How the financial system works, and how banking could work differently

At Triodos Bank, we believe this question is crucial, because finance is not neutral. Every pound, dollar, or euro flowing through the system helps shape our economy, communities, and planet. That is why we’ve set out a clear vision for how finance could work differently and why we choose our approach to banking.

How the financial system drifted away from its purpose
 

At its core, the financial system should serve the real economy. It should help people save securely, support businesses that meet real needs, and fund long-term prosperity. But over time, finance has grown larger, more complex, and increasingly detached from everyday life. Too much capital now circulates within financial markets instead of reaching the real economy. Short-term returns are prioritised, while long-term social and environmental risks are often ignored. Ecological damage and inequality rarely appear on balance sheets, even though they affect our collective future. This is not the result of bad intentions. It is the outcome of a system that has gradually lost sight of its purpose. 

We believe this moment calls for a reset. 

What do we mean by “the real economy”?

When we talk about the real economy, we mean the parts of the economy that create real goods, real services and real value in people’s lives. The real economy is where people live, work and depend on every day. It includes things like: 

• Homes and social housing 
• Renewable energy and local energy systems 
• Food production, farming and nature restoration 
• Schools, healthcare and social care 
• Small and medium-sized businesses 
• Arts, culture and community organisations 

In short, the real economy is about meeting human needs and supporting long-term wellbeing. This is different from large parts of today’s financial system, where money circulates in financial markets through asset trading, speculation, and complex instruments, rather than creating tangible benefits in the real world. When finance drifts away from the real economy, it can grow rapidly without improving everyday life. When it stays connected, it becomes a tool for stability, resilience and shared prosperity. At Triodos, financing the real economy is not a slogan. It is our practical focus.

What does my bank do with my money? 
 

This is one of the most important questions people ask, and one of the least clearly answered. In simple terms, where your money is held influences what gets funded. Money held with Triodos is used to finance organisations working in the real economy, from renewable energy and social housing to education, healthcare and sustainable food. That means savings and deposits are directed towards activities that support everyday life and long-term resilience, rather than circulating within financial markets for short-term gain. We believe people deserve to know how their money is used, because transparency is the foundation of trust. 

Finance is a social tool, not just a technical one 

Money is built on trust. It works because we collectively believe in it. That makes finance a social system, not just a technical one. And like any social system, it reflects the values and priorities we choose to embed within it. Our financial system has been redesigned many times throughout history, often in response to crisis. Today, rising inequality, ecological breakdown and declining trust in institutions signal that another moment of change is needed. The question is not whether finance will change, but how, and for whom. 

How Triodos thinks about banking differently 

Triodos Bank was founded on a simple idea: money can be used consciously to serve our lives. That belief shapes everything we do. We focus on financing the real economy, not speculative activity. We lend to organisations working in renewable energy, organic agriculture, social housing, education, healthcare, arts and culture. We avoid financing activities that harm people or the planet. We are transparent about where money goes, because trust depends on visibility. And we see banking as a long-term relationship, not a short-term transaction. 

Our approach is rooted in three principles that guide how finance can better serve society: 

1. Money and payments should serve everyone 
   Payments are essential infrastructure. Access to money should be safe, inclusive and reliable, because participation in economic life depends on it. 
2. Capital should support regeneration, not extraction 
   Savings and investment should flow towards activities that strengthen society and restore the natural systems we rely on, not simply inflate asset prices or extract short-term value. 
3. Risk should be understood in real-world terms 
   Social and environmental risks are financial risks. Ignoring them does not make the system safer. It makes it more fragile.

These principles sit at the heart of our long-term financial system vision.

Why this matters for your money
 

Where money flows shapes the future. When finance prioritises short-term gains, society pays the long-term cost. When capital supports regenerative activities, it helps build resilience, stability, and shared prosperity. Choosing a bank is not just a practical decision. It is a values decision. At Triodos, we exist to help people align their money with the world they want to live in, and to show that banking can be a force for positive change.