Webinar Summary – Just Money: Mission-Driven Banks and the Future of Finance

On November 17, 2022, the Boston University Global Development Policy Center hosted Katrin Kaufer and Lily Steponaitis to discuss their book, “Just Money: Mission-Driven Banks and the Future of Finance,” as part of the Fall 2022 Global Economic Governance Initiative Book Talk series. Kaufer and Steponaitis take readers on a global tour of financial institutions that use finance as a force for good. From a bank in Europe that bases its business model on full transparency to a credit union in Canada that designed an alternative to payday lending, they discuss how money can be a tool that serves nature, human development and social justice.

Kaufer began the talk with an overview of her and Steponaitis’s work, including their book and their online program, Just Money, featuring best practices of the organizations they have worked with. Kaufer underscored the importance of recognizing that finance writes the story of our future and that calls to transform the finance system are as old as the system itself. She also introduced four levels of values-based impact strategies that she and Steponaitis have articulated in their research. Level 1, isolated social and green projects, is a strategy used by every bank, not exclusively for “just” money. Level 2, placing mission-driven finance at the core of the business model, has important implications for innovation. Level 3, financing lead innovators and leveraging points for change as well as Level 4, international (purpose-driven) ecosystem innovation, get to the core of just finance.

The conversation, moderated by Rishikesh Ram Bhandary, centered around some of the challenges facing mission-driven finance and explored some key examples in the book. Kaufer and Steponaitis discussed the role of mission-driven finance in bringing financial innovations to scale, emphasizing their role as testing grounds. As mission-driven institutions test the risk of new ideas, they must provide proof of concept and advocate new ideas to larger institutions. Kaufer and Steponaitis also made a compelling case for taking a system-wide perspective in finding solutions and new ideas. Acknowledging that systems themselves have flaws became a critical perspective following the Global Financial Crisis, and the idea that businesses stay neutral is no longer true. Steponaitis explained that through this system-wide perspective, businesses can be held accountable for their downstream impacts.

Bhandary raised a question about the frequent use of the buzzword “integrity” and its role in mission-based finance. Kaufer raised suspicions around words like “integrity,” as they make mission-based finance a question of morality instead of rationality. Mission-based finance can be just as rational as traditional economics, as impact-based organizations must explain why and how they make decisions and take on projects. Mission-based finance requires a new way of operating, one that is anchored in governance structure and ownership, leadership and implemented in the organization through the way processes are organized. Steponaitis expanded on this idea, explaining that just finance requires framing a policy in a way that supports the mission it is trying to achieve. Structures must be created around this to ensure consistency at every step of the process.

To move the conversation from theoretical concepts to practical applications, Kaufer and Steponaitis discussed several key examples from their book. Kaufer noted the BRAC Bank in Bangladesh as an important case that emphasized working with the “missing middle,” financing small- and medium-sized businesses. The bank developed new personalized processes to provide these loans and established an area of job creation through their work. She also touched on the Southern Bancorp in Mississippi and Arkansas, which started an initiative recognizing the key connection between physical and financial health. Steponaitis noted the value of organizations like Banca Etica in Italy, which demonstrates that while ownership is a necessary condition to support just banking, it is not the only quality necessary. The innovation of institutions like Banca Etica is key to the success of mission-driven finance.

In the Q&A portion of the discussion, Kaufer and Steponaitis addressed the critical issue of how to measure impact in mission-driven finance, emphasizing the need to understand how actions work toward larger system goals. They also addressed the role of civil society and politicians in mobilizing finance for climate change, underscoring the importance of mission-driven banks as testing grounds for new ideas and as institutions that are more responsive to civil society. Finally, they addressed how to overcome key challenges for just finance. Mission-driven organizations require a new way of thinking to operate and require innovative solutions to get around issues like the scaling challenge. Drawing on their theories of mission-driven finance strategies, Steponaitis acknowledged the need for Level 3 and 4 innovation to support projects and the use of other points of intervention to make progress.

In all, the book makes a compelling argument for the value of mission-driven organizations and just finance. Kaufer and Steponaitis underscored the importance of innovation to make mission-driven finance a reality and overcome the inherent challenges of using money to work toward intentional goals. Through their examples, they demonstrate that money can be a tool to build a more equitable and sustainable future.

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