CLIMATE FINTECH RISE INSIGHTS REPORT - #HOMEOFFINTECH - RISE BY BARCLAYS
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Climate
FinTech
Rise Insights report
#HomeofFinTech
1 / rise.barclays
Contents
4 The time is right for 24 The green consumer
Climate FinTech
hello
26
Q&A: The rise of the
6
Macro landscape
green retail bank
31
Influencing green consumer
8 Enablers choices with behavioural
economics
9 Data
34 ringing personalisation
B
11 Policy to impact investing
12 Technology 38
Solving the pensions and
environment conundrum
13 From enablers to opportunities
40 Ecosystem update
14 Alternative markets
42 From our Rise sites
16 oyalty peer-to-peer
L
energy trading 48
Programmes and
Strategic Initiatives
18
Embedded carbon removal
50
Making an Unreasonable Impact
20
Sustainable foundations
in the insurance market 52
Rise global network
3 / rise.barclays
The time is right for
Climate FinTech
Tackling climate change is an essential component of the global But how can FinTechs understand the
real-world possibilities and turn ideas into
sustainability agenda and one in which financial services can practical solutions? Collaboration with
To find out more about Barclays’
commitment to a low-carbon economy,
make an important contribution. business and technology teams in banks is a visit our website, where you can also
great place to start. These teams have see our climate dashboard and learn
experience with new patterns of spending, about BlueTrack™, our methodology
The United Nations recognised this when We are also committed to helping finance saving and investing; and witness first-hand for measuring financed emissions.
it created the Principles for Responsible a greener economy. By 2030, we aim to how attitudes towards money are changing.
Banking, a framework to develop a more provide £100 billion of financing for green They are also engaged with the development
To learn more about how to work with
sustainable banking system. Many banks, activity that supports the low-carbon of green financial products; appreciate the
enterprises on Climate FinTech
including Barclays, have signed up to these transition, including for renewables, energy increased emphasis on sustainability in
opportunities, attend one of Rise’s
Principles, which seek to align industry efficiency and sustainable transport. This is capital markets; and understand how to put
enterprise engagement workshops.
practice with the vision set out by the UN's driven by innovative products from our new types of data to use.
Sustainable Development Goals and by the Corporate and Investment Bank, including
2015 Paris Climate Agreement. things like green trade loans, green Based on what the Rise ecosystem has
innovation loans, green deposits and green achieved through collaboration over the last
It's our ambition for Barclays to be a net zero asset finance. Our retail bank, Barclays UK, is five years, I know that synergies exist Sasha Wiggins
bank by 2050. We are already net zero for also helping small businesses to fund green between smaller, more agile FinTechs and Group Head of Public Policy
our own operations, so our focus now is on energy and sustainability projects, and was the teams innovating in large financial
and Corporate Responsibility,
reducing the client emissions that we finance the first mainstream UK bank to launch a institutions. Working together is fruitful. It
Barclays
– so-called ‘financed emissions’. That starts green mortgage. allows both parties to discover new insights
with aligning our financing with the goals of and drives greater, more rewarding
the Paris Agreement, not just for lending but The FinTech sector has an important innovation.
for our capital markets activity as well. contribution to make. I see significant
opportunities for innovative, fast-growth Whatever your interest in Climate FinTech,
To help us do that, we have developed a companies that are developing financial I encourage you to explore this report, learn
methodology to measure our financed technology in supporting the transition. about how financial services are evolving
emissions and track them over time against a Capital is increasingly being deployed into fast to support new low-carbon scenarios
decreasing ‘carbon limit’. We have already the green economy with expectations of and industry enablers, and take part in the
started work to track and reduce the investment returns driven by several factors, exciting innovations you’ll read about – or
financed emissions of our clients in the including technological innovation and invent your own.
energy and power sectors, and we are shifting consumer demand - two areas that
committed to extending this approach to our FinTechs are disrupting. In addition, the
entire client portfolio over time. As we collection and analysis of new types of
progress, we will continue to work closely climate-related data will lead to exciting
with clients to help them better understand value propositions in Climate FinTech.
and manage their transition to the low-
carbon economy.
4 / Rise FinTech Insights 5 / rise.barclays
Macro landscape
Data, policy and technology are enabling startups across
a range of sub-verticals. Take a look at a few of these
startups in the macro Climate FinTech landscape.
Carbon offsetting
and sustainable Risk
Data challenger banks management
Policy ESG data
and reporting
Technology Impact
investing
Energy trading
and marketplaces
6 / Rise FinTech Insights Source: CB Insights 7 / rise.barclays
Data
Quantifying the impact of environmental, social and governance
(ESG) initiatives started over 20 years ago, but in the last three
years, climate change has accelerated the need for new data
sources, improved analytics and better benchmarking.
enablers
Access to data mirrors the growth and Clarity
evolution of Open Banking and Open
Finance over the last decade. In the EU, Broadly speaking, environmental data
the revised Payment Services Directive covers a company’s energy use, waste,
(PSD2) required the UK’s nine biggest conservation efforts, and also environmental
banks to release their data in a secure and risks and how these are being mitigated.
standardised form. Open Finance extends “Broadly speaking” is key. Turning these
this beyond access to banking data, and general terms into well-defined and clear
includes other financial information such as measurements to obtain an accurate
investments, liabilities, lending and payroll. representation of a company’s sustainable
FinTechs have an opportunity to leverage impact isn’t simple. To take just one problem
Three huge areas of change and this data to build use cases around that needs fixing, with the growing use of
transparency and increased connectivity carbon markets, there is potential for double
opportunity are enabling Climate and infrastructure in the sustainability space. counting in carbon offset issuance that must
FinTech. New sources and ways of be avoided to maintain credibility.
treating data combined with emergent According to the Energy and Climate
Intelligence Unit, almost one sixth of global Without the appropriate data points, asset
government policy are allowing GDP is now covered by net-zero emissions managers and investors are unable to easily
compare companies. Take the analogy with
FinTechs to harness technology that targets1. It’s no surprise that data is a key
accounting. Investors wouldn’t consider
enabler of this global change as nations,
informs environmental standards and regions, cities, companies and individuals
examining markets and comparing companies
product design. We spoke to several measure how those targets are being met.
without accounting standards for the data
they’re using. But with ESG data, there is
contributors to discuss how these But as so often with data, this raises
no GAAP (generally accepted accounting
questions. What exactly does it mean to be
enablers support organisations' ESG sustainable, and which metrics should the
principles).
reporting problems, for investors’ industry use? Who sets the data standards? This lack of clarity extends to corporates
sustainability insights and for And what technology will enable us to better who are relatively underserved, with few
understand and project these metrics? accounting data requirements and standards.
consumers’ growing adoption of
Whether it's data in (data tracking and
sustainable patterns of consumption. Although the standardisation of emissions recording) or data out
environmental (as well as societal and (requirements around reporting), this
governance) data has accelerated in the lack of clarity affects sustainability
last few years, these questions aren’t always and net zero policies across
easy to answer. Three things are currently corporations and their supply
in short supply: clarity, more granular chains, an area that has been
data and tools. particularly complex and
undefined.
8 / Rise FinTech Insights 1. Energy and Climate Intelligence Unit 9 / rise.barclays
Policy
As more data sources are defined and Tools 15 countries already have policies to achieve net zero by 2050,
environmental data frameworks take shape,
FinTechs have the opportunity to access have proposed it or are considering it.
Investors and financial institutions need
more granular transactional, expense, reporting tools to make sense of environmental
accounting and investment data sets and
data and to prepare submissions to regulators
develop specific use cases and products to More than 1,000 businesses are working Should we anticipate a single, globally
and other external bodies. The tools must
accelerate innovation. with the Science Based Targets initiative recognised data standard? Probably not.
allow users to easily align data and
(SBTi) to reduce their emissions in line with Alternative frameworks may overlap and have
frameworks, and identify meaning that steers
climate science. And more than one third of commonalities but different standards will
financial decision-making towards reduced
More granular data environmental impacts and risk exposure.
the FTSE 100 have joined the UN's Race to likely always exist. It's possible that de-facto
Zero campaign. standards will emerge and be accepted,
Finding, cleansing and comparing reliable especially in less regulated geographies,
Collaborations with institutions are more based on the work of individual providers
data is hard. Currently, it’s spread across National governments, and leading industry
likely if FinTechs can show a unique who take the lead in developing data sources.
many documents and websites, and not and academic groups are collaborating on
approach to data and demonstrate how This means that the key to comparing green
reported in a consistent way. What’s needed common standards and best practice around
other companies won’t be able to clone it. investments in international markets will be to
is the capability to assess how well companies disclosure scores, with the Task Force on
FinTechs must clearly demonstrate how examine and understand the differences
are doing against, say, the UN's broad Climate-related Financial Disclosures (TCFD)
their data or tools bring new information to aligning change in regulation and policy. The between frameworks and, at a more granular
financial inclusion or water usage goals, and decision makers that creates value, such Task Force, comprising 31 members from level, the factors used within frameworks.
ways of making that assessment robust when as the eligibility of green products, or across the G20, aims to develop consistent That can be complex but FinTechs are helping
reporting requirements and data standards improvements in alpha (a basic performance climate-related financial risk disclosures for address the problem.
change. But right now, there are gaps in the indicator of a fund) or beta (the impact of a
measurements and it’s difficult use by companies, banks and investors.
fund's volatility on performance).
to identify the data that describes how
Collaboration is taking place partly because
" One of the things that I get most
companies' and customers' decisions affect
the bottom line. Such measurement " FinTechs have the opportunity governments are involved in programmes like excited about when I deal with
capabilities would really add value.
to become the flag bearers for
TCFD, but also because the explosion in global FinTech is that I don’t know what
investing means investors and asset managers
better ESG data." need to compare companies from country to they’re going to come up with."
FinTechs’ ability to put blue-sky thinking to
country. As the world’s most international
practical use is allowing them to discover
exchange2, London is leading best practice Mark Carney,
new, granular data sources and metrics that Katherine Wilson,
and, like other global financial hubs, is Secretary-General’s Special Envoy
the traditional vendors are likely to have VC at Illuminate Financial
promoting globally consistent disclosure for Climate Action and Finance, United Nations
missed. Whether those discoveries amount
standards for ESG. The EU, Canada, India,
to 5% or 50% of the total meaningful data You don’t have to go it alone. Climate New Zealand and China are also developing
required to accurately and reliably measure FinTechs are also adding value to well- A global initiative of interest to the FinTech
taxonomies to define green business activities.
environmental performance is difficult to established data vendors and other financial ecosystem is the Green Digital Finance
say. One thing is certain. There’s a lot we service providers by delivering Alliance (GDFA), a partnership between Ant
"Agreeing on policy details such as weightings
don’t know so even if it’s 5%, the financial enhancements and add-ons to their product Financial, China’s leading online and mobile
attributed to some variables, can be hard. For
opportunity is enormous given the size of offerings, while also creating marketplaces financial services provider, and the UN
example, some investors will overweight
the market for data. that allow corporates to find a respective Environment Programme, the global
nuclear power as a zero-carbon power source.
offset partner based on specific environmental authority. GDFA promotes the
Others will underweight it based on concerns
sustainability mandates. development of current and emerging digital
over its waste. Much research and consensus
technologies to advance sustainable finance,
are required to decide the point of balance. Or,
and creates publications about specific
in finance, the emissions impact of Bitcoin may
technologies and the digital sustainable
2. London Stock Exchange Group be high now, but technology and investment
landscape in individual countries4.
3. New York Times companies are actively seeking ways to make
10 / Rise FinTech Insights 4. Green Digital Finance Alliance its production greener3. 11 / rise.barclays
Technology From enablers to opportunities
Any technology that opens new routes to customer The three enablers – data, policy and technology –
engagement or removes friction for corporates has are supporting the development of products and services
a place in new green finance products. demonstrating the best of FinTech innovation.
Perhaps the technology that’s most relevant " Open Banking can track the Data providers like Net Purpose will begin and complex reporting journey. Nossa Data
to Climate FinTech is blockchain. It’s a vital to quantify many of the aspects of company provides companies with a platform with
enabler in tracking the highly connected
carbon impact of transactions and behaviour which, until now, have sometimes simple ESG reporting templates, data
world of carbon emissions and energy encourage lifestyle changes." been viewed as largely subjective and more collection, workflow optimisation, and
consumption. It makes taking action of an afterthought4. Data points like this will robust peer and investor analytics.
much simpler. Bruno Werneck de Almeida, Corporate and move from being alternative to conventional
Business Development Lead, Plaid and any market participant not factoring Up until this point, action has been driven
For example, blockchain allows smart energy them into their analysis may be putting by ‘pull factors’, particularly regulatory clarity
distribution to take place, verifying how themselves at risk of mispricing assets. and policy, that are pulling corporations to act
The convergence of blockchain, IoT and AI
utility companies have redistributed their means that physical objects will be able to in more sustainable ways. However, we’re
overproduction of energy. How else could capture, validate and report ‘impact’ data In the policy field, YvesBlue, for example, now seeing more ‘push factors’ led by
that be done without connecting a myriad of that reflects the real-world effect the has created a platform for investors that increased engagement, profit motives and
incompatible systems and verifying data at environment is having on them, or that pulls together the disparate and growing value-based signals that are pushing
each connection? FinTechs are already they’re having on the environment. The data number of ESG data sources, and presents corporations and consumers towards
involved in this world of smart energy. One can then be uploaded to storage devices a consolidated view of the impact sustainable products more organically.
example is Dipole, the distributed energy where algorithms can analyse it, before it’s characteristics of the companies in a
aggregator that's decarbonising the energy reported to distributed ledgers. portfolio. Investors can visualise this across There’s no doubt that further innovations
sector, using blockchain, and the Internet of regulatory frameworks, compare and across financial markets and the consumer
Things (IoT), to manage consumption and to prioritise scenarios, and then report back space will be demanded by consumers and
IoT, 5G and AI will allow investors to track
allow energy providers to trade electricity. to clients. clients, with Climate FinTech in a prime
huge volumes of metrics on physical assets
without human intervention and review the position to tackle the challenges.
data against a chosen ESG taxonomy to Nossa Data, an alumnus of the 2021 New
examine the assets’ environmental York Barclays Accelerator, powered by
performance. Techstars is streamlining the ESG world for
corporates, simplifying all parts of their long
12 / Rise FinTech Insights 4. Springer 13 / rise.barclays
New financial markets for environmental assets
Technology has historically played a big The traditional insurance sector is innovating
alternative
part in the energy and environmental too through collaboration and adopting the
sectors. Nowadays, with green finance latest tech to offer new insurance products
fusing ‘digital’ with ‘sustainable’, tech that promote sustainable behaviour.
innovations are more fundamental.
The insurance market is also shifting
For example, Patch is using the smart towards greater collaboration of big players
markets
application of APIs to help digital banks with smaller companies and use of the latest
calculate carbon footprints and identify technologies. New ways of underwriting
offset projects to programmatically and disruptive product offerings are
remove carbon from their operations. becoming established.
Power Ledger’s blockchain platform is Common to all of these scenarios is the
being used to decentralise energy trading involvement of FinTechs, who continue to
and provide trusted accounting and drive innovation in markets.
settlement solutions in energy markets.
The loyalty peer-to-peer programmes
that enable this allow exciting new ways " Global ESG assets are on
for brands to engage consumers while track to exceed $53 trillion
also helping them meet their
Can you really get beer in exchange for electricity? sustainability goals. by 2025."
Yes. Are there tradable assets that truly reflect
Asset managers and institutional investors Bloomberg Intelligence
physical carbon allowances? Also yes.
can now track and index carbon in their
assets and portfolios, and remove ‘their’
FinTechs are involved in shaping new asset classes, CO2 from the atmosphere through
and markets are adapting to the increasing sustainable operating practices. Investing
in carbon has become easier, allowing
popularity of green solutions. institutions to trade in green financial
products that directly reflect the value
of physical carbon allowances.
14 / Rise FinTech Insights 15 / rise.barclays
Loyalty peer-to-peer A case study:
Energy beyond carbon, loyalty beyond air miles
energy trading
For any ESG manager, sourcing green Participants in the electricity exchange
energy is a difficult balance to achieve. programme can log in at any time and find
Blockchain is reducing costs, increasing trust between On one hand, companies need to procure out how much electricity they’ve produced
electricity at an affordable rate. On the for the brewery and how much beer they’ve
customers and brands, and decentralising energy trading. other, companies also need to make sure its accrued. And it's not long after they’ve
credentials are solid enough for when the provided the electricity that a van pulls up
media start scrutinising what they are outside to deliver their beer.
Customers are increasingly scrutinising like Power Ledger’s blockchain platform, doing. This balance between perception,
brands’ claims of sustainability. With allows all the participants in the CUB reality and the financing of green energy There are so many different ways to source
energy, there’s a disconnect in public programme to do instantaneously what is has never been easy. energy, but when you drill down to it they
perception between power sources, their quite an extensive and complex piece of all come with issues and complications.
green credentials, and how they get traded accounting, without the aid of any bank or Carlton United Brewery (CUB) and Power CUB's energy exchange avoids these, and
in highly complex often quite circuitous and ‘trusted party’. Ledger in Australia are trying a new option. has the added benefit of promoting brand
abstract ways1. Brands can address this engagement. The brand gets to engage with
issue by engaging in new ways that build This cost efficiency feature brought by After CUB was acquired in 2020, it set about their customers on a whole other level. They
trust – like loyalty peer-to-peer (P2P) blockchain technology, combined with its helping to meet a sustainability goal of its can stop talking about being sustainable and
programmes. intrinsic security (traditional systems are new owner, Asahi Beverages. That goal was just start demonstrating it by buying their
more likely to get hacked or corrupted), to be powered entirely by 100% renewable customers’ solar energy.
Loyalty P2P creates an increased and make blockchain key to decentralised energy energy by 2025, but balancing the cost of
dynamic interaction with consumers by trading. The public likes the blockchain part electricity while also ensuring its green Sustainability goals met.
turning a commodity (for example, energy) of it, almost like it’s become a brand in itself. credentials was difficult. Brand engagement increased.
produced by them into a currency that can
be exchanged for goods, services or
individual recognition.
"The brand can stop talking about Loyalty P2P energy trading provided a
solution. It allows CUB’s customers to sign Dr Jemma Green
being sustainable and just start up to a deal supplying the brewery with their Executive Chairman of
Loyalty P2P energy trading turns the trust demonstrating it." excess rooftop solar electricity, in exchange Power Ledger
challenge into an opportunity for brands by for beer. The programme involved Power
using customers’ interest in sustainability Ledger’s blockchain-powered software jemmagreen
Maybe the connection between CUB’s beer
and getting them to do the work of a and solar electricity isn’t a particularly platform that facilitates the exchange of
traditional energy provider. In the case of intuitive one. But it’s easy to imagine many energy at a decentralised scale.
Carlton United Brewery (CUB, see the case other consumer goods and services brands
study on the opposite page), the customer’s looking to loyalty P2P as a way to solve their
acting as a solar farm and providing a energy procurement headaches in the future.
significant proportion of the electricity the Telecoms, supermarkets, fashion, hospitality,
brewery needs to make the beer. restaurants, food and beverages sectors are
all now expressing an interest, but they will
Like many really good ideas, you might ask need help to integrate sustainability into their
why this hasn’t been done before. Part of the customer journeys using innovative products,
answer is technology. Before the arrival of such as those provided by FinTechs.
blockchain, the numerous small transactions
between the various parties would collectively Thinking back to the 1990s, loyalty
have been too expensive. Blockchain makes programmes were all predicated on air miles
them economical. The accounting and and burning fossil fuel in a conspicuous way.
settlement process, based on technology They’ve come a long way since then.
16 / Rise FinTech Insights 1. BBC 17 / rise.barclays
Embedded
carbon removal
Embedded carbon removal enables developers to build a whole new
set of Climate FinTech products and features, fostering a more
sustainable financial services industry.
Now poised to be at the vanguard of emissions through nature-based solutions,
embedding environmental sustainability such as reforestation, and leading-edge
directly into digital products, a number of negative emissions technologies, such as
FinTech startups have recently gone to direct air capture, biochar (charcoal Using Patch’s platform, businesses can: In digital banking, we expect to see a
market with climate-focused products produced from biomass) and mineralisation growing number of applications providing
across banking, wealth and infrastructure. processes. The science is clear that both •A
chieve net zero goals (they remove users with the option to offset emissions for
levers need to be pulled to reduce the as much carbon as they emit) or negative particular purchases – say a flight or petrol
In a few years, a majority of FinTech impact of climate change. emissions goals (they remove more than – or offering carbon removal as a credit or
applications will offer environmentally they emit) debit card reward type. Car insurance
sustainable products in one way or another. Patch focuses on carbon removal, facilitating providers are exploring how they can let
This shift to sustainability across industries negative emissions for businesses. The •E
mbed carbon removal into their customers offset their driving emissions
is imperative to address climate change, API-first platform makes it possible for products and services directly in a user portal. And all FinTech
so the business opportunity to offer businesses to programmatically remove companies can offset operational emissions,
sustainable products in the FinTech sphere carbon from a growing network of removal There are a number of FinTech use cases which they should also be working to reduce,
is incredibly compelling. projects across the globe. APIs, or that are well suited for embedded carbon and position their brands and products as
application programming interfaces, enable removal. Take cryptocurrency. Bitcoin environmentally sustainable.
Studies show that 88% of consumers want software to communicate with each other, mining has come under heavy scrutiny for
brands to help them live more sustainably1. and—in the case of API providers such as its carbon footprint, which is estimated at If you’re a FinTech company wanting to
Products marketed as sustainable show Twilio, Plaid, and Patch—can serve as an nearly 37 megatons of CO2 annually3. This efficiently acquire and retain users and
growth at over five times the rate of those external infrastructure layer upon which energy requirement means Tesla’s recent deliver sticky, engaging experiences, we
that are not2. There’s clear evidence that developers can build products or features $1.5 billion investment in Bitcoin has an encourage you to explore climate-themed
sustainability can improve employee within their applications. In the case of estimated carbon footprint equivalent to products and features. Some users won’t
acquisition and retention, and increase Patch, developers are able to embed project the annual emissions of 1.8 million cars4. care. But for the 88% of those who do,
workplace satisfaction and overall metadata into their digital experiences, Many potential Bitcoin buyers may be you’ll be offering a powerful combination
productivity in the workplace. generate emissions estimates for certain put off by this negative environmental of financial services and environmental
activities, and then programmatically order impact. We imagine a world in which responsibility.
To balance carbon emissions budgets, there carbon removal from our network of projects crypto exchanges offer their users the
are two primary levers businesses can pull. across the globe. option to offset the carbon footprint
First, they can reduce the amount of carbon associated with their Bitcoin purchases. Brennan Spellacy
they emit into the atmosphere using more CEO, Patch
energy efficient business operations and
renewable energy. Beyond that, businesses atch.io
p
can also opt to remove any unavoidable bspellacy
@bspellacy_
1. Forbes 2018 3. Digiconomist
18 / Rise FinTech Insights 2. Harvard Business Review 4. Cointelegraph 19 / rise.barclaysSustainable foundations
in the insurance market
Investors, rating agencies, regulators and consumers are looking for
insurers to intensify their efforts in sustainability.
This is backed up by a 2020 survey1, finding Sustainable insurance products
that only 14% of the insurance sector
Underwriting
regarded ESG factors to be extremely Recognising the importance of engineering
Climate change is often described as having
important in the underwriting process (and behavioural change in customers, many
three types of risk2:
10% viewed them as unimportant), indicating insurers are expanding beyond traditional
that some insurers are still adapting to the risk transfer activities into risk mitigation
ever-changing ESG landscape. • Physical: the risk resulting directly from
to develop engagement strategies that
extreme climate-related events
shift customer behaviour in a more
Nonetheless, industry leaders no longer sustainable direction.
view ESG defensively and instead see its • Transition: the risk resulting from policies
opportunities. The industry is reacting and regulation aimed at decarbonizing
A new impetus in the industry, 'impact
with better climate-risk modelling and it economies
alignment', aims to prevent unwanted events
increasingly recognises its part in promoting and instead promote positive environment
• Liability: the risk resulting from clients
climate resilience, with larger insurers outcomes. This makes perfect ecological
suffering a loss resulting from a physical or
increasingly using tools like risk dashboards, and economic sense, as insurers are
transition risk (for example, if an investor
risk capital allocation and limit consumption increasingly aware of the ESG underwriting
claims against a business that makes a loss
reports to understand early-warning indicators dividend in a growing market that leads the
due to a climate-related event)
of breaking climate risks and the impacts on way in driving a low carbon economy. In
capital allocation. expectation of a rise in demand, insurers are
Uniquely, insurers are susceptible to all three
risk types and are taking steps to address them. already innovating with new types of cover
The industry leaders now also conduct their for climate-related risks.
own organisation-wide stress tests and include
climate risk assessments more consistently in The emergence of new hazards has required For consumers, the innovation has mainly
their broader enterprise risk management new underwriting solutions and new centred on buildings insurance and motor
(ERM) framework. These activities help in products. Today’s challenge for many insurance. In the latter class, many providers
assessing capital and liquidity implications and insurers is that traditional models are offer discounts for low emission vehicles. But
in identifying and correlating impacts across relatively simple – they merely reflect the now, depending on your location, you can
different lines of business and investments. experiences of past losses and don’t also get limited mileage motor cover, with
adequately predict the future. With climate gradual discounts depending on the
Regulators are increasingly mandating change, those models become less useful. distances covered. Research has shown that
disclosure and stress-testing, and bodies like New thinking is required in managing such packages encourage customers to use
the International Association of Insurance portfolios, but the compounding nature their vehicles less, leading both to reduced
Supervisors (IAIS) are working to share best of climate losses adds complexity. greenhouse gas emissions and claims. In
practice on ESG regulation within the sector. another green scenario, in France you can
Ratings agencies too are increasing pressure get covered if you hire a small urban,
on insurers to take into account growing low-emissions vehicle during the week and
vulnerabilities to future payouts by the sector. a large family car over the weekend or for
1. AM Best
20 / Rise FinTech Insights 2. Deloitte 21 / rise.barclaysholidays, thereby reducing overall emissions Innovation and collaboration Other InsurTechs are enabling on-demand
without the need to purchase two cars. insurance for micro-events (like borrowing
2020 was a difficult year for the insurance your neighbour’s car) as well as peer-to-
For companies, new and sustainable peer insurance (when individuals pool
industry, but it saw extraordinary digital
insurance includes pollution liability insurance, a premium).
transformation as the pandemic forced
warranty insurance (to increase confidence in
incumbents to explore digital distribution
the long-term performance and financial It’s becoming more common for incumbents
channels, enhance back-office capabilities
attractiveness of photovoltaic products like to partner with InsurTech companies in an
and leverage analytics in new ways. The
solar panels), environmental liability insurance effort to enhance the customer experience,
demand for digital solutions continues to
(for damage to the environment caused by up-sell and cross-sell, generate cost
increase across the value chain, from quote
companies’ operations), crop insurance and efficiencies and explore new markets. As
issuance to claim settlement.
flood insurance. with FinTechs and banking, incumbents in
New platforms, like Pega, and cloud insurance often face barriers to innovation
With global renewable energy capacities set
solutions are driving operational efficiency, due to legacy technology, and InsurTechs
to more than triple by 2050, the renewables
but InsurTech companies really bring their lack the experience operating in one of the
sector is growing. Energy producers will
prowess in designing simple customer oldest financial insurance markets.
increasingly need insurance for new energy
experiences and, perhaps most importantly, Collaboration, where both companies form
installations. Accordingly, risk consulting and
analytics with cutting-edge products such a strong relationship and learn from each
risk service solutions supporting those sites
as ultra-customised policies and using new other, is key to disruption in the industry.
and their underlying technologies will also
be required. streams of data from internet-enabled
devices to dynamically price premiums
New approaches to close protection gaps according to observed behaviour. This drive
have inspired new thinking on sustainable in precision allows products to be priced Cedric Leung
insurance. For example, Allianz proposes more competitively. Financial Institutions Group,
that the insurance sector can support clients’ Barclays International
transition journey by offering3: Some InsurTech companies are also cedric-leung-04861577
experimenting with AI to automate the
• Policies that support upgrades to eco- tasks of brokers and find the right mix of
labelled appliances, and that encourage policies to complete an individual’s
people to repair rather than replace products coverage. An example of what’s possible
is Lemonade4, the US-based insurer,
• Insurance solutions for car-sharing and disrupting the buildings insurance model
the transition to electric vehicles, including with AI and behavioural economics to
vehicle batteries and energy infrastructure evolve traditional insurance. This is unusual
in the highly specialist industry with its
• Support as a mediator, service provider high barrier to entry (due to regulation
and risk bearer to help accelerate the and capital requirement), and other
take-up of energy efficiency measures solutions are likely to follow.
in real estate properties
If impact alignment succeeds globally, a
fraction of the industry’s capital could make
a substantial impact on global sustainability.
22 / Rise FinTech Insights 3. Allianz 4. Forbes 23 / rise.barclaysEmpowering consumers to make green decisions
FinTechs are seeking to innovate and OpenInvest uses technology to mainstream
green
empower individuals to turn climate socially responsible investing, as individuals
the
thinking into climate action. seek an ethical way to invest.
Transactions are a rich data source. They Perhaps nothing typifies an individual’s
can broaden the understanding of how long-term commitment to the planet like
consumption affects the climate. And an ‘ethical’ pension. As more of us grow our
personal finance management tools – pension pots with the environment in mind,
consumer
standalone or built into a bank’s or utility Cushon is giving people a more active say
provider’s app – can use the data to tell users in how pension investments are made.
that they’re purchasing a lot of fossil fuels,
analyse their use and provide ways
to soften the environmental hit.
" Highly empowered consumers
seek and champion brands that
In the US, companies like Aspiration have commit to sustainability."
a green take on the shift toward digital
banking. They foster consumer action with
Forrester
socially-conscious and sustainable cash
Debit cards can work for you in new ways, management services, enhancing the trust
like helping you go green. You can even round between customers and banks. (Aspiration is
the company behind the tree-planting idea.)
up your card purchases to plant trees.
Surfacing insights into consumer behaviour
By understanding customers’ aspirations and is a great way of applying behavioural
developing the products and services that meet economics to environmental data. It’s an
imaginative fusion of data science and
their needs, FinTechs are playing a pivotal role FinTech. Envaluate, a London-based startup,
in supporting green consumers. is using research-based behavioural
economics to create new technology that’s
good for both individuals and banks.
24 / Rise FinTech Insights 25 / rise.barclaysQ&A: The rise of the
green retail bank
Green consumer banking is one of the most direct ways that
individuals can understand their impact on the environment, and
challenger banks are helping their customers see the link between
their money and their values. Susana Lacouture, FinTech Associate
for Barclays Investment Bank, spoke with Andrei Cherny, Co-Founder
and CEO of Aspiration, on the success of green retail banking.
Susana Lacouture: Tell us a little about concept of sustainable money into a reality.
Aspiration’s aims. That was the inspiration for Aspiration.
Andrei Cherny: We’re on a mission to build While we have seen ESG investing grow by consumers in their financial lives. We’ve seen SL: Aspiration has amassed an amazing
a better world. Aspiration is a 'Sustainability incredible leaps and bounds, especially over a lot of movement on that front over the past number of customers, so the platform is
as a Service' platform that offers ways for the past two or three years, when we started couple of years, but there is certainly still clearly resonating. What is driving that
individuals and businesses to align financial Aspiration eight years ago it was clear that more work to do. growth, adoption and engagement?
needs with their values. ESG investing wasn’t enough – we needed
ESG banking, saving and spending. SL: Will traditional retail banks follow suit or AC: We’ve seen that growth increase over
SL: What was your inspiration to tackle partner with FinTechs to address this demand the past six years since inception. The
climate change through a consumer SL: What steps are you taking to educate in the market? impact of COVID-19 has really supercharged
finance solution? Americans on climate change and encourage that growth. Not only has there been a
action through the use of your products? AC: We are seeing with Aspiration a real greater movement towards digital products
AC: Climate change is an issue that I’ve been acceleration over the past few years as across the board, specifically financial
engaged with for 25 years, going back to AC: Most people care a great deal about a people seek out ways to align their money solutions, but there has also been what I
when I was a young person with the incredible challenge like climate change. They’re and their values and to bring ESG into all think of as a ‘flight to sustainability’, as
opportunity to work for then Vice President Al changing the way they power their homes, aspects of their financial life. When you see opposed to the traditional flight to safety and
Gore in the White House on the issue that we get to work or the kinds of products they buy that kind of trend, it creates an enormous a return to the tried and true that people
called global warming at the time. in the grocery store, but then think nothing market opportunity, and so it is no surprise might have expected in this kind of crisis.
about buying those products with a big-bank that we are seeing a lot of companies in
Since then, we’ve seen the rise of sustainable debit or credit card. different sectors jumping into aspects of the What we’ve seen at Aspiration, even more
energy companies transforming the energy sustainable money revolution. It is going to than before the pandemic, is consumers
industry, the growth of sustainable People might not realise that their deposits be a multi-trillion-dollar trend. The growth thinking about what kind of world they want
transportation transforming the auto in a bank are not sitting in a vault but are in new startups and their acceleration in to live in, and about what really matters to
industry, and yet it was clear to me that if we being lent out and a large portion of those the space really speaks to the scale of them (whether it’s the need to buy plant-
really wanted to have the kind of impact we deposits are being used to fund oil and gas the opportunity. based foods or any other imperative of the
needed on an issue like climate change and exploration, pipelines and the like. There is consumer landscape). I really think that the
the other ESG challenges that we are facing, an education process to help that part of the COVID-19 impact has supercharged the
we needed to have a financial institution ‘conscious consumer’ demographic really sustainable money revolution and there is
for consumers that was going to turn the understand that they can also be conscious no going back.
26 / Rise FinTech Insights 27 / rise.barclaysSL: Could you tell us about the Aspiration SL: While we are on the subject of products, us to grow in reaching more customers
Impact Measurement and other data congratulations on launching the Aspiration and providing more products here in the US
Aspiration is tracking for their users? How Zero credit card. Could you say more about and other countries. And our Aspiration
does that tie into customer engagement and your products and their impact? Sustainable Impact Services arm is helping all
accountability? kinds of businesses meet the sustainability
AC: We are really excited to be rolling out demands they are facing from government,
AC: Aspiration Impact Measurement (AIM) is our Aspiration Zero credit card. It’s the first shareholders, employees and customers alike.
something that we launched almost five credit card that enables customers to reduce
years ago and it really is a first and one-of-a- their carbon footprint by using it on a daily SL: If you had to identify one key lesson from
kind offering that empowers consumers by basis and rewards them for doing so. 70% of your journey as an entrepreneur in the
allowing them to see their own daily personal Americans are concerned about the climate sector, what would it be?
sustainability score based on where they are crisis and 35% are highly alarmed by it. This
spending their money. Think of it as a Fitbit tool allows them to reduce their carbon AC: When we first started in 2013, telling
for sustainability. footprint easily and automatically – without investors that we were going to launch a
changing their behaviour. financial institution that would provide an
It also shows you the People and Planet alternative to big banks built around ESG and
scores of different places where you might It builds on our plant-your-change sustainability, that would allow customers to
be thinking of making a purchase. So if programme that we launched last year for pick their fee (even if it was zero) and that
you’re walking down a street in New York our debit cards, and then launched at would give 10% of its earnings to charity, it led
and there is a Duane Reade, a CVS and a plantyourchange.com. This allows customers to some pretty short meetings. My advice is
Walgreens across the street from one to plant a tree with every purchase they that if people aren’t telling you “you are crazy”
another, it helps you make a decision make with any credit or debit card simply by then you aren’t thinking big enough.
between them on the basis of both how rounding up that purchase to the nearest
those businesses treat their employees (the dollar (if the card enables that feature). The There is an enormous opportunity to sail into
People score) and how they treat the Aspiration community has planted over 10 the sustainability revolution that’s transforming
environment (the Planet score). million trees in the past year which has the all aspects of our lives. By aligning the ways
collective carbon impact of taking every car in which a company can do well and do good
Americans spend $36 billion a day as in West Virginia off the road for a year. But at the same time, you are able to marry profit
consumers. That is an enormous amount that’s just the beginning. As we scale, so will and purpose together in ways that not only
of power that they can wield through their our ESG and climate impact. create a lot of economic value but also
dollars to give them a voice and a vote. There create societal value.
are many people who want to take this sort SL: What’s next for Aspiration and the future
of action. of green retail banking?
Andrei Cherny
Co-Founder and CEO,
AIM is a unique tool that allows them to, AC: We think a third of the US population
and it’s built right into the app that they use (and even more than that in other parts of Aspiration
for their day-to-day spending, saving and the world) are looking to bring conscious andreicherny
banking. consumption and sustainability into the core @AndreiCherny
of their financial life. Aspiration has really led
this type of ESG and sustainability-focused
financial service. While we’ve brought that Susana Lacouture
to people’s banking lives, credit cards and FinTech Associate,
investments, there is still enormous room for Barclays International
susanalacouture
28 / Rise FinTech Insights 29 / rise.barclaysInfluencing green consumer
choices with behavioural
economics
Public concern for climate change is at an all-time high and consumers
want values to be reflected in the products and services they use.
Green behaviour differs among individuals Envaluate is conducting research with
and is influenced by a number of variables University College London’s Centre for
such as income, attitudes to climate change Behaviour Change to determine the optimal
and personality (for example, their degree of combination of behavioural change
activism). Building ‘green profiles’ of techniques to get people to reduce their
consumers can segment the market and help carbon footprint. Informed by this research,
to get the right products to the right people, our technology can connect to users’ bank
increasing the uptake of green products and accounts through secure APIs and analyse
accelerating the transition to net zero. their spending to give feedback on the impact
of their purchase, allowing users to monitor
Data can create visibility. One example is their behaviour and make changes (see the
smart meters, where the goal is that case study on Envaluate). Metrics and charts
households will change their daily behaviour if such as a monthly carbon score can be
they understand how it impacts their energy displayed, as well as breakdowns by different
consumption. We need to make it easy for sectors (e.g. transport) that highlight users’
consumers to adopt greener habits, and smart most carbon-intensive purchases. By also
meters achieve this by automatically taking implementing personalised tips, users can see
readings and reducing energy bills. the positive impact they have on their scores,
which helps to close the intention-action gap.
When it comes to green behaviour, there
is an intention-action gap. There is a Social comparison is an important method of
disconnect between the values people say inducing behaviour change. Envaluate, for
they have and how this translates to their example, incorporate this into their product
consumption. Framing language can be used through benchmarking against UK averages.
to avoid the ‘doom and gloom’ of climate Put simply, users who fall below the average
change and to motivate people with a sense are motivated by guilt and competition to
of urgency and optimism. Prompts or cues reduce their carbon footprint. And using the
can be used to shape good habits both right language encourages ‘above-average’
digitally and in person, such as placing users to stay on track and lead by example.
reusable cups at the front of a till when we
order our morning coffee. While it’s important Read more about Envaluate over the page.
to make people feel good about buying
sustainable products, the focus should be on
creating the products with the most positive
impact and avoiding greenwashing (glossing
over facts to appear green).
30 / Rise FinTech Insights 31 / rise.barclaysCompany spotlight:
Envaluate manages individuals’ carbon footprints
and helps them lead a greener life.
The company Key features
Carbon footprint should become a The London-based company received Transaction-level Carbon scoring Simple, API-enabled
significant factor in decision making, pre-seed investment from Bethnal Green analysis and feedback product
similar to price. Envaluate is an early- Ventures, Europe’s largest tech for good • ‘CO2 per pound’
stage startup aiming to achieve this by VC, and rolled off their accelerator • Estimates, using factors take into • Banks enable the
helping consumers to measure and programme in December 2020. They unique Carbon account what spending software via an API
reduce their carbon footprint through also received investment from Atomico Models, a carbon across categories and
analysis of their spending habits. Angel, Harry McLaverty. impact for each brands • Users log in to their
transaction made existing mobile
• Deep level of analysis banking apps to view
• Provides analytics and unlocks the footprints their carbon footprint
The proposition tips to help lead a of specific products data
greener life
• Leverages Open
Banking technology
Over 70% of adults in the UK are By partnering with retail banks, our
concerned about climate change, yet technology can reach a wider audience
often feel overwhelmed and unsure what to achieve large-scale climate impact, Working with Barclays The team
actions to take. Data shows that people and also be a platform for banks to
also want to see green values from their segment their customers and launch
bank. Retail banks are looking for green products. Banks benefit by being
Envaluate participated in the 2021 Sabrina Gill
innovative solutions to retain climate- more attractive to climate-conscious
Barclays Black Founder Accelerator, Co-founder at
conscious customers and increase customers, enhancing their sustainability
kickstarting their relationships with Envaluate
stickiness, while also facing a rising agendas and by increasing the stickiness
Barclays and working with the
pressure to put sustainability at the of their mobile app. sabrina-gill1
Innovation team in their Chief
forefront of their operations.
Technology Office.
envaluate.co.uk Ahmed Babikir
@envaluate Co-founder at
Envaluate
ahmedbabikir
32 / Rise FinTech Insights 33 / rise.barclaysBringing personalisation
to impact investing
Impact investing is transforming from being a standalone product
to a disruptive service for consumers based on transparency,
personalisation, and new models of engagement.
ESG, especially the environmental side, Individual consumption is
is disrupting how individuals are choosing
to invest their money. Though large
driving a new model
corporations are educating their audiences
about the need for change and are taking The psychology of investing is changing, and
steps themselves, individuals are having a with it, the way that investment products
major impact. So much so, that we can work is being re-examined. Transparency
think of ESG as a new paradigm for and personalisation through digital channels
consumer investing. are giving consumers the power to engage
with and act on their ESG values.
Traditionally, well-paid experts have issued
new investment products through legacy In the pre-digital era, music was packaged
fund vehicles. While understanding and and sold in the form of CDs, without the
interpreting all the facts and figures may ability to purchase individual tracks
be easy for corporations, it’s difficult and according to taste and preference. From the
time-consuming for individuals. Thanks to perspective of consumption and simplicity,
FinTech, this product-centric industry the experience wasn’t great. Nowadays, it’s
model is being turned on its head. all much easier – with consumers, not the
record label, increasingly in control. Curating
our favourite songs into a customised playlist
" 32% of consumers are highly is a wholly digital, quick and engaging
engaged with adopting a experience thanks to excellent user
interfaces and AI recommendation engines.
more sustainable lifestyle."
That consumption model is what’s driving
Deloitte modern impact investing. Whereas ESG used
to be sold to institutional investors as a
product, its success increasingly rests on
how the consumer experience addresses
real-world impact. For example, the modern
consumer might ask how the companies in
their portfolio contribute to carbon
emissions or how they can vote at
shareholder meetings. Instead of
impenetrable financial products, a new,
environmentally aware generation wants
34 / Rise FinTech Insights 35 / rise.barclaysfeature-rich experiences involving AI- These factors have stoked demand in impact One area of opportunity as more granular
enabled analytics, realtime dashboards, investing. Capital flow is following and data is accessed is supply chains, historically
personal impact reports and stories based on regulators are working to prevent the ‘green seen as black boxes. Supply chain issues
ESG data. All the technology to design these washing’ of investment vehicles that don’t account for 40% of environmental,
experiences exists: it just hasn’t been stand up to ESG scrutiny. governance and social impacts – 60% of
assembled on a large scale yet. which are for the environment alone.
One impediment to greater capital flow is However, these ESG impacts have not
inertia with many people reluctant to switch historically been captured in the “four walls”
Societal factors also play a part investment providers. However, as the above that determine portfolio construction. As
drivers (especially the powerful cultural shift) individuals demand more detailed impact
Increased exposure to environmental factors take hold and innovative new providers tracking, AI and Big Tech use cases will
in our lives is driving consumers’ demand for become mainstream, that investor address these needs for probability mapping
change and interest in impact investing. It demographic may well view a switch as an around supply chain impact.
was there 15 years ago, but the influence of exciting opportunity.
climate change (and ESG as a whole) on We need quality data to address these issues
decision-making comes down to: and quality technology to communicate
More granular data is needed them to consumers. OpenInvest is providing
• Culture: The ‘silent generation’ has scalable compliance solutions for maximum
traditionally left investments to the ESG data was originally designed for large impact. We offer values-based financial
experts. Today, consumers are more institutions. Typically, a big data provider solutions that help financial advisors
aware that money has many dimensions. would help fund managers build a report seamlessly build, manage and report on ESG
People are eager to take a more active describing large entities – funds or portfolios by providing frontend
role in their investments companies – and a third-party consultant visualisations and experiences to engage
would validate the report. This asset with clients on a new level.
• Governments: Addressing climate change supported the fund managers’ advice to
is causing nation states to deliver policy institutional clients.
ever more urgently. The resulting top-down Josh Levin
legislation is high-profile and gets noticed For impact investing to succeed, different Co-Founder, Chief Strategy
data – in fact, a complete inversion of the old Officer, OpenInvest
• Education: Large asset management firms data model – is needed. Instead of large
have made retail investors aware of green entities, the data must describe the joshualevin
products and impact investing for several individual accounts (within funds) into which
years. Promotion and educational investments flow. This more granular,
marketing will continue account-level data can reveal insights and
stories that plug a gap for investors who not
• Costs: Trading costs have decreased in only want to feel that they’re making a
the last few years, allowing more people difference to the planet, but see tangible
to explore what individual trading feels results validating their efforts.
like on a small scale
36 / Rise FinTech Insights 37 / rise.barclaysYou can also read
