Banks face growing pressure from shareholders and customers to take more action on sustainability. While transitioning to a greener business model will be challenging, banks have a plethora of strategies to choose from.

Green neobank talks the talk, but does it walk the walk? Aspiration’s actual performance lags its promotion of itself as environmentally friendly. The reputational risk it’s facing is a warning to banking players that market ESG heavily.

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Revenue opportunity: Sustainability-based banking products present vast potential extra revenue streams for industry first-movers. Banks with a “very good” ESG rating have a higher net interest income and net fee and commission income than peers with lower ratings, per BearingPoint. Harsher regulations: Tougher sustainability legislation is poised to hit the banking industry.

The big takeaway: Banks that fail to move sustainability up the agenda risk alienating clients. Last year, over half of those surveyed in every Canadian province showed some support for phasing out fossil fuel use, per Environics. This concern for the environment will only strengthen as Generation Z takes up additional banking products.

For less technologically advanced incumbent banks, more monitoring over concerns about their long-term sustainability. For DeFi, globally consistent regulatory frameworks as well as encouragement of self-policing and governance through industry codes and self-regulatory organizations, as in the traditional securities market.

The PPFA could succeed in its mission if it’s backed by a sustainable mix of financing—which critics of the concept, per reports, have raised as a concern.

Securing Full UK Banking Licenses. A full banking license—as opposed to an e-money license—allows neobanks to hold their own deposits, invest and lend them out, and offer FSCS protection. Holders don’t have to share profits with a licensed banking partner.

Their value was truly realized at the onset of the Covid-19 pandemic, when they helped customers easily stay on top of their banking needs through the web and mobile apps. Neobanks have run away with customization, personalization, and affinity banking. Thanks to them, most customers can find an option that suits their personal values and satisfies their specific needs.

One in six Americans feel unwelcome purchasing banking products due to their race, gender, socioeconomic status, or sexual orientation. Black and Hispanic customers are 44% more likely to select a bank based on their personal values, compared to the average consumer.

How does Gen Z’s quest for social justice and environmental sustainability manifest itself in financial behaviors? Gen Zers patronize financial institutions and invest in companies that mirror their goals for sustainability, social justice, and other causes they deem important. They celebrate individuality and are more apt to champion brands that understand them and embrace their values.

Both business banking and signing up paid retail banking customers will be essential to Monzo’s profitability and sustainability as a company. Bringing on higher volumes of business clients and converting retail customers from free to paid accounts are two of the main approaches neobanks can use to solve their profitability problem.

Technology decision-makers within the banking industry will need to balance high tech spending with the potential for regulatory disruptors.

Tasking employees with sustainability to engage with people who focus on business continuity and risk management. Adding sustainability frameworks to business continuity management systems. Updating risk assessments so that climate risks are included.

This is especially true of the up-and-coming Gen Zers, who patronize financial institutions and invest in companies that mirror their goals for social justice, sustainability, and other causes they deem important.