Ethical investment is on the road to the mainstream. According to the Ethical Investment Research Service (EIRIS) £9.8bn is now invested in ethical and environmental funds in the UK - a small, but significant and growing figure.

Now current accounts at ethical banks and credit unions are also getting a welcome boost, perhaps as consumers turn away from high street banks over the past 18 months. The Cooperative Bank is probably the best known option in this sector. In last week's banking special at Ethical Consumer Magazine, the bank was one of our "Best Buys" for current accounts, scoring 6/20 on our rating system Ethiscore, which ranks companies on 22 criteria including climate change performance, worker rights and environmental reporting.

Consumers have been flocking to ethical alternatives in the banking sector in recent months, including the old mutual building societies. Triodos, (Ethiscore 14.5/20) saw its number of customers grow by a quarter in 2008, and Ecology Building Society (Ethiscore 16/20) has seen a vast increase in savings deposited since the crunch, building on a 10% increase in 2007. Britannia Building Society, currently merging with the Co-op Group to form a "super-mutual", noted that 140,000 new savings accounts had been opened in the quarter to February.

Credit unions are also benefiting from the credit crunch. Twenty-one credit unions offer current account services, managed through the Coop. Developed in the 19th century, credit unions are non-profit financial cooperatives, owned and controlled by their members. The members of any one credit union all share a "common bond" which could be living or working in the same area, having the same employer or belonging to the same church, trade union or other organisation. Members pool their savings, allowing loans to be made, often to those that wouldn't find credit through a high street bank – and helping to keep people out of the hands of local loan sharks. There are approximately 600 in the UK with around a million members.

This spread of assets into a diverse range of institutions, each with their own particular set of rules, can only be healthy for the financial system. In recent years, money had become concentrated in certain areas of the economy, a phenomenon likened by economist Richard Bronk to "monoculture".

"Just as relying on only one seed strain leaves agriculture at risk of catastrophic crop failure," said Bronk, so the banking system was at risk when financial products started resembling monoculture. The "exotic" and "innovative" financial instruments exacerbating the credit crunch, were in reality the fruit of a monoculture among banks who all acted and made decisions in the same way.

Perhaps, then, we're seeing the introduction of a bit of healthy monetary permaculture in the financial system. We could do with more. A coalition of unions, small businesses, charities and campaign groups, including the New Economics Foundation have launched a campaign for a "people's bank" built on the Post Office network.

The nationalised banks are another species again. There's a remarkably close correlation between the best and worst scoring institutions on Ethical Consumer's Ethiscore ranking and how they have fared in the credit crunch. Many appear to be failing in their duty to society as well as to shareholders. RBS (Ethiscore 3/20) for example has been heavily criticised for its investment in fossil fuels and its use of tax havens.

Now that they are nationalised, Northern Rock (Ethiscore 12/20), RBS and Lloyds (Ethiscore 3/20) are in a prime position to become leaders in social banking. As the economic crisis worsens this might become an imperative to avoid rising repossessions and provide small short-term loans to small business. The possibilities for the banks under state control are massive but people must put pressure on the government to ensure that they start to fulfil a social function. In the US the coalition A New Way Forward has been formed by groups and individuals to support an alternative bailout strategy and last week they held demonstration across 50 cities.

Who knows where this pressure might lead and what might be possible in the future - socially owned banks investing in socially useful projects?

• Tim Hunt is a journalist for Ethical Consumer Magazine