Fintech can help advance Sustainable Development Goals

The following article was originally written as a contribution to “The Advance of Fintech in Vietnam” report published by Acclime Vietnam in collaboration with DecisionLab.

The term “green fintech” refers to technology-enabled innovations applied to financial operations and products that intentionally support the Sustainable Development Goals.

According to the Green Fintech Classification Report, there are several types of green fintech, including green digital payment, green digital investment solutions, digital green analytics, green crowdfunding, green risk analysis, green digital lending, green digital asset solutions, and green regulatory technology.

In the Asia Pacific, Singapore, South Korea, Australia, and Hong Kong have reached mature levels of green fintech development.

The green fintech ecosystem in Singapore is particularly well established, with prominent players such as CO2 Connect, MetaVerse Green Exchange, STACS, and others.

The Monetary Authority of Singapore (MAS) has implemented various projects and initiatives, such as Project Greenprint, the Singapore Green Bond Framework, ESGenome, and the Green Finance Industry Taskforce, to actively promote the use of green fintech. These projects contribute to the encouragement of green solutions and the advancement of green finance in Singapore.

Indonesia and Thailand are also making progress, having launched green bond markets and established incentives for sustainable investments. Their governments are also partnering with fintech companies to develop innovative solutions that promote sustainable finance.

In comparison, green fintech development is still in its infancy stage in Vietnam, though the Vietnamese government has shown interest in green fintech. One thing is for sure, government support will be crucial in facilitating the development of green fintech.

For example, the State Bank of Vietnam (SBV) is expected to soon issue guidelines for financial institutions to promote green finance. The SBV Governor has also issued a directive requesting relevant entities to establish a legal framework for green credit development and an action plan for the banking sector to implement the National Strategy on Green Growth.

Furthermore, there are increasing funding opportunities available to support sustainable fintech initiatives in Vietnam, from venture capital firms to non-profit organisations.

One of the primary barriers to the development of green fintech is the lack of awareness among the public and businesses about the benefits of sustainable finance and green investments. Many people are still unfamiliar with the concept of green finance and may not understand the extent to which their financial decisions can impact the environment.

Regulation remains a significant obstacle, as there is still a limited regulatory framework governing sustainable finance. It is crucial to have specific regulations and guidelines that encourage the development and adoption of environmentally friendly Fintech solutions.

Without accurate and reliable data on environmental impacts and performance, it becomes challenging to assess the effectiveness and credibility of green fintech platforms. Access to data on clean energy, carbon emissions, and other environmental factors is often limited, making it difficult for fintech companies to assess the environmental impact of their products in Vietnam.

In addition, limited access to finance and venture capital remains an issue for entrepreneurs, as green fintech projects often require significant investment for research, development, and implementation.

Most importantly, green fintech requires collaboration among various stakeholders, including fintech companies, financial institutions, government agencies, environmental organisations, and consumers. Strong partnerships are essential to building a more robust and sustainable green fintech ecosystem.

Read more insights in “The Advance of Fintech in Vietnam” industry report.

Story: Dr Huy Pham, Senior Lecturer in Finance, Founder of RMIT FinTech-Crypto Hub, RMIT University Vietnam

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