How to unlock personal financial data for sustainability
Personal financial data for sustainability is a secret weapon in the fight against climate change with the potential to transform global consumer consumption habits for the better.
Using personal financial data for sustainability to better understand consumers
Personal financial data is everywhere. The last few decades have born witness to a data revolution, where constant data collection and data-driven decision-making have become the new norm. In the age of information, data is a highly sought-after commodity that, given its sheer volume, few truly understand. For the banking industry, it has been massively underutilized.
Why? Because the climate crisis is at an all-time high and consumers are not equipped with the knowledge or tools to take meaningful action. The personal financial data that sits in bank accounts across the world could help turn the tide in halting and even potentially reversing the crisis. It just needs to be transformed into actionable knowledge to empower consumers with the transparency around how their purchasing behavior creates environmental impact.
This is where the world of personal finance comes in. Banks are bastions of financial data, data which has the power to influence our consumption habits. Whether it be our choice of transportation, where we shop or what we eat, banks know exactly where and how we spend our money. And digital banking is on the up and up. To put it into perspective, 1.9 billion people worldwide actively used online banking services in 2020. That number is expected to reach 2.5 billion in the next couple of years.
When combining that payment data with environmental impact calculations, it can be enriched to provide sustainability insights specific to a certain spending category. Over time, the collected data also has the potential to highlight reductions in the carbon footprint of each of these categories, showing consumers their progress.
A data-driven approach to making sustainability easy and simple
Transforming payment data into insights results in an incredibly powerful tool, namely consumer education. However, information overload and cognitive dissonance often leave consumers frustrated. They want to do something, but just not the wrong thing. Demystifying sustainability also means challenging preconceived notions or overcoming behavioural tendencies.
Let’s take shopping bags as an example. The idea that fabric bags made of cotton are a more sustainable alternative to plastic bags is a widely held notion. Yet, in order to be more sustainable than the plastic bag, a fabric bag actually needs to be used 131 times as more energy and resources go into the production of a tote bag compared to a plastic one.
Then there’s the challenge of overcoming innate human programming to ensure that behavioural change lasts. As humans, we tend to reward ourselves for doing something good. For example, say you buy an energy-efficient refrigerator or invest in solar panels for your home.
With the money you’ve saved in energy expenses, you decide to treat yourself to a vacation on the beach – flight included. The progress made towards a better future is often partially offset by the so-called “rebound effect”, the moral license to do counterproductive things offered by a clear conscience after a good deed.
So, how can sustainability-enriched data help us? Sustainability is riddled with complexities. To best inspire long-term durable climate action, financial data needs to be leveraged as a powerful tool in two ways. First, it should serve as a base for informing consumers about their environmental impact through, i.e. carbon footprinting. Secondly, personal financial data can be paired with climate insights to promote long-lasting behavioral change.
We can’t force consumers to stop taking flights or eating meat altogether. Yet, what we can do is provide them with the transparent data and sustainability facts to empower them to adapt their consumption habits in line with more sustainable alternatives. Consumers now have the power to easily optimize their lifestyles how ever they see fit to make a sustainable change.
Passionate and inspired, consumers can go even further by engaging in sustainable investing, taking part in financing the green upgrades to our infrastructure needed to secure a better tomorrow. Regardless which changes the consumers choose to make, scaling that change to the soon-to-be 2.5 billion online banking users will have undeniably positive impact on the future of the planet.
The first step to unlocking personal financial data for sustainability is to offer customers the value-added feature of transparent transactions. To do that, you need partner with the right expertise. From there, you can go further by making banking an insightful and engaging experience powered by climate insights. Luckily, ecolytiq has got your back.
Written by Maja Jakobs