Fintech – a game changer for responsible investment?

• 13 Feb 2017

For several years, markets have been abuzz with talk of how fintech will transform the provision of financial services. For sure, the disruptive technology start up scene will throw curveballs at traditional models – from mobile payments to loan provision, from fundraising to money transfers.

But despite being such a hot topic, we are still grappling with its full potential and we have many miles to go. Nowhere is this more apparent than in the field of responsible investment. Instinct tells us that fintech can be a game changer in the mainstreaming of responsible investment but first we need to bottom out how.

Why fintech matters to responsible investment

The rise of fintech fundamentally changes the way that companies do business. It can also change the way we invest and then ultimately the way we live as society.  But how do we leverage this and what are we trying to achieve? Can we use fintech to …?

• Democratize the way that individuals access investment opportunities and products. Imagine being able to invest your cash directly into companies aligned with your beliefs and values?
• Shake up the investment landscape by circumventing the traditional financial advisory model. Financial advisors who ‘get’ responsible investment can be hard to come by but fintech solutions could change all of this.
• Showcase to the masses what responsible investment looks like in practice – from pooling of resources on getting started and finding the investment products you want, to sharing of hands-on experiences and know-how.
• Support financial innovation through new funding mechanisms such as equity crowd funding platforms for sustainable companies and funds. Critically financial innovation could support entrepreneurial innovation for sustainable growth.
• Develop and promote tools to measure and monitor impacts and returns beyond just the financials. This could include using real-time data to support our understanding of these impacts and then used to forecast for future investment decisions.

All of this can mean big things for responsible investment – if we recognize the opportunities that it presents and start taking action now.

Learn more …

The United Nations Environment Programme (UNEP) recently published a report, ‘Fintech and Sustainable Development: Assessing the Implications’, exploring how fintech can be developed and leveraged to advance sustainable development. This excellent report raises a number of important questions including:

• How can we mobilize domestic savings at scale to enable long-term investing in sustainable development innovations?
• How can we provide better market conditions for investors who are aligned with the sustainable development agenda?
• How can we best collect information for better economic-decision making?

In his article, ‘Greening digital finance’, Simon Zadek highlights the importance of accounting for the environment if fintech is to reach its potential in truly advancing the global public good. This year, the Green Digital Financial Alliance was launched bringing together a coalition of digital finance companies, including ANT Financial Services. Zadek argues that 2017 could well be the year that green digital finance comes of age.

And while it certainly is exciting times, we should also move forward with a degree of caution and give deeper thought to what this means in practice. Let’s not forget, simply because fintech is a market disrupter, this does not necessarily mean that all within society automatically benefit. So far it has largely been higher-income groups that have benefitted with greater access and uptake. As Emma Amadi highlights, the real challenge is leveraging the potential of fintech to ensure that the most marginalized of people have access. And of course, the thorny issue of regulation must also be addressed to support financial inclusion for all.