09 October 2022 |

The ‘Future’ of fintech


Climate change is a significant barrier to financial stability. 

The devastation caused by Hurricane Ian last week is a good example. Climate change is making nature-driven disasters more expensive. Parts of Florida may become wholly uninsurable as a result. Nor will everyone be able to move – in the future, there will be insurance deserts where rapidly rising premiums or an absence of coverage strands people.

Insurance and real estate are some of the biggest financial markets that will be fundamentally re-written by climate change. And at the level of the consumer, Increasingly, fintech apps are aligning themselves to climate action, looking to surf a wave of interest from Millennials and ‘zoomers’ (Gen Z) who demand sustainability of the products and services they use.

The space is pretty small as of yet. There’s Aspiration, Greenpenny, Ando, Joro, and Stripe Climate, to name a few. Last month, banking fintech Future stepped up, after announcing its $5.3M seed raise, to pay consumers to reduce their carbon footprint. 

Let’s take a look at what they have on offer.

How it works

Future’s platform aims to reward users for making ‘climate-friendly’ purchases. 

In and of itself, that’s an interesting rabbit hole to jump down. Who is the arbiter of what constitutes a ‘climate-friendly’ purchase? What qualifies? 

Consumption in most forms involves some form of extractive or emissions-producing activity, whether embedded in the product or owing to how it and all the materials that went into producing it are transported worldwide.

Here’s how Future breaks this down. On their site, they note they…

…define a purchase of a product or service as green if it has a significantly lower carbon footprint than the most common alternative.

Purchases that match this criterion earn users’ ClimatePoints (one point per cent). Based on that criterion, here are some activities that qualify and earn users up to 6% cash back:

  • Public transit
  • Thrift stores and secondhand marketplaces
  • Shared mobility (if you’re in NYC like me, think Citi Bike)

You might wonder why some impactful consumer choices aren’t on the list, like buying plant-based meat instead of beef

It would be hard for Future to reward users for buying a meat alternative in a grocery store because there’s no access to that granular of data when they use their card. Like any other card, merchants only send Future details about their store, like a merchant category code. If you shop at Whole Foods, the store probably shows up as ‘5411’ for Future, classifying it in the “Grocery stores and supermarkets” category. This dynamic constrains Future’s system a bit.

I’ve been messing around with DALL E a lot. Here’s what it spit out when I prompted it to imagine “purchases that restores the climate, painting by Salvador Dali”

How future-forward is this?

A bigger question that I often come back to is how much impact changes in consumer behavior drive on their own. In the grand scheme, the answer is ‘not all that much,’ and not enough to slow climate change. That level of impact requires systems and industry-level change

Putting the onus back on consumers isn’t necessarily the right way to get them involved, either. Oil companies have long been hard at work with marketing campaigns that do just that. To this end, I’d caution Future against one of the bold taglines on their site. “Make the fight against climate change personal” veers dangerously into a similar type of message.

At the same time, I’m not suggesting that consumer behavior changes can’t help. On the contrary, impactful changes, like not eating beef, can make a difference when scaled.

Even if Future’s platform can’t necessarily reward you for buying plant-based meat alternatives because of the merchant categorization challenge we noted earlier, it can point you in the right direction. Climate change is complex, and it can be hard to understand what behavior changes help; well-aligned incentives help guide consumers. 

Further, the movement Future represents may be the most impactful component of this story. Climate fintech startups raised $1.2 billion in 2021. That’s 3x more than all previous years combined. Before 2021, some 292 climate fintech startups only raised $400 million.

The burgeoning green fintech ecosystem, including Future, illustrates that consumers increasingly demand climate-aligned options from their financial partners. And really, all the companies they interact with need to align with a sustainability and offer climate action:

  • 39% of Gen Z + 42% of Millennials would pay a premium for sustainability, according to Simon-Kucher’s global sustainability study in 2021. 
  • According to Forrester, Gen Zers and Millennials who live in cities and have college or advanced degrees are the most likely to pursue green banking products — and to make brand decisions based on environmental considerations about the company or product.

The net-net

If companies need to transform their business practices to become sustainable to ‘win’ with these customer cohorts, then the speed of change should continue to accelerate. The nitty-gritty of how fintech apps align consumer behavior to climate action can evolve over time.

Further, helping consumers feel empowered and getting them active is often just a first step. If that helps assuage anxiety and leads to additional steps that culminate in them working for a climate tech company or as an activist, policymaker, or politician, down the road, there’s significant power in that.