In the climate innovation race, American banks are losing ground faster than the icebergs are melting and if they don’t mobilise fast enough, they won’t be able to catch up...

Money20/20 USA calls itself “The world's biggest, most influential gathering of the global money ecosystem”, but amongst 350 speakers and countless topics, ‘sustainability’ and ‘climate’ come up only once on the show agenda . Climate isn’t one of the four main ‘themes’ and hasn’t made it through as one of eleven dedicated topics.

The truth is, the leaders of the capitalist world are lagging far behind the rest of the world when it comes to climate-friendly banking innovation. Besides moving from ‘in-person’ to ‘online’ and doing away with cheques, Personal Finance Management (PFM) offerings haven’t changed in what feels like decades. 

By contrast, in countries at the other end of the map including the UK, Netherlands, New Zealand, Australia, Japan, Singapore and Canada, banks are going live with world-first in-app carbon footprinting functionality and gaining a 100% increase in share of voice for sustainable finance. 

To gain back lost ground (and there’s a lot of it), American banks need to overcome three core issues holding them back from making important progress: ‍

Legality vs leadership

In Europe and other continents , a strong moral impetus drives the commitment around leaving the world in a better state for future generations and many banks have chosen to take a proactive leadership stance towards climate action before they are legally obligated to do so. 

In the UK, for example, Natwest launched in-app carbon footprinting even before consumer duty came into effect. Today, the number of customers accessing carbon impact data through the bank's app has surpassed half a million, officially totaling 585,000 active users - up from 334,500 in just four months. 

This is a significant figure, and a clear signal that climate concerns are no longer ‘marginal’ for banking customers. It’s time that they became more than a ‘marginal’ concern for US banks. 

A mindset shift: from risk to opportunity 

American society's aversion to risk, epitomised by the phrase "Sue me!", has deep historical roots and many American banks are fearful of offering sustainability advice: “The numbers aren’t 100% accurate.” “What if someone follows our advice around lowering their footprint and it doesn’t end well?” 

Many banks opt to introduce footprinting first (in which customers are shown the carbon impact of their transactions), reserving carbon actions (suggestions for reducing their footprint) for a later phase of roll-out. 

I believe the real risk lies in not recognising the opportunity to meet customer expectations. Integrating in-app features that align consumers' sustainability values with their spending habits appeals to conscious consumers. This, in turn, boosts customer attraction and retention and can helps banks to successfully market targeted products such as green lending. It’s a powerful narrative of environmentally aware consumers; attentive banks; and a promising future.

Depoliticising to prevent polarisation

Lastly, numerous American banks perceive the climate agenda as inherently political. When Al Gore introduced An Inconvenient Truth, it was prior to becoming a Democratic Party leader, but climate issues have become polarised along partisan lines. Even Biden's Inflation Reduction Act, linked with climate-friendly subsidies, is associated with Conservatism. And banks are apprehensive, citing “...a potential loss of Republican customers…” if they emphasise climate initiatives. Yet, the key realisation is that sustainable change demands everyone's involvement. The solution to this challenge will never emerge if no one acknowledges their personal responsibility to drive change.

Will 2024 be the year America's banking leaders choose to shift the agenda? It's time banks take a leadership role in the journey towards a greener America.