The World’s First Green Fintech Taxonomy

The Green Digital Finance Alliance and the Swiss Green Fintech Network, with support from the Swiss State Secretariat for International Finance (SIF), launch the final version of the world’s first green fintech classification. After having collected industry feedback on the first version of the report, formerly entitled ‘A Green Fintech Taxonomy and Data Landscaping’, the final version has been re-named to ‘Green Fintech Classification’. The role of the Green Fintech Classification is to be a tool to further mature and stimulate the green fintech market via enabling a harmonised approach for policy makers, investors, and market actors to analyse and segment green fintech markets. It shall also further mature the understanding of green fintech markets and thereby stimulate more innovation and adoption.

The time is right for the introduction of a green fintech classification, given how much the past year’s fintech market evolution has been marked by a new wave of fintech solutions with a green intent. During the first years of the fintech market, various classifications emerged using categories such as digital lending, digital payment solutions, and digital wealth management. These categories largely mirrored the established financial products segment, just recast in digital forms. Thereafter came the second wave of fintech market development defined by using new data sets and underlying infrastructure to innovate entirely new digital financial products and services, for instance building on programmable assets such as utility tokens or on security token offerings.

Now, the landscape has further evolved to encompass new types of commercial applications which collectively can be thought of as a third wave of fintech market development. This third wave is defined by fintech solutions designed to better align the financial system and the behaviours of its protagonists with green objectives. Those solutions either unlock new and more advanced green finance or align better existing financial and capital flows with green objectives. Given this latest wave in fintech’s market evolution, an updated taxonomy is in order. This report constitutes a clear classification of green fintechs that will continue to evolve over time.

This publication first establishes the following seven green fintech categories:

• Green digital payment and account solutions
• Green digital investment solutions
• Digital ESG-data and -analytics solutions
• Green digital crowdfunding and syndication platforms
• Green digital risk analysis and insure-tech solutions
• Green digital deposit and lending solutions
• Green digital asset solutions
• Green regtech solutions

The report also maps main databases leveraged by each category of green fintech. The database mapping offers an overview of datasets that, if made accessible, could drive a greater supply of green fintech innovation. Open-source datasets that have already enabled many green fintech innovations include open-source earth observation data from the Copernicus and NOAA databases, carbon inventories and carbon accounting databases, voluntary carbon credit registries and open banking data infrastructure. In addition, green fintechs strongly leverage proprietary company databases managed by ESG data vendors, often in combination with web-scraping. IoT-generated, dynamic asset level data is one of the least leveraged dataset categories. However, structuring IoT and data in infrastructures such as national or regional data hubs holds the potential to accelerate green fintech innovations across the Green Fintech Classification’s categories.