Creating Sustainability-Oriented Fintech Lending Platforms in Australia

Description of impact *

Our research team investigated how FinTech lending companies can use customers' environmental information to assess their creditworthiness and whether lending decisions based on personal environmental information derived from customers’ transaction data can promote pro-environmental behaviour, expedite the societal transformation towards a low-carbon economy, and increase financial inclusion particularly for the unbanked population. These objectives were accomplished through a field experiment conducted in 2021 in partnership with the Australian Fintech Association and a sample of over 12,000 customers from a Chinese Fintech firm. Our research outcomes have created:


1. Social benefit: the carbon footprint credit model assists unbanked people to gain greater access to credit. The experiment results showed that using the new carbon footprint credit model during the experimental period, the fintech company improved financial inclusion by granting loans to 20% more customers while maintaining default rates and borrowing costs low. Preliminary calculations indicate that the new credit model could help the world's approximately half-billion underserved population improve access to credit.

2. Environmental benefit: the experiment discovered that alerting borrowers that their carbon footprints would be factored into their credit scores motivated them to cut their total annual carbon emissions by 17% through reawaking their environmental consciousness.

3. Economic benefit: the experiment results verified that the adoption of the new credit model generated an additional 526,000 Yuan (AUD 116,000) profit for the Chinese Fintech partner throughout the experimental period, translating to an approximately 5% increase in profit for the Fintech lending industry.

Impact date	2021
Category of impact	Environment impacts
Impact level	Adoption (early)