Expert opinions, TECHNOLOGY

The Fourth Industrial Revolution in finance

The rapid development of technology is fundamentally reshaping everyday life in the 21st century. With so many things now occurring faster, we sometimes feel like there’s less time in the day – and measurements have proven this to be exactly the case. According to the atomic clock used by the International Earth Rotation and Reference Systems Service, an organization in charge of global timekeeping, the day of June 29, 2022 was 1.59 milliseconds shorter than the usual 24-hour day. There are many theories as to what caused the change, but one thing is clear – human activity has played no small part in it.

Even those outside the scientific community are noticing that life is becoming more fast-paced. It took society two centuries to advance from the first industrial revolution (the shift from manual labor to machine labor in the late 17th century) to the second one (the invention of conveyors, power plants and telephone in the late 19th century). The third industrial revolution is widely taken to be the development of computers in the late 20th century – and yet, here we are, in less than a century, already discussing the fourth industrial revolution, the concept Klaus Schwab proposed in 2016.

As in all previous cases, the driver of change is technology. However, which innovations will become history, and which ones will become reliably and sustainably embedded within societies, remains a matter of speculation.

At the moment, the list of contenders is quite long, from autonomous robots to augmented reality and meta-universes. Well, Tesla robots and augmented reality goggles are no longer sci-fi tropes.

The ways metaverses can be used extend far beyond fiction; they are becoming a reality every day. The European Commission has presented a strategy for the development of metaverses that estimates the global metaverse market at an impressive €800 billion by 2030, which is more than 4% of the EU’s nominal GDP in 2022. This growth is expected to create 860,000 new jobs, opening the door to innovation and economic development. McKinsey analysts confirm these prospects, predicting the metaverse market to grow to $1 trillion by 2030. This opens up overwhelming opportunities for business and investment.

The penetration of metaverses at the state level is also noticeable. The Saudi Ministry of Culture has launched an online platform offering an immersive and interactive experience of the country’s cultural heritage – an initiative that demonstrates how metaverse technology can be used to preserve and promote cultural assets.

Singapore courts are preparing for a whole new phase where trials will be held in meta-universes, which paves the way for more effective justice.

The financial sector has not been immune to innovation. One of the world’s largest investment banks, JP Morgan Chase, was the first to establish a presence in the metaverse by opening its own virtual “lounge” in Decentraland.

Respondents in a Deloitte research clearly hold similar views, as they noted the importance of using new technology and artificial intelligence in supply chains.

Such global cases describe opportunities for deployment of metaverses in public sector finance. Russia is active in exploring the use of metaverses in the regulation of public finance, which emphasizes their potential for innovation and economic management.

Russia has been ahead of the planet in terms of finance and financial services’ progress over the last decade, and is already researching ways to apply metaverse technologies in finance. The Institute of Digital Finance, a school at the Financial University under the Government of the Russian Federation, is working on theoretical and applied projects involving digital finance in the current economic environment. In particular, the institute’s researchers are building a financial metaverse model for the public sector in the Russian Federation.

Thanks to the development of such advanced competencies, Russia may become a pioneer in the metaverse-based regulation of public finance. A technological breakthrough like this should give a boost to GDP growth through higher efficiency of economic processes.

One way or another, with the further development of technology, in the next seven years we are going to see an exciting change in everyday life, both in terms of finance and basic daily processes.

By Daniil Bolotskikh, Research Assistant, Institute of Digital Finance

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