WTO , 4TH industrial revolution and the Changing landscape of the financial services

Tanaka Mandizvidza

Like the manufacturing and other sectors of global industries, industry 4.0 has impacted the financial services significantly. The impact of the industry 4.0 precisely referred to as the I-4 is very prevalent from online payments, digital loans, plastic money, cryptocurrency, online forex trading and many other financial activities in the financial services.

Most of the development of financial technology is modernizing traditional financial services and products in several areas payments and transfers: online payments, online transfers , peer to peer currency exchange , B2B payments and transfer services , clouding technology  to store data on accounts information of financial consumers, smart terminals and cash desks.

Robo advisors as one of the biggest innovations of industry 4.0 are gaining traction in the financial sector because of their ability to improve decision making capacity of investors by using sophisticated algorithms and data collected from investors about their financial situation, future goals   to offer advice and automatically invest in to client assets which is efficient in balancing risks associated with investments as robo advisors make accurate calculations compared to humans.

Mobile payment systems prove beyond reasonable doubt that the 4th industrial revolution is changing the landscape of the financial industry and are making banking financial inclusive. With the introduction of financial technology costs of making financial transactions, and operating financial services have reduced making banking affordable to the unbanked population which is approximately about 1,7 billion according the world bank report.

The internet of things as a subset of industry 4.0 is also changing the landscape of the global financial system in that the use of integrated internet banking application is helping banks to offer their clients personalised services. Banking service providers can now use internet of things to gather more data about its clients.

After gathering real time insights about customers’ needs and interests’ businesses can offer customer content and tailor experience which enables banks and businesses to connect with their audience in more ways and benefit through user interface which allows interaction between the bank and its clients.

The cloud is proving to be a superior option to boost capacity to handle data, and is now providing an unrivalled level of agility, security and scalability to banks. For use cases such as data analytics, batch processing and data storage, banks can access the cloud as and when required, which means they can utilise such resources more flexibly and efficiently. Cloud computing is also enabling financial institutions to achieve considerable gains in efficiency and reductions in costs, as the technology requires banks to pay for only the services they use.

Block chain technology has brought the winds of change in the global financial system   through the introduction of bit coin and other crypto currencies, but also by improving cross border payments. The technology at the heart of bitcoin and other virtual currencies, block chain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way which makes it easier for countries trading with each other to exchange information on payments and make payments faster.

This form of technology improves cross border payments reducing fees and currencies exchange rate costs. Moreover, for emerging markets the idea of “zero” transaction costs can encourage international trade in that block chain technology through its ability to process big data and exchange information faster , makes cross border payments convenient, faster and lowers the cost of payment.

Multilateral trade regimes like the WTO are also playing a role to regulate ground breaking innovation through principles Such as TRIPPS to protect intellectual property so that other countries do mimic or steal ideas or technology from other countries and replicate the technology copied from other countries so as to ensure that states engage in fair practice in international trade.

The world trade organisation through its TRIPPS mechanism is also making continuous efforts to ensure that there is transfer of technology from economically developed countries to less economic developed countries so that these countries access sophisticated technology to improve productivity and provide high quality financial and business services.

The advent of 4th industrial revolution is also creating disparities between the wealthy and poor in that the wealthy are harnessing the cutting edge technology to create more profits and new streams of revenue , whereas the poor that do not have access to these technologies are marginalized.

Therefore there is need for countries to harness the opportunities brought by industry 4.0 to create a financially inclusive global economy.