The future of finance: why you should be banking sustainably
Tomorrow aims to be the "bank from and of tomorrow" - sustainable, transparent, mobile.
Written by HYER NEWSROOM
What if every time you use your bank card, you could contribute towards a reforestation project? With sustainable banking business Tomorrow, this can become a reality. Founded in 2018 and based in Hamburg, the company combines mobile banking with true sustainability. Tomorrow is here to help you make the switch that will not only radicalise your own approach to your finances, but to help turn around the climate catastrophe in the process.
The financial industry is a major driver of the severe problems humanity is currently facing, both ecologically and socially. Since the Paris Agreement alone, the biggest 30 banks in the Western Hemisphere have fuelled more than €60billion into fossil fuels. Even after world leaders agreed this needs to stop and that they would unite to work against the climate crisis, they still continue to fund industries that destroy our future and planet. While money is a major driver of the problems, Tomorrow believes it can also be part of the solution by shifting money towards positive change, instead of fuelling the downtrend. That’s where sustainable banking comes in.
Tomorrow co-founder Jakob Berndt says that if everybody over 18 in Germany alone banked sustainably, more than €50billion could be saved on societal costs every single year. And yet currently less than 0.5% of Europe is banking sustainably. Many of us have switched over to organic or plant-based foods, opt for cycling over driving, and select green-based energy providers in an attempt to do our part. We are consuming more consciously and sustainably in multiple areas of living. But this same mentality is yet to apply on a large scale to the way we treat our finances. Given how influential this area is and the leverage it can have, Jakob feels it’s a hugely missed opportunity.
Interview with Jakob Berndt, Co-Founder
“We only have this one chance to turn around the climate catastrophe, and we need to make sure that every dime is being spent on the right things.”
Jakob Berndt, Co-Founder
Think back to that €60billion euros pumped into fossil fuels; huge amounts of money are going into helping these detrimental industries survive. If we continue in this way, it is guaranteed we will not hit the below 2 degrees Celsius goal. The IPCC has reiterated recently that, if we want this turnaround to happen, we need to ensure every single dime is being shifted towards positive change. This can only happen when the majority change the way they bank.
So what actually is sustainable banking, and how is Tomorrow helping its users to do it? The idea is to make money a key part of the solution to the global challenges we face, rather than being the dire catalyst of the problem. Interestingly, very few of Tomorrow’s team of 100+ people came to the business from a banking background. All were new to the industry, and had never previously dreamt of becoming bankers or working in the finance world.
But what brought them all together in building the first digital and sustainable bank in Europe was the observation that money is a major part of the problem, and it shouldn’t be. Sustainable banking has actually already been in existence for the last couple of decades, but not in an accessible format. Previously it has been somewhat old school, niche, and not very high-tech.
Tomorrow works on the basis that making sustainable banking as accessible, but also as relatable, as possible is a vital component in its wider success. As Jakob puts it - “If you really want to change the world you have to throw a better party than those destroying it.” This is what Tomorrow tries to bring to the world of banking; a truly mission-driven, sustainable approach that feels fun and fresh, solves pragmatic problems for individuals, while still contributing to saving the planet.
To approach the masses successfully, barriers must be kept as low as possible. This is apparent in Tomorrow’s brand, in everything from the aesthetics to the language. Jakob hopes to make sustainable banking “first the new cool, and then the new normal.”
Tomorrow’s impact strategy is closely connected to the UN’s Sustainable Development Goals, with their most important areas of focus being climate justice and social inequality. There are three main components of the impact of Tomorrow’s work. Firstly, shifting money towards positive change. There are currently 120,000 people banking with Tomorrow, amounting to approximately half a billion euros sitting in their current accounts.
Tomorrow shifts this money into green, social, housing and blue bonds, trying to ensure the money in its customers’ accounts is working to drive forces for good, as opposed to the damaging industries invested in by other banks. Secondly, whenever people pay for something with their Tomorrow card, there is a small fee - which usually banks would use as a revenue source. Tomorrow uses part of this fee for climate protection projects.
Thirdly, their own soon-to-be-launched investment products where users can actively invest in the top 100 most sustainable companies worldwide. This ensures their customers know that, while they save for their own future, they are also protecting everyone else’s.
Tomorrow is all about creating a slick, simple solution to some of the biggest challenges of our generation. How we live in the future is up to us, and depends hugely on how we manage our resources moving forward. Sustainable banking helps put this power back into our hands. While there is nothing wrong with the fact that banks use the money in our bank accounts to invest, there is something wrong with where that money is being invested.
With no end in sight to the current funding of coal, weapons, fossil fuels and more, Tomorrow provides an opportunity to invest exclusively in sustainable projects instead, while making it as simple as possible. When it’s this easy to be sustainable, what’s our excuse not to do it?