Banking on technology to achieve net zero
When it comes to retrofitting their homes, people face several challenges. These include restricted knowledge of decarbonisation and energy efficiency, a lack of awareness and understanding of available energy-saving solutions, and logistical challenges, such as finding reliable installers and dealing with installation disruption.
Another major barrier to green and energy efficient upgrades is affordability. Considering this, Financial Services Providers (FSPs) have a key role to play in initiating and driving the adoption of energy efficiency measures across the UK with mortgage lending, which is by far the most common way of financing home ownership, being key.
Although the Green Finance Institute has found that the green mortgage sector has increased from three to more than 50 products in recent years, there has been limited uptake of the available products. A key issue appears to be a lack of consumer awareness and understanding.
As such, the role of FSPs in educating and informing consumers on both the practicalities and benefits of embracing energy efficient home improvements should not be underestimated. Many lenders have a strong local presence, allowing them to engage with communities in a way that other stakeholders can’t. Lenders should leverage this, aiming to not only be a source of trusted information and advice for customers in relation to greening their homes, but also by streamlining the process and providing innovative and easy to use solutions.
In fact, according to a report by Nesta, the UK’s innovation agency for social good, customers aren’t just looking for low interest rates and flexible repayment terms when it comes to green finance; they want complementary support, such as personalised home assessments, advice on which measures to choose, and how to find competent tradespeople.
Role of technology
Technology has a key role to play in helping FSPs educate their customers about energy efficient improvements and upgrades and encouraging them to take the necessary action to achieve net zero homes and generate substantial savings.
Heero Technologies has developed an App that enables banks and building societies to reach out to customers with a powerful tool that streamlines and guides homeowners through the entire retrofit journey.
As the leading independent energy platform and powered by the most sophisticated software engine for housing in the UK, the Heero App offers the ideal solution for FSPs looking to differentiate themselves by offering financial products that are both personalised and specifically targeted at home energy improvements. This is important as there is no one-size-fits-all solution; the energy efficiency of each home is determined by its individual characteristics.
For example, lenders can use the platform to present homeowners with targeted finance offers, to highlight specific measures based on their ability to improve the thermal efficiency of the property and to generate energy/heat from renewable sources, as well as to show the cost of installation and energy bills savings associated with the suggested measures. Furthermore, they can recommend installers based on customer feedback, estimated cost of work, and proximity to the householder.
Essentially, the technology enables FSPs to guide their customers through the entire retrofit journey, from offering personalised home energy insights and recommendations which show what carbon-neutral changes are feasible, to valuable information on financing and installation.
Considering ESG
While mortgages can be a vehicle for financing greener homes, they are also crucial in the financial sector’s own plans to reach net zero. According to the Financial Conduct Authority, emissions from mortgaged homes account for around 80% of lenders’ total emissions. If these properties aren’t decarbonised, FSPs risk missing their own net zero and Environmental, Social and Governance (ESG) targets.
As the need to quantify carbon emissions and show verifiable reductions continues to grow, the Heero App provides lenders with a validation tool that ensures they are meeting their objectives. It measures the amount of carbon saved, specifically lifetime carbon savings, which is valuable as besides regulatory compliance, customers are increasingly choosing service providers based on their ESG credentials.
It is undeniable that the banking and finance sector has a vital role to play in the UK’s transition to net zero. By fostering an innovative culture and turning to technology, FSPs can educate and guide homeowners, ultimately driving the uptake of energy-saving solutions in homes across the UK.