As I continue on my journey to explore The New Ethos in Banking, I seek input and opinions from the leading minds across a diverse range of financial institutions. What does it mean to be part of a cooperative bank group without being a cooperative yourself? And how far do the values of the group determine the values of each organisation from the group?

This interview with Guy Schellinck, CEO, Beobank, has got me wondering once again to what extent the business model of a bank determines its definition of ethos, and how that impacts its daily operations.

Last year, you participated in our conference to discuss the theme that my book will also cover: The New Ethos in Banking. How do you define Ethos in Banking?

Ethos refers to the set of guidelines that companies, including banks, are expected to adhere to in terms of ethics. It is a societal expectation that will continue to evolve and increase in the future.

As members of society, we all have a responsibility to contribute positively. In the banking sector, this means going beyond providing standard products and services to fulfil a role in building a relationship with customers.

To me, ethos in banking relates to the future role of banks in our society. It is important to delve deeper into this topic to understand what this role should be.

How do you implement this differently at Beobank compared to other banks? I remember inviting you to speak at our conference in Brussels last year because, even though you are not a cooperative bank yourselves, you are part of a cooperative group. To what extent does this define your identity, and how does it impact your daily operations?

It affects us considerably. Our bank, Beobank, operates under the cooperative spirit, even though we are not a cooperative bank ourselves. Our shares are entirely owned by Crédit Mutuel, which is a cooperative bank. This enables us to align our mindset and strategic objectives with those of the group.

The cooperative banking model offers several benefits. For instance, we do not have any shareholders, except for Crédit Mutuel. We have fewer short-term commitments. This allows us to focus more on long-term projects and investments that benefit society, instead of prioritising short-term profits. Therefore, we are committed to using our resources to make a positive impact on our customers and the communities we serve.

The group is deeply committed to social causes in France and other countries where they operate. They have a policy called "Societal Dividend" which means that they allocate 15% of their net income annually to initiatives that benefit society. They have three pillars under this policy - "Environmental and Solidarity Revolution Fund," "Tarification Solidaire," and "Mecenaat."

“Environmental and Solidarity Revolution Fund” is used for initiatives to sustain and enhance sustainability and diversity in nature. This ranges from the purchase of forests to investments in new technologies to promote the green transition, such as organic farming and other initiatives that do not always easily find funding through regular channels despite their social commitment and contribution to a greener world.

"Tarification Solidaire" is an initiative aimed at making essential social products accessible to everyone. An example of this is a recent campaign that offered bike financing with no bank charges for certain customers, such as NGOs. This encourages people to travel in a more sustainable and environmentally friendly way. Another example is specific assistance for people with disabilities who need certain specific renovations to live independently.

The third pillar, “Mecenaat,” is used to support art, culture, or matters in education.

This is not just marketing. 15% is a significant contribution, far exceeding the publicity aspect. Crédit Mutuel is among the top 10 largest banks in Europe, which translates into a contribution of 500 to 600 million euros per year allocated to socially relevant projects.

We, at Beobank, have been a member of the Alliance Fédérale for the past 2 years. As a responsible organisation, we have taken on a part of social responsibility and care. Setting up such an initiative structurally takes time. With Mecenaat, things are happening faster than other initiatives. We have been involved in this for a longer time and will continue to do so.

Under the umbrella of Tarification Solidaire, we see in Belgium that the energy transition in the housing market for individuals is going to cost a lot of money. The cost of this transition is predicted to be around 450 billion euros by 2050, which is a significant amount of money. As it is unlikely that individuals will be able to fund this transition themselves, we are working at Beobank to develop products that will support people with limited financial means. These are often the people who require the most extensive adjustments to their homes. Our goal is to find a way to make these adjustments budget-neutral for them in the upcoming months.

We recently launched the "With You Fund" in December 2023, along with Banque Transatlantique, a sister bank. This fund is managed by the King Baudouin Foundation and used to combat social inequality and ecological issues.

What are the concrete ambitions of the With You Fund, and what is the role of the banks in this fund? Are the banks supposed to finance this fund or offer it to customers?

We have collaborated with both a private bank and a retail bank, with the intention of fulfilling our social responsibility rather than pursuing a business venture. We have established predetermined objectives, and we support projects through a fund that is financed by the banks.

This initiative is in line with the principle of our parent company in France, where we allocate a portion of our profits for social projects. These projects can be unrelated to our core business, as long as they can bring clear benefits to society.

How can a bank balance these contributions with its profit and shareholder value goals?

Our only shareholder is Crédit Mutuel. We don't have to pay dividends to the market. That is the big difference with other financial institutions. We can afford this as part of our financial objectives. Our profits are reinvested in our own funds. With our structure, we can afford to pursue slower growth of our own funds and allocate that money to these social initiatives.

Let's discuss the sustainable transition that we are currently in. The biggest problem that we face today is that the people who need to make the most significant change are often the ones who only make short-term decisions due to financial stress. As a result, they see little benefit in a long-term transition towards sustainability. Unfortunately, this group often constitutes a majority of the population.

The way we are currently approaching this transition poses a risk of increased inequality. As a bank, how do you plan to deal with this issue?

I am also convinced that if we keep handling the transition the same way we are doing now, the inequality between the rich and the poor will keep growing. At Beobank, we are striving to find a solution to this challenge, but we acknowledge that it's not an easy task.

Allow me to illustrate the problem with a personal experience. I am fond of travelling, and back in the early 1990s, China opened up to the world. My wife and I took the opportunity to go on a trip to China, and it was an unforgettable experience. However, during our visit to a particular city, we noticed that there was a thick layer of smog caused by an open mine, which constantly released small dust particles into the air. We talked to a local resident about the smog and asked him if it didn't bother him, especially with its impact on health. Surprisingly, he replied, "I understand that it's a problem that you can point out, but my immediate concern is to ensure that I have food to eat today. The issue of whether I'll develop cancer in five or ten years is less pressing because if I don't have food today, I'm already gone."

This experience highlighted a different perspective on the matter, emphasising that those who are less fortunate and have limited resources are more concerned with meeting their basic needs on a daily basis. They cannot afford to think about the future and invest in it, unlike those with access to capital who can plan for the long term.

We need to involve everyone in the transition to sustainable energy and investments. This can be done by making them pay the same amount for energy and investments as they would if they did nothing. This would create cost neutrality and help build a future-proof product in the medium term. However, implementing this is difficult due to legal restrictions, among others.

We are currently working on this challenge with one of the major energy suppliers in Belgium. We want to ensure that our assessments and developments meet the market's expectations.