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Weekly Wrap — Week 03, May

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Investments that consider environment, social, and corporate; AI in banking; lessons from past crises.

What is driving the growth of green and social finance?

There is evidence of a positive link between sustainable behavior and financial return which will likely drive the continued growth of green and social finance. Over the past decade, sustainable finance has become a prominent feature of global finance around the world. Green and social finance which target investments with specific and measurable environmental or social objectives witnessed fast expansion in recent years.

 

AI IN BANKING: How forward-looking banks are using maturing AI solutions to design both customer- and employee-facing innovation

AI in banking is maturing and entering the mainstream as financial institutions (FIs) roll out AI solutions across their businesses. AI is helping banks with their anti-money laundering and know-your-customer obligations. Business Insider Intelligence. This marks a move beyond the experimental for the technology, with a solid majority of global financial services firms either having implemented or currently working to implement AI solutions in business domains like risk management (77%), generation of new revenue potential through new products or processes (80%), customer service (74%), process re-engineering and automation (73%), and client acquisition (69%), per the Cambridge Centre for Alternative Finance and the World Economic Forum.

 

Three lessons that past global crises can teach us about today’s pandemic

The COVID-19 pandemic is not the first global shock to hit hard almost every country in the world.   The 1918 Flu Pandemic, the Great Depression and World War II were similar events that required tremendous efforts by governments to overcome their adverse effects. These crises hold three important lessons for today: (i) social distancing and masks make a large contribution to stem the spread of the virus; (ii) safeguarding the banking system and keeping trade open are vital for the survival of economies; and (iii) governments should reallocate resources to strategic sectors by collaborating efficiently with the private sector.

 

Investments that consider environment, social, and corporate governance issues can help reduce carbon emissions

More funds should be allocated to innovative firms and essential projects in the areas of renewable energy, electronic vehicles, storage batteries, hydrogen technology, and carbon capture, usage, and storage. ESG investment aims to encourage companies to consider environment (E), social (S), and corporate governance (G) issues by raising their long-term corporate value. It is becoming indispensable for filling the funding shortfalls needed to achieve the Paris Agreement’s goal of limiting the global temperature increase this century to well below 2 degrees Celsius above preindustrial levels, and desirably within 1.5 degrees Celsius, as well as to encourage the transformation of corporate behavior toward net-zero emissions.

 

Plugging into contactless payment in post-COVID Asia

Asian economies must strengthen their regulatory frameworks, and invest in digital networks and infrastructure, to support contactless payment systems. The development of contactless payment technology, which allows payments to be made without any direct or indirect human contact, is being given a big push by the fear of COVID-19 infection. In particular, digital (or online) payment has gained a lot of traction since the outbreak. At a broader level, digital technology is redefining how we work, shop, play, learn, and live in the COVID-19 world.

 

Assistant Secretary General, The Ceylon Chamber of Commerce

Amanda Senewiratne

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