As sustainable investing evolves and grows, so are the concepts that credibly wear the “sustainability” tag. It may surprise some investors to learn that the expansion includes assets like the ARK Fintech Innovation ETF (NYSEARCA: ARKF).
Sustainability is often viewed through the lens of environmental awareness and related investments and, to a lesser extent, concepts such as improvements in agriculture production, which can lead to improved crop output and healthier choices for consumers.
However, when a broader view of sustainability is taken, it’s clear fintech concepts will play important roles in making the world a better place. Those good vibes can lead to positive outcomes for investors.
As just one example, blockchain technology – one of the backbones of fintech and a concept accessible via ARKF – checks sustainable boxes, including economic convergence, environmental action, more even economic growth, and improved infrastructure.
A More Sustainable Digital Wallet
Digital wallets, such as Square’s Cash App and PayPal’s Venmo, can make traditional financial services more inclusive, particularly for folks that are unbanked and overlooked by old guard banks. ARKF provides access to that theme with exposure to both fintech giants.
“Financial inclusion is critical to a range of UN Sustainable Development Goals. In 2016, the UN Secretary General’s office documented the link between financial inclusion and eight UN SDGs: eliminating extreme poverty, reducing hunger and promoting food security, achieving good health and well-being, fostering quality education, promoting shared economic growth, promoting innovation and sustainable industrialization, and building a more equitable and peaceful society,” according to ARK Invest research.
As digital wallets become more accessible, particularly in emerging economies, the number of mobile money accounts increases in exponential fashion, cementing the notion that digital wallet purveyors provide an essential function in financial inclusion.
There’s also compelling evidence suggesting digital wallets have an array of other derivative effects that can further sustainability.
“In ARK’s view, acquiring users at dramatically lower customer costs (CAC) and leveraging digital-only business models, digital wallets not only offer financial services more cost-effectively than traditional institutions but also can service consumers – especially lower income earners – who previously would have been unprofitable. Square’s Cash App, for example, is acquiring customers for roughly $5, while our research indicates that traditional banks pay $1000,” notes ARK’s issuer.
For more on disruptive technologies, visit our Disruptive Technology Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.