What is socially responsible banking? Your questions answered
Did you know, there’s now an option for you to use socially responsible banks? If you didn’t, this begs the question, how do they work, and what are the benefits of using them? Let’s find out.
Socially responsible banking
Typically, before a bank loans money, they make an assessment based on finances. They monitor the risk and the likelihood of the borrower repaying their loans, in addition to how much of a return they’ll make, and whether the credit complements the kind of investment that falls within the bank’s niche, etc.
With traditional banks, you don’t have control over who your money is loaned to. This means there’s every chance you’re indirectly funding something that doesn’t align with your morals and values. This is where socially responsible banks come into their own. These organizations thoroughly vet the companies they do business with. In particular, they try and avoid working with organizations that either has a negative impact on the planet or communities of people.
The advantages of socially responsible banks
Typically, socially responsible banks pay their customers a higher rate of interest than ‘traditional’ banks. It’s also pretty standard for them to offer a range of bank accounts that don’t charge monthly fees, in addition to access to free ATMs.
Some socially responsible banks even rate the merchants you shop at. So, the higher their rating, the better the reputation the vendor has for being socially responsible. This is amazing for helping consumers gradually make more ethical shopping choices.
Who should use socially responsible banks?
If you’re someone who values social responsibility, then socially responsible banks are a natural fit.
These are the kind of organizations that prioritize people over profits. In addition to improving the way they lend money, they also prioritize workers rights and the fair treatment of consumers- win-win!