By: JeromeDowney

Recently the Royal Bank of Canada (RBC) suffered a public relations setback with the announcements of the outsourcing of  jobs within the banks internal administrative IT division. This type of negative media focus has been prevalent since the 2008 financial crisis for many banks. With record job losses, home foreclosures and the rise of predatory B lending capital there has been no shortage of material for public’s scrutiny. However with that said positive solutions must come out of this financial crisis one way or another. And that is where the concept of social finance as a new financial tool of lending capital has an opportunity to succeed.

Finance As a Tool of Equity and Growth

The financial service sector has always been an engine of economic growth for North America’s economy. The development of different financial instruments, products, services and credit approval criteria has revolutionized how money is exchanged between consumers and merchants. In Canada our finances have become increasingly digitized. We have online banking, secured/unsecured credit cards, and simple debt cards. We have online equity trading platforms and a verity of other tools that enables the economic flow of capital. However there has been little development on the technology of lending criteria. The big question social finance can help us answer is “How do we value the human element of capital”?

The emerging popularity of online currencies such as Bitcoin has infatuated the imagination of people who are now thinking beyond the landscape of the financial status quo. Beyond the negative there are some very positive platforms and organizations that are taking a leadership role in the development of new financial tools and lending criteria that is coming to market. DMF Energy Inc. is an example of a young company that is making a swift transition into this market, however long time established institutions such as the Royal Bank of Canada have also started to position themselves into this developing field. 

RBC Social Finance Initiative

The Royal Bank of Canada has played a leadership role in this effort thus far with the development of Social Finance Capital Infinitive. It is a small pool of capital that has been set up as a test for market validation.

RBC’s social finance initiative is designed to help ignite the growth of social finance in Canada and to build a more dynamic impact investing marketplace.

The initiative is comprised of:

• A $10-million pool of capital committed to impact investing that will provide much-needed financing to enterprises tackling social or environmental challenges while generating a financial return;
• An investment of $10-million of the RBC Foundation’s assets in Socially Responsible Investments (SRI) through PH&N’s Community Value Funds;
• Support for research, development of knowledge networks, and thought leadership that will catalyze the growth of social and environmental entrepreneurship in Canada.

By encouraging enterprises to provide market-based solutions to environmental and social issues, social finance can open doors to new opportunities, drive economic growth, protect our environment, allow communities to reach their full potential, and offer a brighter and more sustainable future to all. RBC hopes that our commitment to social finance in Canada will not only spark entrepreneurship and innovation, but will also encourage other organizations to make similar investments that generate positive social and environmental change.

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