As the focus on Environmental, Social, and Governance (ESG) strategies accelerates, Anette Trulsson Corda, SVP Market Development at IDEX Biometrics explores what sustainability means for the payment industry, and how biometric innovation is driving a more sustainable ecosystem…
For the next generation of consumers – Millennials and Gen Z – sustainability has never been more relevant in defining their choices and preferences. According to research, as many as 73% of millennials are willing to pay more for sustainable products compared to 66% of the general population – and this behavior is translating over to payments and financial services.
As more wealth is transferred to this generation, and they eventually drive our global economy, the impact on company decision-making is only set to grow. As a result, several promising initiatives are already underway that are driving both an environmental and social impact within payments. From the use of biometric authentication to aid financial inclusion across the globe, to eco-friendly materials and processes associated with biometric-enabled payment methods – such initiatives are increasingly being recognized as a force for change.
Putting financial inclusion at the heart of sustainability
The opportunity for financial inclusion as a sustainability tool is already acknowledged, globally. It was cited by the World Bank as one of the most effective strategies to eradicate poverty, while regulators have gone a step further to identify the role of payment cards, specifically, as a way to improve access to credit.
Biometric cards offer one of the most secure, accessible, and flexible routes to inclusion, as a product that can only be used by the card owner, reducing the risk of misuse or theft. Funds are secure even if the card is lost. Furthermore, they vitally remove the barriers of entry to the digital economy, bringing autonomy and bypassing the need for PINs and passwords. They sidestep illiteracy limitations and instead contribute to previously unbanked people’s financial education.
With the payments ecosystem already taking steps to become more sustainable and inclusive, the potential of biometric cards to bring the unbanked and underbanked into the financial ecosystem, with ease and in line with the digital revolution, is huge. Regulators and governments are demanding that socially responsible banks offer more inclusive payments and finance opportunities, and biometric cards could propel these efforts.
In Bangladesh, Mutual Trust Bank is launching biometric payment cards to innovate the finance sector in a way that includes the underbanked population. Biometric cards are also in motion with organizations such as TaluCard, or Moneycarer who are using the technology to enable carers to make payments on behalf of the visually impaired, elderly, and those with dementia.
A greater and longer-lasting impact
Governments, corporations, and organizations in the private and public sectors are seeing the potential of leveraging technology such as biometrics to accelerate the accessibility and inclusivity of digital payments. Financial exclusion imposes significant costs on those directly affected and hinders the economic growth and development of nations. In fact, consulting firm EY Global has estimated that broader access to banking, savings, and lending products could boost GDP by up to 14% in large emerging countries such as India, and up to 30% in frontier economies such as Kenya. The use of biometrics smartcards supports this, promoting more ethical and transparent practices among businesses and consumers. They vastly reduce the likelihood of data theft, with each card ‘attached’ exclusively to its owner via the personal identity marker of, for example, a fingerprint.
Physical payments take strides for change
While bridging the financial inclusion gap is set to have a huge social impact, there are other examples within the physical payments space where key players are making a difference from an environmental perspective. For example, by 2028, Mastercard has vowed that all newly produced plastic payment cards will be made from more sustainable materials including bio-sourced plastics like recycled PVC (rPVC), ocean-sourced/bound forms such as rPET, or Polylactic Acid (PLA).
When it comes to consumer preferences for green payments, more than three-quarters of Millennials say they would prefer to use an upcycled credit card if functionality wasn’t disrupted. Considering Gen Z and Millennials use payment cards 30% more than other groups, amplifying the production of recyclable, green credit, and debit cards will only prove favorable for issuers, manufacturers, and merchants alike.
For biometric-enabled payment cards, the migration away from plastic is already underway with banks exploring titanium cards to provide a more durable and sustainable option. Recently Eastern Bank Limited (EBL) in Bangladesh announced the launch of the world’s first biometric metal card, a trend anticipated to grow as banks seek more exclusive and sustainable payment options.
From eco to ESG: a broader opportunity
Ultimately, the payments ecosystem is in the eye of its eco transformation, with traditional and new players having to rethink their operations and supply chains. The same responsibility to be a pioneer and to promote eco-friendly operations falls to the biometric sector, with the biometric sensor market set to triple its value to $3.3 billion by 2030, as consumer adoption scales.
Amid this speed of sector growth, industry players need to take strides in differentiating and taking proactive steps to implement sustainable ESG initiatives. This involves eco-friendly production processes and sustainable card materials as a default strategy. It also includes considerations around manufacturing locations, bringing production centers and supply channels closer to key markets to reduce the overall carbon footprint, and implementing thorough recycling strategies.
Biometrics has an advantage as a burgeoning industry to not just set benchmarks, but to provide a scalable solution to manufacturers, issuers, and regulators to transform the payments ecosystem. At its heart, this can be driven by a worthy goal of making finance greener, but from this starting point a much greater, longer-term impact on businesses, livelihoods, and the planet can be envisioned.
About the Author
Anette Trulsson Corda is SVP Market Development at IDEX Biometrics. IDEX Biometrics ASA (OSE: IDEX) is a leading provider of fingerprint identification technologies offering simple, secure and personal authentication for all. We help people make payments, prove their identity, gain access to information or unlock devices. We invent, engineer, and commercialize these secure and safe yet incredibly user-friendly solutions. Our total addressable market represents a fast growing multi-billion-unit opportunity. For more information, visit www.idexbiometrics.com and follow @IDEXBiometrics
