Katherine Hunt, Marco Lamandini and David Ramos Muñoz
The chapter investigates whether inclusive niche ethical banks and MFIs which build business models around serving the previously financially excluded can be helped, or ‘nudged’ into building business models that are also financially robust. We posit that they can, and that once this is achieved, the sector can tap resources that may dwarf corporate social responsibility (CSR) programmes in terms of social impact. Today, these financial institutions are still marginal, but they clearly represent one of the greatest opportunities of our times: to achieve financial inclusion (also) via the private sector. The chapter argues that regulation and self-regulation in this sector could and should bolster this shift, and that rules should be designed to help achieve this purpose. This, in turns, means, first, ‘nudging’ ethical niche banks and MFIs towards self-sustainability choices, and, secondly, helping all other banks to pilot a transition towards more socially responsible and inclusive banking.