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Fintech hackathons turn attention to green finance

'G20 TechSprint 2021’: the hackathon was presented via an online event on 7 May featuring Italy’s minister of economy and finance Daniele Franco, as well as Banca d'Italia and BIS Innovation Hub leaders | Credit: YouTube screenshot

Two central bank-backed international fintech hackathons are putting the focus on green finance as they invite the private sector to showcase innovative technology.

The Bank for International Settlements (BIS) Innovation Hub and Banca d’Italia (Bank of Italy) have launched the ‘G20 TechSprint 2021’ to highlight the potential for technology to tackle challenges in green and sustainable finance. 

The Monetary Authority of Singapore (MAS), meanwhile, has made ‘Harnessing Technology to Power Green Finance’ the theme of its next ‘Global FinTech Hackcelerator’. This competition aims to put the spotlight on fintech’s ability to ‘accelerate the development’ of green finance in Singapore and the wider region.

A hackathon is an event during which participants, typically coders and developers, design and present innovative solutions to a particular challenge.

Both competitions get underway at the start of a six-month period likely to see growing scrutiny of governments’ climate-related policies ahead of the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow in November.

The rapidly growing green finance movement focuses on allocating capital to economic projects that protect the environment, part of the broader trend towards environmental, social and governance (‘ESG’) investing. Green finance was also among six priorities in the Bank for International Settlements’ (BIS) Innovation Hub work programme for 2021-2022.

‘Top of central banks’ priorities’

For the G20 TechSprint, the BIS Innovation Hub and Banca d’Italia, as part of the Italian G20 presidency, have invited private firms to develop tech-based solutions to three ‘operational problems’: data collection, verification and sharing; analysis and assessment of ‘transition and physical climate-related’ risks; and better connecting projects and investors.

The closing date for applications is 31 May, with shortlisted teams invited to showcase prototypes in front of national authorities and experts. Banca d’Italia will award €10,000 to all teams shortlisted. Three winners will be announced in mid-October and will receive €50,000 (about £43,000).

VIDEO (43:35): the hackathon was launched via an event featuring: Banca d’Italia governor Ignazio Visco and deputy governor Alessandra Perrazzelli; Italy’s minister of economy and finance Daniele Franco; BIS Innovation Hub head Benoît Cœuré; and BIS Innovation Hub Singapore Centre head Andrew McCormack; Banca d’Italia’s head of communications Angela Barbaro was moderator | Credit: YouTube

“This TechSprint shows how fintech innovation can help promote green and sustainable finance, which has advanced to the top of central banks’ priorities,” said Benoît Cœuré, head of the BIS Innovation Hub, which was set up in 2019.

“The G20 TechSprint 2021 has clear and measurable goals to fire the imagination of people worldwide, inspiring everyone into action to develop practical solutions to address issues in the field of sustainable finance,” said Banca d’Italia deputy governor Alessandra Perrazzelli.

The one previous TechSprint, run by the BIS Innovation Hub alongside the Saudi G20 Presidency, focused on a different Innovation Hub priority: regulatory compliance (‘RegTech’) and supervision (‘SupTech’). Three winning firms were announced last October. This competition was implemented with the support of organisations including MAS, the Saudi Arabian Monetary Authority (SAMA) and Financial Stability Board (FSB).

The BIS Innovation Hub’s other four current priorities are central bank digital currencies (CBDCs); open finance; next-generation financial market infrastructures (FMIs); and cyber-security.

Green fintech ‘an important enabler’

MAS’s Global FinTech Hackcelerator will be taking place for the sixth time, with finalists invited to pitch their solutions at this year’s Singapore FinTech Festival, which will be on 8-12 November.

Entrants such as fintech companies can submit their solutions to address more than 50 problem statements that have been collected from financial institutions and green finance industry players. The problem statements focus on three challenges: mobilising capital, monitoring commitment and measuring impact.

Up to 15 finalists will be shortlisted and paired with a ‘corporate champion’ – teams from Singapore-based financial institutions or organisations that will mentor finalists and help them to develop customised prototypes. Each finalist will receive a cash stipend of S$20,000 (about £10,670) and be eligible for a fast-tracked application for a MAS grant of up to S$200,000. Up to three winners will be selected, with each receiving S$50,000 in prize money.

“Green fintech can be an important enabler to accelerate Asia’s transition to a low-carbon future,” said MAS chief fintech officer Sopnendu Mohanty. “It can provide much-needed innovative solutions, and develop the crucial technology stack, which can help promote green financial services, catalyse efficient allocation of green capital, and facilitate trust in the green data value-chain.”

Separately, MAS has announced a commitment of S$42m (about £22.4m) to a new RegTech grant scheme and an enhancement of its ‘Digital Acceleration Grant’ (DAG) scheme to drive tech adoption for risk management and regulatory compliance in the financial sector. The DAG was launched 13 months ago to encourage smaller financial institutions and fintech firms to adopt digital solutions to better cope with Covid-19’s impact.

*** Applications have also opened for the third Women’s World Banking’s ‘Fintech Innovation Challenge’, which seeks to highlight fintech innovations serving unbanked and underserved women. Winners will be announced in October.