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<\/figure><\/div>\n\n\n\nAccording to the Climate Fintech report by New Energy Nexus<\/a><\/b>, there were 250 climate fintech companies in the world in 2020 alone. The green finance revolution<\/a><\/b> is here. According to PwC, 8% of all European and UK fintechs using open banking APIs already offer a sustainable product. Asia is also waking up, as seen in this PwC report on fintech in Singapore<\/a><\/b>.<\/p>\n\n\n\n In recent years, especially since 2020 and the COVID-19 storm, many companies have used their employees\u2019 \u201cfree time\u201d in quarantine to develop products. We can break them into three categories:<\/p>\n\n\n\n Companies like Doconomy<\/a>, Greenly<\/a><\/b>, Sinai,<\/a><\/b> or Kettle<\/a><\/b> pave the way for the next generation of highly advanced products. Not all of them are fintech-related. Kettle, for example, is a risk-management platform that can be included in the green fintech product and impact chain, leading to an ecosystem of mutually beneficial platforms for environmental impact.<\/p>\n\n\n\n What is green fintech?<\/strong><\/p>\n\n\n\n Just a quick reminder. Although green fintech is a very broad term, it can be described by this definition:<\/p>\n\n\n\n It\u2019s general technology, actions, business operations, internal procedures, and cooperation with third-party actors that provide, implement, and enhance sustainable solutions to the financial services sector, for businesses and consumers alike.<\/em><\/p><\/blockquote>\n\n\n\n There are a few key areas for green fintech<\/strong>. According to the Green Digital Finance Alliance<\/a><\/b>, there are a total of 8 product categories within green fintech:<\/p>\n\n\n\n In the UK alone, the percentage of green fintech companies is staggering. According to Platformable<\/a><\/b>, 90% of European and UK green fintech solutions are focused on limiting climate change. This, however, is not easy, since calculating carbon footprint is mostly based on the so-called Merchant Category Code (MCC), a four-digit number for each transaction processed by Visa or Mastercard that classifies businesses based on the type of goods or services they sell. The problem is that MCC codes don\u2019t help with categorization<\/a><\/b>. Ergo, the carbon footprint calculations seem to be arbitrary and\u2026 well, serve the \u201cdecarbonization idea\u201d.<\/p>\n\n\n\n Eurobarometer Climate Change<\/a><\/b> survey in 2021 showed that 93% of Europeans consider climate change to be a serious problem and a full 96% have taken action to combat it. A UK study by Deloitte<\/a><\/b> in 2021 found that 8% of respondents had already shifted some of their personal investments towards ethical and sustainable options, and a full 34% had specifically chosen brands because of their sustainable practices and values.<\/p>\n\n\n\n Let\u2019s take a look at the leading practices, innovations, and product offerings that drive sustainability forward. <\/p>\n\n\n\n Open banking<\/strong>. The leading fintech development today fostering a more sustainable future is open banking. When the EU passed PSD2 in 2018, this legislated the need for banks to share data with third parties.<\/p>\n\n\n\n This has paved the way for innovative services and personalized experiences to be delivered to consumers via their bank, with newly created digital ecosystems promoting competition, transparency, and customer control of finances.<\/p>\n\n\n\n It also makes certain banking data points public, fostering a more connected and efficient financial ecosystem where sustainability can be placed front of mind, both for financial institutions and the consumers that use banking services. <\/p>\n\n\n\n Environmentally-friendly cryptocurrencies<\/strong>. Many cryptocurrencies today are shifting their focus away from traditional proof-of-work mining practices to proof-of-stake models. Indeed, the energy-intensive nature of crypto mining has continued to be a thorn in the side of the crypto sector.<\/p>\n\n\n\n Now leading crypto platforms like Ethereum have switched from a \u2018proof-of-work\u2019 protocol to a \u2018proof-of-stake\u2019 protocol, cutting out a staggering 99.9% of the energy consumption used in the origination of its cryptocurrency.<\/p>\n\n\n\n Proof-of-stake algorithms are combined with consensus mechanisms to offer more sustainable investment options to those looking to trade in crypto markets.<\/p>\n\n\n\n Reducing emissions<\/strong> digital wallets<\/strong>. Much like contactless payments, digital wallets on smartphones facilitate the completion of payments via a mobile device. Not only does this reduce the need for paper, but also reduces plastic waste from wear and tear to credit and debit cards.<\/p>\n\n\n\n Today, users are increasingly adopting mobile wallets as a more convenient means of payment, and as a means to adopt an environmentally-conscious lifestyle, supporting renewable energy sources and sustainable infrastructure. <\/p>\n\n\n\n Contactless payments for sustainable transport<\/strong>. One of the most ubiquitous fintech trends today driving sustainability is contactless payments. The innovation has eliminated the need for cash or paper tickets on public transportation services, reducing paper usage and eliminating the need for cash by making card payments simpler to complete.<\/p>\n\n\n\n Today, contactless payments have facilitated access to both bike and scooter-sharing services, such as Lime<\/a><\/b>, promoting alternative transportation methods in major cities and reducing the impact of vehicle emissions.<\/p>\n\n\n\n Carbon-neutral payment processing methods<\/strong>. Much like mobile payment solutions for carbon offsetting, carbon-neutral payment processing methods offset carbon emissions through renewable energy projects.<\/p>\n\n\n\n These projects are tailored to payment processors, helping achieve a net-zero carbon footprint by promoting the adoption of energy-efficient technologies and the selection of renewable energy sources to mitigate the environmental impacts of payment processors.<\/p>\n\n\n\n Companies like Switch2Zero<\/a><\/b> offer Pay-as-you-Go solutions to businesses, that can offset their impact on a range of environmentally friendly initiatives. <\/p>\n\n\n\n Carbon tracking<\/strong>. Carbon tracking technology has been introduced to meet the needs of consumers to know the carbon impact of their purchases. Fintechs like Ecolytiq<\/a><\/b> have seen both their popularity and business scale as financial institutions see the value of delivering carbon tracking technology to help monitor emissions.<\/p>\n\n\n\n The startup hopes that one day, there will be as much emphasis on the environmental cost of a product as there is on its monetary value. Other digital solutions, like blockchain, enable real-time tracking of CO2 emissions, allowing businesses to better manage their carbon footprints and implement subsequent measures to reduce their environmental impact.<\/p>\n\n\n\n If you want to learn more about current green fintech trends, take a look at the Sustainability & ESG Strategies Panel at Net Zero LIVE London 2024<\/strong>:<\/p>\n\n\n\nWhat currently drives and will drive the green fintech market?<\/h2>\n\n\n\n
Top green fintech trends<\/h2>\n\n\n\n