There are a growing number of eco-minded customers being drawn to fintech services, as it is easier to measure the green credentials of newer players than those operating in traditional finance. This is according to virtual payment card provider Lanistar.

Jeremy Baber, CEO of Lanistar comments: “The initial attraction of new fintechs was the focus heavily on perks such as shiny holographic cards and powerful in-app or platform-based services. But now, in a bid to attract eco-conscious customers and implement more sustainable industry practices, there are several environmentally focused fintech trends we expect to see come to dominate the industry, and those players that lean into these trends will be the winners in the race to appeal to this new demographic.

“It’s a great time to be involved in the fintech industry. Not only is it an exciting industry, but a socially conscious one too. Customers are now much more discerning when it comes to choosing financial services and are likely to scrutinise the green credentials of providers before making their selection.”

As we see continued growth in green initiatives in the fintech industry, what trends can we expect to see in the near future?

1) Goodbye Plastic

“Given that a lot of fintechs - particularly challenger banks – stood out from the crowd in the early days by offering a shiny new card to their customers, discontinuing them would seem self-damaging. However, as of 2021, there were over 150 million physical bank cards in circulation across the UK. That’s a lot of plastic,” continued Baber.

“We are likely to see a growing number of fintechs ditch the shiny cards in a bid to curb plastic pollution. Now that bank details and transactions are becoming increasingly app-based, this trend will likely gain further momentum in the fintech green revolution.”

2) Reforestation is a Key Contribution

“Deforestation has had an impact on our environment for decades. This is why a growing number of fintechs are partnering with charities such as One Tree Planted to counteract the effects of deforestation and offset the impact of their own carbon emissions.

“Initiatives such as planting trees for new customers, at certain intervals, or planting multiple trees once a business milestone has been reached, will make a forest-sized difference to our environment in the long-run,” added Baber.

3) Look To the Power Of AI

The capabilities of artificial intelligence have been a key talking point in the early months of 2023, and the latest developments in AI can play a crucial role in the success of fintech’s green initiatives.

Baber continued: “The latest developments in AI have meant businesses now have a very powerful tool at their disposal. Harnessing AI to monitor environmental targets will be a trend we can expect to see grow in the coming months and years.”

Rather than setting environmental, social and governance (ESG) targets which then fall to the back of the priority list, AI can now do the leg work for fintechs, to ensure they remain on track. It is now possible to harness AI to monitor fintechs’ data in key areas of environmental performance, such as energy consumption, water waste, carbon footprint and so on.  

This will be a major trend as we see the ESG targets come under much greater scrutiny. At its core though, AI will be a powerful tool to help ensure fintechs remain on target with their goals.

4) Set Clear and Achievable ESG Goals

Baber added: “In fintech, transparency is a major part of what sets us apart from traditional financial institutions. Fintech customers are often more environmentally conscious and want to know just how dedicated their fintech provider is to its own ESG goals.

“There is a lot of value in fintechs publicising their ESG targets to reassure customers that environmental concerns are key to any decision made. Furthermore, prospective customers might look at publicised ESG targets, and seeing that progress is being made could be the final push they need to become a customer.”

5) The Rise Of Green Banking

In the midst of greenwashing rows involving a number of traditional financial institutions, we can expect to see fintech widely adopt the concept of green banking.

The idea of green banking is for institutions to prioritise achieving their climate goals, rather than take a ‘profit above all’ approach to banking. Green banking involves investing in initiatives such as clean energy projects and avoiding fossil fuel financing. 

Baber continued: “Green banking avoids any investment in environmentally damaging markets. More fintechs will likely embrace green banking this year to showcase their green credentials.”

“The record level of green investment we have seen across fintech will form a firm foundation for the industry to embrace more sustainable business practices. If these practices see widespread adoption, other industries will come to look at fintech as the gold standard for green business,” concluded Baber.

6) Green in Crypto Currency

One final sector to note amongst the growth of green finance is crypto-currency.

“We believe crypto-currencies are here to stay but to need to improve their carbon footprint”, Baber said.

It is well known that Bitcoin is energy heavy through crypto mining processes, as are many of its peers. The industry is leaning towards more eco-conscious methodology, sure, but there is still vast room for improvement, for which Baber suggested the following solutions.

“This part of the fintech sector needs to get on-board with delivering plans to deliver carbon offsetting. This could be done either through a percentage or the transaction fees or a carbon levy created within the blockchain”.

No matter the execution, in order to continue to thrive in the green finance age, the crypto economy will need to change. With projects like Ethereum, that change is beginning to be seen, however, it is clear there is still work to be done.