German banks have green opportunity

19 November 2012

BERLIN: Banking brands in Germany could benefit from tapping the rising demand for green and socially-responsible products, a report has argued.

Roland Berger Strategy Consultants estimated that approximately 3m customers currently use these products, a figure which was pegged to stand at 6m by 2015.

When discussing the investment volume for such offerings, the organisation predicted that the market should reach a size of €100bn in 2015.

Looking even further ahead, the company stated that up to 11.5m people might ultimately come to utilise sustainability-led products, a substantial audience for brand owners active in this segment.

One core motivation supporting this trend is that consumers increasingly want to know about how financial services providers employ their money.

Wolfgang Hach, a partner at Roland Berger Strategy Consultants, suggested that learnings from the grocery category, especially, were applicable for banks seeking to gain ground in this area.

"The success of organic foods in recent years is a strong example of how companies can benefit from market growth with sustainable products," he said.

More specifically, the study asserted that low-risk savings may be the main growth driver for German banks, which are ranked "near the bottom" of the European league in launching green services today.

"Traditional banks are rarely known for their sustainable business practices. This is why they face challenges when it comes to making eco-friendly or ethical investment products attractive to their customers," said Martin Wallraff, of Roland Berger.

GLS and Hannoversche Kassen are among the country's leading social banks. The top four such providers have awareness levels of between 5% to 17%, but also logged growth of 20% in 2011.

To compete, the industry's major players could benefit from creating a "traffic light" system, he added, showing the ecological and social credentials of individual products.

"With the help of a transparent system, customers can decide how they want to invest their money. This makes the bank seem like a trustworthy partner," said Wallraff.

"However, the topics of green and social banking should not be considered purely as marketing tools. If they are, banks will quickly lose the trust of their customers."

Data sourced from Roland Berger Strategy Consultants; additional content by Warc staff