The world of financial technologies has been growing at an enormous rate for the past five years. At this point, there are thousands of FinTech companies out there working towards revolutionizing the world of finance.
Recently, a new developing sector called Impact FinTech has grown to serve a bigger purpose. These companies work toward making the world a better place in various ways. This article will address examples of Impact FinTech companies that have been leaving a mark, as well as enacting both social and financial agendas around the globe.
FinTech companies have a great impact on society, says Hadas Mishli, a partner who leads the ESG & IMPACT practice at KPMG Israel. “COVID-19 dramatically highlighted the consequences of being unbanked or financially excluded. Whereas many people were able to order groceries online, make other purchases, and transfer money between accounts as needed, for others it has been a totally different experience. Financial exclusion has led to social exclusion”.
The financial sector plays an important role in managing climate change, says Mishli. “It can significantly help mitigate the economic risks and enter the low-carbon economy by providing appropriate products and services. There are many everyday activities that leave a carbon footprint and by bringing it to our attention it can change the way we consume products and services today.”
One issue that’s becoming increasingly visible is the environmental impact of product manufacturing. It is incredibly hard for buyers to find credible, in-depth information regarding how their new possessions got into their hands.
There is, of course, the issue of carbon emissions and energy/material waste, but a problem that somehow isn’t often addressed is the inhumane methodology from companies to create their products. Right now, there are over 250 million children alone working in sweatshops. This isn’t exactly a well-known statistic. As a big problem that hasn’t yet even been acknowledged by the world’s biggest players, someone needs to solve it. Luckily, a solution is in the works. This solution is Provenance.
What is Provenance?
Provenance is a company that works with businesses to be completely transparent with their shoppers about what is used to make products, how those products are made, and how these things affect people around the world, in addition to the environment. As the CEO and Founder, Jessi Baker, states in an explanatory video, “Provenance is a platform to enable commerce as a force for good.”
This organization has software that makes credible information easily accessible to shoppers by conveniently placing QR codes on products. They have also developed what they call the “Provenance Framework”, a system that gives products a symbol relating to their various effects. The symbols relate to climate, waste, nature, workers, and communities.
For an issue to be solved, it must first be known. Provenance is making the supply chain issue known, and there are countless other new companies working to do the same for other issues. It’s more than likely that there are now multiple companies working to solve the issue that Provenance brought to light. The FinTech community grows more and more with innovative companies piggybacking off the previous ideas of others to look at an issue and take the solution one step further. Now the heart of innovative financial application not only lies in the financial industry, but countless new companies are appearing with great purpose that stretches across many spheres. Impact FinTech has taken a lot of steps, and thank goodness that it isn’t slowing down.
Another company that leaves an impact on this industry is Olio.Olio is a company devoted to reducing waste and making products cheaper/more accessible for families who need them. It acts as a sharing app for selling, borrowing, lending, and giving away items to people in nearby communities. As a company that focuses specifically on groceries, this is a huge step for businesses in the food industry that would throw out disgusting amounts of perfectly good food. It’s known that between 33-50% of all food produced in the world is never eaten. An organization like Olio exists to lower that number.
To make people more aware of how costly their buying decisions are for the environment, there are companies like Ecolytiq that connect with banks to display clients’ environmental impacts. One of its SaaS (software as a service) features is a CO2 usage calculator. In addition to being helpful information for bank account holders, this is useful for statistical purposes. For that, it’s also much easier to use a technology like this than to use other means for finding statistical information on individuals’ environmental impacts.
One of the most innovative solutions we saw, is a search engine called Ecosia that devotes its profits to planting trees. Given the environmentally harmful industries that destroy ecosystems, Ecosia works to plant native trees in those areas in an effort to restore what was once there. For example, the palm oil industry has destroyed 25% of the rainforest in Indonesia, and Ecosia is currently working to give this industry other sources of income by planting trees that provide alternatives to palm oil on former plantations.
It seems that soon, we will be able to simply name a longstanding problem faced by society with confidence that somewhere, somehow, there’s a FinTech company working to solve it. More and more people are finding ways to apply their technical skill sets to completely different fields. Companies are realizing that they can make great profits by offering services and products that truly benefit their customer bases, themselves, and even those not involved. When more sectors follow FinTech's example, we can assume that the impact that’ll have will be enormous.
Nir Netzer is a Founding Partner at Equitech Group. He is chairman of the Israeli FinTech Association - FinTech Tel Aviv.