Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Entrepreneurs, Start-ups, Small Businesses
CCA Policy Proposal to Expand Investment Crowdfunding
Investment Crowdfunding | Oct 17, 2024
How Expanding Investment Crowdfunding Can Drive Economic Growth
Kudus to Crowdfund Capital Advisors (CCA) for their policy proposal to expand investment crowdfunding and boost economic growth in the U.S.. Their approach is built on years of experience and provides a practical way to create jobs and support small businesses across the United States. This proposal comes during the final stages of the 2024 election where the economy is a hot topic in political debates. One important piece that is often overlooked is the fact that small businesses and startups are the real drivers of job growth and innovation in the U.S.. A special shoutout to Sherwood Neiss, an advisor at the National Crowdfunding & Fintech Association (NCFA), whose guidance is helping make investment crowdfunding more accessible and beneficial for entrepreneurs everywhere.
Investment crowdfunding makes it easier for everyday Americans to invest in startups and small businesses through online platforms. Created under the JOBS Act of 2012, it helps removes obstacles that keeps small investors locked out from investing directly in private companies by letting businesses raise money directly from their community. So far, it has helped raise over $2.5 billion, providing startup and growth capital to support to a wide variety of businesses across the country.
Why Expand Investment Crowdfunding Now?
Expanding investment crowdfunding is a great way to boost the U.S. economy right away, offering several important benefits:
1. Improves Access to Capital
Many small businesses especially in rural areas or owned by women and minorities have a hard time getting traditional funding like bank loans or venture capital. Investment crowdfunding offers a simple and flexible way for these businesses to raise money directly from the public when they need it.
See: The Real Story of Access to Capital
This helps close the funding gap that often holds back promising startups from innovating, creating value, and propelling an economy forward with jobs and economic impact.
2. Aligns with Economic Priorities of All Campaigns
Vice President Harris has worked on promoting innovation and creating more opportunities for underrepresented entrepreneurs. Investment crowdfunding fits well with her goals because it provides a practical way to boost funding to women and minority-led startups who find it difficult to secure funding from the banks or traditional venture capital. Over 40% of capital raised on crowdfunding platforms to date has gone to underserved businesses, confirming that it’s a great way to support those who are often left out by traditional financing options. Compare this percentage with the statistic that with venture capital only 2% of funds go to underserved groups.
Investment crowdfunding also supports Trump’s focus on strengthening U.S. manufacturing, cutting taxes, and creating jobs. It can help direct money to manufacturing startups to help them grow faster and create more jobs.
3. Job Creation and Economic Strength
Small businesses make up 55% of all new jobs in the U.S. since 2013. Expanding investment crowdfunding can help these businesses keep growing and creating new jobs, especially in areas that often get overlooked, and strengthening local economies.
4. Building a Community of ‘Investomers™'
Investment crowdfunding creates a special situation where investors are also customers (or investomers™). These people have a strong interest in seeing the businesses they support succeed.
See: Fintech Fridays EP62: The Future of Investment Crowdfunding: Innovations, Data, and Opportunities
They provide more than just money. They also promote the business and stay loyal which is incredibly valuable for any startup looking to grow.
The Proposal
Investment crowdfunding has already made a big difference to local communities contributing over $19.7 billion (this figure represents the total impact). With more support from government, the impact of investment crowdfunding could more than double helping small businesses in both urban and rural areas to launch and thrive.
- CCA suggests creating two funds for the government to co-invest. $1 billion fund for equity and another $1 billion for loans. The government would use these funds to invest alongside entrepreneurs in businesses raising money through crowdfunding.
- The proposal also suggests giving tax breaks to people who invest in crowdfunding campaigns where they could write off 100% of their investment in the year they made it. This would encourage more people to invest, making it easier for small businesses to get the money they need.
See: Innovating Crowdfunding with Bitcoin’s Network
- Partner with venture funds using artificial intelligence to identify promising startups to ensure investment dollars go to businesses with the greatest chance of success to reduce the risk for both investors and the government.
Outlook
Investment crowdfunding is a great way to tackle the country’s economic challenges in a way that strikes a chord on both sides of the political aisle. It can create jobs, support diverse entrepreneurs, and give small businesses better access to the funding they need to succeed.
Download the 6 page PDF Crowdfunding Policy Proposal --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
 |  |  |
|---|---|---|
 |  |  |
European Fintech 2024: Profits Rise, Unicorns Fade
Fintech Report | Oct 16, 2024
Image: State of European Fintech 2024 (Finch Capital)
Finch Capital's 2024 report reveals a shift in Euopean fintech towards profitability, sustainable growth, and strategic M&A
European fintech in 2024 is about consistent financial gains over rapid expansion. Fintech Capital released the 9th edition of the "State of European Fintech 2024" (37 page PDF) lifting the veil on recent market developments and adjustments to investment thesis' that are influencing this sector, such as the dominance of the UK, the role of AI and digital currencies, and the resurgence of digital banks. This post looks to highlight the key trends and insights that matter to fintechs and investors.
1. Current State of Fintech in Europe (2024)
- European fintech funding fell 25% in 2024 compared to last year.
- Despite challenges there are signs of recovery especially in mid-sized mergers and acquisitions (M&A).
- Companies are focusing more on more consistent profits instead of fast growth.
- Sustainable business models are preferred now instead of chasing high valuations.
- The UK leads the market, receiving 65% of the total fintech funding.
- Other regions like the Nordics and the Netherlands are maintaining stability despite the overall downturn.
2. Funding and Market Insights
- In the first half of 2024, total fintech investments reached €2.9 billion across 443 deals, down from €3.8 billion and 548 deals in the same period of 2023.
- Investors are being more selective, prioritizing companies with clear paths to profitability.
- Large late-stage investments have decreased while smaller more sustainable rounds are rising.
- Higher interest rates have boosted challenger bank profits, and fintechs with deposits.
- There's early stage interest for crypto and digital assets (especially stablecoins) as they challenge traditional banking models although the market continues to be volatile.
See: DLA Piper’s Tech Index 2024 – Highlights for Fintechs
- Insurers have embraced AI to streamline operations, with over 80% utilizing AI in underwriting and risk assessment. This insurtech trend points to increased efficiency and reduced operational costs.
- Deals in the mid-sized segment (under €500 million) have increased, making up 32% of the global market for such deals. This is similar to the U.S. in terms of volume but smaller for larger transactions.
- Companies with higher profit margins (EBITDA) are valued more with some seeing valuations over 10 times their earnings.
- The payments sector is seeing more mergers aimed at boosting efficiency. Buy Now, Pay Later (BNPL) is making a comeback, thanks to better risk management powered by AI.
3. Geographic Insights
- The UK is attracting 65% of Europe’s fintech investment and has a strong M&A market driven by a focus on profitability.
- Nordics and Netherlands remain steady despite economic challenges, with consistent funding and a focus on profitable, mature companies.
See: How Fintechs Are Unlocking Value in Private Markets 2024
- Government support in Ireland and Germany is nurturing tech startups, so possible growth rebound in 2025.
- Poland has a vibrant early-stage investment scene but lacks the follow-up funding needed for companies to scale up in later stages (Series A and B).
Key Takeaways
- The mid-sized M&A market in Europe offers stable returns, so an interesting time for Canadian venture funds to explore deals in the UK and Nordics?
- Increasing use of AI in insurance and banking creates opportunities for Canadian fintechs with AI expertise to enter the European market.
- The focus on sustainable business models and B2B solutions aligns well with a longer term investment approach. Germany and the Netherlands have strong government support, which may be attractive for Canadian investors.
European Fintech Outlook in 2024
European fintech in 2024 is all about stability and consistent growth. Finch Capital’s latest report shows that the focus has shifted from grow at all costs expansion to more sustainable models and profits. For more perspective, check out Chris Skinner's post here.
See: Global Fintech Funding Sees a Boost in Q2 2024
Although the UK remains the leader (65% of investments), government support in the Nordics and Germany may create a good time to explore AI and mid market M&A in Europe for Canadian investors.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
|---|---|---|
| | |
A New Era in Generative AI Video Creation
AI Video | Oct 15, 2024
Iage: Freepik AI
Adobe’s Firefly GenAI to Video Can Help Fintechs Create Amazing Content Safely for Commercial Use
The way companies and creatives approach video creation is changing rapidly with Adobe's new Firefly AI package pushing boundaries. These tools work smoothly with Adobe flagship programs like Premiere Pro and After Effects and allow users to create original content from prompts that fintechs and banks can use to produce realistic B-roll footage or use for a wide range of video applications legally.
See: Driving Fintech Growth: The Role of Video in Communicating Your Value Proposition
- Firefly is a very flexible tool for video producers with advanced controls for camera angles, motion, and scene layout.
- Users can create highly realistic and detailed scenes ranging from close-ups to panoramic shots in just minutes, saving video producers a ton of time and money.
- Importantly, Adobe guarantees that all generated content is legal and okay for commercial use since the model was trained on licensed or internal data only.
- Adobe's new Firefly video model is currently in limited public beta for use.
How Adobe Firefly Stacks Up Competitors
Firefly video is powerful GenAI to video tool but far from the only provider in a highly competitive space with rivals like OpenAI's Sora, ByteDance's Kuaishou, Meta's generative video tools, and Runway Gen-3. Here's an overview of how Firefly compares to some of its key competitors.
1. Customization and Controls
- Adobe Firefly lets users customize videos with features like zoom, pan, and camera angle adjustments.
- Video editing is made easier by its seamless integration with Adobe products like Premiere Pro and After Effects.
- Users can control both traditional video footage and AI-generated content, providing more creative flexibility.
- Adobe's technologies are stronger at managing physical details and realistic object interactions (thanks to their strong background in video production).
- Sora from OpenAI is more focused on developing characters and story lines, especially in complex scenes with multiple people and locations.
2. Integration with Existing Tools
- Adobe excels at integrating Firefly into Creative Cloud products (especially Premiere Pro), which makes it easier for customers to combine traditional and AI-generated videos.
See: Compliant Marketing: How to Avoid SEC Fines
- For creatives who want independent tools, Runway's Gen-3 and Meta's tools are great options since they concentrate on building full scenes from scratch. However, users in larger Adobe ecosystems might not find them as easy to integrate as Adobe.
3. Legal and Ethical Safeguards
- Adobe ensures that all created video outputs are safe for commercial use since Firefly models are trained using legally licensed data.
- This means, companies and creators can avoid legal pitfalls and remain compliant with intellectual property.
- This also means Firefly customers can use and/or sell their content without risk which is a huge potential issue with some AI models that are criticized for their data sources.
4. Ease of Use
- Adobe Firefly is designed to be practical for every day video creators and is arguably easier to use than more experimental platforms like Sora or Meta's video tools designed for highly creative or academic projects.
- Firefly can even be used by non-video experts for a wider range of applications.
Why Fintechs Should Care?
There are lots of great reasons according to Vidico why fintechs should consider using more video in their daily business operations and marketing tactics from improving brand awareness to increasing conversion rates.
- Video accounts for 82.5% of all internet traffic worldwide, and 86% say videos lead to increased website traffic
- A whopping 91% of businesses use video marketing
- 88% of marketers say video is an important part of their marketing strategy
- 90% of of video marketers use Youtube who dominates
See: 12 Market Entry Approaches for Fintech Startups
- On average, marketers allocate 21-30% of their marketing budgets on video
- 85% of marketers plan to increase their video budgets in 2024
- 90% say video increases brand awareness
Outlook
AI video tools like Adobe's Firefly are making it easier and cheaper for companies to incorporate video into their marketing strategies. Adobe Firefly is great because it's easy to use, ethically safe and integrates well with Adobe's creative suite. There are lots of competitors however, for those that prefer independent options or are looking to create more complex scenes. Fintechs and financial institutions can use video to scale content in more dynamic and effective ways than ever before. With AI, video production will change the relationship of how companies interact with their customers.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
|---|---|---|
| | |
OECD-FSB Discuss New AI Trends in Finance
AI | Oct 10, 2024
Image: OECD - FSB Roundtable on AI in Finance: Summary of Key Findings
Generative AI and 3rd Party Services are Transforming Finance
Artificial Intelligence (AI) in all of its flavours are changing the banking sector and financial services from advancements in everything from fraud detection to customer support. There is an increasing reliance on third-party AI services providing fintechs new opportunities but requiring strong governance. The Organisation for Economic Co-operation and Development (OECD) and Financial Stability Board (FSB) held a public-private round table in May earlier this year to discuss the latest risks and challenges. A summary of key findings was recently published (12 page PDF). This article focuses on new AI trends and implications for financial technology firms.
1. From Streamlining Internal Processes to Customer Facing Apps
While it's largely known that financial institutions (FIs) are using AI/GenAI for automating and optimizing a wide range of internal processes to free up resources, such as code creation, generating regulatory documents, and translating legal materials, FIs anticipate that GenAI will be a major factor in customer facing applications.
See: How AI is Shaping the Future of Financial Services in Canada
AI powered financial advising services can provide a highly customized customer experience. Fintechs that innovate and gain early adoption of individualized client services can remain competitive and also attractive to the banks.
We are finally arriving at the day where AI financial planning tools can instantly recommend the best solutions for unique client needs with a simple 'optimize' button, which will transform the customer journey and experience (not to mention their level of satisfaction and trust).
2. Third Party AI Services Must Balance Innovation and Risk
The financial sector is becoming increasingly dependent on third party AI service providers for cloud infrastructure, data analytics and the latest AI models. While outsourcing or integrating these services boosts innovation, it increases the risks of concentration (working with a limited vendor), accountability and transparency.
See: Industry Resists SEC’s Oversight on AI in Finance | California’s AI Safety Bill Veto and Its Impact
Fintechs and FIs must monitor and control these embedded AI services, especially critical functions. This means that both fintechs and FIs must carefully manage their relationship with these third party AI vendors to avoid becoming overly dependent on a single vendor and to remain flexible. Diversifying service providers while also building internal AI capabilities is advised in most cases to avoid vendor lock-in.
Further, increased regulatory compliance requires that firms ensure proper governance and accountability when working with third party vendors, so striking the right balance of controls and innovation is key.
3. Generative AI's Competitive Advantage Will Disrupt
The roundtable discussed how early AI fintech adopters might outperform established financial institutions in niche sectors and industries. GenAI has proven to be a game changer in asset management, trade analysis, risk assessment and portfolio optimization. This means fintech startups can use AI tools to disrupt traditional financial services by being agile, scaling quickly, and deploying these solutions in less liquid markets.
The panel focused on how early AI adopters might outperform established financial institutions, especially in specialized industries. By automating intricate processes like trade analysis, risk assessment, and portfolio design, GenAI in particular is revolutionizing asset management, trading, and portfolio optimization.
Fintechs now have more chances to compete in markets where conventional companies are taking longer to develop as a result of this change, levelling the playing field against larger competitors.
4. Human Oversight is Critical for Accountability and Trust
According to the expert panelists participating in the roundtable, human monitoring is still essential, so AI decisions can be reviewed and evaluated to ethical principles to avoid mistakes made by AI that can have huge negative implications like in fraud detection.
See: AI’s Ethical Dilemma Grows as Innovation Surges
Transparent AI is key for building and maintaining consumer trust. Fintechs can differentiate themselves by highlighting strong governance frameworks and ethical AI use that keep 'humans in the loop' while also creating efficient, fair and accountable outputs.
Harnessing AI's Potential in Canadian Fintech
Based on the latest discussions at the OECD-FSB AI in Finance Roundtable, it's pretty clear that AI is changing the landscape of financial services. Fintechs and financial institutions should embrace AI for operational efficiencies to earn a competitive edge while reducing risks of third party dependency, governance, and ethical AI. NCFA Canada's community, whether they are a new business or established firm, should think about how they can use these insights to lead and innovative in the fast paced and evolving AI powered financial services industry of the future. And if you haven't heard the news, the 'Godfather of AI', British-Canadian Geoffrey Hinton was just awarded the Nobel Prize in Physics for his foundational work in AI neural networks.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
|---|---|---|
| | |
Marathon Bitcoin Miner Ventures into Whisky Barrels
Tokenization | Oct 9, 2024
Image: Freepik/bearfoto
Marathon’s Anduro Takes Tokenization to Bitcoin with Whiskey Pilot
Marathon Digital Holdings is breaking ground into tokenization with its latest venture, Anduro under the Avant platform which was created in partnership with tokenization specialist Vertalo. The project plans to tokenize real-world assets (RWAs) on the Bitcoin blockchain starting with whisky barrels where investors can purchase and exchange fractional ownership via the platform.
This project is part of a growing trend in Bitcoin's ecosystem where RWA's that are non-digital and non-financial are being converted into tradeable tokens and then offering them to investors as an investment, store or value or utility.
See: Coingecko 2024 Report: Investing in Tokenized RWAs
Although tokenization for RWAs has been widely used in Ethereum and Solana, Bitcoin has been slower to include the smart contract capability that enables this kind of tokenization. Things are starting to change with the creation of platforms like Avant.
For miners like Marathan who are experiencing reduced income from decreased block rewards as a result of the latest Bitcoin halving, they are incentivized to look for new sources of revenue, which can lead to the incubation and/or launch of some exciting projects.
Several Tokenization Platforms Driving Industry Forward
While Anduro and Vertalo are tokenizing on Bitcoin, several other platforms are leading the charge across various asset classes and blockchain networks:
- Ondo Finance tokenizes U.S. Treasury bonds and money market funds in the Ethereum ecosystem and offers low-risk asset tokenization to both institutional and individual investors looking for safe and liquid assets.
- Maple Finance offers blockchain-based credit solutions and decentralized liquidity pools, enabling lenders and borrowers to engage in tokenized RWAs like Treasury bills.
- Centrifuge is tokenizing invoices and receivables (similar to 'invoice factoring' in traditional terms), which allows companies to use these assets as collateral for loans.
- Tokeny specializes in compliant digital securities and the infrastructure to safely issue and manage tokenized assets. Institutional investors choose its platform because it incorporates several blockchains, such as Ethereum and Tezos.
Beyond Whisky
Various asset types are expected to be digitized over the next few years. Below are a few of the asset classes that are ripe for tokenization and digital markets.
See: How Fintechs Are Unlocking Value in Private Markets 2024
- Real Estate
- Precious Metals
- Art and Collectibles
- Bonds and Securities
- Commodities
Tokenizing the Future
Tokenization offers new liquidity, transparency, and inclusion in financial markets, making it very interesting for fintech startups and investors in communities such as NCFA Canada. Tokenization is one of the most significant financial trends to monitor as blockchain technologies innovative new use cases for both buyers and sellers.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
|---|---|---|
| | |
Streamline Workflow: Choosing the Perfect Internet Service for Maximum Efficiency
Oct 8, 2024
Image: Freepik
The internet is an invaluable tool today. People with reliable internet access find they can accomplish more each day. However, finding the perfect internet service for maximum efficiency can be challenging. There are countless options, and a person doesn't want to make the wrong choice. What factors should be considered when selecting an internet provider?
Available Providers
Many people are looking into switching to fiber internet service, but they may be unable to do so. The first step in finding the perfect internet service is to learn about available options. While many providers service customers nationwide, others are limited regarding their geographical coverage. Consumers must know what options are available in their area so they don't waste time looking into one company only to find it is not offered where they live or work.
Know What is Needed
Before researching available providers, people must list what they use the internet for. Some people only use the internet for email and to gather information. Others need high-speed service so their video conferences don't lag. The number of users who will be online simultaneously also plays a role in what is required in an ISP. A higher-speed option is needed in this situation.
Data Caps
Some providers have data caps in place. When a user exceeds the cap, the service slows, or the provider takes other measures to restrict usage. Learn whether a provider being considered has a data cap, what measures will be taken if the user exceeds this cap, and which plan will provide enough data that the cap won't be an issue.
Pricing
Pricing is always a consideration when choosing a new internet service provider. Look at the cost per month when comparing providers and research additional fees. Are customers charged the cost of equipment? Will there be set-up and installation fees? What charges are imposed when a user exceeds the data cap? People need this information when comparing providers to ensure they get the service they need at a price they can afford. Bundling services may help reduce costs. Look for cancellation fees, as well, because they can be costly. If the service doesn't meet expectations, people might be stuck because they want to avoid paying a hefty cancellation fee.
Special Features
Internet service providers must compete for customers. To attract new customers and retain existing ones, providers might offer unique features and add-ons. Many providers offer free items with certain service tiers. For example, the company might provide a gift when a customer has been with them for an extended period. Others offer free equipment. Customers need to decide which perks best meet their needs.
Customer Service
Consumers need reliable internet service, particularly those who work from home regularly. When the connection doesn't work, they need help immediately. Consider this when comparing internet service providers and find one that offers outstanding customer service. The customer service team will be responsible for helping clients get their internet up and running again quickly. Ensure this team is responsive, friendly, and helpful. In addition to calling in and speaking to a team member, individuals should read online reviews from current and former customers to learn more about the company's service.
See: Can Canada Harvest the Next Wave of Productivity Growth?
Internet service providers differ significantly in their plans, pricing, customer service, and more. Consumers need to consider all factors when choosing a new provider. Spend time researching the options to find the right provider the first time.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
|---|---|---|
| | |
The Role of Fintech in the Circular Economy
Circular Economy | Oct 8, 2024
Image: Freepik
Manufacturers and fintech firms are driving sustainability and circular economy innovations to reduce waste and boost efficiency
Many manufacturers and sellers have prioritized sustainability and circular economy concepts in response to environmental regulation, institutional pressure, and the need for more resource-efficient manufacturing.
A study published on ResearchGate, conducted by Abdul Gani, Neeraj Bhanot, Faisal Talib, and Mohammed Asjad, shows that small and medium-sized enterprises are the most important part of the global economy where sustainability practices are gaining worldwide attention. A prominent example of this would be Evergreen Solar (which specializes in designing and installing solar energy systems for residential and commercial customers in Canada.) and Tentree (a Canadian clothing brand that plants ten trees for each item sold and uses materials that are eco-friendly.)
See: Alternative forms of capital will be key to develop sustainable economic systems
However, large-scale industries are also following sustainable practices. Resolute Forest Products is an organization that is committed to sustainable forest management and is investing in renewable energy projects aimed to reduce carbon footprint.
Sustainability and the Circular Economy?
The Circular economy works upon three principles based on sustainability:
- Eliminating pollution and waste
- Circulating products and materials to maximize their value
- Regulating the environment
This model promotes the leasing, sharing, repairing, reusing, refurbishing and recycling of used products and materials for the longest time period possible. This way, the lifespan of goods and articles manufactured is prolonged. This also lowers waste production at a significant rate.
See: Sustainable Business and The Regenerative Future
By shifting to the circular economy, organizations can boost their productivity and profits at a significant rate. For example, Loop Industries has seen substantial profits and growth thanks to the high demand of its recycled polyester products.
How Technology is Powering the Circular Economy
Since the 70’s, technology has become the most important part of this economic model. This was the time when the first Earth Day was commemorated in April 1970. This is when the term “Recycling” was gaining momentum, with revolutionary processes and machinery that paved the way for material recovery.
By the 90’s, the term “Extended Producer Responsibility” was introduced, which ensured responsibility took the centre stage. It focuses on the responsibility of the producer for their product’s impact in the last stage of its life cycle and after consumption. It also encourages manufacturers to create products that significantly lower the impact on health and the environment.
EPR programs, often equipped with technology, incentivize manufacturers to create and manage their products in a responsible manner. They do so by identifying the impact of the life cycles of the products. This, on the other hand, promotes circularity through mindful designing and end-of-life planning.
See: CSA Backs New Sustainability Disclosure Standards
The introduction of blockchain technology in 2010 brought a revolutionary era in the circular economy altogether. This technology enabled manufacturers to tackle the long-standing issues in the transparency of the supply chain, addressing accountability and traceability- the most important elements for encouraging circularity by ensuring responsible and efficient sourcing and disposal of materials. Blockchain technology also helps customers make well-informed decisions and deem companies responsible for the practices followed by them.
However, the story doesn’t end with blockchain. Today, there are various other technological advancements that are energizing the circular economy, such as:
- Circular Economy Token Systems - Gamification and tokenized systems are used to promote sustainable choices by offering rewards and incentives to individuals and companies to increase green user engagement, thus contributing to the circular economy.
- Sorting Robots Powered by AI - There are various AI robots specializing in sorting. They are programmed in such a way as to improve the efficiency and accuracy of the recycling process of a material. By doing so, these robots are helpful in tackling global waste crisis in an impactful manner. These robots enhance the transparency of supply chains by providing real-time data on the quantity, quality, and value of any product. Fintech platforms can leverage this level of transparency to offer more transparent and accurate financial products. Furthermore, it also helps you reduce the financial risks associated with investing in recycled products, thus enabling manufacturers make data-driven decisions.
- Blockchain Traceability offers a decentralized ledger to record each transaction and movement within a supply chain. All the people participating in the supply chain, such as raw material suppliers, manufacturers, retailers, and customers, contribute to the blockchain data. This level of transparency helps in tracing the journey of any product with the utmost accuracy, encouraging sourcing and efficient recycling. There are many global organizations like IBM Food Trust and Provenance, that track the origin of products and ensure sustainability and ethical sourcing.
- AI-enabled Circular Design is also helping in product designing and recycling processes. These tools use machine learning algorithms that recognize patterns and the correlation to the data. Furthermore, AI promotes the creation of products that are aligned with the principles of circular economy.
Fintech Poised to Grow the Circular Economy
- Market Growth - According to a recently MarkNtel Advisors study, fintech was valued at approximately US$553 billion in 2023 globally and is rising at a CAGR of 6.6% from 2023 to 2030.
See: Sustainability: A Must for Fintech Growth
- Investment - In recent years, investments in startups specializing in fintech have risen. A significant part of these investments have been allocated to areas that prioritize sustainability and circular economy solutions. A Canadian company that meets this definition is CoPower, a Toronto-based fintech firm focused on sustainable investing (purchased by Vancity Community Investment Bank). CoPower focuses in offering investment possibilities for clean energy and green infrastructure projects that adhere to the concepts of sustainability and circular economy. CoPower provides 'Green Bonds' to fund projects such as energy-efficient retrofits, solar energy, and geothermal installations, making it a pioneer in integrating financial solutions with a sustainable effect.
- Regulatory Promotions - Many governments across the world are introducing regulations that are supportive of fostering the growth of fintech in the circular economy. For example, The European Union has a Circular Economy Action Plan that promotes sustainable finance and investment for various circular economy projects. The United Kingdom also has a Green Finance Taskforce that promotes finance and investments for sustainable projects.
More Examples That Utilize Fintech in a Circular Economy
Below are a couple of Canada examples that have adopted fintech solutions to support a circular economy:
Loop Industries
Loop Industries is a chemical company based in Terrebonne, Canada. This company has developed a technology that recycles plastic waste into polyester fibre. This company has utilized fintech solutions to boost its supply chain, manage financial risks, and secure funds for its revolutionary recycling technology. Loop uses a technology that provides a sustainable and eco-friendly alternative to the traditional production of plastic. This technology contributes to a more circular economy as it encourages the reduction of waste and the conservation of resources.
CarbonCure Technologies
Based in Halifax, Nova Scotia, CarbonCure Technologies has developed a process that captures and stores carbon dioxide in concrete. This company has utilized fintech to attract investment and secure funds for carbon capture solutions. CarbonCure’s technology is helpful in lowering carbon emissions and making the construction more sustainable and eco-friendly, thus promoting sustainable economy.
Conclusion
Sustainable practices are impactful in lowering the carbon footprint and saving a lot of money. It enables people to discover and follow the best solutions that can be helpful in conserving resources. Technologies like AI, Blockchain and Fintech are advancing the development and impact of the circular economy by promoting the conservation of resources while streamlining transparent production process that reduce pollution and enable people to adopt sustainable practices.
About the Author
Amir Waheed is the co-founder & CEO of SEO Toronto Experts. He intends to bring a massive transformation to eCommerce SEO Services. His team of talented IT professionals knows the secret of getting huge conversions.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
| | |
|---|---|---|
| | |
