The Weekender: the fintech explosion and the power of money
The Weekender features a longer form publication or multimedia production from a reputable source. We select articles or things to watch or listen to that discuss issues and opportunities we deem just off the radar for many business people, students, and faculty. We aim to expand the mind, broaden the heart, and sharpen the analysis. Have a great weekend.
My notes:
Actuary and author Nick Silver, author of Finance, Society and Sustainability says that finance at its core is a “social technology which allocates economic surplus back into the economy.” And it provides many important services:
managing the payment system
allowing people to manage risk
enables people to smooth lifetime consumption
it allocates savings to useful investment.
So finance was making an impact, long before impact investing. It is woven into daily life from debit card payments to Venmo to small business loans. Finance is always changing and quickly. The growth of financial technology vehicles ("fintech" for those in the inner circle) has been staggering. Our MBA Sustainability Case Competition this year is focused on fintech so I have been trying to catch up. This piece from Fast Company provides a great overview of the evolving space with a ton of links to examples.
There are financial management tools like Mint and YNAB; robo-advisors like Betterment and Stash plus robo-impact advisors like Aspiration and OpenInvest; sustainable investment funds for impact themes like solar (Wunder Capital) and women’s empowerment (Ellevest); and there are investment firms specializing in impact like Community Capital Management and Calvert. Even large incumbents like BlackRock and Goldman Sachs are creating impact investing funds.
How To Invest Your Money Responsibly, Sustainably, Or For Impact (They’re Not The Same) (Fast Company)
"Your Aunt Cynthia has died unexpectedly. Our condolences. In her will, she’s left you $25,000. Now you want to invest it wisely, as in–not just leave it in a checking account that pays next to no interest. Ideally, you want to make a decent return, but you also want to be responsible about it. Cynthia was a good person who cared about animals, the environment, and everyday people. She didn’t like violence, or pollution, or dictators. She distrusted Wall Street, and you’re not crazy about it either. You want to invest the money sustainably, but maybe not in the traditional ways. What are your options?
The good news is there’s a widening array of sustainable and “impact” alternatives these days and they’re not all for accredited investors–that is, people earning more than $200,000 a year, or with a net worth of more than $1 million. Through screened mutual funds, 'robo-advisers,' various forms of crowd investing, community investing, and even direct investing, you can hope to make money and make a difference at the same time....." Read full article.