Open Innovation & Collaboration at LBBW: Where Impact Investing, Blockchain Technology and Sustainability Become a Matter of the Heart

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The financial world is in upheaval. New technologies and their diverse possible applications, new actors, and disruptive innovations are giving rise to new business models and unimagined collaborations with purpose. In the financial industry too, targeted collaborations and investments are steering change in a future-proof direction to achieve sustainable, positive impacts. 

The necessity of sustainable investments — in the sense of holistic sustainability transformations — is given. The good news: we have all the prerequisites and the most diverse possibilities to meet this necessity with positive intentions and advanced technologies. 

The LBBW challenge within the ekipa Future Finance Open Innovation Program shows how new thinking, future technologies, and collaborations enable and allow sustainable and social innovations to flourish. Yes, this requires a tendency toward openness and also trust, because in the financial markets there is no avoiding a degree of risk. 

Friederike Sofie Burckhardt, Business Analyst at LBBW, describes the current developments as follows: “SWIAT is a blockchain by banks for banks. Institutions that actually compete with each other are joining together to create a shared infrastructure and further advance the digitalization of the financial sector. By pooling our ideas and know-how, we are faster, more efficient, and more cost-effective in the market. It’s simple: those who cooperate win.” 

In this context, one speaks of ‘coopetition’ — a combination of joint development and subsequent competition. “Financial institutions today are leaving old dogmas behind and opening up to each other. Together, knowledge is built up and shared with partners; at the same time, proprietary products and services for securities processing are created and offered to customers,” adds Erik Frank, Digital Transformation Consultant Sustainable Finance at LBBW. 

The SWIAT technology, based on Ethereum, is a powerful driver: “it is a ‘technical gateway’ for projects with impact,” says Friederike with enthusiasm. And this is where an important role for banks comes into play: “Our aspiration is and should be to take responsibility, and to exercise our steering function in such a way that we give the required sustainability transformation a positive, impactful direction.” 

Precisely at this point, the LBBW challenge picks up and invites further thinking: with blockchain-based dApps, impact investing is to be promoted, further developed, and accelerated. It is explicitly these ‘decentralized applications’ that the LBBW challenge is looking for. The goal is to make it easier for investors to discover, invest in, and trade sustainable assets. Moreover, this investment format ensures a high degree of transparency and accountability. 

The possibility of obtaining information about the projects themselves and their progress via dApps should be particularly interesting for investors who, through their investments, pursue positive, especially sustainable and social effects — such as transformation of the clothing industry, creation of educational and continuing education offerings, ESG or diversity projects and inclusion models, or initiatives for the preservation and promotion of biodiversity. 

Friederike emphasizes that LBBW deliberately kept the scope of the challenge broad, so as not to constrain things too strongly at the outset. What is more important, she says, is for investors to know where the money flows and what happens with it. “More and more investors are looking for the meaningful use case; they want money to flow into specific topics and have the certainty that they are creating something positive. Our role also consists in promoting smaller initiatives and enabling flexible investments. We see in this a clear social mandate and, as a state bank, take responsibility while simultaneously ensuring investor protection through tokenization,” emphasizes Friederike. 

That is one of the advantages of blockchain or blockchain-based securities, adds Erik: “The use of blockchain and specifically tokenization enables smaller tickets, which in turn facilitates investment for small investors.” Erik also sees another important role for LBBW in the implementation of certain sustainability goals and the social responsibility of the state bank. Moreover, LBBW also shows what is possible in the development of personal ideals: “Here I can not only promote, strengthen, and steer urgently needed impact investing, and thus accelerate the urgently needed sustainability transformation; here I can also implement my personal causes in this area.” 

Long before Erik joined LBBW, he gained startup founding experience by designing, producing, and bringing to market ties made from recycled ocean plastic. His subsequent entry into the financial world and blockchains came via the stock exchange, where he worked at the interface of traditional capital markets and digital assets. Now, within a strong financial institution, Erik can link these experiences and promote impactful initiatives with positive impact, thus sustainably shaping the future of the planet. “That makes our challenge so attractive for innovators and startups who pursue sustainability goals and want to support them via a dApp,” confirms Friederike. 

We look forward to the creative solution approaches of the participants in the Future Finance Innovation Program and to the future of impact investing on the basis of blockchain-based dApps. 

LET’S INNOVATE THE FINANCIAL WORLD TOGETHER. 

Notes: 

* SWIAT is a software developer for financial market infrastructure on whose digital platform regulated financial market actors can in future emit, trade, and settle any type of asset on the blockchain. LBBW has been a partner since early 2023. The goal of the new shareholders and partners is to ‘create a uniform standard for the processing of blockchain-based securities via SWIAT.’ 

* As a Decentralised Application (dApp: decentralized application), applications are referred to that are stored on a decentralized network. dApps are stored on a blockchain-based peer-to-peer network such as Ethereum and not centrally on a server. 

About LBBW 

LBBW (Landesbank Baden-Württemberg) is the universal bank for mid-sized corporate clients. The bank accompanies its clients on the path of transformation along the entire value chain in a data-driven and networked world — and itself seizes the opportunities of digitalization. The topic of sustainability has a tradition at LBBW: for more than 200 years, LBBW has been shaping the transformation of companies and society.