The duo of sustainable development and financial technology or fintech has been an area of Limelite in recent years.
The financial landscape is already transforming due to Fintech innovations, especially due to the contributions of the Internet of Things (IoT), Blockchain, and artificial intelligence.
These technologies are not only a blessing in supporting sustainability development goals but also in enhancing and mobilizing green investment resources while improving financial inclusion and transparency in financial systems.
However, as we know, to ensure that we meet the sustainable development criteria, we also need to address the challenges that may come with the fintech and sustainable development intersection.
A report called “Fintech and Sustainable Development Assessing the Implications: a Companion to the Financial System We Need” provides numerous ways in fintech that can improve the financial system in order to align with SDG.
By including fintech, we can reduce expenditures and improve capital funding both internationally and domestically. Mobile payment systems can be a game changer alongside crowdfunding platforms.
Digital banking and fintech, of course, allow low-income individuals and small businesses to contribute to the financial system.
Fintech platforms not only collaborate for domestic savings but also help channel them into long-term investments that can help progress towards sustainability goals with real economics.
This is especially important for funding projects that are related to the neighbor’s energy green initiatives and other infrastructure development.
Fintech lets you know that you have more flexible options other than Conventional financial production. It highlights innovative solutions for diversification and risk transfer.
These digital tools are safe against vulnerable communities and can also contribute to funding natural ecosystems or address climate-related risks.
Fintech also helps in improving data collection, analysis, and allocation of financial data. It has the capability to support better economic decisions, avoid oversight, and better manage risks by providing genuine details about the environmental impacts and market trends.
As we know, advanced technologies like Blockchain and Fintech ensure a sense of reliability in financial markets, which is vital for the issuance of long-term investments to attain sustainability goals.
However, with the immense benefits of fintech and sustainability, there are also some potential challenges that need to be addressed. A few of them are:
Access to digital infrastructure is often unequal and can lead to inequalities. Therefore, this gap needs to be filled to ensure that fintech benefits all portions of society.
Data privacy is also at risk due to the increased number of digital platforms as it increases cyber security and potential misuse of information.
Also, the current digital regulations focus less on sustainability; however, policymakers need to understand the importance of integrating fintech innovations with social governance and environmental criteria.
Another notable challenge is the energy consumption with certain Fintech technologies, such as Blockchain mining operations. The process poses severe environmental threats and needs to be diminished by establishing more greener alternatives.
The full potential that Fintech methods have for the progress of sustainable developments can be channeled. The following action plans can be followed:
The first one is to integrate fintech into national plans. That is, the government should utilize Fintech measures to strategize the financial system development, particularly in areas where its influence can be really transformative.
The second one highlights the need to bring leading Fintech companies together to establish one single platform that can contribute to the standards and policies that can cater to the needs of sustainability projects.
Startups that come up with sustainability objectives should get the support of venture capital funds from governments and international organizations. Challenge funds can also contribute to the development of global collaboration with sustainable solutions.
More and more awareness and educational posts and programs should be built to promote digital finance so that policymakers, consumers, and businesses can understand what fintech can bring in completing the SDGs.
Not only educational programs but also policymakers should step forward to ensure that the must-follow regulations include sustainable practices while making people aware of the risks of illicit financial flows with digital finance.
FinTech for sustainable development is not only just a motto but a goal, a promise that, if approached collaboratively, it can be a revolutionary drive for the SDG.
