Let us understand the On-Set of Finance 4.0. With the inception of Industry 4.0, the change in technological infrastructure took place. Some of the unique characteristics of Industry 4.0 were causing expansion in globalization & rapid development in the digital technology domain. Also, Artificial Intelligence domain experienced swift growth. Such traits created the opportunity to change the Finance Industry with the use of Finance 4.0.
Factors Driving Finance 4.0
Few of the factors, which are driving Finance 4.0, have been generated from Industry 4.0. These have been Robotics Process Automation (RPA), Artificial Intelligence (AI) & Internet of Things(IoT) along with blockchain. Let us try to understand the predecessors of Finance 4.0 to comprehend the evolution of its groundbreaking structure.
Historical Facts over Finance
Finance is a derivative of economic infrastructure. The real purpose of finance is to facilitate actual production. In the past, finance was restricted to trade & war. It used to make use of the conventional banking infrastructure to function.
Finance 2.0 was the reason for the emergence of credit & equity markets. It led to more sophisticated industrialization. Post that, Internet & fax machines entered in the industry, which helped finance to grow rapidly.
Finance 3.0 has been the time of financial derivatives. These derivatives were quite vulnerable & soon investors along with regulators understood that manipulation of them was quite easy. This was possible using data & analytics. This & the previous versions were followed by hierarchical ledger mechanism. It was a pyramid-like structure. Here, evasion of regulations, taxation & administration was easy.
Introspection of Finance 4.0
Let us have a closer look at Finance 4.0. Along with the understanding of cyber-currencies, which is probably its best innovation. Finance 4.0 is the inception of an era where Finance Department acts as a trust giver. Cyber-currencies were possible to construct owing to Blockchain. With regards to structure, it has a bottom-up layout. Here, avoidance of official oversight is technically possible. With the help of cyber-currencies & tokens cross border transactions have become quite easier. This shift has compelled the world to be in the multi-polar state instead of a unipolar one. Here, many reserve currencies also compete for trade & store of value.
In a nutshell, Finance 4.0 has been all about utilizing digital technology to make greater use of finances & related data. Finance 4.0 assures a drastic change in the face of the global finance domain. Several changes are likely to happen because of it. These changes are going to be inclusive of the rules & regulations administering the Financial Sector.
Organizations are required to maintain pace alongside the changes happening in Finance, technology & industrial space. Reason for this has been that these all are closely associated. This is imperative not just to stay relevant, but also to give the best in class service to clients. Here, the requirement is to build a robust infrastructure, which is inclusive in nature & takes in to account updated technology. This will surely help any firm to stay in strong alignment with the industrial revolution.