Five trends that will shape the financial landscape in 2023

Digital payments are a convenient and secure way to carry out transactions. With the rapid advances in information technology, they have radically affected the entire FinTech industry. Today, they go hand in hand with green initiatives as more people show awareness and demand sustainable solutions.

In this piece, we will touch on the key trends shaping the current economic landscape. We will examine how FinTech drives sustainability and creates a more environmentally conscious future for finance.

FinTech’s role in achieving environmental sustainability

FinTech is one of the main industries pushing forward sustainability and green awareness. There are several ways in which companies operating in this sector can achieve this noble goal:

FinTech companies create digital solutions that aim to tackle global environmental issues. Industry leaders are keen to invest in green initiatives such as renewable energy. According to Statista, in 2022 these investments reached $495 billion globally, which is 17% more than in 2021. Other areas that attract the attention of business owners are sustainable agriculture and green infrastructure. By using robust digital platforms, organizations can easily support green initiatives and help build an environmentally friendly future.

FinTech can also play a critical role in tracking carbon emissions, which is crucial to achieving global environmental goals. By leveraging blockchain technology, cutting-edge digital solutions provide real-time tracking of CO2 emissions, allowing businesses to effectively monitor their carbon footprint and take proactive measures to reduce their negative impact on nature.

As digital payments and mobile banking become more widespread globally, they offer an opportunity to minimize the environmental impact of traditional banking practices such as paper statements, checks and cash. FinTech firms can create and market digital payment solutions that are not only more convenient for users, but also more environmentally friendly.

As sustainable business practices gain momentum, financial institutions are seeking new ways to motivate companies to prioritize sustainability. For example, they can achieve this by creating innovative loan products that reward environmentally conscious practices. Companies that invest in sustainable agriculture or energy-efficient technologies can be offered loans with lower interest rates or other benefits. This could encourage more companies to prioritize sustainability when seeking financing options.

FinTech can encourage sustainable finance, which concentrates on investments that take into account environmental, social and governance (ESG) factors. Companies can easily use innovative solutions to discover ESG-friendly investment opportunities and measure the sustainability of their portfolio. This can help to direct resources into companies that prioritize sustainability and further environmental goals. According to PwC, ESG-focused institutional investments will amount to $33.9 trillion by 2026.

So the opportunities for running environmentally friendly initiatives in the financial sector are promising. Let’s now look at five green trends that will shape the industry in 2023.

Harnessing the power of green cryptocurrencies

Recently, the concept of green cryptocurrencies has gained traction, as more and more people realize the environmental impact of traditional cryptocurrency mining. This technological process is really energy-intensive. For example, Bitcoin is estimated to consume over 198 TWh of electricity annually, a level comparable to entire countries such as Thailand. In response to the growing concerns, prominent figures such as Tesla CEO Elon Musk have pointed out the environmental impact of cryptocurrency. In May 2021, his company announced its decision to suspend Bitcoin payments.

To address these issues, FinTech leaders are embracing an alternative approach. It involves innovative technologies that require less energy, making them a more sustainable option for those interested in investing in cryptocurrency. Some meaningful examples of green cryptocurrencies are Chia (XCH), Nano (NANO), and Cardano (ADA).

Unlike conventional cryptocurrencies, green uses consensus mechanisms that minimize energy consumption. For example, Ethereum and some others rely on proof-of-stake rather than proof-of-work algorithms. As a result, energy consumption can be reduced by 99.5%. Instead of implying intensive computation to verify transactions, green cryptocurrencies rely on users staking their own coins as collateral to ensure the accuracy and security of the blockchain. Integrating pre-mining and introducing carbon credits are other meaningful ways to achieve green goals.

Green cryptocurrencies have a few more advantages. Andersen’s experts state that they can be faster and more secure than traditional ones due to their unique consensus mechanisms. They can also offer greater decentralization, making them more resistant to censorship and government interference.

While the use of green cryptocurrencies is still in its early stages, it represents an exciting development in the world of FinTech. As more people become concerned about the environmental impact of their investments, it is likely that they will become increasingly popular as a sustainable option.

Protect the environment with eco-friendly digital wallets

On average, each transaction made through conventional payment methods, such as cash and plastic credit cards, generates approximately 3.78 g of CO2 emissions. Greenhouse gas emissions, primarily as a result of energy consumption and transport, account for approximately 36% of the total environmental impact of the payment card system. Therefore, it is important to reconsider our attitude to making purchases and carrying out transactions.

Reinventing money with social and environmental goals can drive a new global mentality and significant behavioral change. Environmentally friendly digital wallets are essential to achieving this goal. These innovative online payment systems promote the idea of ​​sustainability and reduce the use of resources such as paper and plastic. They are feature-rich, practical and available 24/7, making them a perfect choice for users from different walks of life. More and more customers prefer sustainable payment methods and download mobile wallets. They are an important component of modern FinTech services.

The basic features of eco-friendly digital wallets are paperless transactions, use of renewable energy and sustainable infrastructure. Some businesses that offer e-wallets support environmentally friendly initiatives and donate part of their profits to solve green problems.

Runs sustainable transport with contactless payments

There are several links between contactless payment and sustainable transport.

Instead of carrying cash or buying tickets, people can pay for public transport quickly and easily. This means reducing the use of paper and eliminating the harmful effects associated with production and disposal.

Contactless payments can motivate people to use different modes of transport such as bike and scooter sharing services. Passengers can tap their card or smartphone on the payment terminal to use the service, making it easier and more accessible.

Such digital systems often come with rewards and incentives to get people to use environmentally friendly transport. Some programs offer discounts or reward points for using public transport, cycling or walking to work. This will encourage people to use more sustainable transport options.

Adopt carbon-neutral payment processing to combat harmful emissions

This concept refers to a payment processing system that compensates for carbon emissions to achieve a zero carbon footprint. Carbon offset programs or renewable energy projects are used to offset the total amount of carbon emissions from the payment processing system.

To achieve carbon neutrality, payment processors can take a number of measures, including using renewable energy sources to power their operations, reducing energy consumption with energy-saving technologies and supporting carbon offset programs to combat greenhouse gas emissions.

In sum, carbon-neutral payment processing marks a major step forward towards mitigating the environmental impact of payment processing systems and promoting sustainable practices in the financial industry.

Protects nature with carbon-compensating mobile payment solutions

This trend is closely related to the previous one. Carbon offsetting mobile solutions give users the opportunity to offset the carbon emissions associated with their transactions by supporting renewable energy or afforestation projects. Apps of this type allow people to track their own carbon footprint and make more sustainable financial decisions, while helping to combat climate change.

For example, TreeCard is a project that allows users to monitor their spending and plant trees with each transaction. The app is linked to a debit card made from sustainably sourced wood, and every time a user makes a purchase, TreeCard plants a tree through a global network of reforestation projects. Every $50 spent means planting a tree.

Another successful example is the app called Doconomy. This digital solution takes a climate-friendly approach to everyday banking and allows users to see their carbon footprint and offset it.

By using this service, companies and individuals take a step towards a more planet-conscious future. With the DO credit card, it is easy to track consumption. The card automatically calculates the carbon footprint of one’s purchases and suggests options to offset it right from the app. And if you want to go the extra mile, you can offset your carbon footprint through UN-certified projects.

Conclusion

The FinTech industry is increasingly focusing on sustainability, driven by both environmental change and consumer demand for more ethical financial services. Industry leaders and startups are introducing green initiatives into their operations in many ways, from the use of green cryptocurrencies to carbon offset programs. Such a conscious approach to our planet offers new opportunities for investors, entrepreneurs and consumers alike.