How digitalisation is revolutionising sustainability

AUTHOR: Simon Tribelhorn CEO at Liechtenstein Bankers Association (LBA)

In our fast-moving world, two terms are always in the headlines: Digitalisation and sustainability. Both are not just trends, but also decisive factors that will shape our future. In the world of finance in particular, artificial intelligence (AI) and blockchain play a central role in promoting sustainable finance. But how exactly does it work?

Artificial intelligence and sustainability

Artificial intelligence, often simply referred to as “AI”, is a field of computer science that enables machines to mimic human-like thought processes. In the financial world, AI can be used to identify investment opportunities that are both profitable and sustainable. With the help of AI, banks and financial institutions can analyse huge amounts of data and find out which companies and projects offer the best opportunities to generate both financial profit and a positive impact on the environment and society.

Blockchain: more than just cryptocurrency

When people hear about blockchain, the first thing that comes to mind is Bitcoin or other cryptocurrencies. But the technology behind these digital currencies has the potential to go far beyond finance. Blockchain generally helps to bring transparency and trust to the financial sector by ensuring that every transaction is verified and immutable. This can be particularly useful when it comes to ensuring that investments are actually sustainable.

Why is this important?

The world is facing numerous challenges, from the climate crisis to social injustice. As the interface between investors on the one hand and capital recipients on the other, the financial industry has an important steering function and therefore the opportunity to exert a positive influence on these problems by investing in sustainable projects and companies or launching corresponding products on the market. At the same time, digitalisation offers the tools to make these investments more efficient, transparent and trustworthy.

Blockchain and AI: at odds with sustainability?

At first glance, it may seem as if blockchain and AI are at odds with sustainability, especially when you think about the energy consumption of large blockchain networks or the resources required for advanced AI models. At least, this is the argument repeatedly put forward by critics. But in reality, these technologies can help to reduce energy consumption and utilise resources more efficiently. Blockchain, for example, can help to reduce paper consumption by replacing physical documents with digital contracts. AI can be used to analyse energy consumption patterns and make suggestions to increase efficiency. These technologies are therefore not only compatible with sustainability, but can also help to promote it.

Why courage is needed now

As a banking industry, we are at a crucial point. The world is changing and we need to have the courage to embrace these changes - especially with regard to blockchain and AI. It’s not just about moving with the times, but also about offering our customers real added value. By integrating these technologies into our core business and developing new products, we can offer more efficient, secure and transparent services. Even though we are still at a very early stage and many things need to be tried out and experimented with blockchain, tokenisation and AI first, this is not just a gimmick - it shouldn’t be - but an investment in the future. Of course, courage also requires a willingness to invest in these technologies and take the risk of making mistakes. But only through such courage and the acceptance of mistakes as learning opportunities can we grow and develop as an industry.

Role and stance of the LBA

Digitalisation and sustainability are the two core pillars of our banking centre strategy, Roadmap 2025. We are deeply convinced of the importance and potential of increasing digitalisation and sustainability as well as digitalisation for sustainability. However, this is not easy, does not happen overnight and, of course, we want to do it “right”. We are therefore in a double transformation phase, so to speak. Why? Because we believe that these two factors have the power to fundamentally change the way we think about money and investments. However, this also means that sustainability and digitalisation are the two key competitive factors and will determine in the medium to long term whether a financial centre, a banking centre or an individual institution will still be competitive at all. In short, we see digitalisation and sustainable financing as the future of the financial sector.

DIGITALISATION AND SUSTAINABILITY ARE THE TWO CORE PILLARS OF OUR BANKING CENTRE STRATEGY, ROADMAP 2025. WE ARE DEEPLY CONVINCED OF THE IMPORTANCE AND POTENTIAL OF INCREASING DIGITALISATION AND SUSTAINABILITY AS WELL AS DIGITALISATION FOR SUSTAINABILITY.

And that is precisely why we are involved in both areas at all levels at the Bankers Association itself and, above all, why we are looking for the connection, because ‘no sustainability without innovation and no innovation without sustainability’. And the same applies to the various projects we have launched in this area over the past 12 monthsfrom the climate-neutral non-fungible tokens (NFTs for short) to the various

About Liechtenstein Bankers Association (LBA) collaborations in the blockchain and AI sector. These collaborations and projects in particular allow us to learn and experiment.

Overall, AI and blockchain have the potential to revolutionise the way we think about sustainable finance. We want to help ensure that our financial centre is at the forefront of this revolution and that our future is both digital and sustainable. ■

The Liechtenstein Bankers Association was founded in 1969 and is the voice of Liechtenstein banks at home and abroad. It is one of the most important associations in the country and plays an important role in the successful development of the financial centre. As a member of the European Bankers Federation (EBF), the European Payments Council (EPC), the European Parliamentary Financial Services Forum (EPFSF), the Liechtenstein Bankers Association is an important member of key bodies at European level and plays an active role in the European legislative process. Since 2017, the Liechtenstein Bankers Association has also been a member of the Public Affairs Council (PAC) with offces in Washington and Brussels, and since 2018, a member of the international network “Financial Centres for Sustainability” (FC4S). With the Roadmap 2025, the LBA has placed an even stronger focus on the two major topic «sustainability» and «digitalisation». As a consequence, the LBA joined the following two initiatives in 2021, each of which is a leader in its field: firstly, it has become an official supporter of the UN Principles for Responsible Banking and the Net-Zero Banking Alliance and secondly, it has become an affiliate member of the Canada-based Blockchain Research Institute (BRI), an independent, global think-tank dedicated to inspiring and preparing private- and public-sector leaders to be the catalysts of the blockchain transformation.

About LBA’s Roadmap 2025, the strategy for the entire Liechtenstein banking cente

The Roadmap2025 is the multi-year strategy of the Liechtenstein banking centre. It is all about “growth through sustainability and innovation”. Ongoing climate change is one of the greatest global challenges. We are the first generation to sustainably destroy our planet and probably the last to prevent it. The financing needed to achieve the Paris climate goals as well as the broader Sustainable Development Goals (SDGs) of the United Nations is enormous. According to PWC, the annual global investment required to achieve the SDGs amounts to 7 trillion US dollars. Currently, only one seventh of this is financed by the public sector. A substantial part must therefore come from the private sector. The financial sector, and banks in particular, can and must therefore play a central role in mobilising and channelling these financial resources. This means a great responsibility, but also brings with it a great opportunity. If we successfully accompany this transformation, we will create the necessary growth to continue to create prosperity. Increasing digitalisation has a huge potential to accelerate the needed transformation for the benefit of our future generations.