Based on the findings of a UN task force, now is the time to expand the transformative impact of digitalization in financing the Sustainable Development Goals, particularly by accelerating the use of domestic savings for long-term development, enhancing accountability of public financing, financing SMEs and promoting SDG-aligned consumer spending.
A recently launched report by a United Nations task force highlights the historic opportunity to accelerate and expand the transformative impact of digitalization in financing the Sustainable Development Goals (SDGs). This was a key message from Eric Jing, the executive chairman of the Ant Group, in his opening remarks at the inaugural Inclusion fintech conference in Shanghai, where he shared three emerging trends in the new digital financial system of the 21st century.
First, he highlighted the difference in the constituency being served. Traditionally, financial services have focused on serving the top 20% of customers, whereas new digital financial services now reach out to the remaining 80%. Second, traditional financial services have long been about people looking for money, whereas new financial services are about money looking for people to serve. And third, new financial services are about deeply integrating into the lives of people across a broad range of use cases for ease and efficiency.
Offering cost-efficient financial services to small and medium-sized enterprises (SMEs) has historically been a core competency of the Ant Group, and with the launch of the new blockchain-based trade finance platform Trusple at the conference – with partners BNP Paribas, Citibank, DBS Bank, Deutsche Bank, Standard Chartered Bank and others – finance for SMEs is in for a serious technology upgrade.
The main findings of the UN report People’s Money, shared at the conference by United Nations Development Programme Administrator Achim Steiner and UN Digital Financing Task Force Secretariat Head Simon Zadek, offered a glimpse into five catalytic opportunities in this new digital world. They are the need to:
A deep dive into the last opportunity allowed participants to explore the opportunity to empower consumers to shift from being micro-savers to becoming investors in infrastructure, even granting them a choice over which infrastructure project to allocate their capital to.
Dr Ma Jun, Director of Center for Finance and Development at Tsinghua University and Chairman of the Green Finance Committee of China Society for Finance and Banking, moderated a session on green fintech. He highlighted that fintech needs to help overcome several bottlenecks facing green finance, including the certification and labelling of green assets and projects for greater efficiency and market integrity.
Deborah Lier, Vice-Chairman and Executive Director of the Paulson Institute, offered her insights on emerging practices by a number of Chinese banks using fintech for green impact. This was based on a series of case studies conducted by the Paulson Institute. One case study highlighted Huzhou Bank’s green credit management system, where a cloud platform using fintech is being used to identify, evaluate and classify green projects to provide more accurate information for management of the bank’s green finance business.
During the conference, the Green Digital Finance Alliance (GDFA) shared insights on the state of green fintech in Europe and on the role of green digital finance in the COVID-19 European green recovery. The insights were informed by several country mappings of SDG fintech landscapes undertaken as part of the GDFA’s knowledge partnership with the UN Secretary-General’s Task Force for Digital Financing of the SDGs. In Germany, for example, the strength of the SDG fintech ecosystem is in green robo-advisory and in deploying DLT to innovate financing for SDG 7 (affordable and clean energy). In Spain, the most mature segment of the SDG fintech landscape is for financial inclusion, but with SDG 13 (climate action) as an emerging innovation theme.
Leading to identification of country-specific opportunities, the use issuance of green STOs in Germany has helped steer capital towards green assets, including green SMEs or aggregated smaller green projects. In Spain, opportunities such as the development of incentives to stimulate the inclusion of green functions on real estate crowdfunding platforms is seen as a potential vehicle to help “crowd” both citizens’ savings and foreign investments into energy efficiency and green buildings.
Fintech not only helps propel inclusive and sustainable development in the global economy, but it can also be used to help preserve nature and support the green transition more broadly. This was the takeaway from a roundtable discussion at the conference, which shined a spotlight on a looming Asian elephant crisis and the potential for fintech to provide solutions to human-wildlife friction. This will sure to be on the agenda at the next UN COP15 Biodiversity Conference, expected to take place in Kunming, China, next year.
By Marianne Haahr, Executive Director of the Green Digital Finance Alliance.
The opinions expressed herein are solely those of the authors and do not necessarily reflect the official views of the GGKP or its Partners.