Customer driven

The decision to launch green term deposits was driven purely by its customers, including those participating in focus groups, rather than a response to the arrival of neobanks like Volt Bank, which are also targeting Millennials, or the customer-owned Bank Australia, which is marketing heavily on environmental credentials, she said.

Nor was it influenced by the major banks, including NAB, coming under sustained pressure at annual general meetings over recent years for lending to the fossil fuels industry. “It might be a helpful coincidence but it’s not why we have done it,” she said.

“This is a natural progression for us communicating with customers about social responsibility, and their ability to have a say in what they do everyday to make a difference to our world.

“We have been talking to people about needing to think about their futures, and a massive part of the future is the environment. Our customers resonate with what the brand does, and this is a start of another category for us – which is green.”

Polling by The Sydney Morning Herald this week showed 57 per cent of voters will be swayed by climate change and environmental protection at the upcoming state election, a more pressing concern for voters than hospitals, schools and public transport.

UBank’s creation of retail green term deposits comes after Westpac late last year launched the first tailored “green” deposit for wholesale investors after large numbers told the bank they wanted to back environmentally friendly projects. The Westpac program is open to deposits of at least $1 million and could be expanded to wealthy individuals and small business.

UBank’s initiative comes after NAB developed various green bonds, Australia’s first green residential mortgage-backed security and the world’s first low-carbon shared portfolio, allowing fund managers to invest alongside NAB in renewable projects.

Sustainable practices

UBank’s green TD is requires a minimum deposit of $1000 and is available at two, five, seven, eight, 10 or 11-month maturities. The two-month product will pay 2.1 per cent interest per annum; the five-month TD 2.6 per cent, and the other tenors, 2.65 per cent. These are equivalent to rates paid on TDs of other maturities and Ms Hatton said environmental loans are not necessarily any more risky. “That’s the myth we are trying to bust,” she said.

With the sharp growth of Afterpay’s customers showing the major banks the importance of reading Millennials, Ms Hatton said UBank has found via surveys that three in four Australians want to adopt sustainable practices including buying “green” products, and more than half of Millennials are actively looking to incorporate sustainable products in their daily lives.

“Some say Millennials are selfish but we disagree. We don’t think they are selfish at all, we think they are really for purpose,” she said.

Linking deposits with a particular loan segments “engages people in an economy”, she added. “Where you put your money is not a lazy activity. Where you put money is something people can care about and see the impact of. This will start to change the category of how customers view what companies do.”

UBank made the decision to launch this product only six months ago. “It’s not the big that eats the small, it’s the fast that eats the slow,” Ms Hatton said.

Ms Hatton declined to disclose the size of UBank’s deposit book but said both deposits and home loans are “growing significantly above system”.

While these green term deposits will be pooled against the certified projects, in the future it is possible the loans could become peer to peer, which could link deposits with particular loans, in a similar way to peer-to-peer lending platforms like SocietyOne. “Right now it’s general, but in 12 months it might be more specific,” she said.

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