FinTech for the Future: Who will win, who will lose?

Decarbonization & FinTech: The Macro View

Reducing the carbon footprint from individual consumption will bring about a massive shift for economies, as any kind of industry that is a large emitter of greenhouse gas will be affected by lower consumer demand and increased regulation.

These industries include producers of material consumer goods (such as cars, furniture, fashion, electronics, etc.), the airlines, energy conglomerates, and large food manufacturers. Industries that are suppliers to these companies (eg. chemicals, machinery, logistics firms) will be affected by the shrinking demand for their customers’ products.

Therefore, employment at such companies will decrease substantially over time. Many workers in the affected industries will need to find jobs in different sectors of the economy, or become self-employed and start their own small businesses.

Framed more positively, this development will create opportunities for many people to turn their personal strengths and passions into a business. In turn, it will create openings for the FinTech companies who will serve these small businesses.

The financial aspects of running their small business is a major pain point for many entrepreneurs, and FinTech companies can help addressing these pain points. For example, solutions are needed for lending to new small businesses, for facilitating payments, as well as technology and products to help those new SMBs with regulatory compliance (eg. regarding data protection).

Another sector that stands to benefit is InsurTech. As the number of small businesses and self-employed people grows, so will the demand for insurance. They will require insurance to cover business risks as well as private health, life and pension products. New types of SMBs with new business models require new types of insurance coverage, for example coverage against cyber risks for the ever growing number of small businesses in the digital economy.

We believe (future) FinTech founders need to consider the implications of the inevitable rise in the number of small businesses and the service economy, and the gradual decline in demand for carbon-intensive consumer products.

And we should all get used to the idea that standards of living in a materialistic sense are likely to fall.

Will that mean that we will also be less happy than we are today? Perhaps we need look no further than the nation of Bhutan and judge for ourselves.

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If you are building a FinTech or InsurTech company helping to Decarbonize our economies, we at CommerzVentures would be happy to hear from you. CommerzVentures is an independent venture capital fund sponsored primarily by Commerzbank Group.