Digital Finance and Sustainable Development: Key Insights from the DInnoFin Project

Digital transformation and sustainability are among the most pressing policy priorities
in Europe today. Financial systems play a central role in this transition, as digital
financial innovations can accelerate capital mobilisation, improve access to finance,
and support climate neutrality goals. At the same time, digitalisation alone does not
guarantee inclusive or sustainable growth.

These challenges were addressed in the research project The Role of Digital Finance
Innovation in Promoting Sustainable Development Goals - implemented within
Latvia’s Recovery and Resilience Facility investment framework and the University
of Latvia’s internal research grant scheme.

Research Focus and Approach
The DInnoFin project examined how digital, information, and communication
technology-based innovations in the financial sector contribute to achieving the
United Nations Sustainable Development Goals (SDGs), with a particular focus on
climate neutrality and CO₂ emission reduction.
Empirical analysis covered the Baltic States and combined SDG performance
indicators with internationally recognised digitalisation and innovation metrics,
including the Digital Economy and Society Index (DESI), Global Digitalisation
Index, Global Innovation Index, and Financial Development Index.
Key Findings

The research results demonstrate a strong positive relationship between digital finance
development and progress towards SDG 9 (Industry, Innovation and
Infrastructure) and SDG 8 (Economic Growth). Higher levels of digitalisation are
associated with more efficient capital allocation, improved access to finance, and
stronger innovation capacity.

At the same time, the findings reveal important structural gaps. The link between
digitalisation and SDG 10 (Reduced Inequalities) is considerably weaker, indicating
that digital transformation does not automatically lead to inclusive growth. Moreover,
despite Latvia’s strong digital competitiveness, the financial sector’s digitalisation
potential is not yet fully utilised as a systemic instrument for climate neutrality and
broader sustainability goals.

A notable example is the FinTech sector. While Latvian FinTech companies are
generally aware of sustainability and ESG principles, these considerations are rarely
integrated into their products or business models. Sustainability is primarily
interpreted through financial or technological resilience rather than environmental or
climate impact.
Policy Implications and Future Directions

Based on the empirical evidence, the project highlights the need for a more integrated
and results-oriented policy approach. Key recommendations include defining “green
digital finance” in national regulation, integrating digitalisation indicators such as
DESI into financial policy planning, strengthening data availability, and supporting
regulatory sandboxes and public–private testing platforms for sustainable digital
finance solutions.

This research is supported by Project No.5.2.1.1.i.0/2/24/I/CFLA/007 "Internal and
external consolidation of the University of Latvia" (RRF project), Project No. LU-
BAPA-2024/1–0031, UL and BASBF consolidation grant project.
To get more information, please read the scientific articles listed below:

1. Mavlutova, I., Spilbergs, A., Romanova, I., Kuzmina, J., Fomins, A.,
Verdenhofs, A., Natrins, A., The role of green digital investments in
promoting sustainable development goals and green energy consumption,
Journal of Open Innovation: Technology, Market, and Complexity, 2025,
11(2), 100518, https://doi.org/10.1016/j.joitmc.2025.100518

2. Kuzmina, J., Romānova, I., Natrins, A., Spilbergs, A., Mavlutova, I.,
Innovative Digital Technologies in Finance for Promoting Sustainable
Development Goals: Baltic Economies Compared to OECD Countries. Wseas
Transactions on Environment and Development,  2024, 20, pp. 973–986,
DOI:10.37394/232015.2024.20.89 https://wseas.com/journals/articles.php?id=10179