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A Viral Response to COVID-19: Mobilizing Values-based Financial Institutions to rapidly distribute financial and health best practices around the world

26 March 2020 – Amsterdam – The Netherlands – Humanity faces the greatest existential threats of any generation. Climate change, poverty and social exclusion are everyday realities for billions of people on Earth, and while COVID-19 is but a symptom of larger challenges, its effects are acute and visibly life threatening. To respond, we are required to act in socially and economically disruptive ways. Yet can we do this in ways that reinforce our humanity and sense of community? As values based financial institutions, we are reminded that every action we take involving humans and money must adhere to an ancient social contract – Duty of Care:

“Following a standard of reasonable care while performing acts that could foreseeably harm others.”

One group of bankers is making a difference for nearly half a billion people on Earth every day, and their immediate actions in the face of COVID-19 are a testament to the responsiveness and resilience of their movement’s banking principles.

The Global Alliance for Banking on Values (GABV), a network of 62 banking leaders from around the world, was founded in 2009 to advance positive change in the banking sector. Their mission as a diverse range of institutions is to lead a movement in finance and banking designed to serve the real economy, through investment in economic, social and environmental sustainability. They recognize that individuals and communities, through conscious use of money, can improve the quality of life for everyone. In short, the GABV aspires to change finance while financing change.

Serving the real economy is embedded in the principles of Values-based Banking, so the members of the Global Alliance understand on a deeply profound level how economic, environmental and social resilience work together. External reviews of their cultural values and banking practices attest to the impactful changes they have delivered.

They understand that a healthy financial relationship is built on a long-term relationship with clients so that risks and opportunities can be discussed in a transparent, open way. They see that when businesses are self-sustaining and hold a longer-term outlook they are more resilient to outside disruptions. They know that when finance is grounded in a community, strong relationships are fostered that seed innovation and new business models. At the same time, there is no doubt that GABV bankers achieve commercial success from their principled approach. What can be more efficient than serving clients and investors through transparent, resilient long-term, community centered relationships?

So when GABV banks face exceptional environmental, social and economic disruptions they draw deeply on their values to respond quickly to the challenges facing their communities. Among the Values-based bankers there is a long experience in crisis support and public health – e.g., Nepal, Ecuador and Bangladesh. NMB Bank in Nepal and Banco Solidario in Ecuador are on the front lines of financial and humanitarian support after earthquakes. BRAC Bank and its Foundation are responding daily to the need for livelihoods and schooling in the midst of yearly flooding and massive inward migration.

The time has come to take a good look at how Values-based banks in different parts of the world are responding to crisis while building resilient business models. The first thing one notices is that these banks do not see a separation between a financial, human or environmental crisis. The solutions they provide are often integrative and responsive to the underlying conditions of the crisis. Second, they have to deal with the current realities of people who urgently need support for their lives and livelihoods most of the time.

So how are the GABV bankers who are both allied with their banking movement around the world and living in some of the most deprived parts of the world responding to the COVID-19 crisis?  And what can we learn from their courage and duty of care as economic actors on the front lines?

Getting the basics right. It is striking to see that when it comes to dealing with sanitation and health conditions, where getting the basics right is what matters, GABV banks are well experienced. Outbreaks of infections and quarantines are pretty frequent and require immediate attention. So, what is different about how the GABV banks are responding to COVID-19?

Unique for GABV banks is not only that they are responding, they are also able to immediately share with one-another around the world their methods and plans to anticipate what is coming. For example, most reported improving sanitary conditions and social distancing in their banks. But given the differences in Government responses, they were at different stages and yet part of the same wave of virus sweeping across geographies. They could see that banking colleagues in other parts of the world were responding differently and anticipate stages of the virus.

So first steps were taken to strengthen internal practices in administrative and client based locations. Most GABV banks report implementing immediate safety and sanitation measures, both for employees and clients. For instance, BRAC Bank focused on the safety of its co-workers by offering adequate hand sanitization, masks, etc. Internal communications were designed to create co-worker awareness and BRAC formed committees to monitor the situation across different departments. Remote work, where possible, will be a next step for their co-workers.

Adapting Banking Practices and serving extra needs. GABV banks are finding ways to strengthen their clients’ ability to survive and respond to the crisis.  What becomes a high priority for all countries around the world is the need to support and protect the real economy. On this, an original reaction came from Vancity (Canada). They are investing in the Unity term deposit, a way that the bank turns deposits into loans that will directly support people and businesses who are struggling due to the COVID-19 pandemic. Customers signing up for this product get a competitive return on their investment. Many banks have also waived fees or made conditions more flexible, such as giving a moratorium to borrowers.

Leading the collective response. The GABV has realised that it can play a pivotal role as an Intermediary for Bankers associations, Central Banks and Governmental Responses to the crisis, as banks are continuously aware of what is happening on the ground, especially in hot-spots where self-quarantine has led to whole industries being furloughed and economic activity has come to a stand-still.  A number of banks are proactively leading or being part of collective initiatives in banking at national level. For example, the Japanese Central Bank has set up a new source of funding to enable financial institutions in Japan to support their clients. The funds are available at no interest. Our member, Dai-ichi, is applying for access to the new facility provided by the Japanese Central Bank to support clients in businesses affected by the corona virus.

While in the case of both our members in Nepal, NMB Bank and Muktinath Bikas Bank, they are serving as a conduit for government mandates and pushing Central bankers and governments to take the right measures to support the real economy. They do this as they know that supporting the real economy is, in NMB’s words, a ‘triple-play’ – if it is done right, is supports new business practices and social cohesion while protecting the economic viability of a business, its co-workers and suppliers –.

Partnering. Values-based Banks weave the fabric of their communities by engaging together with Civic actors, Credit Union Members and NGOs to go “beyond” banking. This is where the principle of long-term engagement pays off. In the current crisis, banks are partnering with others to train SMEs and clients in ways that help them build capability to overcome the current situation and prepare them for the future.  Another example of creative action to engage with the wider community, comes from Banca Etica (Italy).  They are working hard to strengthen a sense of community, while reaching out to a broader public on social media. Clients are invited to participate in fundraising campaigns to support volunteer organizations. All are supporting those who have been hit by the epidemic and that are in immediate need. Together with its partner crowdfunding platform Produzioni dal Basso, Banca Etica has engaged and mobilised its clients in a series of free webinars, open to the public, entitled “Activating positive energies”.  There is little doubt that when a bank is part of a community, it is part of generating the appropriate solutions most relevant to that community.

Continuing Support and Looking to the Future. The GABV is initiating its 2020 strategy to Lead, Strengthen and Expand Values-based banking around the world. To this end, COVID-19 creates a special urgency for our actions. The GABV will in the coming days, weeks and months:

  • Run a global response line to update member banks on new products and practices and make it available to anyone in the financial industry
  • Host webinars with CEOs and crisis experts and teams in the different regions and provide update sessions for all members

As we see from their best practices, the responsiveness of the Global Alliance for Banking on Values attests to what banking can do when embedded in the needs of a community. At the same time they are committed to improving the long-term resilience of the financial system and the real economy.

GABV bankers on all continents are working tirelessly to secure and distribute a flow of money aligned to their values. So when a threat like COVID-19 appears to families, SMEs, micro-entrepreneurs, schools or hospitals, to quote a GABV member, Triodos Bank, we “follow our hearts and use our heads” to deliver immediate results designed for systemic impact.

Of course, this is our duty of care. Yet as banks, we are heavily regulated, so in conclusion we ask authorities and regulators around the world, who are also aware of their duty of care, to create the right conditions for a diverse ecosystem of banks to do their jobs. Provide exceptional liquidity and adapt the rules to help us all meet the challenges ahead. Given the immediate and ongoing challenges we face together on Earth, we have a moral and existential imperative to listen and support the banks who want to change finance, and finance change.

Featured image by Josh Calabrese

This article was developed by the GABV team and guided by contributions from GABV regional representatives and banks. Editorial authors: Tom Cummings, Marcos Eguiguren, and Fernando García-Escudero.

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