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Secrets That Make Sustainability The Key To FinTech Growth

Research by McKinsey shows that companies with a strong ESG proposition consistently outperform others at the bottom line, meaning ‘going green’ is now a competitive edge. Here are the the secrets that make sustainability key to FinTech growth.

Reinforcing consumer trust

"Consumers are increasingly becoming brand-agnostic and leaning towards products from socially responsible businesses."

- Samrah Kazmi, Founder & CEO, Women in Sustainable Innovation

Customer expectations are growing, especially when it comes to green initiatives powered by businesses.

A 71% rise in searches for sustainable goods is reported over the past five years, with consumers spending more time discovering and investing in brands that align with their values.

Do you have your ESG bases covered? Get the checklist.

Reinvigorating company culture

“Growth strategies can be invigorating or debilitating depending on context and leadership. The worst mistake a leader can make is to lose sight of the importance of buy-in. If your team does not believe in the mantra of growth, all strategic elements will fall flat. Ignite passion toward a growth goal by making meaning and illustrating how each member contributes to the goal.”

- Melanie Hicks, MGT of America

It is vital that FinTech firms take an inside-out approach to sustainability, integrating and promoting it from the core of their organisation. This includes embedding it with their most precious assets: employees.

Green approaches contribute to creating a strong company culture, with 77% of organisations reporting the positive impact of sustainability initiatives on employee engagement and retention.

They also attract new talent, with 53% of the UK workforce revealing that sustainability is important aspect when choosing where to work.

Considering overall business growth, companies with strong cultures see a 4x increase in revenue, with Net-Zero training enhancing employee knowledge and helping to increase company outputs.

 

Cutting costs instead of trees

“Digital transformation is key for financial institutions. Firstly, you eliminate paper, and secondly, you can eliminate branches. As well as being more sustainable, processes become less cost-intensive and margins increase,”

- Mariusz Ożga, former Chief Innovation Officer of Alior Bank.

A forest area the size of Europe has been cut down in the past 40 years, with 42% of the wood harvested used to make paper.

The financial industry is a major contributor to this, sending an estimated 507 million documents to their customers each year - responsible for the equivalent deforestation of 50,000 trees.

As well as environmental impact, this paper usage comes at a monetary cost. In totail, the financial services industry spends an estimated $10.5 (£7.8) billion a year on printing.

FinTech firms have the opportunity not only for increased internal efficiency, but also to become a key driver for other financial organisations in cutting costs.

Reducing paper output has the potential to create greenhouse gas reductions of 37,000 metric tons, along with annual industry savings of £1.3bn.

40% of banks that have already implemented sustainability initiatives report an increase in cost savings and business growth.

In the words of Steven Stoffer, Vice president of Sustainability and Development at Smurfit Kappa, “sustainability and economic benefits go hand-in-hand”.

 

Improving operational efficiency

“Integrating ESG considerations as part of company decision-making often leads to operational and process efficiencies within the business, thereby helping to improve profitability.”

– Andre Toh, Modeling & Economics Leader at EY.

Increasing the efficiency of operations is vital for business growth through digital transformation. Resource and supply chain management, including the reduction and elimination of waste, is a key part in this endeavour.

However, the financial industry still has a long way to go to generate significant savings, with 70% of their internal processes still remaining paper related.

A reliance on legacy processes is not only environmentally impactful but affects bottom line revenue potential, with paper-based operations being a variable cost and therefore a barrier to scalability.

With digital alternatives available, paper is a draw on an organisation’s competitive edge.

An estimated 72% of UK banks are already embracing digital technology to make their business operations greener. FinTech firms that invest in green tech have the opportunity to:

  •   Provide self-service opportunities for their clients and customers.
  •   Digitise Know-Your-Customer (KYC) and Anti-Money Laundering (AML) processes.
  •   Automate customer communications and other resource-intensive operations.

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