Financial Services and Industry 4.0

By: Ritesh Verma, Vice President, India Delivery Head - Financial Services, Quinnox

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Ritesh Verma, Vice President, India Delivery Head – Financial Services, Quinnox

Evolution of Industry from 1.0 to 4.0

The First Industrial Revolution: The first industrial revolution happened between the late 1700s and early 1800s. Manufacturing evolved from focusing on manual labour to use of water and steam-powered engines along with other types of machine tools.
The Second Industrial Revolution: In the early part of the 20th century, the world entered a second industrial revolution with the introduction of steel and use of electricity in factories.

The Third Industrial Revolution: Starting in the late 1950s, manufacturers began experiencing a shift that put less emphasis on analog and mechanical technology and more on digital technology and automation software.

The Fourth Industrial Revolution, or Industry 4.0: In the past few decades, a fourth industrial revolution has emerged, known as Industry 4.0. Industry 4.0 takes the emphasis on digital technology from recent decades to a whole new level with the help of interconnectiv.

Industry 4.0 optimizes your people, processes and equipment. The Fourth Industrial Revolution is the ongoing automation of traditional manufacturing and industrial practices, using modern smart technology.

Industry 4.0 is the current trend of automation and data exchange in manufacturing technologies. It includes physical systems, the Internet of things and cloud computing. Industry 4.0 creates what has been called a “smart factory”.

Industry 4.0 helps manufacturers with current challenges by becoming more flexible and reacting to changes in the market easier. It can increase the speed of innovation and is very consumer centered, leading to faster design processes.

Information Technology Contribution

Some of important technologies that are transforming and leading way to Industry 4.0 are:

  • Big Data and Analytics.
  • Robotics.
  • Simulation.
  • Industrial Internet of Things.
  • The cloud.
  • Cybersecurity.
  • System Integration.

Industry 4.0, also sometimes referred to as IIoT or smart manufacturing, marries physical production and operations with smart digital technology, machine learning, and big data to create a more holistic and better connected ecosystem for companies that focus on manufacturing and supply chain management.

Predictive maintenance/analytics—Industry 4.0 solutions give manufacturers the ability to predict when potential problems are going to arise before they actually happen. With IoT systems in place, preventive maintenance is much more automated and streamlined. Systems can sense when problems are arising or machinery needs to be fixed. Predictive analytics allow companies to be proactive rather than reactive Analytics can enable manufacturers to move from preventive maintenance to predictive maintenance.

Impact of Industry 4.0 On Economy:

McKinsey Global Institute has recently predicted that Finance 4.0, a subset of Industry 4.0 would help grow the emerging economies by over 6%, which will account for about $3.7 trillion by 2025. According to the United Nations Trade and Development information, more than 37% of the foreign direct investment FDI to the developing countries was made through technology.The addition of over 10 billion mobile internet devices in the global market contributes billions of dollars to the global economy. A new industry known as self-driving cars is expected to add a whopping amount of over $173.5 billion by 2023 at a 36.2% CAGR growth during the next 3 years, according to the Market Watch market forecast. The contribution of the software consulting service sector to the global economy is also huge. According to the Grand View Research forecast, the share of software consulting services in the global economy would be about $382.62 billion by 2025.

Industry 4.0 and it’s Impact on the Financial Services Sector:

According to Nielsen Research, mobile devices have become a new norm for banking activities. In the US, more than 70% of the stock trading decisions are decided based on computer algorithms. Technology powered micro-loans in Bangladesh opened up a new era of financial empowerment of the disadvantaged people in rural areas. The new crypto banking system based on blockchain technology is going to drastically transform the financial sector very soon.

Impact of industry 4.0 on Financial Services:

  • Smart contracts powered by blockchain technology
  • The fastest financial transactions globally with reduced charges
  • Huge decrease in operational cost of financial institutes
  • No human errors in financial activities
  • The emergence of new business domains like FinTech, payment gateways, and others
  • An increased volume of liquidity
  • Efficient trading of stocks and forex
  • Reduced number of financial frauds
  • Financial inclusion of the poor and disadvantaged people

Industry 4.0 is to stay and transform the Industry, Business, Information Technology and Financial Services.

Welcome onboard to Industry 4.0 and fasten your seat belts !!!!