Argenta's interpretation of purposeful and sustainable banking
“I’m not convinced, as a bank, you should preach about purpose. I think it’s imperative internally to have a clear vision of what your company culture should look like. This means that your purpose, mission, vision and cultural values must be aligned. You have to live by it.”
Marc Lauwers, CEO of Argenta, set the tone of the rest of the session. What followed was an inspiring session on how Argenta puts both purpose and sustainability at the heart of its organisation and lets it trickle down to every department and every employee.
Argenta’s official purpose statements are scheduled for April, at its 65thanniversary. This remained a secret. Still, the 1-hour talk revealed all the organisation’s values and provided very concrete hints of what to expect of this announcement.
Challenges of a savings bank
Argenta is a Belgian savings banks, currently number 5 in the retail banking market. We know that the European banking landscape is under pressure. Over the last 10 years, the number of European banks reduced by almost 30% because of regulatory pressure, low-interest fees, tremendous investment in digitalisation, changed customer expectations etc.…
Banks will encounter more challenges in the future, but, as Hedwige Nuyens concluded earlier, Marc, who is also a board member at ESBG (European Savings Bank Group), believes in savings banks’ future.
“We see an incredible variety amongst savings banks in Europe: in Spain, you have some of the most prominent players who compete really with the big universal banks; in Germany, you have the small and mid-side savings banks to the supersized Landesbanken. What they all have in common, to my feeling, is that element of proximity and supporting the local economy.”
It is their purpose that will keep them alive. Fewer savings banks will remain, and the way they are organised might change, but they will keep playing a crucial role in the local economy.
Shared platforms and shared investments will allow them to mutualise the cost of operations and focus on what they are good at. Marc referred to a recent partnership in Germany between 7 Sparda Banks that created a common IT platform with Sopra Banking.
As sustainability and ESG gets higher on the political agenda, the need for economies of scale through collaboration is not expected to change soon. Where in the past, the perception was that the banking industry should enable a greener future, recent developments indicate a shift to a more active role.
Marc: “We are actually beyond the enabling, perhaps not in all aspects of sustainability, because the ESG criteria at large are, of course, not imposed. But if you take climate risk, for instance, it’s clear that there is a political vision behind how the climate risk assessment and the climate risk action plan as a bank have to be drafted in the future.”
If customers, retail and business, will need to report the climate impact of investments they’re making, with the risk of not being creditworthy if certain requirements are not fulfilled, the banking industry is clearly moving beyond purely enabling a greener future.
This evolution will stimulate even more banks to partner on non-core activities in the future.
Argenta’s direction is set by the values they live
The company values are DOPE (Dichtbij, Ondernemend, Pragmatisch, Eenvoudig), or in English: Proximity, Entrepreneurial, Pragmatic, Simplicity. These have been translated into desirable behaviour.
Marc: “It is interesting to see that there was an almost unanimous view from all the management teams and all the employee teams on how it is being considered. We value purpose, and we are convinced it can be guidance in taking decisions, in driving your company forward, in giving a face to what you stand for.”
What this face looks like is “making sure that you accompany your customers through all the stages of life, and ensure that they stay financially healthy, and for every customer with each individual background, that means something else.”
Marc believes that this also implies that they should not have the ambition to become a platform provider or add multiple functionalities that are not financial services-related. Providing straightforward services and simple banking and insurance products is what Argenta always did and what they will keep doing in the future.
“Of course, we are not blind to the impact that digital has on the behaviour of customers,” said Marc. The industry evolves, and so does the notion of proximity, which is more than just being physically close: “We need to make sure that when we translate proximity to our digital applications, that this also remains present in the way we address our functionalities there.”
Marc agreed that branches are losing traffic, but for life-changing moments, personal contact remains essential. Argenta’s net promoter score of +40 last year was only made possible by ensuring that branches were available even in times of a crisis, whether over email, phone, or an appointment in a branch.
It created peace of mind.
He referred to their second home market, the Netherlands, a more modern banking culture where digital mortgage selling exists for many years. Yes, only 6% of all mortgages sold are 100% digital. Hybrid models will define the way we bank in the future, and every bank will need to find a balance between human and technology.
How Argenta contributes to a better future for human and society
“A sustainably successful company does not only do business but should add something to the world of its stakeholders at large. Our policy on sustainability is based on responsibility and care,” explained Marc.
Better wellbeing of the customer
The basics of sustainable financial advice are the simplicity in the products and services, and transparency in the way they do business is, according to Marc: “Opting for simplicity and transparency implies that your customers need to understand our products so that they can adequately estimate what they need to do to improve their financial health.”
Argenta never pays out bonuses, a symbolic statement to show that in everything they do, they put the long-term interest of the customer at the centre of everything they do. This avoids discussing the conflict of interest of serving shareholders vs customers, which we discussed on March 9, 2021.
People who read the Open Banking Interview with Marc remember his frustration over Bigtech that make lots of money on their customers’ data. The recent announcement of Argenta to partner with Cakebroadens the banks’ purpose from pure financial wellbeing to digital wellbeing to a certain level.
“Cake and us share the idea that these data should have value for the customers themselves. So the cashback is a way of telling our customers: “Hey, because your transactions have value for somebody else, they’re willing to pay for that”. And I think we will continue to evolve together with the Cake on that path.”
Sustainable business model
Argenta applies a list of sustainability criteria for its customers’ funds. To avoid any confusion from the market, they apply the same rules of sustainable investments for their own portfolio as they do for their clients’ funds. These criteria are evaluated regularly, and in line with the evolving regulatory environment, they expect these to become stricter in the future.
Sustainable banking goes beyond money management. Three years ago, Argenta set the ambition to reduce its carbon footprint by half. Through multiple initiatives within the company, and with a bit of support from COVID-19, they officially made it.
The new headquarters may not be entirely circular, but it has many semi-circular aspects, solar panels, geothermal energy etc. Employees are incentivised to choose a hybrid or electric car. Diesel cars are forbidden. Stimulated by COVID-19, they introduced more homeworking to reduce traffic.
This is just a start, Marc explained: “At the end of March 2021, we will submit a new sustainability charter and action plan for the years 2021-2023, including very concrete actions in a lot of different domains, which will help us live our sustainable vision.”
Employee engagement for a better future
Argenta has a program called “Healthy Growth”, which touches on the different elements of wellbeing. Every year they measure their employee engagement, whether they are an ambassador for Argenta: “This year, we landed at 87% of employee engagement which this very high. But it has to do with the fact that we’ve worked on all aspects of wellbeing.”
“We’ve invested in programs around living healthily, we’ve invested in our buildings, we’ve launched what we call an Argenta passport,” explained March. “This is a passport, which helps people guide them through their career in terms of employability. All these elements work together, in order to create also for employees a sustainable environment.”
Instead of sponsoring budgets, they have other means to contribute to society at the end of the year. Marc: “Each year, our staff organises a number of activities, which we call Warm Argenta, to collect money. We add something on top of that, and our shareholder puts an additional sum in the bucket. At the end of the year, we ask our employees what projects they are involved in, and we choose a number of projects to distribute the money. That also is an element of sustainability.”
They stretched transparency from the customer to how they manage the bank up to how they see their employees develop their careers.
“When you consider sustainable working as you have addressed it in your company as an Olympic minimum, even to be allowed to be active, it becomes an intrinsic part of your business model.”
It was enlighting to hear from a CEO how they deal with purpose and sustainability on a strategic, company-wide level. For Argenta, these topics are not a symbolic selling point but part of their DNA. By bringing all the initiatives together, they make their stakeholder conscious of their impact and prove to contribute to a better future for human and society.