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Ohpen: Unlocking Sustainable Finance – Why Digital-First Ecosystems Are Key To Enabling Green Growth

As Environmental, Social, and Governance (ESG) initiatives continue to bathe in the shining light of public opinion, the ball is firmly in the court of financial institutions. It’s up to this latter body to react correctly to the needs of the public, and when considering the wider picture, the needs of the environment too. 

Jan-Lamber Voortman, Managing Director of Lending, Ohpen
Jan-Lamber Voortman, Managing Director of Lending, Ohpen

In this guest-authored piece for The Fintech Times, Jan-Lamber Voortman, the Managing Director of Lending at the Dutch fintech provider of cloud-based core banking solutions Ohpen, discusses how financial institutions can better fund cleaner, more sustainable initiatives, and suggests the forms of technology available to them that will allow them to achieve this efficiently. 

The goal of achieving long-term sustainability is no longer exclusive to political and environmentalist arenas. Protecting our planet is a priority for today’s average consumer across a range of sectors from retail and property, to manufacturing and finance. Consumers are making significant changes to their daily lives to do their bit. They’re also making the most of financial incentives – such as government grants – to continually boost their green-driven motivation. As of April this year, 70% of individuals in the UK would like their investments to ‘achieve good for the planet’.  With a need for convenience and satisfaction ingrained in their DNA, modern consumers are expecting firms and organisations to help them do their bit, too – and fast.

The Chance To Make an Impact

Public concern about the climate crisis is soaring – and we’re increasingly witnessing the rapid convergence of consumer action, financial support, and government commitments, as the issue continues to rise to the top of the global agenda.

Financial organisations stand to make a real impact when it comes to this evolution. Backed by governments, several firms are responding to consumer demand by bringing together all facets of an enormous governmental and financial ecosystem. These organisations focus on enabling significant sustainable loans at a range of levels – for the average consumer, sustainable suppliers, banks, and governmental departments.

In the private homeowners’ sector, for example, Dutch agency Nationaal Warmtefonds facilitates financing so that households and homeowner associations can invest in energy-saving measures. Board Member, Harry de Roo, said of the transition we’re seeing, “We’re at a real inflection point when it comes to consumer action on sustainability, whether they are ethically minded millennials, or boomers looking to optimise the costs of running their homes ahead of retirement. But not everyone can do this so easily. Having access to funds and a repayment structure to support their goal is vital for them.”

Now is the golden opportunity for financial organisations to become the go-to trusted partners for consumers when it comes to making these moves. If done right, they stand to help enable individuals to create healthy, low-cost, and eco-friendly living and working environments.

Digitalisation at the Forefront

So it’s clear that the time is now for delivering cutting-edge sustainable finance options. But it takes an ecosystem of players to ensure they live up to their potential.

Most of the complex aspects of constructing a new finance offering lie tied up in legacy back-end banking software. Providers often need to conduct customised loan calculations, factor in multiple funding sources, automate complex lending processes and also involve extensive loan management. And that’s just to get the new offering off the ground.

As an expert in the space, de Roo again comments on what is needed here, “A digital-first approach is an important strong building block towards satisfying customers’ growing sustainability needs. Pairing an ESG or green business strategy with the nimblest of modern technology will make the construction of a new customer offering easier and quicker.”

In short, providers need the right banking tech partner with a modern cloud-native platform. Mix this in with scalable code and sophisticated APIs that can handle complex back-end infrastructure requirements, and you can establish straight-through, fully automated end-processes.

This then makes it easier for institutions and households to apply, estimate and activate a loan online – often within minutes. On the other side, the financial firms themselves can start to see reduced risk, increased profits, enhanced brand reputation, and attract new, ethically minded customers.

Working Together To Drive Change for Good

We’re already well on our way to empowering more consumers and businesses to take sustainability into their own hands and make their green goals a reality. Financial firms cannot drive this green charge alone, though.

Increasing the accessibility of sustainable finance for society more widely calls for continued cooperation between financial bodies, businesses and consumer groups, the Government, as well as technology providers. Central to the long-term success of this multi-faceted partnership is an overarching ethos of digital transformation, too, that is nimble, agile, and fast-paced.

As the COP26 conference draws nearer, all players in this partnership are already ramping up their respective sustainability strategies. Now is the time to strengthen the links within this ecosystem of experts – with ethics and powerful technology at its crux – to better serve customer needs and play a vital role in stopping the climate crisis in its tracks.

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