Can fintech help tackle global sustainability challenges? Growing environmental concerns have presented the financial industry with significant opportunities to create positive change. Steeped in innovation and technical expertise, the fintech sector is uniquely positioned to generate solutions that address sustainability issues worldwide.
One of the hottest topics in the world of finance, sustainability is also on the agenda of the virtual Fintech Inn 2021 conference. Held on 21-22 October 2021, the event will see many exciting panel discussions featuring fintech leaders and top industry experts. A panel titled “Empowering Green Finance: Big Chance for Fintechs?”, presented by ROCKIT, will tackle fintech’s potential for sustainable innovation. According to the panelists, green fintech can accelerate Europe’s transition to a low-carbon future, make green investments easier and faster, and bring environmentally-friendly solutions closer to consumers.
“The clear trend is that the majority of Europe’s sustainable finance companies work in data analytics. They help commercial banks and corporates to become more sustainable by using open data and other sources of information that can be found in the market,” explains Dominykas Stankevičius, Investment Associate at LaunchPad Capital and one of the participants of the panel discussion.
One of such companies is Doconomy, an impact-tech that develops digital tools for climate impact calculations. According to Tee Pruitt, Head of Partnerships at Doconomy and one of Fintech Inn’s panelists, innovative and progressive financial institutions hypothesize that sustainability is the new ‘digital’ – the biggest seismic change to hit finance globally in their lifetime.
“Sustainability is a huge vector for finance. The change is accelerated by the market draw around ESGs as well as consumer pressure. Also, the impending regulatory structures like the EU’s green regulation will force financial institutions to understand their exposures and do something about them. Financial firms have a dual mandate to get their own internal operations in shape while helping their existing clients and partners to be more sustainable as well,” Mr. Pruitt says.
While there is a lot of activity in sustainable finance in countries like Germany, the UK, France, and Sweden, with supply chain analytics, sustainable neobanking, and carbon accounting startups attracting significant funding, the green fintech scene in the Baltics is in its infancy stage.
“Funding for sustainable fintechs is now just starting to emerge, and what is holding us back is regulation,” says Rosvaldas Krušna, Chief Investment Services Supervision Specialist at the Bank of Lithuania. ”The taxonomy of green activities has not been fully adopted yet, so green investments are still a bit of a guessing game. As the regulation progresses, I believe that green investment is going to be as popular in Lithuania as in Western Europe,”
Regulatory clarity is among the key elements for companies and organisations to really engage with sustainability, but Akvilė Bosaitė, Partner and Co-Head of Banking & Finance Practice Group at COBALT Legal, notes that there are fintechs that pioneer sustainable business practices without regulatory pressure.
“Fintech companies strive to conquer their market share, so sustainability and compliance with ESGs are usually not on the top of their agenda. But there are plenty of examples in the market of fintechs that feel the need to be sustainable without regulation. Ongoing conversations and more green initiatives on the political level will force more financial companies to think of how they are meeting sustainability standards in reality, not just on paper,” believes Ms. Bosaitė.
Data shows that ‘sustainability’ already is among the top investment categories for newly launched VC funds. But to truly prosper, green fintechs should offer high risk-high reward investment opportunities, says Dominykas Stankevičius.
“I believe that the next big test for sustainable fintech is breaking into the retail investment market. But retail investors are usually attracted to the possibility of high yields in short periods of time. Just look at Bitcoin – it is a very volatile market, but volatility also makes investing in Bitcoin engaging. So green fintechs should provide retail investors with similar opportunities of high risk and high return,” Mr. Stankevičius explains.
Fintech can help companies to evaluate and reduce their environmental impact, and investors to channel their operations towards more sustainable assets. But according to the panel’s moderator Alex Gibb, Partner at Katalista Ventures, while there is a lot of positive movement in green fintech, sustainability in the sector is not a given.
“The footprint of fintechs is growing, and that is something that we need to address in order to hit longer-term sustainability targets,” he says. “Green fintech is not about just being sustainable for the sake of it, but more about solving problems and finding solutions for consumers and businesses that are working with technology.”
Join this and other discussions on the hottest fintech trends and challenges during the virtual Fintech Inn 2021 conference. Held on 21-22 October, Fintech Inn 2021 will bring together 250+ enterprises and start-ups, as well as 1000+ investors, policymakers, entrepreneurs and technology leaders from all over the world to exchange knowledge and discuss topics from green finance to startup media. You can get your free ticket to one of the largest industry events now on myOnvent platform.