Fintech trends in 2020: Sustainable finance is booming

"While everyone talks about sustainable finance, we don’t see many startups yet in the field. But we might need regulators to lead the way to incentivise companies to follow," says Mads Stolberg-Larsen, Head of Blockchain and Fintech at Tradeshift Frontiers. Photo by Sebastian Stigsby

In 2020 we will see real money flowing through blockchain services. Furthermore, sustainable finance will evolve from being the talk of the town to seeing tangible action. Mads Stolberg-Larsen, Head of Fintech and Blockchain at Tradeshift’s digital innovation arm Frontiers, looks into the fintech and blockchain trends for 2020.

Denmark is in a strong position to become a frontrunner within one of the most talked-about and booming trends in fintech right now: Sustainable finance.

Mads Stolberg-Larsen is the Head of Fintech and Blockchain at Frontiers, the innovation lab of the Danish fintech unicorn Tradeshift. As part of the team exploring business models and use cases of emerging technology, like blockchain, Stolberg-Larsen has a clear vision of what will boom within fintech, and particularly within blockchain next year.

“Everybody talks about sustainable finance now. It’s at the top of the agenda everywhere. I think we will soon see more monetary incentives for companies to move in that direction. Sustainable finance instruments can spur the transformation of supply chains that are needed over the next decades. Maybe also disincentives like not being eligible for such programs can help companies choose the sustainable pathway,” Mads Stolberg-Larsen predicts.

Regulators lead the way

He believes that sustainable finance can become an area where Denmark can take the lead. The nation already has large companies actively improving their sustainability, such as Vestas, Grundfos and Novozymes, and an ambitious political agenda of catapulting the country to the top of the green list, most recently exemplified by the “Climate Law” passed by a broad political consensus.

“While everyone talks about sustainable finance, we don’t see many startups yet in the field. But we might need regulators to lead the way to incentivise companies to follow,” he says and continues,

“Say what you will about the former Danish Minister the Environment Svend Auken and the subsidies that were provided to the Danish wind power sector over the past two decades. But one thing was certain: the investors knew where they had him. Providing a stable investment climate by showing commitment is crucial. That is also why it is very positive that the latest climate law was passed with a broad political consensus.”

Moving to the real value

Mads Stolberg-Larsen also believes that 2020 will be the year where real value will be transferred via blockchain technology. 

“Blockchain is mainstream within financial services. But most cases are still about sharing information, which you arguably can also do via the cloud. Next year Euro, US dollars, Yen, and maybe even Danish Kroner will start to flow onto blockchains. When that happens, the promise of smart contract automation can finally start to be fulfilled.”

Like others in the fintech and blockchain space, Stolberg-Larsen foresees a digital currency race. China is moving at a fast pace after Facebook launch of Libra, while the US has also woken up to the opportunities and threats of new financial infrastructure. Furthermore, the European Central Bank recently announced the bank’s willingness to develop its own digital currency.

Reduce the framework conditions

Among the countries in Europe, the crypto valley in Switzerland, Lichtenstein, and Germany are improving upon framework conditions already in place. 

“We have a small ecosystem around blockchain now driven forward by players like Copenhagen Fintech Lab, European Blockchain Center, MakerDao and local investments from some of the big consulting firms. But policymakers and regulators have to commit. Uncertainty around the framework conditions needs to be reduced. Otherwise private investors will send their funds to other jurisdictions,” Mads Stolberg-Larsen says and concludes, “We have a strong position within fintech in Denmark. But other fintech hubs around the world are moving fast too, so we need to find our competitive advantage. Sustainable Finance, potentially based on smart contract technology, could be that.”