One of the key challenges faced by the global financial system today is to support sustainable activities and the transition to sustainable finance. Digital transformation including AI, IoT, Big Data and blockchain have all been identified by global and EU institutions as potential drivers to mobilize sustainable finance.
On October 2-3, the European Banking Federation organized its annual European Banking Summit in Brussels. This year, the Federation put extra emphasis on sustainable digital finance.
Martin Spolc, Head of Capital Markets at the European Commission announced that fintech was a topic on the sustainable finance agenda, and that the Commission is breaking silos. Mr Spolc should know, he is in charge of a newly installed unit looking at both Fintech and Sustainable Finance at the European Commission.
Mr Spolc further mentioned the potential using blockchain to simplify the intricate processes between various intermediaries. The Sustainable Digital Finance Alliance recently launched a report with HSBC looking into the possible future benefits of trading green bonds on blockchain. To date, Spanish bank BBVA is the first private bank that has launched a green bond on the blockchain. The Green Assets Wallet developed by Stockholm Green Digital Finance and partners is today one of few practical use cases, ready for market implementation later this year. A possible future development of the Green Assets Wallet could very well be financial transactions if it would further support sustainable debt investments, according to Cecilia Repinski at Stockholm Green Digital Finance.
Looking into equity investments, Thomas Verhagen from the Cambridge Institute for Sustainability Leadership proposed a concept that would provide better information to pension investors about the sustainability impacts they have through their choice of pension investments. See image.
Not just start-ups are looking at solutions for sustainable fintech, big tech firms also contributed to the discussion including Microsoft and Barclays. Nicole Sandler at Barclays challenged regulators on faster regulatory processes, while Andrés Alonso of the Spanish Central Bank called for the importance of a well thought through line of action when developing new policies and regulations.
There was unison agreement on that technology can be one solution of many. Before turning to technology, one needs to know where to go, and why.