Civic Banking

Introduction

Civic Banking is a business model that the Spanish bank Caja Navarra (CAN) has introduced. The current CEO, Enrique Goñi, introduced the approach, which began functioning in 2004, with the introduction of the “You Choose: You Decide” program.

As a business model, Civic Banking has sought to turn traditional banking on its head by placing the customer at the center of its business practices and ascribing them rights (the Five Rights), while creating duties for Caja Navarra.

Civic Banking creates networks. First, it links customers to social projects in the community or internationally by giving them an opportunity to direct 30% of CAN's annual profit to specific social projects. Second, CAN facilitates customers volunteering to participate in them, and encouraging others to participate. Third, the social projects link to CAN by encouraging people intersted in the projects to bank with CAN and to then to direct their allocation of CAN's annual profit to the social project.

The Five Rights

The customers' five rights are:Caja Navarra: Your Rights http://www.cajanavarra.es/en/tus-derechos/ Accessed July 3, 2008.]
*1. Social Project Work, which allows customers to choose where CAN donates 30% of the bank's annual profit;
*2. The Civic Account, which is the amount that each customer can direct to up to three social projects, and which represents 30% of the profit that CAN has made from that customer that year;
*3. Project Accountability, which consists of reports from the social projects that detail how they have used the money that CAN's customers have directed to them;
*4. Volcan, which represents an opportunity for customers to volunteer at the projects they are funding;
*5. Know Where Your Savings are Invested, which initially consisted of reports by CAN on how much of its lending was going to each of the areas to which it lent, but now also includes the customer's right to direct in which of these areas CAN should deploy any new deposits that the customer might make.

You Choose: You Decide

Civic Banking and its main program entitled “You Choose: You Decide” (encompassed in the 1st right of Civic Banking), or “Tu Eliges: Tu Decides” in Spanish, has made the bank´s customers responsible for deciding to which social ventures the bank should donate money. Cajas do not have share holders like a publicly owned commercial bank. Civic Banking has sought to incorporate the bank´s customers in a way that shareholders would be incorporated in a publicly traded company – by giving them the decision making power and thus making them feel more attached to the bank.

Officially started in 2004, “You Choose, You Decide” identified nine groups of social projects: disability and welfare, research, cooperation, environment, employment and entrepreneurs, culture, preservation of heritage, sports and leisure. Then, each time a customer contracted a product or service from Caja Navarra they would choose where the profits were spent in an effort to make the customer feel more in touch with the bank and with the community. This is very different from the other Spanish cajas, who choose their social projects and monetary allocation through dedicated boards. Thus in 2005, for the first time, 100 percent of 2005´s social budget was decided by CAN´s customers. The program was a great success with 82% of the banks customers choosing where to allocate their money in the first year aloneCorporate Governance. Vol.7, No.4, 2007.p.440] .

Since 2004 CAN has continued to innovate within their civic banking platform. These innovations include reporting to customers in an individualized annual letter exactly how much money CAN has made from the customer (the social account - the second right). The nine broad categories of social projects have now been expanded into over 2500 individual projects for the customer to choose fromEuromoney. December 2007. http://www.euromoney.com p.112] . In addition customers can propose their own social projects to add to the current list of over 2500 if they cannot find one they identify with. Caja Navarra also encourages its customers to participate in the social ventures they support (Volcan - the fourth right).

Canchas

Civic Banking is also transforming CAN's branches. Branches are normally a place to go to contract bank services. However, in keeping with their idea of growing customer loyalty and participation, Caja Navarra is transforming their branches into open community spaces that CAN calls canchas. At Canchas customers may conduct banking business, but the canchsas also feature play areas for children, free internet access available to the public, free coffee, and once a week, after banking hours, live entertainment. Groups within the community may also use the cancha to hold meetings.

Civic Banking Today

Since 2004 CAN has continued to innovate within their civic banking platform. These innovations include reporting to customers in an individualized document exactly how much money they make from the customer. The nine broad categories of social projects have now been expanded into over 2500 individual projects for the customer to choose fromEuromoney. December 2007. http://www.euromoney.com p.112] . In addition customers can propose their own social projects to add to the current list of over 2500 if they cannot find one they identify with.

References

1. http://www.can.es/en/

2. Corporate Governance. Vol.7, No.4, 2007.p.434-445

3. Lafferty Retail Banking Insider. Issue: 2008/6. http://www.lafferty.com. April 7, 2008. p.11

4. Euromoney. December 2007. http://www.euromoney.com p.112