Invitation to SFTL Green FinTech Roundtable
The transformative arena of impact investing is witnessing significant shifts, thereby increasing the demands placed on the evolving landscape of impact investing. SwissFinTechLadies has identified an exigent need to construct a standardized impact taxonomy for Swiss Fintechs. This taxonomy is envisaged to create a uniform system, thereby enabling Swiss Fintechs to quantify their impact in a standardized manner. The inherent heterogeneity in the fintech industry, particularly in the open banking and open finance sectors, necessitates the development of this taxonomy, which aims to enhance clarity, transparency, and comparability in measuring impacts, thus facilitating informed decision-making for investors, regulators, and the Fintech entities themselves. Together with its science partner, SwissFinTechLadies crafted an academic response to the specified need, substantiating a detailed examination and proposing a framework for an impact taxonomy tailored to the Swiss Fintech sector.
Research Question and Objective
The academic pursuit has led to meticulously address two principal research questions:
(1) Which determinants should an impact taxonomy for Swiss Fintechs contain in order to categorize the generated impact uniformly?
(2) What methods can be used to collect evidence-based impact and ESG data in the Fintech industry?
A rigorous analytical approach has been adopted to answer these crucial research questions, the responses to which form the bedrock of the proposed impact taxonomy. This methodological rigor is underpinned by an interdisciplinary approach, synthesizing key insights from leading Swiss impact-driven Fintechs as well as ESG and impact professionals.
The research commences by conducting a thorough examination of the existing literature and resources pertaining to impact investing. Furthermore, an investigation into pre-existing measurement standards to assess the impact generated by Fintechs in the context of open banking and open finance has been undertaken. To identify best-in-class Fintechs operating in the domain of open banking and open finance, qualitative pre-interviews have been conducted with industry experts. The main phase of the study employs a mixed-methods approach, combining qualitative and quantitative methodologies. The primary objective of interviews is to gain insights into the current practices employed by FinTech organizations in collecting impact and ESG data. Additionally, the interviews aim to identify relevant criteria that can contribute to the establishment of an impact taxonomy. Once the impact taxonomy has been developed, a quantitative survey has been conducted to evaluate the effectiveness of the identified impact themes, strategic objectives, and KPIs. To ascertain the significance and reliability of the impact taxonomy, an in-depth statistical analysis has been performed. This analysis enables a robust evaluation of the impact taxonomy, providing insights into its validity and applicability.
KPIs assessing user satisfaction generally score lower within their respective impact themes, suggesting user satisfaction isn’t a main driver of impact. The bottom-up approach analysis shows high relevance for “innovation” and “sustainability.” Other factors like “financial inclusion,” “financial literacy,” “transparency,” “affordability,” and “efficacy” have a linear cumulative relevance trend, with the second highest score displaying the highest frequency, while “economic growth,” “personalization,” and “security” demonstrate a flatter trend. “Financial Resilience” has high relevance despite low scores, while “Gender Equality” has medium relevance. The top-down approach showed that sustainability-related groups significantly influenced economic, technological, regulatory, and collaboration factors but not environmental, social, or governance factors.
Conclusions and Recommendations for Action
The Impact Taxonomy is a powerful tool designed to aid companies in making investment decisions, encouraging stakeholder engagement, facilitating training and capacity building, assisting portfolio construction, stimulating product innovation, managing risk, and supporting research and development within the Swiss Fintech industry. Notably, it fosters stakeholder engagement by promoting a shared understanding of impact-driven Fintechs, stimulates capacity-building efforts through a standardized impact measurement approach, and allows for more refined portfolio constructions. Further, the taxonomy incentivizes product innovation by offering insight into sustainable practices and impact measurement, facilitates risk management by providing an understanding of Fintech performance and associated investment risks, and underpins development activities by tracking Fintech firms’ progress and the impact of their practices. Therefore, the impact taxonomy significantly enhances the ecosystem’s capacity to drive impact investing efforts within the Swiss Fintech landscape.
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