Top 10: Sustainable Fintech Trends

Sustainability is perhaps the most important consideration for enterprises, organisations and businesses of all sizes in 2024. The need to scale sustainable practices is more important than ever, and the fintech industry is no exception. 

Recently, Sustainability LIVE Net Zero 2024 took place at the QEII Centre in London, featuring leading financial players and the initiatives they are employing the drive a greener future. 

In this Top 10, we look at the leading practices, innovations and product offerings being employed in the fintech space today to drive sustainability forward. 

10. Green loans and sustainable finance

As consumers and businesses clamour for more sustainable products and services from their financial providers, today, financial services providers can create loan products that incentivise businesses to prioritise sustainability. The benefits of these loans can include lower interest rates or other financial incentives for businesses investing in energy-efficient technologies or sustainable agriculture. Banks with green financial programmes include HSBC’s Green Hub, Lloyds’ Clean Growth Financing Initiative and Barclays’ Green Loan. 

9. Digital payments and signatures

Today, as digital payments proliferate across markets and industries, electronic signatures and mobile banking options are helping dramatically reduce the environmental impact of conventional banking methods, making checks and paper statements all but obsolete and leading to a reduction in cash use. Back-end digitalisation has also led to a significant reduction in paper use at banking offices and branches. Indeed, the shift towards digital banking has not only increased convenience for consumers but has also led to more sustainable financial operations. 

8. Green Investments 

Global green investments have seen a significant increase in recent times. Total funding in green projects reached US$495bn in 2022, with facilitation coming from digital platforms and fintech companies. The drive to support eco-friendly initiatives has only grown. Today, investment firms specialising in delivering green funding to environmentally friendly initiatives, such as Green Investment Group and Green Investment Partners, are becoming all the more popular, and banking investment arms are continuing to favour green investment portfolios.

7. Carbon tracking

Carbon tracking technology has been introduced to meet the needs of consumers to know the carbon impact of their purchases. Fintechs like ecolytiq have seen both their popularity and business scale as financial institutions see the value of delivering carbon tracking technology to help monitor emissions. 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.

6. Mobile payment solutions for carbon-offsetting

Over the past few years, mobile payment solutions for carbon offsetting have grown in popularity. These services allow users to offset carbon emissions resulting from monetary transactions by supporting renewable energy projects or reforestation efforts. Mobile applications such as TreeCard and Doconomy enable people to both track their carbon footprint and make eco-friendly decisions by offsetting their environmental impact, contributing to anti-climate change efforts.

5. Carbon-neutral payment processing methods

Much like mobile payment solutions for carbon offsetting, carbon-neutral payment processing methods offset carbon emissions through renewable energy projects. 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. Companies like Switch2Zero offer Pay-as-you-Go solutions to businesses, that can offset their impact on a range of environmentally friendly initiatives. 

4. Contactless payments for sustainable transportation

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. Today, contactless payments have facilitated access to both bike and scooter-sharing services, such as Lime, promoting alternative transportation methods in major cities and reducing the impact of vehicle emissions.

3. Digital wallets to reduce waste and emissions

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. 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. 

2. Environmentally-friendly cryptocurrencies

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. Now leading crypto platforms like Ethereum have switched from a ‘proof-of-work’ protocol to a ‘proof-of-stake’ protocol, cutting out a staggering 99.9% of the energy consumption used in the origination of its cryptocurrency. Proof-of-stake algorithms are combined with consensus mechanisms to offer more sustainable investment options to those looking to trade in crypto markets.

1. Open banking

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. This has paved the way for innovative services and personalised experiences to be delivered to consumers via their bank, with newly created digital ecosystems promoting competition, transparency and customer control of finances. 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. 

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