Embracing the future: the intersection of fintech and sustainable investing
The landscape of financial technology is undergoing a remarkable shift. The traditional pillars of convenience, speed, and innovation are now converging with a new imperative: sustainability.
However, despite the growing demand for sustainable or ESG (environmental, social, and governance) investments, there remains a significant gap in the fintech industry when it comes to addressing this need.
The surging interest in ESG investments is not matched by the technological infrastructure within the fintech sector. While consumers, especially millennials and Gen Z, are increasingly drawn towards aligning their investments with their values, the available platforms and tools are not adequately equipped to support this trend. Current fintech solutions primarily focus on performance metrics, risk profiles, and portfolio diversification, leaving ESG metrics, which are crucial for a growing number of investors, on the sidelines.
Why is this a problem?
Missed opportunities for fintech platforms: By neglecting to integrate ESG metrics, fintech platforms risk becoming obsolete. They are overlooking a rapidly expanding market segment that seeks responsible investment options.
Barrier to sustainable investment growth: The absence of user-friendly, technology driven ESG investment platforms can impede the growth of sustainable investing. When investors encounter difficulties in accessing or comprehending ESG metrics, they may resort to traditional investment avenues.
Miscommunication and misalignment: Without standardised ESG metrics within fintech platforms, misinformation becomes a possibility. Different platforms may assess ESG criteria differently, leading to confusion and distrust among investors.
To bridge this gap, companies in the fintech sector must evolve by seamlessly integrating ESG metrics into their platforms. Here’s how:
Integration of ESG data providers: Fintech platforms should collaborate with established ESG data providers to ensure that investors receive accurate, up-to-date information on sustainable investment opportunities.
User-friendly interfaces: Just as current platforms make stock or mutual fund data easily accessible, ESG metrics should be presented in a visually appealing format, utilising charts, graphs, and color-coded ratings for easy understanding.
Education and resources: Platforms can go beyond presenting ESG data and provide educational resources such as webinars, articles, and tutorials on ESG investing to guide both novice and seasoned investors.
To truly achieve your objectives, you need to communicate clearly, transparently, and simply. Here are some of the best communication practices I use:
Transparency is key: It is essential to ensure that all ESG data sources and methodologies are transparent. Investors should know the origin of the data and how it is analysed.
Feedback loops: Platforms should create channels for user feedback to continually enhance their ESG offerings. By understanding user needs, platforms can refine their features.
Consistent messaging: Consistency in messaging across app notifications, emails, and website content fosters trust and reliability.
Collaborations and partnerships: Engaging with ESG experts, NGOs, and thought leaders can elevate a platform’s credibility in the ESG space through joint webinars or Q&A sessions.
In conclusion, the gap between fintech and sustainable investments presents more than just a technological challenge. It calls for the industry to evolve in line with changing societal values. By acknowledging the problem, understanding its implications, and adopting the right solutions and communication strategies, fintech can truly bridge this divide, ushering in an era of tech-driven sustainable investing.
About the author
Gihan Hyde is the award-winning communication specialist and founder of CommUnique, an ESG communication start-up.
She has been implementing ESG campaigns in eight sectors, across six countries over the past 20 years.
Her campaigns have positively impacted over 150,000 employees and 200,000 customers and have closed over £300m in investment deals. Some of the clients she has advised include The World Health Organisation (WHO), HSBC, Barclays, M&S, SUEZ, Grundfos, Philip Morris, USAID, and the Saudi Government.
Get in touch with Gihan through LinkedIn or X @gehanam.