Fintech Innovation as a Force for Good

Fintech innovation has the power to transform global society for the better. We asked the top U.S. and Canada influencers on the #RefinitivSocial100 how blockchain and other tools can change behavior, fight green crime and deliver sustainable leadership.

  1. Fintech innovation has the power to change behavior, but there must be a willingness from business to use the tools and to adopt a collaborative approach.
  2. The automation provided by blockchain and other smart contracts offers many benefits across finance, including as a “marvellous” anti-corruption tool.
  3. The panel also discussed the Refinitiv Sustainable Leadership Monitor, which encourages positive commercial practice through public accountability.

Eight of the most progressive minds in finance gathered in New York recently to discuss how fintech innovation and the democratization of data can drive positive societal change, tackle green crime and help work towards a low-carbon future.

It’s no overstatement to say that fintech as an industry has the capacity to facilitate transformative good for global society. But there must be willingness from businesses too: To use the tools, to implement the necessary measures, to self-audit. A combined approach could change the world.

The roundtable discussion, which was held in the run-up to the World Economic Forum in Davos, included contributions from the top five U.S. and Canada influencers on the #RefinitivSocial100 — our social media list of the most influential thought-leaders across finance.

They were Matteo Carbone, Founder & Director, IoT Insurance Observatory; Kevin L Jackson, Founder & CEO, GovCloud; Wilhelm Bielert, Chief Digital Officer & Vice President, Premier Tech; Thomas Fox, Founder, Compliance Podcast Network; and Sally Eaves, CTO, Emergent Technology.

The breakfast gathering also featured Richard Bistrong, Founder, Front-Line Anti-Bribery LLC; Juan Llanos Founder, Juan Llanos Advisors; and Sneha Shah, Managing Director, Refinitiv Business Accelerator.

The discussion started with a look at the role of blockchain and how other types of fintech innovation are helping to change behavior.

Experts gather in New York to discuss how fintech innovation can transform behavior. Fintech innovation as a force for good
Experts gather in New York to discuss how fintech innovation can transform behavior

Is fintech innovation able to change behavior?

The automation behind blockchain and smart contracts is transformative in removing the risks associated with human error.

But one of the biggest benefits of blockchain is that it facilitates the movement of value across the world outside of traditional banking systems.

That’s generated some incredible ideas for alternative lending. For example, alternative underwriting mechanisms with data that’s completely outside of the traditional pipes and traditional FICO credit scores and metrics.

“Alternative lending was huge last year, tied to a second product which is called stablecoins, which is non-volatile units of value. What brought this idea to life was Libra, the proposed Facebook currency. But there have been other experiments before, and one of those is a cryptocurrency called Dai, which is fascinating. It’s a completely different way of allowing borrowers and lenders to interact on a distributed platform, with a token to maintain the value algorithmically through incentives and balancing mechanisms that don’t depend on a boardroom making a decision.”

— Juan Llanos, Founder, Juan Llanos Advisors

Blockchain will also transform the coordination of trade and finance — anything that has to do with coordinating multiple entities that don’t trust one another or that require lots of controls.

If you look at long supply chains or import-export mechanisms, there are ways to program or to coordinate the activities across all participants that will significantly reduce errors, manipulation, mismanagement, and negligence.

There is also a huge opportunity to transform basic infrastructure by facilitating ethical investment through increased transparency and security.

In fact, it’s crucial to bring more transparency and compliance to the commercial world as a whole, given that the United Nations estimates that US$3 trillion is lost every year from the global economy to corruption.

Watch: #RefinitivSocial100 Perspectives Roundtable Insights — Data transparency and ESG

“I think the biggest opportunity for financial institutions is to create transparency and security. To put the vehicles and technology into place that I know if I invest into, let’s say, infrastructure in Africa, that it’s not just lost because of corruption, that I can really see the progress.”

— Wilhelm Bielert, Chief Digital Officer & Vice President, Premier Tech

“Where I see fintech innovation having the greatest capacity to positively change behavior is to bring robust regulatory requirements to commercial companies, who are sadly far behind fintech.”

— Thomas Fox, Founder, Compliance Podcast Network

How can financial organizations facilitate change?

There are many ways that financial organizations can drive positive change. Three of the most important are:

  • Insisting on demanding stringent compliance from companies seeking capital
  • Helping businesses to interpret data in a way that drives commercial gains; and
  • Facilitating mechanisms that allow investors to put their money into projects that are transparent and proven to be ethical

“Financial organizations demanding that companies have robust compliance programs and robust defences against money laundering and corruption will lead to a convergence of compliance. And when the people with the money demand that you have the right financial tools in place, that will drive change.”

— Thomas Fox, Founder, Compliance Podcast Network

“People don’t like change, so they do what they know. But when you can bring data to see, to evaluate what they think they know, it’s really a positive tool. So when you can take performance data and use it as a transparency lens to expose industry processes and opportunities, you can accelerate change in literally any industry.”

— Kevin L Jackson, Founder & CEO, GovCloud

“Let’s take an agricultural example. If I could combine let’s say the investment of a fertilizer producer and then really have true data regarding how a certain crop is performing on the field, I can change the business model.”

— Juan Llanos, Founder, Juan Llanos Advisors

Matteo Carbone (L), Juan Llanos (C) and Kevin L. Jackson (R) discuss the role of fintech in driving societal change. Using the cloud for financial markets data
Matteo Carbone (L), Juan Llanos (C) and Kevin L. Jackson (R) discuss the role of fintech in driving societal change

How can businesses play a role in fighting green crime?

Green crime is a costly problem, an illicit industry worth more than $200 billion per year. It’s one of the most profitable branches of crime after drug dealing, human trafficking and weapons trafficking.

The problem is that opportunities for corruption are rife in murky supply chains that often span multiple international boundaries. Blockchain can provide upstream and downstream compliance with security protocols. But to knit supply chains together across international geography really requires NGOs.

“Blockchain is a marvellous anti-corruption tool. It’s impossible to corrupt a smart contract because the inputs are already predetermined, the logic is already approved and accepted by participants, and the output is also expected and known.”

— Juan Llanos, Founder, Juan Llanos Advisors

“If you have entries and distributed ledger that says where things are ordered, what their origin is and where they’re being delivered, you can rapidly clean up supply chains. It gives you the opportunity to modify and create a business model that is globally acceptable.”

— Kevin L Jackson, Founder & CEO, GovCloud

Insurance companies will also play a role in helping companies to clean up. Those who cannot prove their ethical credentials will be hit with larger premiums, while those providing clarity into their supply chains and systems through blockchain and Internet of Things (IoT) will benefit.

And that’s just the start of the commercial imperative. We are living in an age where environmental concerns have never been higher on the consumer agenda. The faster you can prove that your operations are ethical, the faster you will win your share of eco-minded consumers who vote with their wallets.

“Shining a light on illicit practices — and the suffering that they create — will help to drive change as well as commercial opportunity.”

— Wilhelm Bielert, Chief Digital Officer & Vice President, Premier Tech

Sneha Shah was among the expert finance voices at the New York breakfast. Fintech innovation as a force for good
Sneha Shah was among the expert finance voices at the New York breakfast

Achieving a lower carbon and more sustainable future

The most obvious area is the use of IoT sensors to drive more efficient use of infrastructure that — directly or indirectly — contributes to carbon emissions. But the smart use of data has the capability to change the world.

When you can assure the provenance of data, you can put it in the hands of society to make the commercial world publicly accountable for its impact on climate change and society as a whole.

The technology already exists to make it happen.

And that’s where we could see really meaningful change.

“I was discussing yesterday with one player on the IoT retail business how they are able to reduce the energy consumption in a grocery store by 30 percent by adding a few sensors in the refrigerators. That provides insurance about the performance of the machine and the spoilage of the food inside. But you are also generating a positive change for society because you are reducing energy consumption. This model opens the door for anyone with IoT capability to move into insurance.”

— Matteo Carbone, Founder & Director, IoT Insurance Observatory

“There’s a company called InterPlanetary File System. It’s a system that relies on distributed computing to store data. These new technologies allow for the storage of data as it happens. It’s completely unalterable, irrefutable because it’s hashed and cryptographically protected. When you read a file you’re going to be reconstructing data from multiple sources.”

— Juan Llanos, Founder, Juan Llanos Advisors

“If it’s possible to manage and provide records on the lifecycle of a piece of data, that’s going to be huge. If you can maintain data provenance, you can fight data manipulation.”

— Kevin L Jackson, Founder & CEO, GovCloud

At the World Economic Forum in Davos in 2019, Refinitiv launched The Sustainable Leadership Monitor. It provides a means for people to analyze a company against its human rights record, its supply chain, its media controversies and so on. It’s a transformative tool that encourages positive commercial practice through public accountability.

“People want to know about who they’re buying from, who they’re working for and the organizations they associate with. We’re sort of saying, actually, put the power back in the hands of people. Don’t wait for the laws to catch up.”

— Sneha Shah, Managing Director, Refinitiv Business Accelerator

The #RefinitivSocial100: who is driving social media conversations around disruptive innovation in the finance sector?