November 2021 | Yash Patodia, Global Industry Analyst; Bruce Glazer, Global Industry Analyst; Michael Masdea, Head of Investment Science
The views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of investments may become worth more or less than at the time of the original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
In the first three parts of TechWELLcovered, we explored how innovation is reimagining work, transforming the future of fun, and helping you fulfill your full potential in each life stage. Here, we profile how technology empowers you to help address society’s most pressing issues.
The word “legacy” has long brought to mind the wealthy passing on estates to their heirs or making large bequests to a favorite charity. But today, that narrative is shifting as countless technologies allow every person to tangibly improve the lives of strangers across the globe and future generations. For instance, fintech is tackling problems such as inaccessible, unfair, and inefficient financial services while sustainable innovations — like smart meters and super computers — are battling climate change.
You now have vast opportunities to drive progress by investing in tech. Likewise, the innovations you use at work, in experiences, and navigating life stages offer ubiquitous ways to leave your mark.
Everyone now has the ability to create a better world by harnessing advancements in mobile banking, blockchain technology, and the next generation of sustainable innovation.
The way you allocate your capital — combined with the way you live your life — has more potential than ever before to solve challenges like financial exclusion and climate change.
Tech progress fuels enormous growth potential for the companies producing innovations, the firms leveraging them across industries, and the populations leapfrogging older technologies.
Tech companies — and their investors — have powered greater connectivity, cloud computing, and more accessible devices, helping more than one billion people gain access to banking services in the last 10 years. But despite fintech’s headway on financial inclusion, there are still more than 1.6 billion unbanked individuals — over 20% of the world’s population — and 200 million unbanked businesses globally.1
Fortunately, today, we see leading companies in Singapore, Brazil, and India developing digital banking services and applications like mobile wallets and digital wealth-management platforms. These innovative companies help their regional and domestic populations leapfrog older technologies and business models — like credit cards or costly in-person brokerage services — to leverage cutting-edge fintech. By addressing the barriers to entry (like cost and accessibility), these innovators are driving growth while empowering their customers.
Furthermore, key companies are working to make other financial services systems less clunky, costly, and unfair. Take US credit bureaus’ growing use of artificial intelligence and machine learning as an example. These innovations enable insights from big data that streamline lending processes and help to eliminate discriminatory lending practices. Meanwhile, blockchain technology and crypto assets also have huge potential to address issues like fairness and corruption across industries. The future may see entire companies and markets built on blockchain technology — driving enormous gains in efficiency, accessibility, and equality — leveling the playing field massively. By participating in these ecosystems with your actions and your capital, you have the potential to support this progress.
One digital contract company is leading the way using blockchain technology to enhance efficiency and limit corruption. For example, farmers can purchase crop insurance that leverages their blockchain-based smart contracts to automate insurance payouts based on weather conditions, avoiding past disputes and withheld payments.
Sustainability-related innovations are also quickly emerging, allowing investors to directly address the impacts of climate change. We see numerous investable opportunities across a wide range of companies both leveraging and creating sustainable technologies to drive huge results.
For instance, one sustainability-focused investment company solely finances climate solutions like renewable energy projects. Their investments cumulatively avoid emitting 5.2 million metric tons of carbon dioxide (the equivalent of the emissions from 1.1 million cars) and save four billion gallons of water annually (enough for roughly 22 million people to drink).3 Another company builds sci-fi-worthy super computers to enable predictive climate science. Its exascale computers run nearly three billion calculations per second, creating massive climate simulations on thousands of dynamic factors to offer insights that help combat climate change.4
In addition, as individuals, we can now easily contribute to solving climate change issues through the innovations we use on a daily basis. You can buy smart meters harnessing Internet of Things technologies from one US small-cap tech company to improve your home’s energy efficiency and practice responsible water usage. This same firm recently launched an innovation-focused subsidiary dedicated to creating cutting-edge sustainable technologies for its customers.
Similarly, you can shift away from fossil fuels using the next generation of solar panels at your home or work. One large-cap solar firm’s technology has a carbon footprint that is 2.5x lower, a water footprint that is 3x lower, and an energy payback period that is up to 2x faster than older solar panels.6
These companies are just a few of the innumerable ways individuals can participate in sustainable innovation — both with their assets and their actions — that may help protect future generations.
Tech innovation is fueling huge advancements on an individual level, offering more efficient and creative work, increasingly personalized experiences, and better-informed decision making in every life stage.
Meanwhile, on a much larger scale, innovation is addressing society’s most pressing social and environmental issues. Technology is leapfrogging barriers and helping to redefine our legacy for future generations. But the journey doesn’t end here. Critically, investors need continuous research to capture these rapidly evolving trends, with the breadth and depth to cover every industry and leave no stone unturned. Is your tech exposure WELLcovered to capture the potential?
Actual holdings will vary and there is no guarantee that the strategies will have the same characteristics as described above.
1 Source: MSME: Finance expanding opportunities and creating jobs, World Bank, EY, 2017. | 2 Source: World Economic Forum and company reports. Data as of 2020. | 3 Source: Company reports, EPA.gov, Wellington Management. Data as of 2021. | 4 Seagate Blog, 2021. | 5 Source: IEA. | 6 Source: Company reports. Data as of 2021.
Stay up to date with our latest views and market insights.
For more information on our tech and innovation platform, speak with a member of our distribution team.