New and emerging technologies continue to disrupt various industries across the board but different regions are taking different approaches at different paces. Indosuez's Julien Collin discusses the trends and opportunities manifested by the next industrial revolution.
Cheaper access, increasing connectivity and the expanding web of tech-savvy people have led to more and more technologies being created in recent times. Because of the potential productivity benefits, companies are working to incorporate more technology into their operations, such as using robots to actively perform more routine tasks in the value chain.
From augmented reality to blockchain, there is no industry that will not be fundamentally changed by technological advancements. This can be illustrated from a McKinsey study estimating that 60 percent of the tasks associated with all occupations would be automated in the future. Also, a PWC 2016 survey states that 77 percent of CEOs believe technology would change their sector in the next years.
«[T]here is no industry that will not be fundamentally changed by technological advancements.»
The U.S. is the undisputed global leader in tech with a more mature ecosystem, large capital inflows and favorable access to private capital which enables the rise of disruptive technologies even before listing.
Asia has the highest growth potential thanks to its largest potential user base, deep penetration of mobile (e.g. WeChat) and a few pure players on disruptive techs. Besides the private sector, Asian public institutions invest and digitalize. Thus, the Chinese government is expected to invest heavily in artificial intelligence in the coming years.
In an unprecedented move, the Bank of Thailand has been piloting «Project Inthanon,» which looks at using blockchain technology to create a central bank digital currency for interbank settlements. Overall, the digitalization of industries in Asia (especially China), still lags behind that of the United States by a considerable margin, but the gap is narrowing rapidly.
In Europe, there is some maturity, but only in a few established actors (e.g. enterprise software) and despite growing digitalization, it is often overlooked in favor of the U.S. or China.
«Overall, digitalization of industries in Asia (especially China), still lags behind that of the United States by a considerable margin, but the gap is narrowing rapidly.»
One of the main drivers of this exponential curve is how companies collect and use data. This might not be a new concept, considering the hype of big data in recent times. However, what is unprecedented is the sheer volume of data that will be available in the future – approximately 163 zettabytes by 2025 and indeed 90 percent of all digital data in existence in the world today was created in just the past two years.
Coupled with the wide range of potential uses of such data for industrial (analytics and simulations) and consumer (Internet-of-things) purposes through machine learning, the economic impact of this megatrend will be immense. On the flip side, this interconnectedness will increase the likelihood and amplify the effects of any successful cyberattack on digital infrastructure. However, this may lead to a proliferation of cybersecurity firms tailored to new technologies.
«163 zettabytes by 2025 and indeed 90 percent of all digital data in existence in the world today was created in just the past two years.»
It is estimated that through technological advancements, global GDP will increase by $15 trillion by 2030. The main bulk of benefits originating from productivity benefits from process automation, increased consumer demand on new technologies and investments in technology firms.
At Indosuez Wealth Management, we advise our clients to gain exposure to technological advancements globally through a list of stocks, bonds, funds and structured products. Besides, through the coordinated global effort of our investment advisors from all over the world, we have developed a dedicated technology mandate, whereby the clients remain in control of the final investment decision.
Julien Collin is the head of markets, investment & structuring at Indosuez Wealth Management in Singapore.
