Welcome to the 4th Industrial Revolution

A digital revolution is upon us, and it’s a phenomenon taking the global economy to new, exciting places. Klaus Schwab, Founder and Executive Chairman of The World Economic Forum, characterizes The Fourth Industrial Revolution as a “range of new technologies that are fusing the physical, digital and biological worlds, impacting all disciplines, economies and industries, and even challenging ideas about what it means to be human.” And in The Fintech Industrial Revolution is Upon Us, Rajesh Agrawal of Xendpay describes the digitization of our world as democratic and socially minded, with technology becoming more individualized and tailored, with the “potential to connect the world and empower people like never before.”

Cyber-Physical Innovations

Perhaps there’s a bit of the bombastic in this rhetoric, but it’s not unwarranted. To be sure, various modern data exchange, automation, and manufacturing technologies are coming together and causing disruption across the board. We’ve seen through the proliferation of big data, analytics, and human-machine communications that the technological revolution is creating a lot of gray area between the physical and digital. The best example lies in the Internet of Things (IoT), wherein connected equipment is able to capture and analyze data and perform other tasks from process streamlining to quality control.

Financing 4^th Generation Technology

This latest technological revolution is creating an interconnected, global economy that’s held together by digital data. But to contribute to the progress and operate effectively in this new digital ecosystem, companies need to invest in the technology—and they need financing to make the investments. This brings us to banking, an industry undergoing tremendous change. Traditional players and new entrants are introducing easier and more flexible ways to transfer money, lend money, manage fraud, make loan repayments, protect assets, deliver advisory services, and so much more. (Be sure to read “D” is for Disruption and Payment Innovations, Too and Payments Innovations Set to Disrupt the Banking Industry for more insights.)

These new approaches to banking, in fact, are expected to help pave the way for strategic growth in the Industry 4.0 era. A Siemens Financial Services study of CFOs in the manufacturing sector brought to light five key drivers of success for manufacturers in the Fourth Industrial Revolution. The first of which is intelligent financial management, followed by new-generation technology, increased operational efficiency, raised production capacity/flexibility, and more competitive pricing. More insights into the Siemens study can be gleaned from What The Next Industrial Revolution Means For Money Management on PYMNTS.com.

Payments Revolution?

And while Industry 4.0 is changing the very nature of manufacturing, payments are evolving at lightening speed—that payments can be transacted on mobile devices with help from biometrics would have sounded like science fiction to professionals in the first industrial revolution of the mid 1800s. Consider digital currency and the blockchain (see Will Blockchain Technology Power the Future of Payments?), electronic payments, wearables, and yes—the IoT. In Making the Connection: The Internet of Things and Payments, we’re treated to the following examples courtesy of the Yale Economic Review:

• Household utilities (e.g. smart smoke alarms) controlled remotely by smart devices can have embedded chips containing payment information
• Service providers like gyms charge fees based on their members’ use of wireless sensor-yielding machines
• Retail outlets can charge a customer’s sensed device automatically upon picking up an item and walking out with it

For more, read Payments in the Internet of Everything.

Technological change in the modern era is making an undeniable impact on the way consumers and businesses make payments. The synergy between the physical and digital is making it possible for us to manage money in cyberspace—not to mention with a universe of connected “things.” And the new technology that’s emerging to make payments more convenient and secure has just started to gain widespread adoption, especially in the B2B space. As players in every industry across the globe take up new technologies and demand new forms of financing to enable their progress, payments will inevitably evolve—if everything is connected, isn’t that a sure thing?