Founder and CEO, FINTECH Circle and Editor-in-Chief, The FINTECH Book Series
FINTECH Circle Ambassador
All over the world, money is spent on green finance. It could mean investing in renewable energy or responsible waste management, lower green gas emissions or green lending, which is lending funds to sustainability projects.
While millennials seem to be the generation most interested in applying their ideals on environmental, social and governance (ESG) issues to their finances, Gen Xers and baby boomers are also expressing growing interest, according to the ESG Investor Sentiment Study* from Allianz Life Insurance Company of North America.
Nearly two-thirds (64%) of millennials said ESG issues are important in their investing decisions.
The increased focus on green finance or ESG is a new opportunity for fintechs. As in the past, fintechs transformed the way we live. Think of all the innovations from companies such as Revolut, Wise (previously called Transferwise), Klarna and the growing number of Challenger Banks, such as Starling Bank and N26.
Industry offering green solutions
With their agile and innovative thinking – which is the DNA of fintechs – they are well placed to meet the changing demands of our global post-COVID-19 recovery. We see platforms that focus on ESG Investing, such as the UK’s Clim8 as a good example that only list companies with a clear manifesto to tackle climate change.
We predict that green finance will be one of the hottest trends of the global finance and fintech sector over the next decade and rightly so.
The British start-up CarbonChain offers carbon accounting products that create openings for industries to access green financing. The company ReGal 38183 works on a green blockchain to curb fraudulent activities enabling clients to invest in initiatives with a focus on sustainability.
The German start-up Tomorrow provides sustainable and transparent mobile banking services. Tomorrow Zero, for example is a premium account which enables the financing of specific climate change initiatives.
New green fintech solutions
We also see a lot of new green fintech solutions from carbon budgeting tools, incentive schemes, new technologies such as blockchain and AI. Fintechs can be enablers by analysing and responding to climate-related data.
Global financial institutions are also turning their attention to fintechs that focus on sustainability. Moody’s announced the acquisition of a minority stake in MioTech a provider of ESG data and analysis tools in China.
There is no doubt that green finance is driving innovation in financial products and services. Therefore, it is essential for the UK and Europe to be at the forefront. We predict that green finance will be one of the hottest trends of the global finance and fintech sector over the next decade and rightly so. Responsible fintechs are a powerful tool for green investing and help prevent “green washing” through increased transparency and accountability for all stakeholders.
Source: *ESG Investor Sentiment Study* – Bigger than the Environment New ESG Study | Allianz Life