[Economic Essay Contest] How ESG practices can help banks attract young customers

The Korea Times

The Korea Times

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Tue, October 3, 2023 | 05:16

People & Events

Economic Essay ContestHow ESG practices can help banks attract young customers

Posted : 2022-11-14 17:15

Updated : 2022-11-15 14:01

Kim Ju-hyuk

In this current day and age, one word can sum up the whole of society: competition. As the population grows, as more businesses form and as the sacred resources on Earth become more limited, businesses must constantly adapt and fight to last. So, in this competitive society, how can banks, specifically, attract customers and what are some strategies they can apply to gain more customers?

The answer is quite simple: by strategically planning and getting to know their target group, the MZ Generation, banks can effectively use environmental, social and corporate governance (ESG) practices to gain many new customers, maximize profit and gain popularity and loyalty within their community.

Before we dive into how ESG practices can help banks attract customers, we must first get to know the target customers, which will in turn, answer the preceding question. The MZ Generation, or more popularly known as the Gen Z population, are the young folks of our current society, and they are like no other generation before. The Gen Z youths have no fear, they're devout in their beliefs and virtues, and they are highly educated on issues that have been seen as controversial and taboo. Whereas in past generations, controversial issues were not talked about much, and parents taught their children to keep their heads low and try not cause much trouble, the Gen Z population are fiercer and more rebellious than ever seen before. Whether in the heart of protests fighting sexism and racism, in the movement for climate change, or in the battle for gender equality, the Gen Z youths, without a shadow of a doubt, can be seen in the front lines of each movement they support. Knowing all this ― the heart and mindset ― of their target group, banks can use ESG practices to grab first the attention of their potential customers, then, their business second.

Firstly, for environmental practices, banks can use thematic investing, targeting climate change initiatives to both help the environment and use this stance as an appealing point to their Gen Z customers. By prioritizing and funding programs that aim to fight against climate change, the bank can appeal to the community in a positive and caring way. Rather than being seen as money-hungry institutions, by investing in climate change programs, the bank can earn points in both their potential customers (who actively support the movement) and the public eye. By creating a shared and agreed opinion on a major issue, the banks can be seen as trustworthy and honest to their potential Gen Z customers.

Secondly, for the social part, banks can appeal to their target audience by supporting the LGBTQ+ community, maintaining the importance of sexual misconduct, and paying livable salary wages. In many ways, banks can often be seen as a big, corporate monster, but it is important to show that both banks and their customers alike, are all, at the end of the day, human. By showing their care for these important issues and once again standing with their customers, banks will be sure to gain the hearts of their fellow customers and potential customers alike.

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gettyimagesbank

Lastly, for the corporate governance part of the practice, the banks must utilize proper and fair hiring and management. In a world divided by rank, race and gender, banks must show unity and diversity, especially in their upper rankings. By hiring both genders of different races, cultures and ethnicities, for their management positions and board of directors, banks can be sure to be seen as one community of all people. By showing unity in their management, people of different races and cultures can be moved and swayed to use their service.

In conclusion, by utilizing these modern practices of the environmental, social and corporate governance practices, banks can be sure to appeal to their younger target market. Not only that, but banks can change their society's view on their money-hungry, selfish image, to one of community, diversity and change for the better.

Kim Ju-hyuk is a student at Yonsei University.

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