For many, green FinTech is an exciting opportunity. Organizations are already working on environmentally sustainable solutions with crowdfunding platforms, energy sharing marketplaces, and mobile payments. Is it possible to leverage these opportunities with blockchain technology and artificial intelligence anytime soon?
The Green Digital Finance Alliance (GDFA) is being launched by ANT Financial Services Group and UN Environment, a partnership formed at the World Economic Forum in Davos, Switzerland. GDFA will accelerate green FinTech in lending, investment, and insurance by promoting institutions committed to digital technology.
Shifting Consumer Behavior
The aim is to shift consumer behaviors in ways that positively impact the environment. For example, ANT has developed an app that links financial transactions and data concerning an individual’s carbon footprint. The app encourages sustainability by giving carbon offset incentives and tracking it all on social media. In addition to savings and credit accounts, users open a carbon account. Generated by algorithms based on financial transactions, millions of consumers in China have already set personal benchmarks for their carbon footprint. App users then pocket “green energy credits” for reductions in carbon. By linking it to social media and adding a tree planting offset program, going green is fun and interactive. As of now, the app has 72 million users in China.
Peer-to-Peer Energy Sharing Marketplaces
There are also exciting opportunities in the peer-to-peer energy sharing marketplaces. A utility microgrid in Brooklyn, New York, connects people who have rooftop solar panels with neighbors to buy green energy that is generated locally. As a microgrid, it operates separately, but also alongside the traditional grid. The project utilizes blockchain technology, allowing transparent accounting of units of energy generated and bought. Producers and buyers trade on the open market. Smart meters allow participants to monitor energy consumption and production.
“Sustainability and FinTech may be the key words for the future of global finance, which has changed drastically in the past 10 years,” said a director at Morgan Stanley. “Digitalization has opened new frontiers in the classic banking fields. Services have developed, accordingly, in order to accommodate changes that have occurred on global markets.”
Another area of potential growth is green and sustainable investment opportunities. The World Bank, for example, recently offered its first green bond that finances environmentally sustainable projects. The total value of existing green bonds has grown dramatically. Estimates suggest that green bonds released in 2017 were worth more than $161 billion, a 74 percent increase over 2016. According to Morgan Stanley, valuations could reach $250 billion this year.
This specialized FinTech application has a tremendous amount of raw potential. For those interested in living in a more sustainable world, linking consumers with green FinTech might be able to succeed where policy and market forces have so far failed: changing human behavior.