In the last few years, there has been a lot of talk about the financial sector's carbon footprint. The emissions are high and there is a lot of pressure on banks, credit unions, and private equity groups to address this issue.
You might think that in a digital age, the financial sector wouldn't have a high-level carbon footprint. After all, with the widespread adoption of technology, many financial processes have become more efficient and less reliant on carbon-emitted methods. However, the reality is far from that. We still have many challenges to tackle. From inefficiencies of manual data and analytics operations to long customer journey processes that can come with a non-streamlined approach to financial data management.
As technology advances and the demand for financial services increases, the more dependent we are on data centers. These centers, which are critical for the operation of modern financial systems, consume vast amounts of energy, contributing to global carbon emissions and environmental degradation.
For example, an online study shows that data centers consume 2% of the world's total electricity, a figure that is expected to increase in the coming years as the demand for digital services continues to grow. This presents a problem because big amounts of data must be stored, processed, and analyzed in order for operations to run smoothly.
The impact of manual data and analytics operations in the financial sector can be substantial when it comes to the carbon footprint. This is because manual operations often involve extensive use of energy systems such as servers, computers, and data centers. These systems consume a large amount of energy to run, which can result in high levels of greenhouse gas emissions.
There are ways to tackle this issue, for instance - it's estimated that companies in the financial sector can reduce their carbon footprint by up to 80% through automation, digital analysis tools, and other sustainable approaches. By transitioning to a more environmentally responsible model, the financial industry can contribute to reducing its impact on the environment, helping to reduce greenhouse emissions.
Although it's not considered a huge contributor, however bad UX can also lead to increased energy consumption and contribute to the sector's footprint.
For example, when customers get confused with a certain digital journey, it can lead to higher rates of frustration and repeated attempts to complete a task, which causes higher rates of energy consumption. This can be especially problematic in the digital banking space where the customer journey may involve multiple interactions with the website or app, like logging in, navigating through menus, checking an account statement or even doing an online transfer.
Moreover, when there are high chargeback rates, it requires financial institutions spend additional resources to process and resolve these issues. And it doesn't end there, customers may also opt to visit a physical branch or call a customer service representative if they truly feel like they're not able to perform a certain task - That's why its never a bad idea to always double down on providing good UX.
By using advanced technologies like AI and machine learning, we have created a system that allows financial institutions to capture, analyze, and manage big data in a way that's both accurate and less resource restrictive. Doing so not only minimizes the carbon footprint but also provides a better customer experience, with quicker, more reliable transactions.
We want to help financial institutions balance the need for efficiency and sustainability, so they can continue serving their customers while also protecting the environment.
If you're looking to reduce the impact of your financial institution on the environment, while improving the data management process, consider giving Lunedata's API a try.
