For decades, financial institutions had the same inherent goal: to make more money—for themselves and for their customers. It did not necessarily matter what the money was for, how it was used, and how it was gained, so long as money was being made. This worked for a while. Throughout the 1980s, 1990s, and early-to-mid 2000s, banks and other financial institutions were on a steady roll, drawing praise from Wall Street and indifference from the average consumer. Then, in 2008, the financial crisis happened. This put financial institutions under a close microscope for the first time in a long time. Financial institutions were now on the same playing field as everyone else, with consumers demanding more communication, transparency, and accountability from these firms. This new state of affairs combined with vastly evolved digital technology has transformed the financial industry at large — and made room for disruptors that are funding change. Whereas financial brands used to simply stand for “money,” the expectations of consumers have changed, and thus, the brands that have been able to break through in this space stand for something greater, communicating a strong purpose behind what they do.
Money Purpose is power
Regardless of how great an idea or product is, there is one thing that all brands need to make their first break through: funding. For years, there was limited optionality in terms of how a startup could get that Seed, Series A, and Series B funding necessary to truly grow and scale a business. In the past five years, equity crowd-funding platforms have been disrupting the traditional venture capital hierarchy. Founded in 2012, SeedInvest enables individuals to invest alongside VC firms and angel groups. Today’s more conscious—and conscientious—consumers are voting with their wallets, supporting brands that align with their values. Seedinvest gives them the power to shape the very future of promising brands, while startups can turn their most ardent supporters and customers into passionate investors. In a recent interview with Interbrand, Alexandra Tynion, Principal at SeedInvest, spoke about the importance that her company places on its role in the world:
“Our platform is entirely mission-driven. We are fiercely passionate about democratizing startup investing and startup fundraising — giving entrepreneurs access to capital and all investors access to high-quality startups.”
It’s no longer just about providing access to capital, it now requires doing so in a focused way while communicating the value it can bring to all parties.
A refreshing social shift
Investment is not the only industry vertical we’ve seen disrupted by purpose-led brands. Lemonade is re-imagining the property and casualty insurance marketplace. The tagline across the top of its homepage reads: “Instant everything. Killer prices. Big Heart.” These first two claims are table stakes for what 2017 consumers should expect; it’s the “Big Heart” that illustrates a refreshing change in the dynamics of the industry. Lemonade’s commitment to social good is a growth-driver because it’s not just something they say, but because it’s become embedded in the brand, and enacted in they way it does business. Says Daniel Schreiber, CEO and Co-Founder of Lemonade:
“We don’t think that we are sacrificing business for being socially responsible, we think that working with social causes and working in a socially forward-thinking way is actually good for business as well. We really think of this as a win-win—a win-win-win situation. We win hopefully, the consumer wins, and the causes win. We think that brings out the best in all of us.”
Despite the emergence of companies that make noise in the financial space via innovation, proprietary technology, or truly a resonant vision, traditional financial institutions are still safe—for now. However, it’s up to these organizations and banks to realize that their growth potential is tied to the role they play in society. For fintech startups and big banks, growth will be dependent on the ability to create shared value and shared impact, while doing so in an authentic and focused manner—characteristics that are the foundation of great brands.