I generally seek to have a positive effect on the world where I can, particularly where it's easy to achieve with only small changes in behaviour. I have a bank account. I have a savings account. Right now, the profits of these largely go to banks who, while serving a useful function, aren't necessarily my dream beneficiaries.
I spent a while trying to find some good places to put my money, and figured I might as well write up my research in case it's useful to anyone else. I was definitely trying to solve my own problems, so I should probably describe my aims: I live in the United Kingdom (in London). I have a current account, which I largely use for direct debits and to pay off a credit card with which I buy most things. It is always in credit. I have a few tens of thousands of pounds of savings. My life is fairly unstable, so I want relatively easy access to those savings (instant, or at most three months notice), in case I decide to move country, or buy a house, or start a company, or who knows what. I don't particularly care about making the most interest I could make (I'm not a huge fan of making money from having money), but some would be nice, and more would be nicer. I don't want an ISA. I travel a lot, and have a lot of foreign transactions. So practically, what I'm looking for is:
With that established, the next question is, what are my ethical aims? What are the available families of ethical ideologies? I have found only a fairly small handful of "ethical" banks (they're not all banks, but I'm going to use that term broadly), and many fewer who offer current accounts. The broad families seem to be:
For my current account, I really value convenience and customer service, so despite being far from the most ethical choice, I'll be opening a current account with Metro Bank, with an aim to keep it pretty empty.
For instant access savings, I will be saving with Triodos and one of my local credit unions.
For term-notice savings, I will be saving with Ecology.
What follows is a brief narrative about each of the banks I investigated, starting with those who offer current accounts:
I did not investigate Reliance particularly heavily; they're the bank of the Salvation Army, and I have problems with that particular organisation, so they were never really a contender for me. But some relevant information:
Loosely speaking, the Qur'an forbids charging interest on loans and generally making money from money (and accordingly, making interest on savings). Al Rayan, accordingly, don't formally pay interest, but instead share the profits of the bank with their members. It's certainly a subtle dance. One thing that this means is that they don't quote interest rates, they quote "expected profit rates" which may be missed.
Metro Bank were founded in 2010 with an aim towards customer service. They do not brand themselves as particularly ethically focused (though they do talk about being community-focused, responsible, and charitable); their focus is definitely on profit via good customer service. In particular, they neither blacklist nor whitelist specific industries or groups. They don't have an investment bank, they're a small-ish straightforward deposit-taker-loan-lender retail group.
Building societies tend to offer decent rates of interest on savings, often times also offering current accounts. They tend to have a small number of branches in a local area, and to use their savings deposits exclusively to back mortgages (often only locally) though occasionally also for loans and/or insurance. If you're looking for local community investment (where community here literally means "the people around you"), they're not a bad choice. They're formally owned and run by their members, and that gives some control over direction and aims. The largest few (Nationwide, Yorkshire, Coventry, and some others) have many branches across the nation (often times as the result of mergers of smaller societies), but quite quickly you get into the realms of them being very localised, and either only being accessible to those in the area, or possibly able to be operated by post or online.
Credit unions operate fairly similarly to Building Societies; the notable differences are:
They're probably a more impactful place to put money than building societies, but they're also likely to be a less convenient place to operate with; that said, they are frequently lauded for their customer service, and they definitely have very real impact in local communities.
Triodos Bank only lend money to people and organisations they view to be actively making a positive impact on society (whitelisting cultural, social, and environmental borrowers) rather than avoiding actively bad companies. Their definitions of positive are open to question (for instance, they happily fund homeopathy), but for the most part seems decent, and certainly better than most of the field.
One thing to note is that they also offer some ethical investment funds; note that they hold companies in these funds to a lower standard than those to whom they will lend, though still not a bad standard.
The Ecology Building Society take deposits in savings accounts and lend only to support environmentally friendly, sustainable projects, particularly ecological new builds, energy-saving improvements, renovations, and preference to affordable housing. They also very consciously track and aim to improve their environmental footprint (e.g. publishing their "grams of CO2 per £ of new lending").
Charity Bank only lend money to charities and social enterprises from savings deposits. They treat their employees and customers well, foregoing bonuses and hard sales targets in favour of a living wage. Their board are also unpaid volunteers. Their shareholders are all charities, trusts, or foundations, hopefully giving a good direction.
Shared Interest are a co-operative who provide unsecured loans to the fair trade industry; both to producers and buyers, in an attempt to cover the gaps that exist in the production/sales lifecycle. They are run very strongly as a co-operative, including a shadow-board of randomly selected members to oversee the board.
For my current account choice (Metro Bank), I sided mostly with convenience. A bank which is open seven days a week, who charge no foreign transaction fees, and who seem to actually care about the experience of their customers is exciting. The alternatives here were: Reliance (except Salvation Army), Al Rayan (whose offering seems fraught with inconvenience, e.g. problems using cards in America or at fuel pumps), building societies (either not local to me, or not necessarily as convenient), or credit unions (for whom operating current accounts is actually quite expensive, and with whom a current account seems somewhat inconvenient). When Triodos offer a current account, this may change.
For savings, I found Shared Interest too risky for my profile. I found Charity Bank quite interesting, but a) I'd like to know more about their lending criteria, and b) I'm not entirely convinced that pushing loans on charities is the best way to support them. I find credit unions more compelling than building societies. And I find Triodos and Ecology both quite compelling, the former more so than the latter. Please help me!
If there are any interesting offerings I've missed, please let me know! If you'd like to talk about these issues more, disagree with anything I've written, or generally have an interest, I'd love to hear from you too! Get in touch :)