Secrets That Make Sustainability The Key To FinTech Growth

Research by McKinsey shows that companies with a strong ESG proposition consistently outperform others financially. 'Going green' has become a competitive edge. Discover the secrets that make sustainability crucial for FinTech growth.

Reinforcing Consumer Trust

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

— Samrah Kazmi, CEO, Women in Sustainable Innovation

Customers now expect more from businesses, especially in terms of their environmental initiatives.

A 71% rise in searches for sustainable goods has been reported over recent years. Consumers are investing more time in discovering and supporting brands that align with their values.

•  66% of consumers are willing to pay more for goods and services from sustainable companies.
•  44% consider ESG issues critical when selecting a financial service provider.
•  25% of customers might switch banks over ESG concerns.
•  45% opt for paperless billing because it is a greener choice.

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 towards a growth goal by making meaning and illustrating how each member contributes to the goal.”

— Melanie Hicks, MGT of America

For FinTech companies, embracing sustainability should start from within, integrating it deeply into the organisation's culture.

Green approaches not only foster a strong company culture but also boost employee engagement. 77% of organisations have reported positive impacts of sustainability initiatives on employee retention.

Moreover, sustainability helps attract new talent, with 53% of the UK workforce prioritising it when choosing where to work.

In terms of overall business growth, companies with strong cultures can experience a 4x increase in revenue. Net-Zero training enhances employee knowledge and improves company outputs through ongoing education.

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 lost in the past 40 years, with 42% of the harvested wood used for paper production.

The financial sector is a significant contributor, with an estimated 507 million documents sent to customers annually - causing the equivalent deforestation of 50,000 trees.

This paper consumption also carries a hefty price. The financial services industry spends around $10.5 (£7.8) billion a year on printing.

For FinTech firms, there's an opportunity not only to enhance internal efficiency but also to lead the way in reducing costs for other financial organisations.

Cutting down on paper usage could result in 37,000 metric tons less greenhouse gas emissions and annual industry savings of £1.3bn.

Already, 40% of banks with sustainability initiatives report increased cost savings and business growth.

Steven Stoffer, Vice President of Sustainability and Development at Smurfit Kappa, encapsulates this well: “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, Modelling & Economics Leader at EY.

Enhancing operational efficiency through digital transformation is essential for business growth. Resource and supply chain management, including reducing and eliminating waste, plays a crucial role in this.

However, the financial industry still relies heavily on paper, with 70% of internal processes being paper-based.

This dependence on legacy systems is not only environmentally damaging but also impacts profitability, as paper-based operations are variable costs that hinder scalability.

With digital solutions readily available, paper becomes a competitive disadvantage.

Already, 72% of UK banks are adopting digital technologies to make their operations more sustainable. FinTech firms investing in green technology can:

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

References:

Profits with Purpose, McKinsey, 2023.

Sustainable Finance, Netguru, 2022.

Huge Rise in Demand for Sustainable Goods, Climate Action, 2023.

FinTech 2022: The Rise of Sustainability in Finance, Strands, 2022.

Building Resilience into ESG Risk Management, AFERM, 2022.

Customers May Switch Banks Due to ESG Concerns, FinTech Magazine, 2023.

Paperless Billing: Good for the Planet, Bad for Your Wealth?, GoCompare, 2023.

Company Culture Stats that Will Make Culture a Priority, Liberty Mind, 2023.

Green Growth and Sustainable Development, OECD, 2023.

Environmental Impact of Paper, The World Counts, 2023.

Financial Services in EMEIA, EY, 2023.

Which Industries Print the Most?, Toner Buzz, 2023.

TCS, Tata Consultancy Services, 2023.

UK Financial Services Failing to Go Paperless, Accountancy Daily, 2023.

Benchmark for Sustainable Banking Research Report, Mobiquity, 2023.

Sustainable Packaging Survey, The Times, 2023.

Banks Slow as a Paper-Based Process, Tearsheet, 2023.

How to Enhance Long-Term Business Value Through Sustainability, EY, 2023.

Reviewed By:

Sabrina McClune, 19.06.24

Sam Kendall, 19.06.24