Financial Technology

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FinTech 101: What is a Green Bank?

What Is a Green Bank?
You may have heard the term “Green Bank” and wondered what it meant. This short article will explain the term and concept behind it.

Green Banks in a Nutshell
A green bank is a bank that exists for the sole purpose of battling earth climate change by funding projects that may be able to decrease the global carbon emissions and increase the use of alternative and renewable fuels and energy. They tend to support infrastructure spending in wind, solar, and other renewable energy space.

Green Banks: Functional Model
Green banks are not climate charities. Their funding is expected to be paid back with a profit for the bank. Currently, they are supported by some states in the U.S. and also by private funding. Green Banks utilize philanthropic and public funds. They generally fund energy projects that beyond the research stage and “good to go”. The Coalition for Green Capital (CGC) is a nonprofit agency that is deeply involved in advocating for green banks’ continued development.

Where Did the Idea for Green Banks Originate?
The idea for green banks started in 2008 when two entrepreneurial-minded, Ken Berlin and Reed Hundt, came up with the concept as part of the Obama transition team’s plans for promoting cleaner energy changes in US society. A proposal to enact federally supported green banks was attached to the American Clean Energy and Security Act. The concept never made it as legislation at the federal level. Green bank supporters were not daunted. Consequently, green bank advocates persuaded some states to take up the cause.

Green Banks: Some Statics
Currently, there are at least ten states that have at least one green bank. In addition, they are in the early stages of catching on globally as well. They also exist in Australia, the United Kingdom, and Malaysia. Within the U.S., green banks have already been involved in the funneling of some $3 billion in funds for clean-energy projects.

Green Banks: Their Future Development
With the advent of the Biden presidency, green banks may again find a firmer footing at the federal level. Indeed, in December 2020, Mr. Biden proposed the idea of a national green bank. They appear sure to gain more traction internationally as the desire to dampen climate change takes hold.

A Cashless Society Is Closer Than You Think

A Cashless Society is Closer Than You Think

As the online marketplace and the prevalence of innovative payment systems increases, the amount of people utilizing physical money is decreasing. Every day, more people are gaining access to credit cards, Apple Pay, and cryptocurrency. It’s no wonder that industry thought leaders are debating if the end is near — for cash, that is.

Why is cash inferior?

Cash is inferior for many reasons. Sure, you have the physical aspect of knowing where your money is, but that’s where the perks end. When using money, you have to physically carry around the notes and change, as well as spend the time counting it out, and the ability to misplace it. On top of that, carrying physical money is less safe than carrying plastic cards. Don’t believe me? Although someone carrying cash has the same chance of being robbed as someone carrying only credit cards, cash is much more difficult to recover, and cards can be shut down almost instantly.

What are some alternatives?

More people in the UK are using cashless forms of payment than money, as of 2015. Naturally, the most common option is a debit or credit card. There are the old swipe-only cards that are being phased out, and many card companies are moving from chip cards to contactless.

On the other hand, Apple Pay and Android Pay are becoming more common each day, with smartphone users increasingly accepting the use of their devices for payment.

Another form of payment is cryptocurrency. This provides an anonymous way to pay for items online, and is taking off as a popular option for people who need to transfer money to other countries. Although it may be years until we see cryptocurrency accepted in brick-and-mortar stores, it still has the ability to reach that point in the future.

What would this mean for banks?

Banks are frequently targeted, due to large funds being available at any given time. If countries phased out physical money, bank heists would almost certainly cease to exist, and more energy could be put toward cyber security. Although criminals would attempt to find ways around this new system, it would be much more difficult.

Another change could be with the older generation. Investing time and resources into informing older clients of changes could be a nightmare for banks. Yet, with the government’s help, there would be ways to avoid the influx of concerned elders.

Where will cash go extinct first?

As it’s only a matter of time before cash is no more, let’s take a look at who might be the first cashless society. Sweden is the clear frontrunner, as their cash transactions make up a mere 3% of total sales. Three of four large Swedish banks are done handling cash in branches, and apps like Swish are providing instant bank transfers between several Swedish banks. This tech boom sets Sweden apart from the rest of the world, who want to join, but are afraid of citizens’ backlash.

Cashless societies are likely not going to be the norm for at least another decade, but once one country starts, it is likely that others will follow. In a few short years, you may never see a single banknote again.

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