Just Money: Mission-Driven Banks and the Future of Finance by Katrin Kaufer

1 Just Money: Finance as a Tool for
Change
A year ago, when we were walking the streets of Madrid looking for a place
to have lunch, we opened an app on our cell phones and were able to find
an organic restaurant just two blocks away. The app was designed by a
financial institution, the Netherlands-based Triodos Bank, which has
operations across Western Europe and finances social and green businesses
and projects. This app allowed us to locate all the bank’s business
customers in the area. Triodos Bank created the app because its business
model is based on the concept of transparency. Customers choose Triodos
Bank because they want to know how their money is used. As Triodos Bank
sets social and ecological standards for its clients, the app allowed us to
identify social and green businesses around us. With this app, and with a
policy that requires the names of all business clients to be published on its
website, Triodos Bank lifts the curtain between depositors and loan clients
so that depositors know what their money is financing and with that
knowledge are able to take responsibility for the impact of their money.
This transparency also facilitates networking and connections among
Triodos Bank’s clients, thereby growing the community of social and green
businesses.
Let’s move to a different continent and another online tool created by a
financial services institution. Vancity Credit Union,
located in Vancouver,
British Columbia, on the west coast of Canada, created the Fair & Fast
online loan, a nonpredatory credit-building alternative to payday lending.
Payday loans have become an increasingly popular credit option for

families living paycheck to paycheck in the United States and Canada. This
unsecured loan provides a cash advance based on the borrower’s payroll
and employment records. Payday loans are easy to acquire and may have
terms of no more than a few months. They are often predatory, designed for
clients who have no other alternative to bridge a short-term cash flow gap.
Because the clients are desperate for funds, the lender can charge an annual
percentage rate (APR) as high as 600 percent in some cases. Clients who
are not able to repay the loan on time may quickly enter a cycle of debt in
which they take out additional loans to repay the rapidly accumulating
interest.
Vancity Credit Union noticed that some of its members were caught in
this debt cycle and designed its Fair & Fast Loan to provide a responsibly
priced alternative and to help members build their credit history. Credit
union members can receive Fair & Fast Loans of up to Can$2,500 with
terms of up to two years. The loans are considered fair because the APR is
low (19 percent as of January 1, 2020), payment terms are flexible, the
language of the contract is simple and transparent, and there are no hidden
fees. Since the loan is not evaluated based on the borrower’s credit score,
the barriers to borrowing are reduced. An added benefit is that, unlike
payday lenders, Vancity reports to credit bureaus, meaning Fair & Fast
Loans can help members boost their credit scores or build a credit history.
Now let’s travel south to El Salvador and visit SAC Apoyo Integral, a
microfinance bank operating primarily in that country. Microfinance
describes a range of financial services such as lending, providing access to
saving vehicles, and creating insurance pools for individuals and small
businesses with no or limited access to mainstream banking, often because
of poverty, social exclusion, or geographic exclusion. Microfinance aims to
fight poverty and support clients in becoming self-sufficient. Integral was
founded as a credit program by the nonprofit Salvadoran Foundation for
Integral Support (Fundación Salvadoreña de Apoyo Integral, FUSAI) and
has since become one of the fastest-growing microfinance institutions in
Central America. This accomplishment is particularly impressive in light of
the challenging socioeconomic conditions in El Salvador. After a two-

decades-long civil war that ended in 1992, extreme levels of violence have
persisted. The violence has made El Salvador one of the most dangerous
countries in the world. There has also been a mass exodus of Salvadoran

Just Money: Mission-Driven Banks and the Future of Finance by Katrin Kaufer