Sustainable digital finance in Asia: Creating environmental impact through bank transformation

• Main Authors: MERRILL, Ryan Knowles, Simon J.D. SCHILLEBEECKX, BLAKSTAD, Sofie
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: Asian Studies; Finance and Financial Management; Strategic Management Policy; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/7407; https://ink.library.smu.edu.sg/context/lkcsb_research/article/8406/viewcontent/Sustainable_Digital_Finance_in_Asia_FINAL_22.pdf
• Institution: Singapore Management University

Data is arguably the most valuable resource in the digital economy. Used effectively and responsibly it has the potential to serve as a driving force in creating a more sustainable world. The potential is especially potent in the financial sector given its central place in the financial system, and its access to and use of data.Using technologies such as blockchain, artificial intelligence (AI), mobile technology, internet of things (IoT), and the cloud, data can be captured by sensors in the environment and structured to integrate sustainability into existing financial products and services. These can be creatively combined into entirely new sustainable digital finance products. We use the term “Sustainable Digital Finance” to describe these processes. Sustainable Digital Finance (SDF) is closely intertwined with social and environmental problems, and offers solutions to both of these challenges. Attention to date has primarily been focused on SDF’s potential for aiding social progress, especially through financial inclusion. This report demonstrates that the potential for tackling complex environmental issues is equally great. Asia-Pacific, the geographical focus this report, is a region facing complex challenges, as the need to provide basic social services to its citizens meets an increasingly trajectory of stark environmental impacts. At the same time, the region is also home to nations with some of the highest fintech adoption rates.This report shows how digital technology offers new ways to address sustainability problems and in doing so can fundamentally redirect financing towards more environmentally efficient users of capital. The ability to obtain and analyze environmental data (including externalities) at scale and speed vastly enhances opportunities (and requirements) to incorporate such data into risk analysis and thus pricing. This in turn changes the cost of capital for companies in the real economy. It also enables predictive analytics (scenario analysis) that can change banks’ portfolios and offer insight into their alignment with science-based planetary environmental limits