Sibos 2023 interview: Kalliopi Chioti, Temenos, on sustainable finance and digital transformation

At Sibos 2023Kalliopi Chioti, chief marketing and ESG officer, Temenos, chats to Funds Europe about how banks are leveraging technology and ESG demands to drive sustainable finance.

Funds Europe: The EU Sustainable Finance Disclosure Regulation (SFDR) has set stricter criteria for what qualifies as green products. How do you anticipate these regulatory shifts altering the traditional operations of banks, and what kind of adaptations do you foresee as essential for banks to remain compliant?

The introduction of this regulation underscores the increasing significance of environmental, social, and governance (ESG) considerations in the finance sector. Banks and financial institutions are now feeling the weight of responsibility to place ESG objectives at the forefront. This need is evidenced when these institutions approach us for digital transformation but with a clear mandate to incorporate ESG parameters.

The EU and active players like the UK are pushing financial entities to be more precise and quantifiable about the financial implications of climate change. One clear example of this is the imperative to disclose scope three emissions, which covers emissions from their supply chain. On top of this, we’re seeing new standards emerging, such as those under IFRS, which are prompting banks to categorise climate change as a tangible financial risk.

Funds Europe: The emergence of offerings such as impact accounts, reward credit cards and green deposit accounts signifies a shift towards green-conscious banking. What other innovative solutions might we see in the future, and how will they shape the banking landscape?

The pressures banks face today don’t stem solely from regulatory bodies. We’re witnessing a strong shift in consumer sentiment, especially among environmentally and socially conscious individuals. It’s crucial for banks to make the carbon footprint of their transactions transparent. An insightful Economist survey we commissioned at Temenos revealed that a whopping three-quarters of banks are gearing up to provide ESG propositions to their clientele within the coming half-decade. An impressive 74% of these banks are also showing interest in channelling capital into eco-friendly endeavours, while 64% are contemplating divesting from industries with high carbon footprints. The good news is that technology can be a powerful ally in this journey. 

Funds Europe: In the context of evolving green banking innovations, such as the introduction of impact accounts and green deposit accounts, can you project any novel solutions on the horizon that might shape the future of eco-conscious banking?

The various pressures, ranging from regulatory stipulations to evolving consumer preferences, are actively moulding the agendas and strategies of banks. A combination of emerging technologies, including open banking, composable banking, artificial intelligence, cloud infrastructure and software-as-a-service models, will be instrumental in shaping the next wave of banking innovations. A case in point is the rising trend of AI-powered ESG Investing and Impact Investing. By leveraging artificial intelligence and integrating rich environmental data, banks can offer nuanced investment strategies that align with clients’ values.

Funds Europe: Transitioning from legacy IT systems to public cloud services offers the potential for a reduced carbon footprint. Can you elaborate on the main challenges and prospects this migration presents for established banks, especially in balancing operational efficiency with environmental responsibility?

This migration is more than just a trend; it’s gradually becoming an industry standard. Our Economist survey indicated that a majority of banks are seriously considering shedding their proprietary data centres in favour of cloud solutions within the next five years. Beyond the evident benefits of agility, efficiency and security, an often-overlooked advantage is the environmental dividend. By leveraging economies of scale, cloud solutions can significantly minimise carbon footprints. For example, institutions like Flowe Bank have realised tangible benefits.

Funds Europe: As AI gains traction in evaluating sustainable investment opportunities and with projections indicating a significant increase in ESG assets by 2025, how do you believe banks can best leverage AI and other technologies to identify and benefit from sustainable investment opportunities?

The capabilities of artificial intelligence, especially in the realm of sustainable investments, are expansive. It’s crucial, however, that banks ensure the environmental data they integrate into these AI systems is of the highest quality. The fusion of this data with increasingly standardised metrics for quantifying the financial ramifications of climate change will steer the trajectory of digital transformation in banking. 

© 2023 funds europe



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