Does Ethical Banking Hold the Potential to be the Future of Banking?

Abstract

Banks are expected to play a major role in socio -economic and environmental progress of a country; yet, they have by and large neglected their societal and environmental responsibilities, thereby contributing mainly towards economic gains. As such, banks were blamed by civil society for not doing enough for the environment etc. They were also found wanting in providing services to lesserprivileged sections of society, thus unfairly excluding the category from the benefits of basic financial services. The economic downturn exacerbated their plight and exposed the banking sector's irresponsible attitude. Naturally, there has been a public outcry for banks to act more responsibly in the future. The mood of the public seemed to reflect the yearning for an alternate banking model, in order to discharge social, environmental and economic responsibilities effectively. As a result, an Ethical Banking came to be accepted as an alternative, as this model encompasses all three elements -economy, environment and society. Ethical Banking strives to achieve the triple bottom line -planet, people and profit. These banks envisage financial inclusion and also deliver eco-friendly banking solutions to customers. The main objective of this study is to determine whether ethical banking has the potential to be the future of banking. The significance of the study is also to find out how ethical banking may be adapted as the most suitable banking concept of the future. This study is a desk research, in the form of a literature review. The review identifies that Ethical Banking holds the potential to be the future of banking. The outcome of this research, highlights the importance of banking to be ethically oriented, in order to maintain sustainability for the future.