Sustainable Fintech: Green innovations and responsible investing trends

Sustainability has become a driving force in financial innovation in recent years, giving rise to the budding field of “sustainable Fintech”. This concept merges financial technology with environmental and social responsibility, aiming to make finance greener and more inclusive. A July 2023 Eurobarometer survey found that 77% of EU citizens believe climate change is a very serious problem, with 56% thinking the EU, along with Governments, are responsible for tackling it, and 53% think business and industry are responsible as well. Fintech startups, alongside established financial institutions, have started developing solutions which align with climate goals and meet the growing demand for a more ethical approach to finance.

The Green Digital Finance Alliance has identified eight key product categories in green fintech according to its classification published in 2022. These are; green digital payment and account solutions, green digital investment solutions, digital ESG data and analytics solutions, green digital crowdfunding and syndication platforms, green digital risk analysis and insurtech, green digital deposit and lending solutions, green digital asset solutions, and green regtech solutions. The GDFA has already identified several use cases for each of the solutions, demonstrating a trend in a green direction. Several factors are driving this wave of innovation. The 2023 Eurobarometer survey found that 90% of Europeans think there should even be stricter rules for calculating environmental impact. Similarly, a 2023 McKinsey study noted growing consumer preference for products with ESG claims. Enabled by technologies like open banking and blockchain, startups are responding to this demand. According to Dealroom.co, climate-focused FinTech startups raised over €2 billion in 2022, more than triple the 2020 figure.

Examples include the German startup Tomorrow, which offers a sustainable mobile banking service that directs consumer deposits exclusively into sustainable investments, avoiding industries that harm future generations. The Dutch bank ING has also rolled out a carbon footprint tracker that calculates emissions based on consumer purchases. Other initiatives, such as TreeCard’s rewards for ethical spending and NatWest’s CO2-saving tools, reflect broader experimentation with green banking features.

The line between consumer-facing fintech and responsible investing is increasingly blurred.

When looking at investing trends, European ESG investing has been largely driven by institutional capital, however retail participation is increasing. Europe is in fact a global leader in the sustainable investing landscape, being home to 85% of global sustainable assets according to a 2024 European Sustainable Investment Funds Study, reaching €2.2 trillion by the end of 2023, out of a €2.6 trillion market, and here institutional investors have increasingly integrated ESG criteria into mainstream portfolios over the past decades. This is also notable, as 88% of institutional investors have increased their use of ESG information according to a 2024 survey by EY, despite 92% worrying that ESG-related initiatives harm short-term corporate performance. This deep integration reflects both ethical commitments and a view of ESG as a driver of long-term value. A 2022 PwC report highlighted that 60% of institutional investors reported that ESG investing has already resulted in higher performance yields. In contrast retail investors have lagged in ESG awareness and access, however this gap is closing. A MiFID II update in 2022 has led to changes which ensure that client sustainability preferences are considered during investment processes. Thanks to low-cost platforms and robo-advisors, retail investors can invest sums into thematic funds and portfolios with these considerations in place, lowering the barrier to entry.

However, European sustainable finance stands at an inflection point in 2025. Recent years have brought forward growing pains in the form of regulatory tightening and increased emphasis on ESG. With increased pressure to boost competitiveness in the EU, the European Commission adopted a package of proposals in early 2025 intended to reduce the complexity, notably for SMEs. This includes measures such as postponing the application of some reporting requirements in the corporate sustainability reporting directive. What impact this is expected to have on sustainable finance, up and coming innovations and investing trends is yet to be seen. On one hand, easing timelines and complexity might encourage more businesses to engage with sustainable finance (rather than feeling overwhelmed by red tape), potentially fostering more innovation in green fintech solutions and more voluntary corporate action. On the other hand, there’s a risk that delaying or diluting certain requirements could slow down the momentum toward transparency and accountability in the short term. Maintaining leadership in the sector will require continual refinement of policies to support innovation while upholding the integrity of what “sustainable” really means. The next chapter of sustainable fintech and responsible investment will likely involve greater use of technology (AI, big data, IoT) to meet reporting demands and measure impact, more public-private collaboration to fund climate solutions, and possibly the development of global standards.

Sustainable fintech is moving from niche to mainstream, driving green innovation in how we save, spend, and invest. The trends are encouraging, but a cautious approach remains wise amid shifting geopolitical priorities and evolving regulations.

FINE (Fintech Investor Network & Ecosystem) is an independent platform dedicated to fostering cross-border fintech collaboration, regulatory dialogue, and industry growth across Europe. FINE connects fintech companies, policymakers, and financial institutions to promote best practices, innovation-driven regulatory frameworks, and market expansion opportunities.

This article is published by AcrossLimits in collaboration with FINE (Fintech Investor Network & Ecosystem).