Redefining Finance: A Vision for Positive Societal Impact
by Kattiya Indaravijaya
In today’s interconnected world, the role of finance transcends mere profit-making. It shapes the evolution of critical systems in the real economy, such as the systems providing our food, energy, mobility or built environments. Traditional finance has played a dual role in supporting and hindering the functioning and evolution of these systems. On one hand, it is instrumental in facilitating resource allocation and risk management for businesses and projects, driving innovation and transformation across various sectors. On the other hand, its focus on short-term profits has often overlooked long-term sustainability and externalities, exacerbating environmental degradation, social inequality, and financial instability.
Financial service providers have contributed to climate change by channeling funds to brown assets or projects and to some extent have excluded some marginalized groups, further exacerbating the inequality impacting the most vulnerable groups of society. Finance needs to reconsider and strengthen its role as a driver of positive societal change, to create a sustainable and inclusive future for all. Some of the biggest societal challenges that financial service providers should address:
- Climate change and environmental degradation, which pose existential threats to humanity and biodiversity, as well as increasing physical and transition risks for businesses and communities.
- Social inequality and exclusion, which undermine human dignity and social cohesion, as well as hamper economic growth and development.
- Financial instability and systemic risk, which can trigger or exacerbate economic crises and social unrest, as well as erode trust and confidence in the financial system.
KBank’s priorities in this regard are clear. The bank sees itself as a bank of purpose and our vision is to be a leader in sustainable banking by integrating ESG criteria into our core business strategies, operations, and culture, as well as by supporting projects that accelerate decarbonization, regenerate natural capital and help inclusion of marginalized groups in society. Initiatives in financial inclusion and environmental sustainability that we are involved in include Watt’s Up (a battery swap station for EV bikes), Carbon Accounting (Software for measuring carbon footprint), and Knowledge Provider (Delivering climate-related knowledge and advice for business transition by integrating insights from leading institutions).
We believe both KBank and our customers will benefit from accelerating the digital and sustainability transitions. We leverage our resources and capacities to lead and enable collaboration among key stakeholders, driving meaningful impact at scale through the collective expertise, resources, and networks of strategic partnerships, and by providing innovative financial products and services. Innovative solutions for positive societal and environmental impact will not only reduce risks, enhance operational efficiency, profitability and shared value, but also create differentiation and competitive advantage, and build trust and reputation.
Reinventing the Financial System
Overcoming the often-institutionalized inefficiencies and externalities of today’s centralized financial system requires a holistic approach of incremental evolution. Decentralization, inclusivity and sustainability are critical design principles of our vision for the future of finance. Universal and inclusive access to financial services and financial literacy will bridge the gap between the banked and unbanked populations. Technologies such as blockchain and digital platforms can enable secure transactions, enhancing trust and empowering individuals and communities to participate in the formal economy. KBank is participating in this area through KIV by partnering with local fintech companies and community-based organizations to offer mobile banking, microfinance, and e-commerce solutions to low-income customers. At the same time, data and AI-supported investment decisions will help mitigate climate change and optimize ESG performance in alignment with UN SDGs. Such a system holds the promise of fostering inclusive and sustainable economic prosperity on a global scale.
The journey towards a more socially just and environmentally responsible financial system requires mobilizing strong visionary leadership, digital technology, as well as boosting financial literacy of both customers and employees, and integrating ESG criteria into financial decision-making and risk management.
Critical aspects of this transition to the financial system of the future will need to be managed carefully, such as the building of a sustainability mindset among customers and employees, as well as the upgrading of our digital infrastructure to cope reliably and securely with increased demands and expectations. Potential unintended consequences, such as resistance against reinvention from the incumbent actors, need to be mitigated through engagement with the existing financial system stakeholders and demonstrating how our vision can benefit them as well as society. We should also seek to build alliances and partnerships with like-minded actors who share our values and goals. We should ensure that our vision is inclusive, participatory, and respectful of diversity and human dignity. We should also design our system with transparency, accountability, and fairness in mind, and provide mechanisms for feedback, redress, and empowerment of the users and beneficiaries.
Other unforeseen risks or challenges that need to be anticipated and managed are those that could arise from the use of new technologies such as cyberattacks, data breaches, privacy violations, or ethical dilemmas. This could undermine the security, reliability, and credibility of our system, and erode the trust and confidence of the users and society. To mitigate this, we should adopt robust and resilient technological solutions, and adhere to the highest standards of data protection, privacy, and ethics.
In conclusion, redefining finance for positive societal impact is not just a moral imperative but a strategic imperative for long-term success. At KBank, we are committed to leading the way towards a more sustainable and inclusive financial system, one that serves the needs of society while driving prosperity for all. Together, let us embark on this journey of transformation, shaping a brighter future for generations to come.
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About the Author
Kattiya Indaravijaya, CEO of one of Thailands principal banks, KBank, is leading the bank to be a critical enabler of the sustainability transition in Thailand. |
Sasin Collaborative Thought Leadership: Transforming Our Critical Systems
Complex multi-actor systems have developed around satisfying critical human needs, such as nutrition, mobility, energy, or housing. These systems, as well as enabling sub-systems such as education, finance, etcetera, represent most of our economic activity, but there is also enormous inefficiency embedded in the complexity and dynamics through which these systems have evolved, making them responsible for most of humanity’s environmental and social impact.
Current efforts to reduce our negative impact can hardly be considered successful, because too much focus is still on marginal improvement of our traditional models. Only 18% of the 169 targets set for the 2030 SDGs are on track to be reached (most targets show virtually no progress and 15% are in fact reversing). This is why increasingly, scholars and practitioners are trying to understand the nature of systemic change, the radical reinvention of our critical systems. Cambridge University Press recently published ‘
Transforming our Critical Systems –
How Can We Achieve the Systemic Change the World Needs’ by Sasin professor GJ van der Zanden and researcher Rozanne Henzen.
Sasin has invited thought leaders and practitioners from around the world to share their visions and insights on the reinvention of the systems that they are part of. These pieces provide a rich variety of perspectives from business, policy makers, civil society, academia and think tanks, as well as enablers such as finance, technology and start-ups. In systems change, incorporating perspectives from multiple stakeholders is essential to come to a shared understanding of the system dynamics and challenges, develop a shared vision of the future and explore possible interventions and collaborations.