Bank of America is no longer working with companies running detention centers
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Bank of America (BofA) has decided to end its associations with clients that provide prisoner and immigrant detention services at both state and federal levels, CNN reports.
A spokesperson said that while the bank appreciates "steps [those clients] have taken to properly execute their contractual and humanitarian responsibilities," it ultimately has chosen to end those relationships.
The news comes just after Wayfair employees at the retailer's Boston headquarters walked out in protest of the company's sale of bedroom furniture to a government contractor that operates detention centers, according to The New York Times.
Here's what it means: BofA is the latest bank to cut ties with detention center operators, and it won't be the last to do so - or to weigh social consequences in business decisions more broadly.
JPMorgan decided to stop financing private prison and immigrant detention companies in March. While the bank pointed to financial risk in its official explanation, easing heavy pressure from activists was presumably a welcome benefit too. We expect other banks to follow suit to avoid looking socially irresponsible by comparison.
In a similar vein, some large banks also reworked policies and practices to constrain firearm sales in March 2018. Over the last year, as gun safety groups have begun inspecting the firearm industry's corporate ties in the wake of mass shootings, some businesses have begun to make changes, per The New York Times.
Two examples of banks doing so: Citigroup, which stated that it would only work with clients that acquiesced to certain restrictions on the sale of firearms; Bank of America, which said it would cease lending to companies that produce military-inspired firearms for sale to civilians a short time after.
The bigger picture: As consumers align their spending and loyalty with their values, banks may be pressured to cut ties with controversial clients or lose business, but this carries its own risks.
Young consumers in particular care about brands' values, and failure to meet expectations could lead them to take their business elsewhere. The majority of younger consumers (58%) say that a brand's association with a social cause would affect their likelihood of purchasing that brand, according to a survey of 1,908 DoSomething.org members ages 13-25 cited by AdWeek.
As these consumers gain spending power, their opinion of brands will become more important to banks: If consumers think a bank is misaligned with their values, they're less likely to become clients of that bank and could turn to other financial institutions instead.
For example, online bank Aspiration is specifically marketing itself as a Wells Fargo alternative for customers unhappy with the incumbent bank, and 200,000 of Aspiration's 1.5 million sign-ups since 2015 were Wells Fargo customers.
But any action that caters to one side of a divisive topic like detention centers can draw a negative response from the other side. For example, when Nike ran an ad campaign featuring Colin Kaepernick - the first player to kneel during the US national anthem before a football game - many Nike customers took to burning their Nike products in protest of the company's support for Kaepernick.
As national banks are called to act on politically fraught topics like guns or borders, they'll face a delicate public relations balancing act to preserve customers of both political parties.
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