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07 Sep Fintech and the 4th Industrial Revolution

Software and computer engineering are creating a groundswell for what many have deemed the fourth industrial revolution. This next wave in the way companies, technologies and people interact, work and live relative to one another is likely to be more transformative than any previous industrial revolution we have yet seen. The breadth and depth of the impact of this 4th revolution will quickly penetrate nearly every industry. Perhaps one of the most impacted will be the financial services world where antiquated tech has remained the status quo for many years. To fully appreciate the overall impact of the 4th “wave,” it will be important to first understand the history and origin of the other three industrial revolutions. It will also be illuminating to track some of the drivers of today’s industrial revolution as well as the general hallmarks and impacts on the financial services world.

Unlike Any Other

Central to today’s industrial revolution is the idea that engineering—namely computer and software engineering—will drive its current rate of expansion. But first, let’s start from the genesis of such revolutions.

First Industrial Revolution. The first industrial revolution was built on water and steam to power transportation and merchandise production. It used heat, water and steam to power large mechanical advances in factories and transportation via railways.

Second Industrial Revolution. The second industrial revolution was fueled by the implementation of electrical power. Thanks to engineers like Thomas Edison and Nicholai Tesla, further expansion and mass production were made available. In addition, greater productivity was realized through the invention of devices like the light bulb and eventually smaller electric-powered devices created a productivity wave reached down to the masses.

Third Industrial Revolution. The third industrial revolution brought about the combination of information technology and electronics to automate everything from production to business processes. Much of this was powered by the personal computing revolution.

The Fourth Industrial Revolution stands on the shoulders of the Third in that it uses digital technology to facilitate and further automate systems and processes that required physical, human capital. This wave of automation is changing the way we interact with machines and computing. It is also blurring the lines between industries, technologies and the physical and digital worlds themselves.

Hallmarks of the 4th Industrial Revolution

One of the biggest trends of the digital revolution that will be different than all previous trends is the speed with which it will unfold. Previous revolutions evolved in a linear way. Most expect the 4th wave of industrial engineering to take an exponential growth path. New technology will help drive the revolution, but the interconnectedness of systems, processes and technology will drive impactful changes in nearly every sector at break-neck speed. The impacts will be system and industry-wide. There will be few that will be left unaffected. Here are some other detailed hallmarks we might expect to see from this digital wave:

  • Technology will begin to substitute, not just complement, the work of other services including some of the most technically-driven services on the market. Engineers (including financial engineers) will not be able to pass the fray unaffected. I expect the impact to jobs may be greater than we might have expected.
  • The delivery of products and services to fit the needs of demanding clients will accelerate. Supply chain and engineering will work together to quickly supply the needs of clients across industries. You thought Google and Amazon were spurring on “on demand” mentality for information and products? The Fourth Revolution will spur a further requirement in products and services at both the consumer and commercial level like never before seen.
  • Competition for products and services will skyrocket. Delineation of tasks within organizations will become more focused, but expectations for understanding and being able to work across functions will increase. Traditional firms will look antiquated as many newer firms with much different models crop-up. Supply-side competitive dynamics are likely to look more like a mess of spaghetti.
  • As engineering solves many of the issues that require regulation, including automating human processes required to keep people and programs in check and running smoothly, regulation will progressively be reduced, thereby loosening the current level of restrictions.
  • Existing incumbents will not only be slow to react in the rapidly-changing environment, but there will be struggles to remain profitable with antiquated business models. For the larger incumbents, the technology and intellectual property will create a hot-bed for fintech M&A.



Mega-trends are brewing from this perfect storm of activity. The supply-side transformation will continue to manifest itself across the financial marketplace. The revolution involves more than simply efficiency and productivity gains. The disjointed disruption has yet to hit financial services at the same scale as Uber or AirBNB, but the wheels are in motion. Out-of-the-box solutions for technology-enabled finance will occur as boundaries drop. It is exciting to be in the middle.

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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.