Role of Fintech in Upholding Sustainable Finance – I
Published on : Thursday 09-12-2021
Fintechs are playing a major role in revolutionising sustainable finance or sustainability at large, says Utpal Chakraborty.
Banks vs. Fintechs is a hot topic today and there are a whole lot of speculations and schools of thoughts going around this topic. On one hand the fintech firms are aggressively intruding into the territories of the banks, taking over traditional banking functions; on the other hand, we are also seeing some of the success stories of fintech firms joining hands with the banks complementing each other, and thereby offering brilliant services to the customers.
As per some experts, it’s going to be a tough competition initially but someday in the future eventually there could be convergence among the traditional banks and these next-gen financial institutions, the ‘Fintechs’. I personally believe that fundamentally there was a gap that existed, and it exists even today between what customers expect and what banks can deliver. Fintechs seized the opportunity in addressing these gaps. One example is partnering with banks or independently, they provide a frictionless digital banking experience that customers would have been expecting from the banks since long.
Nevertheless, the fintech phenomena has far reaching impacts. It is not only transforming the traditional financial services but also fintechs are already playing a major role in revolutionising sustainable finance or sustainability at large. Fintech has a great power; it brings together the power of technology along with finance and use it for building sustainable future of the planet.
On a broader spectrum, fintechs are transforming sustainable development in finance in three different ways.
Firstly, using the power of internet, mobile technologies, big data and artificial intelligence, it has been able to enhance the digital reach of financial services to those segments of population that did not have access to the services through traditional channels. For example – Financial Inclusion is one of those areas where fintechs have played a major role by bringing a large section of unbanked population under the financial umbrella using disruptive digital technologies. Also, rendering financial services and making those available to the customers wherever they are available- like mobile banking, social banking, WhatsApp banking, etc., are probably some of the biggest attempts towards sustainability and green finance.
The second major impact that fintechs have been able to make is by bringing down the cost of financial services and making it affordable for even the lowest income category of the society by using newgen technologies. It has also been able to break the monopolies of some of the financial institutions and bring competition in terms of cost.
And the third contribution is the innovative approach of serving customers through digital channels and touchpoints keeping customer convenience at the centre. They eliminated the complexities around security, privacy, regulatory and compliance matters from the customer journey while providing a bouquet of financial services to the customers.
Looking at it through a sustainability lens is very important when it comes to any financial initiative to make it a successful green finance project. This dimension must be taken into consideration seriously. While selecting products, services, or partners or even while making investments, sustainability is a factor that has now been investigated very seriously as one of the critical parameters. Experts are now convinced that fintech can play an important role encouraging impact investment or sustainable investment.
Associating sustainable goals with fintech initiatives may not be easy but getting started will start having an impact gradually. Even while doing technological innovations in any field, we should always keep in mind the aspects of sustainability. By encouraging fintech initiatives, sustainable finance is getting encouraged indirectly.
For example, a quantitative analysis and representation of what contributions an individual has done by choosing a sustainable alternative is very important to encourage people for exploring sustainable options in every walk of life. Fintech can solve this easily by integrating sustainable options and displaying qualifiable impact that’s of a buying decision or any other decisions for that matter.
We, at Allied Digital laid down an ambitious plan to seriously consider sustainability options in our business & technological endeavours in our current and future initiatives like fintech, smart city projects, etc. In the past also we have made decisions that are in favour of our sustainable goals; for example, in our smart city and other projects that brought measurable green impacts. Through our fintech initiatives, we aimed to build cutting-edge fintech products and solutions that offer cost-effective options for the financial institutions to reach out to their customers with light-weight channels and touchpoints. Other solutions like human-less bank branch and virtual banking are totally aligned with our sustainable goals.
More on this topic will be discussed in a follow-up article.
(Views expressed above are personal opinions of the author.)
Utpal Chakraborty is Chief Digital Officer at Allied Digital Services Ltd. A former Head of Artificial Intelligence at YES Bank, he is an eminent Data Scientist, AI researcher and Strategist, having 21 years of industry experience, including working as Principal Architect in L&T Infotech, IBM, Capgemini and other MNCs in his past assignments. A well-known researcher, speaker, and writer on Artificial Intelligence, IoT, Agile & Lean speaking at conferences around the world.
His recent research on machine learning titled “Layered Approximation for Deep Neural Networks” has been appreciated in different premier conferences, institutions, and universities.