Sustainable banks: Everything you need to know

Key points in a nutshell:

• More and more environmentally conscious people are searching for sustainable banks.
• Sustainable banks are those that have begun incorporating sustainability aspects into their decision-making.
• The main differences between sustainable and more traditional banks lie in how extensively and strategically they integrate aspects of sustainability into their business.
• Digital sustainable banks represent the new generation of banks, as they not only align their entire business model to sustainability, but also offer a purely digital range of services.
• radicant is Switzerland's first digital sustainable bank, providing sustainable banking through an app for all its sustainable financial services.

1. What is a sustainable bank?

Admittedly, there isn't a clear-cut definition for the term "sustainable bank." However, many banks are striving to present themselves as sustainable. They achieve this by

integrating sustainability aspects into their business decisions. This often involves internal processes:

• How energy-efficient are their offices?
• Could internal bank events be made more environmentally friendly?
• Does the bank use recycled paper?
• What about the inclusion of minorities in the hiring process?

Some banks also apply sustainability standards to their lending, for instance, by excluding investments in weapons or coal. However, this type of sustainability often only scratches the surface of the core banking business.

2. What defines a sustainability bank?

A "sustainability bank" goes one step further: It aligns its entire core business with sustainability. This occurs when all products and services contribute to sustainability goals.

In a nutshell: While a sustainable bank aims to reduce societal and environmental risks, particularly in terms of reputation, the goal of a sustainability bank is to establish a new business model that accelerates the transition to a more sustainable economy and society.

3. Differences between sustainable and more traditional banks

The distinctions between sustainable and more traditional banks primarily lie in how they integrate sustainability aspects into their operations. Sustainable banks incorporate sustainability considerations into all areas – operations, investment decisions, and financing strategies. This is in stark contrast to more traditional banks, where sustainability often is implemented sporadically and without a comprehensive sustainability strategy.

More traditional banks can also move towards sustainability. However, this change is complex and goes beyond the mere marketing of green products. This transformation requires experts to create new frameworks, revise existing business models, policies, and processes. Moreover, employees need training, and new products and investment processes must be developed.

Such restructuring could lead to conflicts of interest. Many corporate clients might come from the oil and gas sector that still provides considerable short-term returns. There could also be resistance to sustainability requirements from existing customers. Transforming banks could lead to internal conflicts that hinder business, and well-intentioned sustainability initiatives often face credibility issues, with accusations of greenwashing against more traditional banks.

Given these conflicts of interest, it's logical to establish a sustainability bank from scratch. This way, the strategy can be completely aligned with sustainability, free from any legacy issues.

4. Are there sustainable banks in Switzerland?

Yes, there are sustainable banks in Switzerland. However, radicant is the first fully digital sustainable bank among these. Our entire business model is aligned with the UN's 17 Sustainable Development Goals (SDGs), providing truly sustainable banking in Switzerland.

All products and services, from banking to investments and financial planning, are thought out and designed with a sustainability perspective.

A portion of the client deposits at radicant are used for sustainable investments and environmentally friendly projects, such as green bonds. With your radicant debit card, you contribute to a greener future free of charge every time you make a purchase, because we use part of the fees to finance sustainable projects. Even the debit card is sustainable – as it's virtual. If you still prefer a physical card, it's made from recycled plastic. PIN numbers are also sent electronically, not by letter.

Furthermore, radicant's integrated carbon tracker allows you to measure your carbon footprint whenever you make a payment, highlighting where you can reduce your carbon emissions.

As radicant also is an efficient digital bank, the process of opening an account is exceptionally smooth. With the radicant app and your ID at hand, you can open an account within 5 minutes. As soon as you've transferred money from an existing account to your radicant account, it's formally opened, and you can start using the virtual debit card – the most sustainable payment card of all.

5. How much does sustainable banking cost?

As is often the case with online banks, basic services in sustainable banking are usually free. This "freemium" pricing model lets you explore the fundamental functions. If you want more services you need to pay.

At radicant, we adopt a clear and simple pricing model for our sustainable banking. There’s no fine print or hidden surprises! Curious about the cost of our features? Take a look at our pricing page.

6. Can I invest my money sustainably with a sustainable bank?

Not every sustainable bank offers investment possibilities alongside account management. "Neo-banks" or online banks often start with a single focus, such as a payment card, and slowly expand their business model. Other providers might offer sustainable investments online but not banking services.

At radicant, you not only have the opportunity to access comprehensive and digital sustainable banking services. Our distinctive feature is that all investments are aligned with the UN's 17 Sustainable Development Goals, ensuring our investments only support companies that have a positive impact on the planet and society.

These investments are promising because they benefit from the trend towards sustainability and the corresponding regulatory measures.

Traditional sustainable investments usually focus on companies managing sustainability risks and avoiding controversial activities. At radicant, we go further by assessing whether companies positively impact the environment and society. This “impact-aligned” or impact-oriented investment approach is rarer. In the European Union, fewer than 4 % of approved funds fall into this category.

radicant’s investment mandate is customised to optimise the risk-return ratio. Our experienced investment team ensures that your portfolio is professionally managed.

This means your money is not only invested sustainably but also broadly diversified and aligned with the prevailing market.

7. Conclusion: Sustainable banks in Switzerland

There are still few sustainable banks in Switzerland. More traditional banks could be entangled in conflicts of interest between existing and new customers while moving towards sustainability. Most online banks usually introduce a product line and then only slowly add sustainability aspects.

Due to changing customer needs, Switzerland requires a new generation of banks that combine both sustainability and digital banking efficiently. This way, clients can access their finances around the clock and make a positive impact on sustainable development through their investments and bank transactions.

That's exactly what you get at radicant – Switzerland's first digital sustainable bank. radicant holds a FINMA banking license and offers you sustainable banking and investing.

Sustainable banking includes a carbon tracker, allowing you to track your carbon footprint for every payment made. You can already benefit from radicant's investment products, managed by experienced portfolio managers, with a minimum deposit of CHF 1,000.

Ready to make a difference? Start truly sustainable investing and banking at radicant in less than 5 minutes – digital, straightforward, and entirely paperles.

FAQs

How secure are client deposits at sustainable banks?

Banks licensed by the Swiss Financial Market Supervisory Authority (FINMA) provide protection for client deposits up to a maximum of CHF 100,000 per client. radicant holds a FINMA banking license and thus provides deposit protection for its clients’ deposits

Are there specific criteria a bank must meet to be considered "sustainable"?

Sustainable banks typically have a sustainability strategy and offer sustainable financial products. They also publish an annual sustainability report and maintain memberships in organisations that promote sustainability aspects, such as Swiss Sustainable Finance (SSF).

How can I switch to a sustainable bank?

The process depends on whether you're dealing with cantonal banks, private banks, or other financial institutions. You can easily open an account at cantonal banks and other retail banks. Private banks usually require a minimum balance for establishing an account. At radicant, you can comfortably open an account with our app online in a couple of minutes