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A cleaner, greener future; Why fintech can lead the way to greater sustainability

With the Intergovernmental Panel on Climate Change (IPCC) delivering a “final warning” on the climate crisis earlier this year, we’ve reached a point where green changes are needed without further delay. The urgency for investments made to be directed by sustainable hands is urgent, as we are now at “a code red for humanity.” Historically, the finance sector has always been the principal driver for incorporating lower-carbon practices, so to safeguard a green transition and avert further damage from the current environmental practice, we must look to them to lead the way.

By Jeremy Baber, CEO of Lanistar

Jeremy Baber, CEO, Lanistar

The finance sector has invested in energy-efficient and work-efficient technologies that have completely revolutionised both their own sector and beyond. The rise of fintechs, alongside investments in the use of artificial intelligence (AI), the Internet of things (IoT) and machine learning (ML) are all ways in which finance has been ahead of the mainstream in adopting newer, cleaner technology. Even the rise of blockchain that we are seeing helps proliferate cleaner technology throughout their industry and beyond.

The time for sustainable net zero or even net negative global CO2 emissions is now to ensure a sustainable future before it is too late. With environmental consciousness currently at an all-time high, both from a governmental and consumer standpoint, we need fintechs to take the helm in mediating a smooth transition towards greater sustainability. The responsibility is upon fintechs to mediate this transition to greater sustainability.

Investing in sustainability is far and wide

Fintechs have always enabled innovation and contributed positively towards sustainability for a lower-carbon world, particularly as they aim to disrupt traditional finance operations in a customer-focused way. The rise of financial technology over the past decade has created a new era of potential for sustainable investing, particularly in ESG investing, green financing, and carbon neutrality.

Digital payment solutions can lead the charge toward sustainability and a low-carbon economy. The carbon footprint brought by physical currency – i.e., its creation, transportation, disposal, etc. – is minimised or eclipsed by digital cash transactions. Utilising digital removes the need for both plastic cards and paper transactions, streamlining transaction processes in an environmentally conscious way by reducing company waste.

Consumers want a cleaner conscience

Retail Week recently reported over half of UK consumers are more likely to buy from a retailer or brand with a strong ethical and sustainable ethos, with Millennials more likely to be eco-conscious and, by contrast, the Boomer generation less so than other generations. The new market is a more sustainably-conscious one, and fintechs should be looking to capitalise upon it. Gen Z and millennials want greater transparency regarding tracking and reducing their overall impact on the environment.

Recent research from the open banking platform Tink revealed that 40% of customers wish to track impact through services provided by their bank, and therefore holding their retail businesses of choice accountable is a big part of this, especially when many will stake green claims for consumer trust but not follow through. Consumers want a clear conscience when it comes to their personal impact, and that is reflected in the retailers they choose to shop with.

Currently, there is a significant gap in the market for innovative tracking solutions, with Tink’s research suggesting a significant number of customers would switch purely for access to tools to track their carbon footprint. Whilst 30% of surveyed banks have expressed interest in offering these tools, currently, these institutions have zero plans to actually do so. Fintechs can hold feet to the fire in this regard and act in the best interests of their consumers as an intermediary for directing businesses to change. It is easy to make green claims to gain customer support, but fintech’s pushing for responsibility for the sake of their customers helps motivate action.

A business incentive is still needed

No operational change can happen without the final say of the business CEO, and no CEO will consider investing in an operation that doesn’t have some business advantage to go with it. In highlighting the rising consumer demand, business leaders can feel more secure in adopting innovative yet lower-carbon alternative technology to gain customer rapport. As customers are more discerning than ever, they are more likely to scrutinise green credentials for authenticity before committing to a provider.

By contrast, change must be meaningful and not just surface-level support. It is no longer as simple as claiming to support green initiatives; real action is needed at every step. With every initiative to attract and secure interest from target consumers, businesses must follow through or their customers will quickly seek a stronger alternative elsewhere. And whilst many bigger fintechs have greater resources to allocate to sustainable initiatives, few are actually choosing to do so.

SME fintechs have greater mobility for impactful business moves

Where financial organisations with bigger pockets may have the power to push for greener tech across the board, they seldom have the mobility to enact changes across their operations. Yet the agility of smaller fintechs to deploy sustainable initiatives has meant that they can often overtake and lead the charge for greener decisions across operations. Smaller underdog competitors suddenly have an incredible advantage with this ability to outmanoeuvre their larger counterparts limited by traditional operations.

As the fintech sector continues to mature, business initiatives can continue to refocus the ecosystem away from short-term successes and instead towards long-term green practices. But without critical support from the UK government to support and protect green initiatives, we cannot make meaningful industry change. An updated policy is needed – without the demand for profit – to best help the finance sector to put pressure on change and secure a cleaner, greener future.

CategoriesAnalytics Big Data IBSi Blogs IBSi Flagship Offerings

Unlocking a digital future: how the finance industry can improve data quality

Deloitte’s recent predictions for the future of finance highlight the need for the finance industry to adopt the technology available to them in order to remain competitive. But for the finance sector to become truly digital, the quality of data is paramount.

By Baiju Panicker, Global CTO and Practice Head – Banking, Insurance and Financial Services at Altimetrik

Shifting to a truly digital mindset means adopting a digital business methodology that uses data to support and improve operations. However, if the data is low in quality, incomplete, or corrupted, this will make it near-impossible for the business to operate in an efficient and effective way.

Data quality critical in finance

Baiju Panicker, Global CTO and Practice Head – Banking, Insurance and Financial Services at Altimetrik
By Baiju Panicker, Global CTO and Practice Head – Banking, Insurance and Financial Services at Altimetrik

Low-quality or incomplete data can lead to poor lending, high-risk, flawed valuations and suboptimal trading. Ineffective targeting can also result from poor data, as can complaints, failures, and distorted insights.

In stark comparison, accurate data enables sound business decisions. High-quality data provides insight for analytics and efficient banking activities. It establishes greater integrity across operational analytics, fundamental to successful financial decisions and the overall success of the financial industry.

A great example of this is artificial intelligence (AI). AI is only as good as the data it accesses. It is crucial for financial firms to invest in data quality at the outset to enable successful digitisation, which in turn can boost competitiveness in the market and increase customer satisfaction.

Technology adoption critical

The adoption of technology is central to improving data quality. Leveraging various technologies to enhance data quality, such as automation tools for validation, AI for anomalies, and streaming analytics for real-time monitoring can ensure that only accurate and validated data is captured, improving the data quality immediately.

Data machine learning, blockchain, and natural language processing can help financial institutions improve their data quality and overall market performance by spotting inconsistencies, securing transactions, and extracting insights.

Without these building blocks, there is great potential for failure. Multiple client records can cause confusion, incorrect bills can damage trust, and customers and contracts may be lost.

Cleansing existing data is vital, but it is important to recognise that this cannot effectively be undertaken as a one-off project. Instead, it needs to be implemented as an ongoing activity to ensure overall business success. Alongside this ongoing process, businesses need to properly validate data as it comes in, such as automating data input and real-time monitoring to maintain a high standard of data throughout.

Utilising data stewards to monitor and address data quality issues gives a direct responsibility within the business to monitor data, clearly setting out the business’ intention to staff, customers and stakeholders that data quality is at the heart of the organisation and its operations.

Building a sustainable data quality framework

Undoubtedly, there will be lots of challenges that businesses face whilst undertaking this process. Focusing on a short-term goal – such as a single data cleanse – can be short-sighted and only create the same problems further down the line. Ensuring coordination across the business is key to success, which leads to greater accountability and removes silos from the process.

Machine learning and rule-based detection can support teams and help avoid any deviation from the prescribed style of data being captured. Text mining and natural language processing can help businesses analyse documents, call transcripts, and social media posts to identify semantic anomalies and outliers that indicate data quality issues. Alerts can then be set up to flag when issues emerge.

Ultimately, combining technology-driven detection with business-driven strategies for ongoing data quality improvement will enable businesses to be vigilant regarding poor quality or erroneous data being captured and utilised.

How to ensure quality

Proactive checking of data for errors and maintaining its quality is vital to the whole process of data quality, as early identification of problems helps to establish trust. Establishing a governance structure internally, where all parties are aware of and active in their roles, is fundamental both from a business perspective and also for stakeholders and customers.

Cross-functional data governance is important. It is not enough for each department to run its own checks and processes; it needs to be business-wide, with no silos or breaks in communication. This is where a Single Source of Truth (SSOT) is important. Rather than having multiple data locations that might not interact with other departments or processes, holding all the information centrally allows for better data accuracy and effective data cleansing across the whole business.

Overarching benefits of high-quality data

The potential benefits of improved quality of data to financial organisations are manifold. There is huge potential for increased revenue and cost savings through optimised data-driven decisions and operations. Data-driven activity is always more accurate, and data quality is central to this. The results are improved customer satisfaction and retention, with improved product offerings based on accurate findings.

From an operational perspective, management will see higher employee productivity with reliable data to work with, coupled with higher staff satisfaction. Through the integration of accurate, high-quality data there can be an increased use of automation and AI for more mundane tasks, enabling employees to work on more challenging and rewarding activity.

The finance industry is at a crucial juncture when it comes to digital adoption. Those who embrace digital adoption and intelligent ways of working through data and intelligent analytics will thrive, whilst those who lag behind will struggle to compete against competitors with a digital business mindset.

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