Christmas shopping? Track your carbon footprint with Mastercard and Doconomy

Alibaba’s Single’s day sales hit $38 Billion in 24 hours. The US Black Friday Online sales was $7.4 Billion and Cyber Monday sales were even stronger at $9.2 Billion. Do we know the impact of this mindless consumerism on our planet?

We will, and soon, thanks to Mastercard’s investment and collaboration with Doconomy.

Only last week I wrote about Climate change and how Fintechs should wake up to the changing global landscape and act. We are witnessing and combating the biggest crisis that humanity has ever faced. It is critical that we come together and address it.

On that note, I proposed a few solutions that financial services and fintechs could come up with to track climate impact of business decisions.

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One of the solutions was to track the carbon footprint of businesses using alternative data and disclosures. Firms will be provided a rating on how green their business models are, and banks could price their product and service offerings based on the ratings.

In essence, a greener firm could have a lower interest rate when they borrowed versus a high carbon footprint company. As a result, banks risk management will also be based on these methodologies, where their capital allocation will be higher when they do business with high carbon footprint companies.

This would create top down pressure on the entire business community and the markets to ensure they are acting in the best interest of the planet. We would also need a clear auditing mechanism to ensure firms don’t exaggerate metrics in their favour.

Now, that’s a top down approach for businesses. However, something similar can be done at the consumer end too. One of the fundamental mindset changes I would like to see is what is called “conscious consumerism” – of their carbon footprint when they splurge money in mindless shopping spree.

If we captured the Carbon footprint of purchases at the transaction level, that would be an important dataset to fix the mess we are in. This data can help gamify the process of capturing carbon scores for customer transactions.

If I did my Christmas shopping and came up with a Carbon score X and if my friend or colleague did their Christmas shopping with a carbon score Y, that could be gamified using a simple app and a leaderboard. The person with a lowest carbon footprint could be rewarded.

When we capture transaction data, and score customer behaviour, it makes them more conscious of their action on the planet. This would take time to scale, but it would start changing behaviours of customers.

As customer behaviour changes at scale, businesses have to pivot their approach to everything from sourcing the right raw materials, following sustainable manufacturing practices, using logistics with the lowest possible carbon footprint, and using the right packaging. This will have its feedback effect on competition as businesses that embrace sustainable practices quickly will have a competitive and a first mover’s advantage over their peers.

If it was China, I would even go one step further to ensure that the consumer’s social credit score includes climate points based on their spending. This would show results in a shorter span of time, and would help change business behaviour quickly.

Now, what if I did buy something which increased my carbon footprint? You should be able to compensate for that by spending money on environment friendly projects across the world, or investing the money into green assets.

So what are Doconomy doing and why are they special? First of all, DO is how they call themselves.

DO have two cards on offer, a white and a black credit card. The white card allows you to track and measure your carbon footprint as a consumer. The Black card has a built-in CO2 emissions limit – helps you become a conscious consumer (as they call it).

Behind the scenes they use an index called Aland to track the CO2 footprint of every single transaction. The index can categorise your transactions and identify its impact on the environment.

They also have a partnership with a firm called Trucost, which is a part of S&P. Trucost are experts in assessing risks relating to climate change and ESG factors. I have gone through Trucost’s clientele, and they have several big names like AXA investment managers, RBS, and several funds listed there. So clearly, they are all using Trucost to understand the climate risks of their portfolios.

In my last week’s article  I discussed about rating agencies who acted at climate bureaus for corporates. This is a very similar idea too.

We all have a responsibility to contribute to the solutions for the climate emergency we are experiencing. Time is running out. Many individuals are willing to do their part, but in many cases they find it difficult as they don’t know what else they can do. Through our collaboration with Doconomy, we hope to provide clear, effective channels to support these individual’s daily climate action.” –

Niclas Svenningsen, manager, Global Climate Action, UN Climate Change Secretariat

Coming back to DO’s offering, they are also providing compensation schemes should you break bad from time to time. Customers can cleanse their guilt by investing into green bonds or projects approved by the UN and aligned to their Sustainability development goals (SDGs). Thanks to all their efforts, DO are also a named partner to the United Nations Framework Convention on Climate Change (UNFCC).

For more information please do check out their website, I have added myself to their credit cards waiting list!

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Smart Bricks meet Clicks & Voice – the Walmart Way

PHYGITAL E-commerce giant Amazon is a big player in many markets. From e-commerce, cloud, delivery, entertainment, payments, smart home devices, and physical stores. Retail giant Walmart, not included in the FANGs or the GAFAs, as it is a native of another tribe (physical retailers), can actually stand respectfully next to Amazon and other large non-financials […]

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`You Can Marcus`

Goldman Sachs is one to watch.

It is an example of how sticky a banking brand name is – It has shredded off scandals in the past and the recent Malaysian state-run fund scandal seems no different. Sack Goldmans – a 2010 slogan – did not stick.

Goldman Sachs is an example of how an incumbent builds a Fintech business positioned in the value stack below its established competence – an investment bank getting into retail banking and wealth management for mass affluent & the hoi polloi.

Goldman Sachs is an example of how an incumbent financial institution can grow Data pools by offering free access to its analytical tools SecDB – explained in my article in the 2018 WealthTech Book  `Empowering Asset Owners and the Buy Side`.

Goldman Sachs is an example of how an incumbent financial institution can grow Data pools by partnering with Apple on a credit card – Apple has 900 million devices and it is expected that the Apple Card will bring 21 million users to GS by year end[1].

Goldman Sachs is a publicly traded company that is trading right now below book value and there are more than enough GS analysts out there to get estimates on the revenues from the different GS `consumer banking` new initiatives.

For now, Goldman Sachs has been building up aggressively deposits (the usual way of offering above-market deposit rates when entering a new market). The 3yr old deposit business has accumulated now $46billion across the US and the UK! The expected growth is in the order of $10billion per year going forward.

Marcus has issued $5billion in personal loans. These are unsecured loans that naturally, may worry shareholders, who typically get nervous easily (even though this is crumbs when taken in context).

The credit card part of the Goldman Sachs business is newer and could also grow at double-digit annual rates. Goldman Sachs knows well that credit card lending gets favorable regulatory treatment – less capital is required against this kind of debt – and as long as this holds it is a win-win situation. Why? Simply because Goldman Sachs will get their hands on valuable data from retailers and their shoppers, in order to process the Apple credit card application.

Goldman Sachs hits two birds with one stone. It gets to issue consumer debt on a global scale with lighter capital requirements, and it gets to process new, valuable consumer data globally.

The Apple & Goldman Sachs card economic terms are not known. Even if they are not that juicy for Goldman Sachs and even though the GS logo is on the back of the Apple card; the consumer data access and processing from 40 countries that this brings to the table is invaluable.

The Apple & Goldman card will grow an important global data pool for Goldman Sachs to leverage in its planned WealthTech offering.

In case you haven’t noticed, Marcus has been moved into the Goldman Sachs asset management unit, which will be renamed the consumer and investment management division. The October 2018 memo says that Marcus has plans to “launch a broader wealth management offering.”

A global consumer outreach is being built in preparation of this broader wealth management offering. And for all those concerned about a growing unsecured loan book, Goldman has great risk management experience and could with great elegance securitize part of this debt, once there is enough to do so. Elizabeth Dilts and Anna Irrera, raise this point too in ` Goldman’s Apple pairing furthers bank’s mass market ambitions`.

Marcus is a brand whose heritage is in risk management and investment banking. They will use these competences to manage growth in their retail-focused wealth management offering. This is a huge advantage compared to Fintechs that started with unbundling a specific financial service (be it loans, or deposits, or investments) and is now, growing by rebundbling additional services (e.g. adding robo-advisors to loans, or deposits to trading, ect).

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

I have written about Marcus several times.

Just after the launch of Marcus in late 2016, Will Goldman become a verb? Watch the Marcus ads!

Just after the Marcus rebranding and UK launch in Fall 2018, Welcome Marcus to the rebranded Goldman asset mgt division and to the UK

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I must however, confess that I have no idea how to interpret the new Marcus Campaign ‘You Can Money’.  Is this an example of new Fintech language? If you have other such rarities, please send them to me, as I collect them. Maybe we can tokenize them, with the hope that they become the next non-fungible craze.

[1] A Seeking Alpha article that includes several links, for anyone who wants to dive into more details

Sources: CNBC, Barrons, Financial Brand, Crowdfundinsider, The economist

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

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