X Annual GABV Meeting Report 6-8 March 2018
Values-based Banking Revisited Facing the Future Together
1
Values-based banking revisited: Facing the Future Together
Foreword For us it is an immense pleasure to present to you the summary of the 2018 GABV annual meeting in Arequipa. This meeting like no other allowed us to step back and look our efforts to contribute to creating a world that is fairer to all. An extraordinary year lies behind us and as we look ahead we face the opportunity to continue to build a movement that is now stronger than ever. This summary will form the basis for the ongoing work and communications of the GABV movement. This document is an edited version of the CEO report to preserve the confidentiality of the CEO conversations. This short report should be used as source of information and inspiration for continuing the discussions related to values-based banking. We hope that members and partners co-workers will find the report informative and will get better understanding of the discussions we are having year-round and bring the values-based banking closer to them. The short report also aims to provide further information about what our annual meeting discussions are all about, to give a flavour of the themes our members and partners are actively working on during the year. Combined with other recently published documents, it is a great resource for journalists, experts and key influencers who are curious to know more about GABV and the challenges of values-based banking. We hope that this report and all the discussion topics will serve as a basis for many interesting articles and discussions at the local, regional and global level. 2
Values-based banking revisited: Facing the Future Together
This year’s annual meeting was a one of a kind event, given our growth as a movement, the challenges in the banking environment, and the continued social, political and economic unrest in the world. The ability of all members to continuously bring the real economy issues and questions to the forefront, connect them to the local context and come out of this meeting with new and exciting ideas will never cease to amaze us. The generosity that each of the participants showed during this very short three days is always humbling. For this meeting we worked to build an agenda that sought to clarify and capture the nuances of our values-based banking approach, to foster understanding and support action in each of our specific banking ecosystems. It is always enlightening to see how the principles of values-based banking are being translated into your organizational purpose, your relationships with co-workers and clients, and the way you relate with the context in which you develop your business activities. By sharing ‘the way’ we have applied our principles, we increase our understanding of each other, and can explore and develop the sources of systemic change. In this way we change finance and finance change. This year we made significant progress in evolving our relationships with one another and strengthening our commitment to the GABV. We are confident that we will be able to strengthen the bonds that are created through the time we spend together in ways that will last way beyond our meetings.
Summary Notes of the 2018 GABV Annual Meeting The 2018 GABV Annual Event brought together more than 40 CEOs from GABV members around the world. The theme of the event “Values-based banking revisited: Facing the Future Together” encouraged members to focus on two aspects of our work together: on the one hand we need to revisit values-based banking to be clear about the concept and meaning behind the principles of values-based banking, and on the other hand, to look further into how our members are putting words into practice. In other words, if we aspire to transform the financial system, we need to: • Understand what values-based banking institutions are doing to encourage and foster transformation, • Explore how such changes – either big or small - are happening in each member’s local setting, • Clarify what it takes to be a values-based banking institution now and in the future, and, • Have clear and concrete responses to the most critical questions about our business models and approach to banking. The design and spirit of the GABV annual meeting was based on the principle that we have a better chance tackling these issues when through dialogue and questioning we learn new
3
Values-based banking revisited: Facing the Future Together
ideas and perspectives from each other. To be clear, from its very beginnings, the annual meeting has placed an emphasis on hosting CEO confidential dialogues to create peer-to-peer learning and engagement that can contribute to the development of the #BankingOnValues movement, while fostering the improvement of the practice of each of our members. A special emphasis on this year’s agenda was to ask fundamental questions: “What makes the GABV unique? What is our purpose that each one of us can enact as a human in our own institution and in our part of the world, each with our specific set of needs and requirements? How can we best serve in the world through finance? The agenda was built around three themes: 1) Re-affirming our Common GABV Principles of Values-based Banking to build a deeper understanding of who we serve and our common mission and impact, so that we can renew our commitment to the #BankingOnValues movement 2) Evolving and transforming as values-based banking institutions - Understanding fundamental changes underway and identifying the footprints from member
banks and innovative values-based financial institutions; exchanging learning on innovation, embedding the values and disruptive transformations; new approaches to social inclusion; commitments to financial education; new methods for dealing with low interest, high regulation banking environments, etc. 3) Investing in and sustaining relationships that will grow our movement - Continuing to build a Values Based Banking ecosystem of relationships with GABV members and partner institutions. The first set of discussions focused on exploring and re-affirming the GABV Principles of Values-based Banking so that we can renew our commitment to the movement in ways that: 1) develop the values-based cultures of our members; 2) affirm the importance of collective and individual actions as members; and 3) clarify who and for what purpose we serve. CEOs had a unique chance to look back to take a closer look at the Six Principles of Values-based Banking. Here are some reflections from the discussion:
1
Triple Bottom Line Approach
$$$
4
2
Real Economy
3
Client Centred
4
Long Term Resiliency
5
Transparency
$$$
Values-based banking revisited: Facing the Future Together
6
Culture
1
Triple Bottom Line Approach
4 1 5 2 2 One of the biggest challenges of TBL approach
3
Principle 1: Triple Bottom Line (TBL) Approach: Real Economy
Client Centred
5
Transparency Long Term Client in the Long Triple Bottom Real EconomyCulture Investment realTerm economyTransparency represents a Resiliency Centred Line Approach Resiliency
is its language, which may not work for all institutions. Some members have a strong social agenda, but limited involvement in the climate debate, while others see that economic viability must come together with social and envi$$$ $$$to ronmental concerns. When we are not able $$$ clearly define TBL we miss an opportunity to add clarity of purpose for our members/clients. We recognise that we are intermediaries and client-borrowers are the ones delivering the impact, so our intentions as banks and banking institutions need to be expressed through the actions of others.
1
Triple Bottom Line Approach
Values-based banking revisited: Facing the Future Together
2
Real Economy
“We, as a bank, want our resources to benefit everyone and harm no one�. $$$ Kat Taylor, CO-CEO Beneficial State Bank.
5
2: 6Principle 4 3 Real economy:
$$$
challenge to continue to rethink banking and do things that other financial service providers do not risk doing. It means bringing issues to the forefront that often no one wants to discuss, and to see opportunities and build relationships where there seem to be insurmountable risks. $$$ Adhering to Real Economy principles continues to be a way to differentiate ourselves from other banks because it can be measured, and the impacts can be felt in the communities we serve.
3
Client Centred
4
5
Principle 3: Client-centred approach Transparency Long Term
6
Culture
OurResiliency commitment to the client is to listen, to analyse from a values-based perspective, and to create products that respond to the specific needs of different types of clients. Technology is being used to better serve our clients but should not come at the expense of human-centred relationships that foster trust and long-term commitment to the impacts that our clients want to achieve. To enact a client centred approach, we need to carefully consider how we develop and deploy co-workers and build a collective understanding of the different ways in which we engage with clients and their aspirations.
6
Culture
3
Client Centred
4
Long Term Resiliency
5
Transparency Culture We must be capable and feel responsible for helping our clients navigate a world full of complexities and uncertainties. The clients should have – and must have – trust in us. This is a very important responsibility – being a trusted advisor that opens the door to building a long-term perspective with clients and stakeholders.
Long Term Resiliency
5
Transparency
Principle 5: Transparency
5
6
Principle 6: Culture
4
Transparency
6
Culture
6
Principle 4: Long term Resilience
6
Culture
Transparency is the way in which we show the commitment and the culture of our institutions to the wider ecology we desire to serve. It is also a fundamental means for creating trust as it elevates the relationship we have with our clients and creates a heightened visibility. It is the way we show that we can live up to our principles.
Values-based banking institutions have a special role in aligning their cultures with the six principles of values-based banking. To do this we must understand clearly the connection between the cultures and the missions of each our members and hold future members to a high standard. Clarity of values, purpose and mission are all related to the eventual impacts we want to manifest in the world.
Values-based banking revisited: Facing the Future Together
Following the first session, participants joined the Caja Arequipa learning journeys designed to better understand how our host is enacting their values and the six principles of values-based banking. To learn more about the learning journeys and the clients visited, click here.
How should GABV members be thinking about effectively changing the whole system, not only intermediating, but helping those with greater capacity to intermediate following value-based banking criteria?
In the afternoon sessions, a few CEOs presented interesting challenges of being a leader and an agent of change within their communities. Here is a brief snapshot of the discussions: Selim Hussein– BRAC Bank. As culture is an all-encompassing feature of values-based banking, addressing culture change challenges can be one of the biggest undertakings of values-based banks. It does not only touch upon all the elements that make the life of our banks, but it also is an organic and never-ending process. BRAC Bank generously shared with us the challenges of creating a new standard for organisational culture. As part of the programme, BRAC Bank created the TARA Program. It started as an internal project at first, more than a year before the full program launched in 2017, covering Retail and SME customers with not only financial but also non-financial services. The internal proposition came from a forum that gathered together 39 women who sat down with Selim to discuss the question of how
to make BRAC the most woman-friendly bank in Bangladesh. What are the steps we have to undertake? How to go about it? The need to create a structure that will support the participation of women in the bank activities was clear. On his role as a leader not only in supporting women within the organisation but also fostering a culture of inclusion and diversity. Read more about the project here Vince Siciliano – New Resource Bank. The case presented is quite unique as it is an important example of two members of the Alliance merging. The discussion focused mainly on two elements of the merger 1) the challenge of staffing after the merger, and the challenges associated with the integration of two cultures, especially in regard to their understanding of transparency, client interactions and speed of growth. The process is still ongoing so the conversation about the current challenges was very open and allowed for other member CEOs to share similar experiences. Read more about the merger here Frank van der Poll – First Microfinance Bank of Afghanistan. One of the issues that we wanted to explore during this year’s session was how in fact our organisations and their CEOs live their values. Frank’s is an inspiring story. Not only did he and his team find a way to do so within their bank, but they also managed to contribute to positive systemic change within Afghanistan. Afghanistan is the third most difficult country in the world for women to live in. In such circumstances the idea to have a female-only branch seemed rather daring. Today the branch is doing incredibly well, especially microfinance loans and deposits. For 2018 year two more female-only branches in Afghanistan are planned to open. Read more about the first women only branch in Afghanistan here.
7
Values-based banking revisited: Facing the Future Together
Jellie Banga – Triodos Bank. Banks often have to deal with pressure coming from different places, and actors. Regulators, clients, boards, for naming some. Jellie shared the perspective of how Triodos bank, as a values-based bank is operationally preparing for the coming years. Triodos has been growing at a rate of 10 per cent a year which means that within Dutch regulation they are now considered a mid-size bank. She reflected on the challenges in working with the regulatory bodies as well as the challenges associated with hiring new staff and the need to quickly propagate essential culture concepts and behaviours within newly recruited staff. The bottom line is how do we manage to sustain the culture of values-based banks? Read more about Triodos vision of growth here. Sunil KC - NMB Bank. The GABV Annual meeting in Kathmandu, Nepal in 2017 was a great success as it enabled the host bank to start much-needed conversations in the Nepali context related to values-based banking. Sunil was not only facing challenges of being named a CEO of the bank in 2017, but also facing the challenges as a new CEO to build on the impact of the GABV annual meeting in 2017. NMB has redefined its vision putting the principles of values-based banking at the forefront. The next challenge is to be able to encourage the staff to bring these values into life within the bank to continue the transformation. Read more about NMB Bank here One of the main conclusions of this conversation is to continue thinking further about the human dynamics that occur within and around the banking business. It also encouraged to explore how GABV members relate to each other, what are some of the spaces in which we can still grow collaboration, and in which areas we can more effectively exchange knowledge.
8
Values-based banking revisited: Facing the Future Together
“Human capacity and technology must go hand in hand to make steps forward� Laurie Spengler, CEO Enclude
Going further, the discussion focused on discovering how members can continue evolving and transforming values-based banks and banking institutions. Understanding fundamental changes underway and identifying the footprints and experience of CEOs from member banks and innovative values-based financial institutions; exchanging learning on innovation, embedding the values and disruptive transformations; new approaches to social inclusion; commitments to financial education; new methods for dealing with changes in the market. The conversations hosted by different CEOs provoked deeper reflections on the role of banking, and the particular way in which we do banking. Below you can find a short summary of the conversations:
Conversation 1 Financial inclusion; provision of financial services for those in conflict, displacement; or in general zones of violence. This discussion focused its attention to better understand the role of values-based banking institutions in serving vulnerable populations. Some of the more salient ideas were related to the notion that while international development and aid organisations often help in the first phases of displacement, banks should aim at providing long-term support to displaced communities.
9
Conversation 2 Islamic Banking and Values-based Banking The discussion focused on understanding Islamic banking and its relationship with values-based banking. Questions included how personal home financing is done as well as how deposits and investment accounts work relative to the systemic risk of loans being charged off. Commonalities between Islamic banking and values-based banking include a focus on human values, the use of money as a tool rather than as an end in itself, providing products that clients want and need, and a commitment to transparency. Transparency is fundamental. In its absence, lack of transparency in a transaction means that the transaction could be voidable.
Values-based banking revisited: Facing the Future Together
Conversation 3 Bank withdrawal challenge in rural communities. There are many markets with growing bank withdrawals. As communities lose population, it becomes increasingly difficult to operate in profitable fashion in such areas. There is importance of scale and density compared to values of providing access to capital. A key factor is that partnership with an engaged community will support the institution. It becomes a symbiotic relationship in which the community assists the bank in raising deposits. It entails to be actively engaged in communities. In recent years partnership between technology and communication have become increasingly important. For that reason, the focus should be put more on thinking about being innovative. Innovation will come from places where the values are most needed by the community and the real economy they serve.
Conversation 4 Profitability
This conversation focused in the relation between profitability and compensation, the fact that this goes “hand-in-hand�. Profitability undoubtedly is a major issue for our banks. It is a balancing act. It is related to the vision we have of the bank having a long-term vision vs a short-term one. We have to be looking at different things if we want to make a factual difference, not to be disingenuous in our efforts. It is important that we strive for the highest results in strategy, impact and also profitability. We have to be willing to engage in a total system change.
Conversation 5 Analog vs Digital values-based banking We have a responsibility to identify how values-based banking translates in a digital platform – values-based banks, and more precisely the GABV, could own the responsible digital bank brand as we move forward. There are many experiences to draw from as many members are making large investments in technology looking into the future. Read our paper here: Where will innovation lead us? GABV Reflections on Technology and Digitalization.
10
Values-based banking revisited: Facing the Future Together
As a conclusion to this document, we will leave you with several large-scale challenges and difficult questions mentioned during the meeting. GABV Secretariat and Board, together with all the members will continue its work to come up with solutions to these challenges and provide guidance to those who need it. a. How should GABV members be thinking about effectively changing the whole system? Not only intermediating, but helping those with greater capacity to intermediate following value-based banking criteria? This question is unlikely to be seriously considered by banks that see themselves as serving a critical gap/need. One of the proposals was that when working with clients such as municipalities, we can influence them to use of our Six Principles of Values-based Banking and Scorecard when they evaluate working with
larger banks. In this way we have a wider impact on the banking system. b. How do we reconcile profitability and values? This seems to be an important question raised during the meeting, especially when facing increasing pressure from over-banked environments where new forms of income are required. c. Greater clarity about the relationship between values-based banking principles and other like-minded intermediation (e.g., UN initiatives, BCorps, SDGs and Islamic banking principles) This document represented a brief overview of discussions and ideas shared during the meeting. The actual discussions went much further and covered the mentioned topics in greater details. To facilitate the platform for free speech and confidentiality amongst the members, we included in this document only the key concepts and outcomes of the meeting. We hope to see more attendees during our next annual meeting in Vancouver, Canada, hosted by Vancity Credit Union, as we will be organizing a public conference around the themes of values-based banking accessible to everyone. Until Vancouver, let’s continue changing finance to finance change.
11
Values-based banking revisited: Facing the Future Together
Find out more infomration about the work of GABV and its members in our ebooks:
Global Alliance for Banking on Values Nieuweroordweg 1 PO Box 55, 3700 AB Zeist The Netherlands T +31 (0) 30 694 30 62 E mail@gabv.org www.gabv.org #bankingonvalues The Global Alliance for Banking on Values is an independent network of banks and banking cooperatives with a shared mission to use finance to deliver sustainable economic, social and environmental development.
12
Values-based banking revisited: Facing the Future Together