Substainable finance discussed at #ICTSPRING
On the second morning of ICT Spring, and more specifically at the Fintech Summit, Manon Loison, Head of Marketing at the LHoFT (Luxembourg House of Financial Technology) welcomed international and local experts who shared their knowledge, best practices and views on the topic of "Sustainable Finance".
Bank 4.0: the bank of tomorrow
The first speaker of the day was none other than Brett King(Bestselling Author, Speaker, Founder, Radio Host, TV Commentator), who created Moven, a mobile bank, back in 2010 and wrote several books on the disruption happening in the banking industry. His latest book focuses on Bank 4.0. "Bank have been around since 1472 but first changed in the 1950s. Later, we saw the emergence of self-service banking to, in a way, extend the opening hours of the bank. Internet and later the smartphone redefined the entire industry," explained Brett King who then shared more Ant Financial/Alipay examples with apps allowing deposits and savings in a click. "In China, these tech companies are also working on VR, AI and voice recognition. Therefore, how can those technologies be added to the mix? And how would one start in bank in today's digital environment?" he asked. Brett King advocated the first principle thinking method and the need to start from scratch. Most banks are actually just updating their legacy systems: it's called design by analogy, but seems wrong as integrating tech in banks represents massive constraints. "Moreover, AI will change the rules further. It codifies human behavior to mimic their behavior. Patent recognition is at the heart of the tech. Fed with data, it can make a decision in seconds while humans can't even process and absorb the information," highlighted Brett King. After sharing a couple of examples, the Fintech guru shared his views on the future of banking: people won't see bank accounts as something they got from a bank, there will be more AI advice with tech being integrated in our lives, etc. "Therefore, how would you structure the bank of the future? Who will be your competitors?" concluded Brett King.
Voice of the Future Generation
The organizers then welcomed Séréna Boukelmoun (Youth Leader) who stated: "we are at a crossroads and need to take actions to make the future a better place for the next generation. We already have the digital tools to do so". She then advocated the use of tech to improve the environment: "we need to rethink societies. Those are not linear anymore, we need to embrace the circular economy".
Is sustainability profitable?
The question asked by Nasir Zubairi (CEO, Luxembourg House of Financial Technology Foundation) to Robert Scharfe (CEO, Luxembourg Stock Exchange) was simple: is sustainability profitable? "Sustainability is not about doing good or being a good citizen. It's about business and brings big opportunities, first explained the CEO of LuxSE, sustainable finance is not just fashion. It is here to stay". Luxembourg launched the first green exchange in the world in 2016, dedicated entirely to green financial products. Today, the platform is host of more than 50% of sustainable products issued in the world. "To be clear, investing in responsible ways doesn't mean giving up on return. It guarantees capital overtime. In order for LGX to succeed we needed to make sure investors understand what the products are, what the risks are, etc. They can now have a look at the whole story. And decide", added Robert Scharfe. The experts then discussed the integration of AI and blockchain in future platforms, which will also force distribution to change.
"Scaling Up": a sustainable finance pitching session
Nicolas Payen (CEO, Positive Energy Limited) first took the stage to present his solution which aims at simplifying renewable energy finance, with the mission to reimagine the funding process to accelerate the deployment of renewable energy. "In order to do so, we mobilized green finance and digital technologies. These types of energies are very attractive on an economic point of view as it is seeing strong development in Asia and soon in Africa," he added. The solution is a digital platform which supports deal execution and due diligence, facilitating the workflow for all players. It also reduces costs and time-to-finance by up to 50%.
He then passed the microphone to Ian Choo (Founder & Managing Partner, Ekofolio), who described his company as a "mission-driven Fintech company", which helps invest profitably in forests. "Despite significant natural advantages, Forest Investments remain largely inaccessible or inappropriate to a large majority of investor groups. Our solution is to create a dynamic, transparent and liquid marketplace for global forest assets, where institutional and retail investors can participate on comparable terms," he explained. Thanks to his solution, forest asset ownership is transformed into tokens, Blockchain settlement radically lowers transaction costs and tradable on a secure platform before maturity.
The session ended with Apricot Wilson (Deputy CEO, IforD (Luxembourg Microfinance and Development Fund)) who discussed financial inclusion, because "it is still difficult for millions of people to access to finance in some parts of the world. For instance, 1,7 billion do not have a bank account. There's also an important gender gap. Financial inclusion can stimulate entrepreneurship in these geographies". Apricot Wilson also shared examples of projects that have been funded all over the world, notably Komida in Indonesia for female empowerment, ACEP in Burkina Faso, etc… She concluded: "it is possible to promote social change and be profitable at the same time".
Responsible AI within Finance
Dr Anand Rao (Global AI Lead, PwC) then took the stage and started by stating that "AI will contribute to substantial gains in productivity and consumption. It will lead to better customer experience and improve productivity". He then shared his definition of Artificial Intelligence: the theory and development of systems that sense the environment, make decisions, and act that would normally require human intelligence. The expert also explained that AI is being applied in four distinct ways progressing from automated to assisted to augmented to autonomous intelligence. "Financial Services firms carry out a huge number of activities and make countless decisions across the value chain that are being optimized or disrupted by AI," added Dr. Rao before sharing several examples from robo-advisory to sales call analysis to suspicious behavior and fraud detection. On the risk side, he added: "AI risks that need to be assessed, mitigated and managed can be categorized into six categories that impact consumers, businesses, societies and nations: security, control, societal, economic, ethical and performance". Dr Rao then presented the PwC framework and toolkit and concluded: "AI is not a silver bullet but rather a collection of tools. It's about governance, people, processes and tools. Moreover, it is crucial to design fairness, interpretability and security right from the start".
What's the future of Finance?
A round table about the Future of Finance moderated by Douwe Miedema (Editor-in-Chief, Luxembourg Times) came next and brought together Brett King, Séréna Boukelmoun, Nicolas Payen, Emilie Allaert (Head of Operations and Projects, LHoFT) and Saurabh Sharma (Investment Director, FIL). According to Brett King, "we are moving in an era with more data sharing. AI can change the foundation of bank: an AI based-economy or company means higher stakeholder shares per employee". Saurabh Sharma then explained that investors now want their money to be deployed responsibly: there is a focus on social value. Nicolas Payen agreed: family offices are also putting sustainable projects and infrastructures in their investment alternatives. "It is time to educate people around sustainable finance. Moreover, norms and certifications, rather than regulations, can favor the development of green finance," highlighted Emilie Allaert. Serena Boukelmoun concluded: "we need to work together if we want to have an impact".
Confessions and outlooks of a Fintech veteran
The Fintech session ended with Laurent Nizri (Founder & CEO, Paris Fintech Forum) welcoming Matthias Kroner (Thought leader, a multi-award winning inspirational keynote speaker and blogger) to the stage to share his experience and Fintech expertise. "I created an online bank when the word Fintech did not even exist. Even if I sold my startup to an incumbent, we are living in an exciting period with many new concepts being developed, from sustainable finance to cryptocurrencies," first underlined Matthias Kroner. He also discussed the collaboration between banks and Fintechs which can sometimes be tough due to different cultures. "Banks are risk-adverse, but Fintechs need to take risks and fail fast. Corporate culture needs to allow innovation. And when it comes to mergers and acquisitions, CEOs need to focus on culture and change management. Culture needs to be a CEO topic," concluded the Fintech entrepreneur.
Photos: Marion Dessard