Photo / Supplied.

Fintechs are supporting a new wave of sustainable businesses.

Buying an electric car is expensive, even in these climate-change-conscious times.
The main reason for that is electric vehicle batteries. So, to make EVs more affordable, what about a scenario where the driver owns the car – but not the batteries?

Power Finance CEO Dave Corbett says that kind of divergent thinking is behind the emergence of new fintech companies like his own. They are new, secure and community-minded finance systems set up as an alternative to products available from mainstream lenders and ideal, for example, to support sustainable businesses and the easy adoption of their services and products.

The EV scenario is an example. Corbett says Power Finance has been asked by several organisations to look into the prospect of a business which makes EVs more affordable – and thus makes a sustainable business idea not only environmentally beneficial, but also within reach for customers.

"We all know EVs are expensive but you can see how this would work," he says. "A family might buy an EV and they would own the whole car – except for the battery."

The battery makes up somewhere between 30-40 per cent of the cost of a new EV, so paying a much smaller lease fee over a period of years means the cars will be much cheaper for consumers.

The business owning the batteries would lease them out, maintain them and recondition and re-charge them towards the end of their life.

It also means win-win, says Corbett, as lower costs will encourage large-scale EV uptake, helping nations and societies live up to emissions and climate change targets – plus creating a whole, new, sustainable business.

There is also the possibility of finding ways to re-use EV batteries instead of having to send them to landfill, with "second-life" projects seeking ways to re-charge and re-use batteries – generating revenue by using them in other applications or selling to a third party.

David Simpson, COO of Sustainable Fleet Finance, a NZ Green Investment Finance majority-owned specialist financier of fleets transitioning to lower emissions, says: "One of the opportunities EVs create is the ability to look at their batteries as longer-term energy products that can have multiple uses over a life cycle.

David Simpson believes more financial innovation could benefit New Zealand's transport emission goals. Photo / Supplied.

"These financial innovations can help reduce costs to users immediately and aim to help speed up reduction of our countries' transport emissions."

Sustainability, Corbett says, is another reason for the emergence of fintechs like Power Finance, which offers an intriguing mix of data and finance to shake up traditional finance systems.

Power Finance's "future of finance" platform can be applied in key areas like New Zealand housing and embedded finance - where businesses backed by Power Finance can offer finance directly to customers in sectors like healthcare, automotive, e-commerce, housing and building instead of those customers having to go to a traditional bank to secure finance to complete the deal.

"We know sustainability is becoming a big driver in all things financial now," says Corbett. "Investors are asking for more data to demonstrate their money is actually supporting sustainability and are not just 'greenwashing'. They want that kind of transparency, as well as a good return.

"That's being driven by demand from consumers and clients – they more and more want to understand how their money is being managed and be assured it's in an ethical and responsible way."

That's where Power Finance's data comes in. Corbett gives another example of a sustainable business built around another environmentally-friendly product: solar power.
It might be good for the planet but solar power has not yet reached the "tipping point" where the savings outweigh the up-front costs of installation.

However, if a solar power business was to, for example, make that installation much cheaper and to maintain an interest by owning any electricity sold back to the national grid – that would again encourage uptake and promote sustainability across society.

"However, they [the business and consumers] would need data to show how many kilowatt-hours of electricity are being saved and all the complex data associated with selling electricity back to the grid," he says.

"It is just a matter of innovative thinking and new ways to finance that thinking - and the data which proves not only the business case but also that true sustainability is being achieved."

Carbon credits are another potential business based on sustainability, particularly with the ability to sell carbon credits to other businesses keen to reduce their carbon footprint but with little prospect of doing so – like a law firm, for example.

Corbett says sustainability in business is here to stay and that the era of greenwashing is fast disappearing with the increasing availability of precise data. The United Nations' 17 sustainable development goals include two (affordable, clean energy and climate action) which are entirely suitable for fintech support using digital technology.