The Fourth Industrial Revolution: Still unmatured

THE FOURTH INDUSTRIAL REVOLUTION: THE IMPACT ON BANKING TECHNOLOGY, society, economics, and other areas

?INTRODUCTION

The Fourth Industrial Revolution(4IR) took a centre stage at the World Economic Forum’s (WEF) annual meeting in 2019 ?in Davos, Switzerland. The theme was to emphasize the consequence?of a combination of technologies that are changing our way of living, working, and interacting as a digitalization ecosystem with the innovation of the Internet of Things technology, bringing together physical and digital objects. This unleased flooding of a non-ending revolutionary technology with light speed. For example, IoT-enabled potential product has been increasing day by day. Nobody has knowledge of when its application will become fully optimized. ???

The first three industrial revolutions

?It will not be out of context, to know briefly that what is the factors which were characteristic of?the first to?third Industrial revolution. The First Industrial Revolution started in Britain around 1760 powered by?the steam engine. The steam engine enabled new manufacturing processes, leading to the creation of factories. The Second Industrial Revolution came roughly one century later and was characterized by mass production in new industries like steel, oil, and electricity. The light bulb, the telephone, and the internal combustion engine were some of the key inventions of this era. The third Industrial revolution started in 1960 with the inventions of the semiconductor, the personal computer, and the internet. It was also This is also denoted?as the “Digital Revolution.”

FOURTH INDUSTRIAL REVOLUTION: CHARACTERISTICS, SCOPE

?It is essential to know about the World Economic Forum (WEF) as the concept of?the fourth industrial revolution has been first discussed here. It?is the International Organization for Public-Private Cooperation, established in 1971 as a Non-profit organization, having its Headquartered in Geneva, Switzerland. It is independent, impartial, and not tied to any special interests. It engages the foremost political, business, cultural, and other leaders of society to shape global, regional, and industry agendas, having the belief that progress happens by bringing together people from all walks of life who have the drive and the influence to make positive change. The institution carefully blends and balances the best of many kinds of organizations, from both the public and private sectors, international organizations, and academic institutions.

Zvika Krieger, the head of technology policy and partnerships at(World Economic Forum (WEF) in an interview with CNBC ?explained?that there was a common theme among each of the industrial revolutions: the invention of a specific technology that changed society fundamentally.

Krieger said the Fourth Industrial Revolution is different from the third for two reasons: the gap between the digital, physical, and biological worlds is shrinking, and technology is changing faster than ever. For evidence of how quickly technological change is spreading, Krieger pointed to the adoption of the telephone. It took 75 years for 100 million people to get access to the telephone; the gaming app “Pokemon Go” hooked that many users in less than one month in 2016.

Krieger also served as the U.S. State Department’s first-ever representative to Silicon Valley from 2016 to 2017, saying technology is often missing from policymakers’ “toolkits.” As a result, he said, companies are left filling avoid trying to understand how to implement — and regulate — advancements like A.I.There’s an absolute hunger for concrete things companies can do.

?Companies in industries from retail to transportation to banking are vying to incorporate new technologies like augmented reality, 3D printing, and artificial intelligence into their operations. A 2017 study conducted by the European Patent Office observed the number of patents filed related to the Fourth Industrial Revolution increased a growth rate of 54 percent in the past three years.

“Technology, and specifically digital technology, is so tangled with many businesses, as well as our social and economic lives, that trying to separate ‘tech’ from ‘non-tech is becoming increasingly redundant.

Jordan Morrow, ?the head of data literacy at analytics firm Qlik, ?said individuals and companies lack skills, like interpreting and analyzing data, to successfully compete in the Fourth Industrial Revolution.“Not everyone needs to be a data scientist but everyone needs to be data literate,”

In 2016, Schwab predicted inequality would be the greatest societal concern associated with the Fourth Industrial Revolution and there has never been a time of greater promise, or one of greater potential peril. As Bill Gates: My ‘best investment’ turned $10 billion into $200 billion worth of economic benefit

We are living in a digital?world?also termed as information age which is transforming everything, our way of living, new communication tools to?communicate with clients and companies.?It suggests certainly a transformation in?the existing business practice and system adopted by all?industries, inter alia,?the banking Industry now better known as a financial institution.

?Industry 4.0 or Digital Revolution is changing the human way of life, communication among clients and companies, so that both existing business methods and financial services are not immune to this change.?An innovative technology, IoT, bridged the gap between the physical and digital world. Accordingly, banks have developed innovative banking services and products over the last few years, including secured systems that reliably protect the data and money of clients. However, just like any industrial revolution, both Industry 4.0 and its impact on the transformation of the banking sector carry with themselves both positive and negative consequences of this transformation. Digitalization of the banking sector is in full swing, with the fact that this process also includes other component parts of the Industry4.0, such as blockchain networks, artificial intelligence, IoT, biometrics, cooperation of banks with FinTech companies, preparation of the suitable?platform, and offering other services for the Generation Z and other

?The accelerating and enhanced spread of?digitalization in banking and finance,?have?resulted in introspection?of thoroughly?revamping the traditional business models, which implies that quick adaptation of the new system to respond to the demands of their clients without compromising safe and secure banking. Security and trust are still the backbone and banks adopted?innovative banking services and products over the last?few years?at a pace never seen before, including secured systems that unfailingly shield data integrity to safeguard?the money of clients. The digitalization of the banking industry is compulsory to intensify rational thinking for?remodeling traditional business models, in order to provide service quickly and efficiently to the demands of their clients at the same time providing?safe and simple services without compromising on security and trust environment as?it is a necessity of its survival.

Though the banking sector has also become virtual and a part of cyber but still?maintains its brick and mortar?image because, like any other most developed nation, our country is still unable to tackle the people living below the poverty line, and infrastructure to provide basic amenities and very slow improvement of literacy rate. ?Though many of the banking services are being delivered ?24*7, anywhere and anywhere concept makes it possible.

This all happened due to digitalization, carrying stiff?competition, new legislation, and all the changes, which have transformed the banking sector significantly but despite all technological changes, human factors, trust, and security still be the key determinant.

As the past three industrial revolutions paved the way for profound change in all spheres of civilization.?As per the opinion?and view of the world-leading economists, ?the fourth industrial revolution is ongoing or as it is also popularly called the Industry 4.0. Each of these industrial revolutions was known by technological innovations that had a major impact on the development of entire humanity.

?The major characteristic of Industry 4.0 is that it has changed in human life and technology as never before with such rapid speed. So, it is making in different ways and aspects of all business activities, concurrently?developing digital and other technologies, but also changing the entire lifestyle in the world. The globalization and the connection of the world into one global market, which resulted in an unobstructed expansion of business, a new era began, which can be called the age of digital transformation or information age. The basic characteristic of the new digital age is that change happens swiftly in new dimensions and new forms. Even the banking industry resists the changes more, ?yet they accepted, adopted, and?adjusted to apply certain processes of their business to changes in the business environment imposed by the digitalization process. The continuous process of creating new banking products and services that are directly linked to the digitalization process is a clear sign that the banking sector has seriously understood the upcoming changes, which certainly result in the creation of competitive advantage and a better position on the market. The big competition on the market, the emergence of various services offered in parallel with banking services; demonstrate market overload and certainly, it presents the biggest challenge for banks in the upcoming period. It should be especially borne in mind that in this situation, banks are not just competing with one another, but also high tech companies dealing with similar services that have emerged in the last few years and started offering this kind of service are also a competition to them. These companies have their own payment systems and customer databases, which results in a deduction of part of the banks’ products. All this clearly means that banks have to work intensively on innovations in the banking field and develop new business strategies and models that will be adapted to new demands on the market. Certainly, in addition to the activities related to the introduction of new services, as well as their adjustment to the market, the focus must still be on the client of the bank i.e. banks must pay attention to the optimum quality of services that will satisfy existing clients and also attract new clients to the bank. It is very important that the transformation process of banking services is accompanied by continuous listening to the market and clients' needs since it should not be forgotten that all banks have and will have additional customers in the future, who will certainly use the standard banking services, as well as clients who certainly will not use digital banking services in a certain period of time. Because of all of this, the banks will have to seek the optimal measure in transforming their business units and introducing digital bank branches that would completely replace human resources. Essentially, the process of digitalization in the banking sector is, besides the great advantages for banks and their clients, also bringing with it certain challenges that banks need to take care of. ?The research "A Brave New World for Global Banking" says that banks in Europe are at risk of loss which can be almost a third of their product. The next, even more, rigorous phase of digital transformation will further dent the bank's profit in the upcoming years, which will be a consequence of even greater competition.

In short, the banking industry that is powered by emerging innovations such as the blockchain, mechanical technology, and IoT (Internet of Things) is growing exponentially so that it appears to be impossible for business experts and professionals to keep pace. AI has an effect on developments in the fourth industrial revolution. It will make our banking technology help provides knowledge, ideas, creativity, and technological progress are still essential drivers for inclusive growth and intensify efforts to narrow down disparity of income and positively make full potential human resources by bringing them into the mainstream. The future of a country depends primarily on total transforming the banking industry at par with global standard, become like an engine of inclusive growth of societies, laborers employed in unorganized sectors, that is, MSME sector through innovative entrepreneurship and economic development of the country as a whole.

The Father of the Fourth Industrial Revolution

Coined popularly by Founder and Executive Chairman, Klaus Schwab, the?WEF,?asserts that the changes seen are more than just improvements to efficiency, but express a significant shift in industrial capitalism.

As outlined above, The?Fourth Industrial Revolution,?4IR,?or?Industry 4.0 theorizes rapid change to technology, industries, and societal patterns and processes in the 21st century?due to increasing interconnectivity and smart automation. Interconnectivity – the Power of Accumulating Communication Technologies joined with ubiquitous computing are key components in the forthcoming age of digitalization. This phase of industrial change is the integration of different technologies like?AI, Advance Robotics.?that indistinct the lines between the physical, digital, and biological worlds.

The fundamental changes are taking place in how the global production and supply network operates through ongoing automation?of traditional manufacturing?and industrial practices, using modern smart technology, large-scale communication (M2M), Cyber-physical systems(CPS), the ubiquitous influencer?(IoT), cloud computing, cognitive or intelligent computing. This integration increases automation, improving communication and self-monitoring, and the use of smart machines that can analyze and diagnose issues without the need for human intervention.

It also represents a social, political, and economic shift from the?digital age to an era of embedded connectivity distinguished by the Omni-use and commonness of technological use throughout society (e.g. a?metaverse) that changes the ways we experience and?know?the world around us. That we have created and are entering an augmented social reality?compared to?the natural senses?and industrial ability of humans alone. This marks the beginning of the imaginative age.

Key themes

Four themes?that recapitulate an Industry 4.0

Interconnectivity of machines, devices, sensors, and people to connect and communicate with each other via the IoT, or the internet of people (IoP).·???????Information transparency with Industry 4.0 technology affords operators with comprehensive information gained by interconnectivity to swift and error-free decisions, ?recognize key areas that can benefit from the improvement to increase functionality.

·Technical assistance — Innovative technology advances?systems to solve complex problem-solving capacity, and ability to take?the pragmatic crucial decisions, and helping to do repetitive works more effectively and even perform with difficult or unsafe tasks, so as people can do some more skilled work.

???Decentralized decisions — the ability of cyber-physical systems which to make decisions on their own and to perform their tasks as autonomously as possible. Only in the case of exceptions, interference, or conflicting goals, are tasks delegated to a higher level.

Distinctiveness

Proponents of the Fourth Industrial Revolution argue a ?diverse revolution, and a ?rather than simply a perpetuation of the Third Industrial Revolution considering the following distinct traits:

??????Speed ?— the exponential pace at which incumbent industries are affected and displaced.

·???????Scope and systems impact – unparallel change ?of sectors and firms that are affected

·???????Paradigm shift in technology policy — new policies designed for this new way of working.

Still, critical analysts of the concept do not agree that Industry 4.0 as a marketing strategy though acknowledging revolutionary changes are discernible in distinct sectors but no systemic changes. Further,??In addition, the pace of acknowledgment of Industry 4.0 and policy shift varies across countries; have still debated of a universal definition of Industry 4.0.

Primary drivers

Digitization and integration of vertical and horizontal value chains, Digitization of products and services, and digital business models and customer access making customer satisfaction is a perpetual, multi-stage process that requires modification in real-time to adapt to the changing needs of consumers.

Trends

Smart factory

Smart Factory is the vision of a production environment in which production facilities and logistics systems are organized without human intervention. It does not remain as a vision but feasible also clarifies with practical examples how it will work.

The technical foundations of the Smart Factory or the intelligent factory employ?cyber-physical systems that communicate with each other using IoT and Services. of this process is two ways flow of data between the product and the production line, that provides an efficient connection of the Supply Chain and better organization within any production environment.

Predictive maintenance

Industry 4.0 with the help of technology and IoT sensors provides predictive maintenance easier and allows machine owners to perform cost-effective maintenance and determine it ahead of time before the machinery fails or gets damaged.?

3D printing

It has to have extensive dependency on3D printing?technology.?The benefits are 3D printing can print many geometric structures, as well as simplify the product design process. In low-volume production, it can also decrease lead times and total production costs. Moreover, it can increase flexibility, reduce warehousing costs and help the company towards the adoption of a mass customization business strategy.?3D printing can also help in printing spare parts and installing them locally, therefore reducing supplier dependence and reducing the supply lead time.

Smart sensors

Sensors and instrumentation drive the central forces of innovation, such as smart production, smart mobility, smart homes, smart cities, and smart factories.

Smart sensors are devices, which generate the data and allow further functionality from self-monitoring and self-configuration to condition monitoring of complex processes. The power of wireless communication reduces installation effort?and helps realize a dense array of sensors.

The importance of sensors, measurement science, and smart evaluation for Industry 4.0 has been recognized and acknowledged by many experts who endorses the statement "Industry 4.0: nothing goes without sensor systems.

Some issues have to be addressed such as time synchronization error, data loss, and dealing with large amounts of harvested data, which all limit the implementation of full-fledged systems.?A simple way to show the power of smart sensors in the electronic?smartwatches,?sensors receive the data from the movement of the user, process the data, and provide the user with the information about how many steps they have walked in a day and also converts the data into calories burned.

Agriculture and Food Industries

?

It is still in the testing stage which may be termed hydroponic vertical farming.

?This new technology is used as a tracking system as well as the collection of human data and product data.

Accelerated transition to the knowledge economy

The knowledge economy is an economic system in which products and services are largely based on knowledge-intensive activities that contribute to an accelerated pace of technical and scientific advances.?The present economy transitions into a knowledge economy by increasing reliance on intellectual capabilities than on physical inputs or natural resources.

Challenges

Economic

·???????High economic costs

·???????Business model adaptation

·???????Unclear economic benefits/excessive investment

Social

·???????Privacy concerns

·???????Surveillance and distrust

·???????General reluctance to change by stakeholders

·???????Threat of redundancy of the corporate IT department

·???????Loss of many jobs to automatic processes and IT-controlled processes, especially for blue-collar workers

·???????Increased risk of gender inequalities in professions with job roles most susceptible to replacement with AI.

Political

·???????Lack of regulation, standards, and forms of certifications

·???????Unclear legal issues and data security

Organizational

·???????IT security issues, which are greatly aggravated by the inherent need to open up previously closed production shops

·???????Reliability and stability needed for critical machine-to-machine communication (M2M), including very short and stable latency times

·???????Need to maintain the integrity of production processes

·???????Need to avoid any IT snags, as those would cause expensive production outages

·???????Need to protect industrial know-how (contained also in the control files for the industrial automation gear)

·???????Lack of adequate skill-sets to expedite the transition towards a fourth industrial revolution

·???????Low top management commitment

???????Insufficient qualification of employees?

?What may be the constraint, it will remove all obstacles, and make the entire world into a smart world. We are already seeing the virtual world so the possibility is more to become smart.