Stronger Together : vdk bank's Partnership with NewB
NewB, a Belgian challenger bank, realised in October 2022 that it could not collect the required funds to proceed with its sustainable work under a banking license. After a strategic review, the bank announced on January 14 that the best scenario to continue its good work towards a greener future was to establish an alliance with vdk bank, a Belgian full-service bank that we had invited before at our virtual table to discuss banking for good.
As you can read in the blog of October 19, 2021, vdk is a bank founded in 1926 by the Ghent-based workers association and a few leading local families, with a mission to "improve financial inclusion and stimulate more emancipation in an era where labour rights were minimal, social security was still to be invented, and many people were in financial stress, unable to think ahead in life." Today vdk bank has a portfolio of 4,2 billion in deposits and 3,4 billion in outstanding credits.
NewB is listed second, after Triodos on the Fairfin Bankwatch list. Vdk bank ranks 3rd but first as a full-service bank (which NewB and Triodos are not).
We invited their Chairwoman, Leen Van den Neste, again on March 9, 2023, for more context around this strategic partnership.
ESG as a guiding compass
"Our mission statement is to be a bank for the customer, but also for the region of these clients and for the good of the planet we live on. This is in our DNA since the day we were constituted by unions, among others. We have worked this way for 97 years and will continue to do so. So we really have the social impact of our banking system as a goal", explained Leen.
The three aspects of ESG are equally important: "It's the ecological footprint, but also the social aspects are essential. We want to bank for everybody, and we want to be open to everybody, on equal terms: we can give the same service to somebody who has less money than to somebody who has a very big portfolio to manage."
She continued: "Also, on the governance side, we have worked really hard the past few years to be an example in terms of transparency. For instance, as of this year, we publish all the companies we invest in on our website. You will see that fossil energy is no longer in our investment portfolio." Leen was also honest enough to share that clients are currently only advised on article 8 and 9 funds.
On top of that, vdk bank is a member of the Global Alliance for Banking on Values, a group of banks that share best practices for being a value-driven bank.
vdk bank to the rescue
Now we know that in terms of values and DNA, there are many similarities between NewB and vdk bank, but there are more: they also have a few similar shareholders. Despite being competitors, vdk bank opened the dialogue at the beginning of October 2022 with NewB, fearing that customers might look for another, less ethical bank if NewB lost its license.
Leen: "During these talks, I got to know a group of very engaged people who were persistent on banking for good, banking in a sustainable way. I went to the shareholder meeting twice, and I got to know a lot of warmth, committed and convinced people. We learned that they really would like to continue their cooperative work."
In early November, they reached an agreement on principles. They agreed that NewB would become a digital agent of vdk bank for Wallonia and Brussels like they already are for insurance with Monceau.
The NewB – vdk bank partnership in practice
In April, a few months after the official agreement in January, vdk bank will migrate all the NewB clients to their platform. All these clients will receive a vdk bank card. Quite an organisational challenge if you ask me.
NewB will become a commission-based business instead, and instead of building banking products themselves, they sell vdk bank banking products and rely on their processes for onboarding, KYC…
This also implies that NewB can focus even more on its core mission and cooperative work.
This adventure means that vdk bank will start doing business in the French-speaking part of Belgium. So by April, the vdk bank platform must support the French language. Leen: "So far, we had enough to do in Flanders and didn't look for expansion in the French region. But this was an opportunity: having about 20 to 30,000 customers on the other side of the language barrier makes it a worthwhile investment."
What's more: they have a 100% online digital agenda for the first time. This is new to them, and it is another challenge to deal with, as one of their values is personal contact.
"In Flanders, we focus on personal contact. Our branches are open to everybody; we don't work exclusively on booked meeting hours. So everybody is welcome whenever they want," explained Leen. "That personal contact is really one of our success factors. So how we're going to translate that to the digital agency will be quite a new chapter for us, too. But I think it's possible."
When we asked Leen for the next steps, she ran us through the history of vdk bank again and shared how they evolved from a small savings bank in Ghent to a full-service bank across Flanders and with NewB, now also in Brussels and Wallonia.
"Banking is a very beautiful job because we work together with you, with our customers, on an equal level. We want to bank for the region. We want to bank for the planet and leave it to our children. It is important that they still can live in a very healthy environment. Maybe also an environment where there's not too much war. So let's work together on how we keep this planet liveable for the future."
To my surprise, and they may have been because of the teasing question of my friend Andrew Vorster, a question I didn't dare to raise on the record 😉, Leen is already looking further.
There is still much work in Belgium, she said, and she hopes that one day they become Belgian's number 1 sustainable bank, and once they achieved that, it may be time to start looking abroad.
Who knows? Maybe the Global Alliance of Banking on Values can help achieve that ambition.