The 4th Industrial Revolution and how it affects finance
What is the 4th Industrial Revolution?
The 4th Industrial Revolution (4IR) has been around for a few years now. It is characterised by the development and integration of artificial intelligence (AI), robotics and other technologies that merge the biological and digital worlds.
How is it pioneering change?
Faster computer processing
The advances in quantum computing and cloud storage are shaping industries such as healthcare, which rely on secure storage of large amounts of data and powerful processing. Many industries are adopting technologies that facilitate AI and provide advanced analytics of complex data models. The aim of this is to efficiently use businesses’ most valuable asset, data, for insights into past, present and future patterns.
Customer experience and personalisation
It is said that customers are the driver of change in the implementation of the 4IR, as there is a focus on developing ultra-personalised buying experiences. AI and virtual reality (VR) are already dominating e-commerce websites and social media apps to encourage users to interact with brands in a way that resonates with them, for increased sales. Algorithm development has also seen rapid implementation from companies such as Netflix, who use AI to carefully curate feeds of recommendations for each user. Social media sites are battling for the best algorithms, taking inspiration from TikTok where anyone can go viral on the ‘for you page’ and be discovered. TikTok and Instagram are making changes to become shopping-focused platforms, guided by best practice in user experiences. This is a result of the 4IR and its focus on user experience and the way consumers interact with brands.
What does this mean for finance?
Financial institutions adopting 4IR technologies are making significant changes in their processes, leading to fast-moving innovation in their industry. In the last few years, personalisation of banking has skyrocketed and almost become an expectation for customers. Users look for banks that use AI to provide personalised services and advice such as safe ways to spend, investment tips and categorised breakdowns of their outgoings. This is in line with e-commerce and entertainment platforms who are developing their user experiences to be ultra-personalised, which is expected to continue to rise in the finance sector.
The 4th Industrial Revolution has also seen changes in decision-making which is becoming an automated process. Banks and credit lenders are using AI to accurately assess lending decisions without the need for manpower, giving customers fast responses. Financial predictions are also being automated in this way, using precise data models to recognise patterns and calculate risk. This is important in modern finance due to the volume of digital transactions that take place everyday that pose higher cybersecurity and fraud risks. Introducing accurate AI systems can ensure security and stability in a business.
4IR is already a few years old but has years of innovation and development left. It is predicted that finance will be predominantly self-service style, touchless and personalised to the customer, in a people-driven era of change. Inside finance teams, data analysts and storytellers will be a priority for new talent as they aid the transformation in technology and shape the focus of the brand to consumer relationship in modern marketing. Overall, the 4th Industrial Revolution will continue to transform the finance industry with personalisation, AI and data processing.
