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Industry 4.0: How it impacts the financial sector

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What is Industry 4.0?

In 2016, the founder of the World Economic Forum, Klaus Schwab, christened the term “fourth industrial revolution”, or industry 4.0. Innovation in technology defines this era. The significant development of the fourth Industrial revolution is the internet, which allows instant connectivity through IoT or the internet of things and on-the-go data accessibility. Developing computer algorithms that power entire work systems digitally also characterizes Industry 4.0.

Industry 4.0 enables more ubiquitous and networked collaboration across divisions of the organization, its suppliers, and partners in industrial enterprises. Businesses can operate more efficiently and quickly due to Industry 4.0 technology, which also gives them access to a massive amount of real-time data to understand better how their company, consumers, and suppliers are faring.

How it impacts the industry of financial services?

Industry 4.0 makes technological solutions readily available in the market in all sectors. The financial service sector is no different. Due to the acceptance of the advantageous effect in the finance sector, institutions such as banks, lenders, the stock market, insurance companies, and brokerage houses have benefited from automating financial processes to streamline operations. 

Additionally, all kinds of services from different financial institutions are available (or at least on the way to being available) at your fingertips through smartphones and the internet. Let’s not leave out the development of cryptocurrency and blockchain technology. It is set to alter the face of operations for every sector. However, every coin has two sides, and all changes, even when they may look overall advantageous, could pose some challenges.

Challenges posed by Industry 4.0

We looked at industry 4.0 through the rosy glass window above. However, to keep it accurate, let’s assess some significant challenges it brings to the finance sector.

1. Security concerns

With easy accessibility provided by the advancement of the internet and technology through industry 4.0 comes the hot topic of cybercrime. While every industry feels threatened by cyber risk, the banking and finance sector remains the wariest around it.  

2. Need to build trust

Every financial institution needs to build trust and rapport with its customers. It’s central to the growth of the organization. Building a relationship takes not only time but also needs a human touch. With the advancements in Industry 4.0, digitalization will omit the need for one-on-one conversations and the opportunity to build this relationship.  

3. Rise in competition

Industry 4.0 increased competitiveness in finance as it made financial institutions rethink their operations. They must keep up with digital advancements and provide services, internet solutions, smartphone-compatible systems, etc. Customers want financial service providers to deliver improved experiences, smooth transactions, on-demand help, and linked digital solutions. All of these and more become the criteria for choosing the providers.

Opportunities created by Industry 4.0

With the rise of Industry 4.0, the finance sector will need to continue finding ways around its challenges to benefit from its advantages. These challenges create a set of opportunities for the finance sector to explore. Let’s look at them: 

1. Security Through Blockchain

One of the major themes of the fourth industrial revolution is blockchain technology. While the technology is yet in its nascent phase of adoption by different sectors, it can provide near-fool-proof security, which can significantly benefit the finance sector. Blockchain technology securely and transparently records every exchange. It enables individuals to transmit money affordably, virtually, instantly, and anywhere globally. Additionally, the danger of hacking reduces since all activities are cryptographically safeguarded.

2. Elevated Experiences for Customers 

Technology helps businesses significantly improve customer experience. Big data gives organizations more knowledge of consumer behaviour, likes, dislikes, and wants. AI technology has allowed them to quickly adapt consumer experiences, engage them at key touchpoints, and adjust goods and services.

3. Increased Flexibility

The fourth industrial revolution pressures businesses to react to clients and circumstances instantaneously at all times. The hybrid cloud integrates public and private clouds to form a single, adaptable cloud environment. It provides enterprises with both public and personal cloud space, solves data protection, management, and compliance issues, and allows quick arranging of resources.

Conclusion

Industry 4.0, supported by software development and the IT sector, significantly influences financial services. By introducing several new industrial sectors and significant market value, Industry 4.0 has already positively impacted the world economy. By embracing its expansion and market size, industry 4.0 shows excellent potential for financial services. 

At Marwadi Financial Services, we strive to keep up with the age of technology and development. We actively update our systems, software, and services to adapt to the changing demands. Marwadi is committed to providing the best customer experience with constantly evolving management and services to meet your needs. Contact us to learn more about bringing Industry 4.0 to Marwadi. 

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