Government support in Asia is key to fostering a green economy for the fintech ecosystem
- Government support plays a vital role in facilitating green fintech development.
- Green fintech startups in Asia have already offered a wide range of green fintech services.
The fintech ecosystem is a greener alternative to traditional banking.
Given the pace of technological development in the banking industry, fintechs cut cost and environmental impact by using the cloud instead of in-house data centres.
Using AWS and Microsoft Azure, the endeavor is already in motion. According to research from October 2019, switching to the AWS Cloud can help businesses cut their IT operations’ carbon footprint by up to 88%. This is crucial for the APAC region in particular.
The five locations—Hong Kong Special Administrative Region (China), Indonesia, the Republic of Korea, Singapore, and Thailand—demonstrate the diverse stages of development in Asia. With a forward-looking and collaborative viewpoint, the goal is to learn from one another to understand the best practices in various socioeconomic circumstances.
By 2030, global emissions must be reduced by 25% to keep global warming at 2°C above pre-industrial levels. GoImpact, an ESG and Sustainability education company, and The Chinese University of Hong Kong’s Business School revealed the findings from their paper, Exploring the Green Fintech Ecosystem in Asia: Insights from Five Economies in APEC. The study concluded that government support is crucial to the development of green fintech.
Green fintech describes financial operations that make use of ecologically friendly technology, and is derived from three elements: environment, finance, and technology.
Industry leaders from five APEC nations have urged governments to create an environment that will allow green fintech to thrive. They contend governments can promote change by establishing sustainable regulatory frameworks, requiring disclosures, reporting, and thresholds, and providing incentive programs for growth in the industry.
Key findings from the study showed that Asian green fintech startups have already offered a wide range of services: green variants on digital lending, digital asset solutions, digital asset payment, digital investment solutions, digital analytics, crowdfunding, and regtech.
ESG disclosure regulations are also crucial for developing the green fintech ecosystem. Case studies in the Hong Kong Special Administrative Region show that green reporting startups have expanded faster since the mandate for ESG reporting for all listed firms was enacted in 2020. The Green New Deal in the Republic of Korea and the Sustainable Finance Initiatives in Thailand are two examples of initiatives by governments that recognize the value of a green economy.
Prof. Kalok Chan, Wei Lun Professor of Finance at the CUHK Business School, was pleased to partner with GoImpact to investigate the Green Fintech ecosystem in Asia.
“This research paper offers a glimpse of trends and insights for the five Asian economies in terms of Green Fintech Ecosystem health, government initiatives and supporting institutions. As one of the leading business schools in Asia, we will also continue cultivating talents with a socially responsible mindset and equipping them with the skills and knowledge to make a positive impact for the betterment of the Green Fintech industry,” he explained.
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