How Fintechs Could Be The Future of a New Green Economy

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Fintechs play a huge role in the green revolution taking the planet by storm. 

Since the historic Paris Agreement in 2015, the traditional banking industry has spent over $3.8 trillion on coal, oil, and natural gas projects. You would think the world coming together to forge a climate deal of this magnitude would make them adjust to more sustainable practices, but apparently, that has not been the case. 

This unethical use of customer deposits is why you might want to consider switching to a green neobank. Increasingly, consumers look to do business with companies engaged in sustainable practices. In a recent Deloitte survey, 70% of customers said they would be more likely to choose a bank that’s making a positive environmental impact. 

How green fintechs are changing the rules 

It’s been glaringly obvious for some time now that financial institutions need to find ways to make their day-to-day interactions with customers more sustainable. By moving to platform-based cloud solutions, fintechs are making massive improvements to operational efficiency, drastically reducing environmental impact in the process.  

However, that’s not all they’re doing. Sustainable banking goes way beyond paperless statements and digital cards to embracing such environmentally friendly practices as refusing to make loans to companies contributing to climate change. By depositing your money into a green fintech, you’ll have the peace of mind of knowing that you won’t be helping to finance dirty energy projects.

Environmentally friendly neobanks offer many of the same features other fintechs provide, such as debit and credit card and savings account services, but also offer additional ones. For example, carbon offsetting, carbon-neutral credit and debit cards, zero-emissions pledges, and green deposits.

A move in the right direction with a focus on sustainability

What’s encouraging is that these days, most venture capital firms are keenly interested in whether a company they want to invest money in adheres to sustainability principles. 

This means environmentally friendly fintechs looking for funding no longer need to sacrifice sustainability objectives. This has caused a profusion of fintech companies to spring up in the last several years committed to slowing down the rapid pace of climate change.

These paradigm-shattering banking startups are used for everything from small transactions at small upscale hipster coffee hangouts to huge business-to-business payments. 

Growing environmental awareness 

Environmental awareness is growing at an exponential pace. 

The demographic group that seems most invested in healing the planet is the estimated 1.8 billion millennials who want more ecologically friendly banking solutions. Their desire for a better way of doing things is causing the entire financial ecosystem to become greener and more socially responsible.

Today’s consumers have an environmental awareness that earlier generations didn’t have. Years ago, bank customers tended to prioritize the convenience of having a branch near their home, decent loan rates, and friendly tellers. Nowadays, customers want companies to handle their cash in a way that aligns with their values, including a commitment to sustainable business practices.

How fintechs can be the future of a new green economy 

Acting as a catalyst for ecological change 

The traditional banking system has come under fire recently because of its massive contributions to climate change. By putting our money into these banks, we’re colluding in creating the environmental atrocities happening in every corner of our world. 

On the other hand, green fintechs allow ecological concerns to drive business decisions. This is a total inversion in an industry motivated more by insatiable greed than by planetary respect. 

Traditional financial institutions are trying to jump on the environmental bandwagon. For example, Goldman Sachs started a sustainability initiative last year to help secure financing for more environmentally friendly modes of transportation, agricultural practices, and energy generation. 

The UN recently issued a statement announcing that 43 banks from 23 countries formed the Net-Zero Banking Alliance, a global organization committed to having net-zero emissions by 2050 or sooner. While this is encouraging, most big banks continue to invest heavily in the fossil fuel industry. 

Huge banking conglomerates contribute to runaway global warming by funding big-ticket oil and gas infrastructure such as mines, pipelines, and liquefied natural gas terminals. If the banking industry continues to finance new fossil fuel projects, saving the planet from the worst effects of climate change will become virtually impossible. 

Green fintechs are uniquely positioned to be vanguards of transformative new business practices with their disruptive business models and nontraditional ways of getting things done. They’re leaving their legacy counterparts in the dust with the impressive number of ways they incorporate environmental activism and ecologically friendly strategies into their financial offerings. 

These green neobanks are upending an industry that’s been way too slow to pivot to more sustainable practices, becoming inspiring catalysts for ecological change in the process. 

Helping customers become better environmental stewards 

Many green neobanks provide customers with the carbon footprint of every purchase they make using one of their debit or credit cards. Customers typically get a “climate score” based on their shopping habits, which helps them track, reduce, and offset the carbon impact of everything they buy. 

This allows users of environmentally friendly banking services to proactively take action instead of passively purchasing carbon offsets after doing something having a negative ecological impact. For example, using the Aspiration Zero credit card once a day can completely eliminate the average person’s carbon footprint. 

Other programs offered by forward-thinking neobanks reward individuals with cashback when they buy sustainable products, thus encouraging more environmentally aligned buying habits. 

Focusing on stakeholders

Environmentally conscious online-only neobanks are taking bold action to show that it’s not just the shareholders that matter but also stakeholders, including everyone who lives on the planet. That’s because we’re all affected by the ravages of climate change. This transforms what was once an economically and environmentally unsustainable practice into one that’s more enlightened. 

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Sustainability principles for green fintechs  

No gimmicks 

As individuals worldwide become keenly aware of the impact of their daily choices on the earth, financial institutions, both traditional and digital-only, are becoming more sustainable to cater to customers’ changing tastes. 

However, for some banks, this is all just deceptive window dressing. They make it look like they’re a bright shining star of environmental responsibility while continuing to engage in ecologically destructive practices. This is known as “greenwashing,” a practice whereby a company spends more time and money on marketing itself as sustainable than on reducing its carbon footprint.

Green fintechs need to commit to sustainability, not just pay lip service to it. This means implementing environmental practices that aren’t merely gimmicks but ones that make a difference in the lives of real human beings. 

Any bank can use recycled paper and energy-efficient lightbulbs and say they’re environmentally friendly. However, banks genuinely committed to the cause are the ones that adamantly refuse to bankroll industries causing widespread ecological devastation and uphold the tenets of environmental justice. 

Examine practices and portfolios 

If fintechs want to be the future of a new green economy, they can’t rest on their laurels — they need to continually examine existing practices and portfolios. 

They might just discover that a company they invest in just became a part-owner of a corporation that manufactures bee-killing pesticides. In that case, they need to divest themselves of this enterprise ASAP to maintain their credentials as a fierce protector of the earth. 

Deliver exceptional customer experience 

Digital transformation has dramatically increased the number of interactions customers have with their banking services provider. This makes it crucial that green neobanks provide their clients with an easy-to-use banking interface that seamlessly integrates into their everyday existence. 

Let’s say a sustainable fintech fails to make basic banking tasks simple, such as intuitive menus that don’t require a ton of taps. For their good work for the planet to make an impact, fintechs need to retain their customer base. Without a good experience, customers will find a bank that not only promotes environmental justice but also gives them an exceptional customer experience. 

Be part of the green future with Aspiration 

At Aspiration, we’re passionately committed to stemming the insidious tide of climate change.

One way we’re ensuring a green future is by helping the LA Clippers build the most environmentally friendly sports arena on the planet. The stadium, set to open in 2024, will be LEED-Platinum certified, the highest certification possible for green infrastructure. 

It will be 100% carbon neutral from the minute it opens its doors, with solar panels providing much of its power. Moreover, whenever you buy a Clippers ticket, we’ll calculate the emissions produced by your stadium trip and what it’ll cost to plant trees to offset this travel (although you can always opt out of it).

Automate your positive impact on the planet by applying for the Aspiration Zero carbon neutral card today!

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