Fintech players hone ESG strategies in digital lending industry: Astra ESG solutions

SAN FRANCISCO, 23 January 2023 /PRNewswire/ — Fintech companies, banks and non-bank financial players have embraced digital lending to streamline seamless loan disbursement, approval, recovery, credit assessment and other credit services through outsourced and automated lending processes. On the heels of the COVID-19 pandemic, banks are racing to play their part in environmental, social and governance concerns. In an effort to contribute to a greener, transparent and robust world, digitizing the lending process can lead to a tectonic shift, such as improved customer experience and better decision-making. A prominent increase in collaboration between investors and firms that take ESG into account has given an impetus to banks and fintech players.

Digital lending has added a richness to financial inclusion, especially helping borrowers who may not reap benefits from formal sources of finance. Banks are exploring opportunities to increase and automate credit processing, including digital lending and incorporating ESG considerations into lending decisions. The trend for end-to-end e-invoicing and payment solutions to help businesses with simple digital transactions has been pronounced among fintech and banks. Giving and collecting loans through apps and online platforms has become popular. An increase in mobile money accounts has accelerated the advanced financial services that can reduce costs, increase transparency and streamline services. However, the prevalence of microfinance risks and the chances of spillovers to the economy have justified regulation. IN September 2022Reserve Bank of India issued guidelines on digital lending and emphasized that regulated entities should ensure that the lending service providers and digital lending apps follow the guidelines mentioned in the circular.

Discover more about the practices and strategies being implemented by industry participants in the Digital Lending Industry ESG Thematic Report, 2023, published by Astra ESG Solutions

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Investors are likely to prioritize environmentally sustainable strategies amid a data-led credit process that is gaining ground globally.

Environmental perspective

The need for an organic economic model that is in line with the environmental paradigm has become crucial for an organization to be truly sustainable. At a time when fintech lenders are navigating opportunities in cutting-edge technologies, including AI and machine learning, investments in the environmental pillar can give them an edge in the competitive ecosystem. For example, ICE Mortgage Technology is committed to a 50% reduction in scope 1 and 2 emissions by 2032. It has also implemented data center air management, optimal thermal stratification, automated lighting control systems and high-efficiency HVAC systems, which play an important role. role in its Power Usage Effectiveness (PUE) which exceeds the base building design by around 14%. The company has also purchased renewable energy credits for electricity consumption in data centers and offices. A bullish approach to sustainability will advance their brand position in the global landscape.

Social perspective

Lately, an inclusive financial ecosystem has come on the horizon for social progress with access to loans and capital opportunities. Companies offer competitive and comprehensive benefits to promote employee wellness, health, financial security, diversity and inclusion. Essentially, Fiserv has formed a solid partnership with black colleges and universities and the National Black MBA Association in the United States. In 2021, the Fiserv Back2Business initiative reinforced its commitment to USD 50 million which initially stood on USD 10 million for minority-owned small businesses affected by the covid-19 outbreak. Furthermore, the company has invested in workforce diversity as it claims that 34% of its employees are racially or ethnically diverse. Companies have increasingly relied on social strategies as an integral part of their business process.

Gain more insight into what key industry players like Ellie MaeInc., FIS; Fiserv, Inc., Newgen Software, Nucleus Software identify, analyze and mitigate ESG risks and ensure compliance

Management perspective

Fintechs and banks have championed the importance of ESG for the sustainability of the business. Assessment of ESG-related opportunities and trends has been largely driven by the governance aspect. The operation of companies in an ethical manner to discourage corruption and bribery has been stated. In particular, Newgen Software has promoted its commitment to a high level of transparency, accountability and integrity. With a two-tier management model, the company consisted of 7 board members (per March 31^St 2021), of which 4 board members were non-executive board members (independent), while three were managing board members. The board has prioritized innovations in business strategies, diversity, strategic planning and analysis and compliance requirements for transparency, accountability and safeguarding shareholder interests. Given the risk of a data breach, stakeholders have also emphasized risk management to provide state-of-the-art security for operations and mitigate business disruptions.

Is your company one of the participants in Global Digital lending industry? Contact us for focused consultation around ESG Investing, and help you build sustainable business practices

Coordinated efforts in risk monitoring, business strategy, succession planning, ESG and financial reporting can provide an advantage to key players. The size of the digital lending market stood at USD 5.84 billion in 2021 and could register an impressive CAGR of 25.9% from 2022 to 2030. Strong demand for quick access to working capital for day-to-day operations will provide impetus to the growth of the advanced lending process.

Browse several thematic ESG reports from the technology sector, published by Astra – ESG Solutions

Key Aspects of the Digital Lending Industry ESG Thematic Report

• Offers a global perspective on the digital lending industry and the policies and measures taken by its players to overcome environmental, social and governance challenges.

• Key insights into the sustainability practices of major players in the market.

About Astra – ESG Solutions by Grand View Research

Astra is the Environmental, Social, and Governance (ESG) arm of Grand View Research Inc. – a global market research publishing and management consulting firm.

Astra offers comprehensive ESG themed assessment and scores across various impact and socially responsible investment topics, including both public and private companies along with intuitive dashboards. Our ESG solutions are powered by robust fundamental and alternative information. Astra specializes in consulting services that equip companies and the investment community with the in-depth ESG research and actionable insights they need to support their bottom lines and their values. We have supported our clients across various ESG consulting projects and advisory services, including climate strategies and assessment, ESG benchmarking, stakeholder engagement programs, active ownership, development of ESG investment strategies, ESG data services, building corporate sustainability reports. The Astra team includes a pool of industry experts and ESG enthusiasts who have extensive ESG research and consulting experience at a global level.

For more ESG-themed reports, please visit Astra ESG Solutions, powered by Grand View Research

Do you need expert consultation regarding the identification, analysis and design of a plan to reduce ESG risks related to your business? Share your concerns and questions, we can help!

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SOURCE Grand View Research, Inc