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Consumers are becoming more and more engaged. They want to buy local, from ethical companies with social and environmental aims. They want that transparency, and they want to help to improve our society. This change is also apparent in the banking system, where social enterprises are expanding in Canada and elsewhere; this industry has also seen the emergence of several non-traditional banking models across the planet. A good example is Triodos, a bank in the Netherlands that did not lose a penny through the economic crisis of 2008, as a result of investing solely in the impact economy – that which has a direct impact on the community — rather than the financial economy.
It is from this innovative concept that Paul Allard, in conjunction with ten other entrepreneurs, financiers, and bankers in Montreal, Toronto, and Paris, had the idea to launch what they call Canada’s first socially-responsible Canadian bank: Impak Finance.
“We need to restore more sense and responsibility to the financial system,” said Allard. “In my view, one of the fundamental structural problems…is that the role of banks is neither responsible nor social.”
“This new banking model is also at the crossroads of three movements: the sharing economy, FinTech, and the social economy.”
The entrepreneurs hosted a crowdfunding campaign with accredited Canadian investor platform FrontFundr on October 13 to fund the creation of the bank. The enthusiasm was such that Impak rapidly exceeded its goal to raise more than a million dollars within two weeks, not including private investment. Unlike other campaigns of its kind, donors automatically became shareholders at Impak Finance for as little as $100.
Impak Finance is one hundred percent devoted to the impact economy, meaning that the bank invests in small, medium, and large-sized companies with one common feature: they have a positive social and environmental impact. Allard said its portfolio, which is not yet public, includes a wide range of companies grouped into different sectors, and they decide how to invest capital based on the priorities of the investor.
“With this technology, you choose the areas where you want your money to be invested, and in return we give you full transparency,” said Allard. “Impak Finance follows up on client investments by providing access to a performance indicator and by recommending other companies that may be of interest for future investment. An algorithm is also being created to assess the risk of the projects.”
Currently, traditional banks use client money to generate more capital, which they then invest in a myriad of companies. It is virtually impossible for a customer to know where their money is invested and they essentially have no choice in these decisions. In contrast, Impak Finance focuses on people and the planet through a ‘triple bottom line’ approach — People, Planet and Profits — while maintaining the high standards of security and stability that characterize Canadian banks.
“This new banking model is also at the crossroads of three important movements: the sharing economy, FinTech, and the social economy, in order to “deploy and reinvent the banking experience,” said Allard. “We want to get with the times and offer a completely new banking experience.”
The first version of Impak Finance will be launched next year, when investors will be able to open investment accounts. The aim is to offer full banking functionality from the third quarter of 2017, notably by granting loans.