According to a recent survey by McKinsey, Climate Linked Financial Products are getting public attention as American consumers are making a conscious shift towards cleaner and greener energy. The survey also highlights the need for financial institutions to treat green offerings as a business opportunity rather than a concession.
McKinsey recently conducted a survey and the result of this survey showed that American consumers were showing a strong desire to sign up for financial products that were linked to the climate.
However, there is still a long way to go before these unmet demands of consumers can be met. Consumers need to be educated about this field and the companies offering such products need to push themselves out as a unique player.
The survey provided these insights that financial institutions need to make a note of:
- The demand for green financial products is there and it is strong. Also, it is not limited to a particular niche.
- Financial organizations need to treat green offerings as a business opportunity and not a concession.
- Customers could do this with advice and support from their financial partners.
- Consumers need to be educated as they still might not know what green offerings are the best for them.
- So far consumers haven’t started classifying banks based on climate topics and so everyone has a chance to establish themselves as the top player in this new segment.
However, it is not that early in this race as some financial institutions have picked the flow of wind and made some necessary innovations to their offerings.
A mortgage lender has included the option of financing a rooftop solar installation as a part of the home purchase package. On the other hand, a wealth manager has started to conduct balance sheet risk assessments for clients who plan to incorporate climate risks in their assets or properties.
Climate linked financial products are getting public attention and here we mention a few ways that financial institutions can get in and take their chance to attract consumers.
- Find a product that customers need and serve it uniquely with a financial product then conduct a test to determine the discrepancies between the interest of the customer and their behavior.
- Identify how you can build, launch and scale climate products. This includes stuff like tech, data, operations, risk, etc.
- Design an operating organizational model that supports the new model.
- Find out the markers of success early before newer products even get a chance to break even.
The way Americans live can be transformed if policies are changed, incentives are expanded, and technology costs are rapidly brought down.
Banks have a great chance to help out customers on their journey toward clean and green energy. And if they end up doing so successfully then the financial institutions can end up scoring strategic and financial benefits from it.
Source: McKinsey Sustainability
