The financial sector is experiencing a transformative era where Environmental, Social, and Governance (ESG) principles are emerging as fundamental components of business strategy.

This shift reflects a broader societal movement towards sustainability and ethical governance, fundamentally altering the landscape of banking and investment.

Banks and financial institutions are now tasked with a dual mandate: achieving financial success while actively contributing to environmental conservation and social welfare.

At the Singapore Fintech Festival 2023, Fintech News Singapore had the opportunity to speak to Ramki Ramakrishnan, Managing Director of Temenos APAC.

During this discussion, he provided valuable insights into the ongoing evolution of ESG-focused finance, shedding light on the strategies and technologies that empower banks to navigate this transformative era.

ESG is a strategic imperative in finance

Incorporating ESG into the core of financial operations is no longer a choice but a necessity. It transcends the traditional boundaries of regulatory compliance, encapsulating a holistic approach towards ethical business practices, social responsibility, and environmental stewardship.

“Adopting ESG is about aligning with global values and the evolving expectations of stakeholders, including customers, investors, and regulators,” Ramki said.

Financial institutions recognise that ESG compliance is not just about mitigating risks but also about seizing opportunities to innovate, build brand equity, and establish long-term customer loyalty.

This approach necessitates a deep integration of ESG values into all aspects of banking, from investment strategies and loan disbursement to operational practices and corporate governance.

The integration of ESG principles is also reshaping the dynamics of customer relationships in banking. Banks that actively embrace these principles are finding a more profound connection with their clients.

“Banks that demonstrate a strong commitment to ESG are more likely to build trust and loyalty among their customers,” Ramki pointed out.

This alignment with customer values enhances the bank’s reputation and opens new avenues for customer engagement and business growth.

Spearheading ESG integration

Temenos is increasingly recognised for its role in supporting the integration of ESG principles within the banking sector.

The company enables banks to seamlessly embed ESG criteria into their core operations by offering sophisticated software solutions, effectively aligning business processes with their goals.

“Our solutions are designed to bridge the gap between the traditional banking model and the emergent ESG-focused approach,” explained Ramki.

These solutions cover various functionalities, including enhanced customer due diligence (KYC) to ensure compliance with social standards, loan analytics tools incorporating ESG metrics, and comprehensive reporting systems providing transparency and accountability.

By equipping banks with these tools, Temenos is enhancing their capacity to meet ESG standards and empowering them to become leaders in sustainable finance.

Beyond providing software solutions, Temenos extends its role to educating and advising banks on effective ESG implementation.

“We’re committed to supporting banks throughout their ESG journey, offering both tools but guidance and expertise,” Ramki explained.

This comprehensive support includes training programs, workshops, and advisory services, ensuring banks have the tools, knowledge, and understanding to use them effectively.

Acknowledging the unique challenges and objectives of different banks in their ESG journey, Temenos tailors its solutions to meet individual needs. This approach ensures that banks comply with ESG standards and can leverage these principles to gain a competitive edge, enhance customer engagement, and drive innovation.

“Understanding each bank’s requirements is important to develop effective strategies and tools to ensure successful ESG integration,” said Ramki.

Advancing cloud technology for sustainable banking

In its commitment to sustainable banking practices, Temenos advocates adopting cloud-based solutions.

“The cloud is a game-changer, not just for operational efficiency but also for environmental sustainability,” Ramki noted.

Cloud technology reduces the need for physical infrastructure, decreasing energy consumption and carbon emissions associated with traditional data centres.

Additionally, Temenos focuses on efficient coding in software development, which is crucial in reducing the computational load and energy usage of banking operations.

This dual approach of leveraging cloud technology and efficient coding practices aligns with the ESG goals of reducing the environmental footprint and promoting sustainable practices in the digital banking space.

The cornerstone of sustainable business strategy

Data management is a critical component of effective ESG strategy implementation. Temenos places a high priority on ensuring accuracy, integrity, and efficient data handling.

“Robust data management is key to developing a clear and actionable strategy,” Ramki asserted.

Temenos provides advanced tools that help banks aggregate, process, and present data in easily interpretable and actionable formats.

This enables banks to make informed decisions, track their progress against ESG goals, and report their achievements and challenges to stakeholders transparently and confidently.

Engaging a new generation

The rising generation of banking customers is increasingly aware of and concerned with ESG issues. This demographic shift prompts banks to adapt their services and products to meet these new expectations.

“Younger customers are looking for banks that not only offer digital convenience but also demonstrate a commitment to ESG principles,” Ramki observed.

Temenos’ digital banking solutions are specifically designed to cater to this demographic, providing tools that allow customers to engage with and monitor the sustainability impacts of their financial activities.

This alignment with the values of younger customers is not only ethically sound but also strategically beneficial for banks seeking to attract and retain this increasingly influential customer segment.

Temenos and Project Greenprint

The collaboration between Temenos and Gprnt, a part of Singapore’s Project Greenprint, represents a significant advancement in ESG integration.

This partnership focuses on incorporating reliable climate and sustainability-related data into banking solutions, thus enabling banks to measure and manage their ESG performance effectively.

“Our work with Gprnt is a testament to our commitment to providing banks with cutting-edge tools for ESG management,” said Ramki.

This collaboration focuses on supporting financial institutions to decarbonise their balance sheets and ensure compliance with stringent ESG-related regulatory frameworks.

Temenos and the evolving landscape

Integrating ESG principles into financial services marks a pivotal shift in the industry beyond traditional banking to embrace a more sustainable and responsible future.

“We aim to continuously innovate and adapt our solutions to meet the evolving needs of the banking sector,” says Ramki.

With ongoing technological advancements and a steadfast commitment to sustainability, Temenos is well-positioned to continue playing a vital role in shaping an ethical, responsible, and sustainable financial industry.

Ramki succinctly summarised, “Our mission is to bridge the gap between technology and sustainability, ensuring a future where finance is not just about wealth but also about well-being.”

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• Source: https://fintechnews.sg/80712/green-fintech/how-temenos-champions-esg-in-banking-transformation/