Luca Borella (Financial Economist), Dylan Thiam (Writer)
TESOBE first announced the Open Bank Project in February 2010 with a vision of bringing open Application Programming Interfaces (APIs) to banking and enabling greater innovation, data portability and financial transparency.
In providing technical solutions to banks around the world for nearly ten years – and as a producer and consumer of open source software – TESOBE acknowledges the power of collaboration in solving complex problems.
It makes sense then that TESOBE, with its API and Fintech experience – and a recent desire to help in the fight against climate change – could form a partnership with the Energy Efficient Mortgages Initiative (EeMI).
The EeMI is intended as a pan-European effort to coordinate market interventions in relation to the financing of energy efficient buildings and to create synergies in the mortgage and covered bond value chain.
In this way, they create a virtuous circle of benefits from the origination of the mortgage to the pooling of energy efficient collateral, which would be the underlying collateral for “green” covered bonds.
Energy efficient mortgages, or “green” mortgages, specifically target green buildings by financing energy efficient renovations or the purchase of an already energy efficient building. OBP has signed up to the Energy Efficient Mortgage Pilot Scheme, created to determine the feasibility of implementing the product framework into existing processes.
To know more about how green mortgages benefit borrowers, loan originators, investors, and the environment, or to read more about the initiative, take a look at this. Green mortgages are already an example of a green solution, we just want to help the world create more of them.
The Green Sandbox
Despite there being other ways to innovate and find solutions, the clock is ticking. An all-inclusive Green Sandbox would speed up green innovation and cut experimentation costs.
The idea is based on the rationale of the Industry Sandbox. Innovate Finance, who was invited by the UK FCA to chair an industry consultation on an industry-led sandbox for financial innovation in 2017, defines an Industry Sandbox as “a shared off-market development environment where developers of Fintech solutions can access data, technologies, and services from different providers in order to validate innovative ideas or address common industry challenges”.
Having this in mind, applications created in the Green Sandbox will have the objective of:
- tracking carbon emissions,
- corroborating companies’ energy efficiency claims,
- providing green investment options to investors, and
- delivering green-labelled products to a larger audience.
By building this forum for both engagement and observation for tech companies, incumbent institutions, and regulators, the time and costs related to experimenting new green apps and solutions will be reduced. This will benefit the whole economy.
Using green apps, consumers can track their carbon footprint on a day-to-day basis through transaction metadata (if you buy a flight ticket from Berlin to London you can easily calculate the average CO2 emission of your purchase). All of these details, such as airports, company, aircraft type, etc… can be shown in your bank account’s transaction metadata using OBP metadata APIs.
SMEs and corporations can also use their data to prove how energy efficient their business is, gaining clients’ trust and guaranteeing them a place in the green economy.
Banks, using eco-friendly apps, have a greater possibility of reaching the target audience for green financial products, who are persons with a strong interest in the environment. What’s more, banks show their contribution to the environment and, therefore, have a higher probability of attracting this same audience.
The opportunity to invest in eco-friendly products is no small thing, everyone should be able to choose what to do with their money. That’s why investors will be particularly satisfied with wealth management apps that also allow investments to be made in sustainable projects.
A green sandbox has the potential to speed up green innovation, cut experimentation costs, and be of great value to investors, consumers, companies, banks, and governments. The green apps and solutions created within it have the overall objective of reducing carbon emissions to make sure we don’t go over our expiring CO2 Budget.
The evidence is there, it’s clear as day, everyone must act – the incentive is that it’s also convenient to do so.
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Are you one of the sharp minds that we’ve been talking about? Feel free to get in touch with us at firstname.lastname@example.org to share a few ideas.