3 green fintech predictions for 2022

GreenFintech.org

We have seen huge growth in green fintech. Many inspiring financial start-ups, successful scale-ups and established financial services are making green their competitive differentiator. These companies are getting their stake of the USD 35 trillion sustainable finance market. Increased capital is allocated to green fintech initiatives. We expect that this trend will continue. 2022 will be an exiting year for green fintech. Let's focus on three green fintech predictions for 2022 and thereafter.

Prediction 1: Continues impact reporting of each dollar invested via IoT and the blockchain

Investment is about risk and return. Green investment is about risk, return and impact. This means that we have to look how to make, measure and report green impact of our funds.

A transition is required to provide investors insight into the impact of their funds. Most of the impact reporting is manual and performed once a year. This is cumbersome and one of the reasons for increased transaction costs for impact investment. The impact reports themselves are important but may also not be useful and reach their full potential.

Many home owners with solar panels do have continuous reporting of the energy produced via an app. A similar solution can be deployed for green investments. The company, project or asset invested in can use internet of things (IoT) solutions to report on the impact metrics. These impact metrics can be stored on the blockchain and made continuously available via an app to the investor and others involved.

The opportunity for continuous impact reporting is enormous. Impact reporting solutions based on the IoT and blockchain have many advantages. These technologies avoid tampering, ensure transparency and reduce transaction costs. They are one of the key enablers for the required and expected exponential growth of impact investment.

Prediction 2: Increase in sustainable product and service offerings with high customer value

Financial products and services often standard offerings. Take for instance current and savings accounts. The only differentiator is the interest. This means that there are opportunities to differentiate and to stand out. Especially as consumers are keen to be sustainable and to contribute to a better world.

Green fintech provides financial institutions the opportunity to offer sustainable products and services. From carbon footprint metrics of payments to investment managers providing the customers the opportunity to select instruments based on their Sustainable Development Goals (SGD) impact preferences.

Sustainable product and service offering are possible due to advanced technology of green fintechs. There are all sorts of solutions which can be integrated into existing apps. An SaaS API to help customers monitor and reduce their carbon footprint based on their purchases is one example. We will see an increase in new innovations and sustainable offerings by banks, investment managers, pension funds and payment providers.

Prediction 3. Climate risk management as part of investment decisions

Financing the green agenda is top priority of financial institutions due to regulatory and commercial pressure. Financial institutions have to ensure early compliancy to climate risk policies and frameworks. To be in the forefront of the transition to ensure they manage their transition risks and invest in low risk and high value assets.

Advanced technologies enable financial institutions to manager their physical and transition risks to be in the forefront. By means of satellite solutions, AI and advanced data analytics. Satellite solution can be deployed to monitor the portfolio of physical investments. AI/ML and advanced data analytics can be used to measure exact climate risks as wild fires and sea water rise of each part or their portfolio.

Financial institutions build these capabilities fast by partnering with specialised green fintechs. The expectation is that we will see huge demand climate risk management expertise and solutions in the coming period.


Share this blog via