Social innovation and investment: The ShoreBank experience

Abstract

Purpose

This chapter discusses how one bank, committed to social innovation and investment in low-income communities, evolved into a model of socially responsible banking and exemplary community development financial institution. The authors draw lessons from this experience and propose ways to apply those lessons to other financial institutions.

Methodology/approach

The chapter is based on an in-depth case study of ShoreBank. It includes extensive interviews with two of the bank’s cofounders, who served as the bank’s leaders for more than 37 years.

Findings

The case study has identified six key enabling factors for social innovation: (1) a social purpose that is deeply, and effectively, embedded in the organization’s mission, strategy, and operations; (2) an ownership structure to support the social mission and a structure (e.g., bank holding company) that facilitates social innovation; (3) capital capacity – that is, ability to create credit through leverage; (4) a deep level of knowledge about the business, the clientele, and the operating environment; (5) talented people who bring both skill and passion for the mission to the institution-building process; and (6) the discipline to continuously innovate, at a scale appropriate to the problem, with resources that are adequate to the challenge.

Limitations

This work has several limitations including a focus on one U.S. bank holding company, and based on interviews with that bank’s cofounders.

Social implications

The chapter provides a rich description of how social innovation through social investment created a meaningful social impact. Important lessons and useful recommendations are drawn for social enterprises that are committed to social innovation in the financial services industry.

Originality

The chapter provides insights into the ShoreBank case based on a unique set of data. It offers useful recommendations for social enterprises.

Citation

Wilson, F., Post, J., Grzywinski, R. and Houghton, M. (2014), "Social innovation and investment: The ShoreBank experience", Socially Responsible Investment in the 21st Century: Does it Make a Difference for Society? (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 7), Emerald Group Publishing Limited, Leeds, pp. 65-89. https://doi.org/10.1108/S2043-905920140000007003