Green and Sustainable Fintech II

Simon Thompson

Managing Director and Author

The finance sector has a rich history of embracing technology, from adding machines to AI and machine learning. The evolution, known as FinTech, involves digital, data-driven, internet-enabled, and AI technologies, impacting the delivery of financial services. Beyond traditional financial institutions, a broad ecosystem includes FinTech and BigTech firms like Apple, Alphabet, and Alibaba. Green and sustainable FinTech is seen as a catalyst for achieving Paris Agreement objectives and UN Sustainable Development Goals. Despite overall positivity, concerns about potential negative consequences of FinTech tools and techniques require attention.

ESG Financial Products

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Green and Sustainable Fintech II

6 mins 13 secs

Key learning objectives:

Explain the uses and benefits of FinTech tools in promoting G&S development
Identify some real-world examples of the impact of FinTech

Overview:

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Summary

What are Cryptocurrencies, and how can they be used to promote Green & Sustainable Finance?

Cryptocurrencies - These are digital assets, generally using blockchain as a means of exchange for financial transactions without a central issuing authority.

Proponents of cryptocurrencies suggest that decentralised blockchain and smart contract technologies, linked to the availability of environmental performance and sustainability data, can incentivise more sustainable consumer behaviour. For example, Solar Coin, which rewards producers of solar energy.

What are the challenges and costs of adopting FinTech tools?

The risks of digital exclusion, especially in relation to vulnerable customers
Granularity - the individual pricing of risk enabled by AI and advanced data analysis, which may exclude individuals from products such as insurance
Unconscious bias in AI and machine learning
The loss of data control and privacy
In the case of cryptocurrencies, bitcoin relies on “mining”, which in turn requires huge computing power and energy consumption to function. This power is often generated via fossil fuels

What are the FinTech challenges in Green & Sustainable Finance specifically?

Increased automation can lead to significant increases in job insecurity. At the extreme, the replacement of large numbers of customer-facing and back-office jobs
Greenwashing: The benefits of a new product are overstated in order to secure investment or grow market share

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Simon Thompson

Simon Thompson is an accomplished executive with over 17 years of leadership in banking and finance, specialising in ethical and sustainable finance. As Managing Director of the Global Capacity Building Coalition (GCBC), he drives global efforts to enhance financial systems through capacity building and education. Previously, as Chief Executive of the Chartered Banker Institute, Simon transformed it into a global leader in socially responsible banking, advocating for ethics, culture, and sustainable finance. He is the author of Green & Sustainable Finance: Principles & Practice and course leader for the Certificate in Green & Sustainable Finance, a globally recognised qualification. Simon is a thought leader in green finance and lifelong professional learning in the financial sector.

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