If it’s one thing this era does not lack, its vast development; Skyscrapers, metal printing, artificial embryos, electric and self-driving cars, AR and VR are luxuries of our time. New technologies continue to emerge every day and in a variety of fields making anticipated change the only constant aspect of the foreseen future and in the words of Doc Brown in the sci-fi classic Back to the Future “Where we’re going, we don’t need roads!”
While gross development comes bearing great privileges and benefits, innovation has always been profit-centered. But as we’ve learned through the deteriorating state of our planet, the cost of unmonitored innovation has taken its toll on society, from the air we breathe, our natural resources, transactions to the human state. A healthy community requires change on an economic, social, and environmental level. By considering sustainability in future developmental prospects and integrating it into technological systems, we can have our cake and eat it too.
What is Fintech?
Financial Technology, today termed as Fintech, came to light with the amalgamation of the two industries after the global financial crisis of 2008-09. It encompasses a technological ecosystem that includes crowdfunding, artificial intelligence, the “internet of things,” blockchain, and cryptocurrencies. Its companies now fill a tangible space in the financial-based business field and continue to expand on a large and rapid scale. Funding for Global Fintech overpassed $100 billion and is anticipated to continue growing.
If you’re not familiar with the term Fintech, it does not necessarily mean that you’re not actively a subscriber to its services. Through the integration of the internet, fintech infiltrated our everyday financial transactions including your standard mobile payments. It is primarily employed in the automation and improvement of financial services and has created swift and efficient alternatives to existing financial structures. Fintech has allowed start-up companies to provide competing services in the fields of payments, Peer-to-Peer transactions, investments, Crowdfunding and digital banking.
But where does fintech stand in driving sustainable and equitable innovation?
As defined by Arthur D. Little, sustainable innovation is ‘the creation of new market space, products and services or processes driven by social, environmental or sustainability issues.’ it entails a degree of inclusion and adoption of standards for sustainability by Businesses, technologies, services and products. These could be marginal improvements or the creation of a more environmentally efficient alternative that satisfies the same function of existing models.
Fintech as a digital solution functions on consumer-oriented services, it infiltrates different industries including education, retail banking, fundraising and nonprofit, and investment management. The services offered include money transfers, check deposits using smartphones, application for credit by bypassing a bank, raising money for a startup, or managing your investments. All these aspects have direct and indirect effects on sustainability.
A GDP boost of $3.7 trillion is expected by 2025 for emerging economies as a result of crowdfunding. Fintech has the power to ensure and process a more sustainability considerate screening of financing decisions and directing it towards climate protection, society impacts and labor rights.
Crowdsourcing or crowdfunding an emerging Fintech model, has resulted in bringing about direct and tangible social impact. Through bringing about like-minded contributors together, it is used for many purposes that bring about visible change and enhance efforts for sustainability. In property and infrastructural development, crowdfunding is channeled in the construction of affordable property in areas where there is insufficient funding. Ethis, as a Fintech company, specializes in ethical crowdfunding to bring investment to various impact-driven projects. Its platform in Indonesia targets the construction of affordable housing projects in efforts to reduce the housing shortage and support infrastructural development. Ethis aims to launch its latest platform in Malaysia, Ethis equity which will invest in SMEs and a variety of other projects. The platform received Malaysia’s first Islamic ECF License from the Securities Commission (SC) Malaysia.
Through the use of mobile payment systems, it is also gaining momentum for charity – for sponsoring education, empowering individuals and projects and raising charitable funds for a variety of causes such as the making of solar technology accessible to poor communities, enhancing the conditions of societies with shortages in basic sustenance requirements, fundraising for natural disasters and more. In addition to this, crowdfunding services assist low-income individuals who disregarded or overlooked by traditional banks. If you’re interested in charity and helping the less fortunate, Global Sadaqah is a platform that caters to humane causes and individuals in need from across the globe. It features campaigns with the amount needed for each case and once each campaign is funded, the money is disbursed directly to those who need it.
Beyond this, it has affected the way people handle money. Through the facilitation and ease of public payment experience and transfers, services like instant transportation of money across borders, transfers through mobile banking, branchless banking, insurance services are all now available at lower costs. The need for commute for such services has been substantially reduced as the reach of online banking increased. Additionally, Fintech has also influenced business transactions, smooth sale structures and ease of ownership of contracts between buyers and sellers have all been facilitated as well as led to a more transparent & decentralized global financial system. The function of Fintech platforms is characterized by its platforms increasing visibility and transparency in transactions.
Fintech, no doubt, has already, directly and indirectly, contributed to sustainability. However, the platform has great potential to inspire greater change in years to come if channeled correctly.
Read more on the Sustainable Development of an Islamic Financial System