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How fintech fuels impact investing

November 2, 2017 By: MaRS Centre for Impact Investing

By Ashley Gardner.

Impact Investing has expanded in scale and importance in part due to new financial technologies (fintech). Innovative companies are leveraging new technologies to connect social enterprises with investors and raise awareness about sustainable investing opportunities.

Some of the most prevalent features within fintech products include transparency, accessibility and simplicity. Open Impact, an initiative led by Purpose Capital and the Lee-Chin Institute at the Rotman School of Management, has generated an online resource guide about trends in impact investing. It has identified more than 200 Canadian funds that all ranges of users – from individuals to institutions – can explore. The Unicef Innovation Venture Fund has a transparent platform that allows the public to invest in start-ups that are creating products to solve some of the world’s greatest challenges.

Fintech is also powering platforms that facilitate alternative investment opportunities, allowing investors to support ventures that deliver impact. Alternatives to traditional venture capital funding, which is not always suitable for impact enterprises, are increasingly available through online platforms. Portals such as Enable Impact and SVX help entrepreneurs seeking funding to connect with impact investors. Another fintech company, CoPower, offers investors fixed-term three- and five-year “green bonds” that are used to fund clean-energy projects.

Future growth

The next steps in the development of these platforms are to scale these opportunities and leverage metrics that quantify their beneficial impact on communities and the environment. Platforms and apps that consolidate indexes, mutual funds and venture funds for social enterprises could emerge, giving investors a single dashboard for convenient sustainable investing.

Social media could play a prominent role as friends can promote their investments, learn about new opportunities, and encourage others to join.

It is also expected that sustainable options will continue to be incorporated into existing financial management platforms, like Scotiabank’s iTRADE, which has a tool for aligning your investments with your views on environmental, social and governance factors. As interest in impact investing continues to grow, automated financial planning services will increasingly incorporate sustainable investments and may help to transform traditional investment approaches.

Learn more

Hear directly from people who are using financial tech for good at FinTech Meets Impact Investing at the Social Finance Forum.
When: Thursday, Nov. 9, at 4 p.m.
Who: Jeff Hindle (MaRS Discovery District), Trish Nixon (CoPower) and Kevin Taylor (SVX).

About the author
Ashley is an MBA candidate in the Rot3man School of Management at the University of Toronto. Her work experience spans across public accounting, international development as a Peace Corps volunteer, and microfinance in the non-profit sector in the US. She recently completed a summer internship at a social enterprise in Guatemala. Her undergraduate degree is from Santa Clara University, where she studied accounting and Spanish.