It’s time to restore financial innovation to respectability, by focusing the financial services industry’s ingenuity on financing the public good.

Much of the innovation in the industry has been exposed as being badly flawed, such as “negative amortization” mortgages and “synthetic collateralized” debt obligations, which had helped to cause the recent financial crisis. Increasingly complex retail products have been devised to collect more fees from investors in novel ways, but without providing them with genuine benefits. Then there are the sophisticated algorithms that exploit minor arbitrage opportunities but add nothing to market quality. Financial innovation has come to be seen as a way for companies to come up with clever ways of boosting their bottom lines.

There is an opportunity to change that perception. As increasingly overstretched governments look for new ways to deliver public benefits, charities and other social services organizations struggle with inadequate funding, and investors become more open to opportunities that aren’t driven purely by financial returns, there is a chance for the financial services industry to do good. If the industry could apply its intellectual firepower to the challenge of getting more private capital into the hands of organizations that are working for the public good, it could both generate some real benefits for society and help improve the industry’s reputation.

To be sure, there is much to be done by governments, regulators and socially driven organizations to make this happen. The recent report from the Task Force on Social Finance, chaired by Rhodes Scholar and venture capitalist Ilse Treurnicht and including leading financial services industry executives, points the way. The report highlights some of the challenges blocking capital flow to socially useful endeavours, and recommends changes to public policy that could help unblock that clog.

But there also needs to be a commitment from the financial services industry to do this sort of work. Its expertise in structuring deals, creating effective investment vehicles, managing risk and spotting profitable opportunities could all be employed to great effect in this undeveloped market segment. It’s time the industry used its powers for good.