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.
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.
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:
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.