The UN Environmental Program has been partnering with financial services companies with the goal of promoting sustainable development globally. Their goals include increasing financial inclusion, promoting financial services infrastructure, and funding innovative fintech development. But how does financial services innovation mesh with environmental stewardship?
The answer, and the path forward, include the carbon emission savings when services move from paper-based to digital, and further, into a cashless society. The UN’s partnership with Ant Financial, Alibaba’s financial services arm, is working toward the development of innovative fintech to make the cashless society a reality.
Global fintech development has been focusing on issues of inclusion, privacy, functionality, and market saturation. In China, the use of QR Codes for point of sale purchases tied to mobile money accounts has been very well accepted, and the key to the movement toward their cashless economy. With 710 million internet users in China, and nearly 60% of that total using mobile money for some type of payment, most using either the AliPay or the WeChat app, the market is moving rapidly into acceptance of mobile money and POS transactions, and the cashless economy is not far behind.
There is also significant development in the peer-to-peer lending platform system of credit and small loans. Many in China are foregoing use of their bank for these new innovative fintech solutions. The mobile money apps and systems that have enabled the rapid acceptance of this new infrastructure, seeming to skip from cash to mobile money without ever investing in credit and debit card systems, also means the government or the financial services companies have the ability to collect a significant amount of private data on citizens. How much of this ability to collect and store private data that is acceptable or understood by consumers is probably cultural.
But how do these new fintech systems promote environmental stewardship? While there are some fun apps that allow tracking personal carbon emissions and planting trees after so much carbon savings, the real environmental benefit is cumulative. Consider the system of bridge tolls in New York. When the system went from paper tickets, cash payments, paper receipts, and human toll operators, to automatic digital payments, the carbon savings involved not just the paper saved, or the work involved in collecting, moving, counting, and storing cash. There was also the gas savings when traffic did not have to stop at a toll booth, or when idling cars sat in a congested area. With traffic flowing more smoothly, commute times were lessened. These tiny individual savings, compounded over time and the millions of miles that cars travel on busy bridges, and the savings becomes significant.
With world populations now being measured in billions, efforts to reduce inefficiency in our systems will have significant cumulative effects. Tiny carbon emissions savings can be multiplied across populations. Fintech solutions that are moving us to a cashless economy have the potential to change the environmental playing field considerably.
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