Finance / Global
Banking on it
From investing exclusively in ethical causes to helping small businesses access emergency funds, these three socially conscious lenders are helping businesses to succeed with a human touch.
Craig McMillan and his wife Juliana Mattar run a small communications agency in Singapore called Motion. They organise internal events for large multinational corporations, such as regional management conferences for Hilton’s Asia-Pacific operation. “We are essentially a projects-based business, so we are at the mercy of our clients’ plans,” says McMillan. In 2020 a strong pipeline of events was put on hold and they watched almost s$1m (€617,000) in expected revenue evaporate, followed by an agonising wait that will be familiar to entrepreneurs around the world. While Singapore’s government declared its intention to help small businesses, banks held back on lending until they could read the small print of any state support. It was during this time that the couple heard about the “Hope Fund” and quickly put in an application.
The s$5m (€3.1m) Hope Fund was created by six Singaporean friends in March to advance emergency loans, each worth s$50,000 (€31,000), to viable small businesses. Alex Chua, a former JP Morgan banker, is one of the key people behind the Hope Fund. “When the pandemic began we thought, ‘We don’t need a foolproof plan; we need a plaster for companies that are bleeding and just need to stem the blood while they find real help from banks and the government,’” says Chua, who heads up the financing arm of his father’s commercial vehicle-leasing business, Goldbell Group. Eight moonlighting Goldbell staff provided the expertise to administer the emergency loans, assessing and approving applications based on willingness over ability to pay them back.
“There was so much uncertainty but the Hope Fund gave us confidence and clarity in our decision-making”
Motion received money within two weeks, helping it to avoid redundancies until a full bank loan arrived two-and-a- half months later. “There was so much uncertainty but the Hope Fund gave us confidence and clarity in our decision-making,” says McMillan. Motion repaid its loan early.
The original idea was for borrowers to move on to a larger, longer-term loan from an established bank but that was shelved after only one out of their 25 referrals met the partner bank’s rigid lending criteria. So Chua decided to do it himself: acting under Goldbell’s banner, he was granted admission to a panel of banks approved by the government to make state-backed loans to small and medium-sized enterprises. It now sits alongside banks including dbs, hsbc and Standard Chartered, issuing unsecured loans of up to sg$300,000 (€185,000) at 5 per cent interest to applicants who have mostly been rejected by more established players. “They added us because they saw what we did with the Hope Fund,” says Chua, who approved loans worth sg$5m (€3.1m) in the first two months, with another sg$10m (€6.2m) to go.
Goldbell is now partnering with a food-delivery platform to offer tailored products to the hard-hit f&b industry. Chua says that the reluctance of major banks to make smaller loans isn’t just about risk, it’s because of the work put into each loan. “The entire credit process and due diligence are the same, so why bother?” he says. Best let McMillan and Mattar answer that one.
Bruce van Saun took the helm of Citizens Bank in Providence, Rhode Island, during its 2014 spin-off from the Royal Bank of Scotland. In doing so, the New Jersey native left behind his world of spreadsheets and boardrooms to visit homeless shelters and food banks to improve the regional bank’s community image.Now Van Saun is reaping the benefits: the bank, which operates nationwide with branches in 13 states, has regained its vitality, reporting $180bn (€152bn) in assets at the end of June, compared with its $122bn (€104bn) nadir in 2013 before the spin-off. Global Finance magazine named Citizens this year’s best regional bank, for both New England and the Mid Atlantic region. And industry bible American Banker selected Van Saun as its 2019 banker of the year.
“It’s clear that personal interaction remains important to customers, so financial institutions must find ways to serve them”
Customer experience is a key focus: the bank conducted a national survey and found that while the pandemic was accelerating customer reliance on online services, large majorities still want face-to-face interaction at least some of the time. “It’s clear that personal interaction remains important to customers, so financial institutions must find ways to serve them seamlessly in their channel of choice,” says chief experience officer Beth Johnson; her job title is itself an innovation. Citizens also works with 20 financial-technology firms to support consumer, small business and commercial banking. That should help ensure that it can keep up with the big banks on technology while preserving the personal touch of a regional bank.
With a long tradition in recycling, organic agriculture and renewable energy, it shouldn’t be surprising that Germany is a leader in sustainable banking. “Ethical banks have shown the most resilience in these times of crisis, because we mostly finance bare necessities such as energy, housing and nutrition,” says Thomas Jorberg, ceo of Germany’s gls Bank. It’s this focus on the essentials that he says limits loan defaults in ethical banking, while traditional banks take riskier bets on more volatile industries.
“Ethical banks have shown the most resilience in these times of crisis, because we mostly finance bare necessities”
While there are now dozens of socially responsible German banks, gls was the first of its kind when it was founded in 1974. Besides investing in areas such as organic farming, wind farms, free schools and affordable housing – and openly communicating the projects it funds – gls Bank extends its ethical credentials to creating a fair deal for the customer. The aim is not to get the maximum amount of money from the customer but to be as respectful of their needs as possible.
In response to the pandemic, gls Bank has been quick to help companies and individuals in precarious situations, for example by offering an emergency fund for artists who were struggling when cultural events were suddenly cancelled. “gls Bank does not only consider money as a means of payment but as a medium for shaping a future that we all desire,” says Jorberg. “Funding ethical practices is the future-proof solution.”
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