustainability, and 2) BCG\u2019s data shows correlation\u2014not causation\u2014between sustainability scores and business performance.<\/p>\n

Toomey\u2019s accusations are really the ones that are \u201cout of bounds\u201d since many organizations take stances on social issues that have nothing to do with the industries they operate in (it\u2019s called \u201cfree speech\u201d).<\/p>\n

Why Banks Stay Out of the Social Fray<\/h2>\n

The vast majority of financial institutions shy away from taking a stand on social issues for a good reason: They don\u2019t want to piss anyone off.<\/p>\n

For a long time, that approach worked. Back in 2012, I wrote that organizations had to practice \u201cpolitical tightroping\u201d and explained:<\/p>\n

\u201cLike it or not, this is a very polarized time in our history. Marketers can\u2019t afford to be on the wrong side of the fence and have to be extremely careful who their firm supports in political races and which proposed policies and regulations they support or oppose.\u201d<\/p>\n

Some high-profile bank CEOs have deflected the question of taking a stand on social issues back to the government. In his 2022 letter to shareholders, JPMorgan Chase CEO Jamie Dimon wrote, \u201cwe require a 21st century government\u2014we need to find a way to more rapidly reorganize our government for the new world.\u201d<\/p>\n

PNC CEO Bill Demchak believes the government should be the one to make policy choices on social and environmental issues, not banks. According to Demchak, \u201ctrying to shame people out of certain exposures for social reasons without a plan, without a formidable plan on the other side to actually cause changes, is nuts.\u201d<\/p>\n

Social Issues Influence Consumers\u2019 Brand Choices<\/strong><\/h2>\n

Taking a stand on social issues may be the customer-centric thing to do, however.<\/p>\n

A new study from Cornerstone Advisors looked at consumers\u2019 attitudes towards social issues and asked how social issues influenced their choice of banks and the relationships they have with financial providers. Key findings include:<\/p>\n