The idea is that by acting on those building blocks — customer, people and society — financial value will follow. Supported by meaningful metrics and a fit-for-purpose business model, this stakeholder-based approach can create a virtuous circle where all four pillars feed off each other, leading to stronger customer relationships, more engaged employees and a socioeconomic playing field that provides greater opportunity for growth and profits.
Customer value
Digitization and the COVID-19 pandemic have stressed the customer journey and accelerated the push toward customer-centricity as the industry strives to build trust. FIs are responding with initiatives that demonstrate a commitment to key market segments and underserved communities.
For example, Citi in 2020 launched a three-year, $1 billion initiative⁸ to help close the racial wealth gap and increase economic mobility. The effort supports homeownership and affordable housing options for people of color, procurement opportunities for Black-owned business suppliers and dedicated investment capital for Black entrepreneurs.
People value
Employees are the heart of the organization. Flexible work policies and investments in training and development opportunities to support their career aspirations in differential ways can inspire loyalty and effort, which can ultimately trickle to the bottom line.
For example, PayPal has launched initiatives to promote workers’ financial wellness. These initiatives include financial coaching, efforts to reduce worker health care costs, increased equity grants and the introduction of more specialized training programs.
Societal value
At a time of increasing scrutiny, shaping an organization’s value proposition to fit societal goals is becoming critical to fueling economic growth and a larger playing field. The list of potential initiatives is broad and includes those related to confronting climate change and promoting financial inclusion, social justice and transparency. Finding quick wins can create momentum.
For example, the MetLife Foundation is a founding partner in the Common Cents Lab.⁹ The initiative seeks to leverage behavioral science in designing financial products and services to help low- and middle-income customers decrease expenses, manage debt and boost savings.
Financial value
The days of emphasizing shareholder returns above all else may be fading, and that can be disorienting. Reframing strategy, capital allocations and business models around customers, people and society can fuel positive results and lead to FIs being viewed as more attractive investment opportunities.
For example, 92% of Vanguard’s stock funds outperformed their peers over a five-year period,¹⁰ forming a foundation for long-term client returns and growth. The ability to deliver measurably beneficial value propositions is critical to overall ESG success.