How Digital Technologies Will Impact Trade in Services
The fourth industrial revolution refers to the disruption of economic activities caused by digital technologies. Artificial intelligence (AI), blockchain, cloud computing, and the Internet of Things (IoT), in particular, are set to transform how we transact and organize our economies and societies. This will trigger the next wave of technological advancement, just like the internet did 20 years ago. As the global economy becomes increasingly service-centered, the service industry will likely face the most disruption in the coming years.
Digital technologies will reshape global service supply chains. Tasks will be more finely divided, and new players will enter the value chain.
Take the banking industry, for example. For years, banks were the custodians of their customers’ money and the creators of financial items like payments, cards, and loans. However, this is now all changing, thanks to the rise of neobanks, open banking, and cryptocurrencies. Fintechs will take over major parts of the banking value chain in the coming years and develop innovative digital banking products. Traditional banks, on the other hand, will increasingly degrade into regulated safe-keepers of funds, relying on a platform approach to collaborate with various fintech companies to provide digital services to their clients.
Digital technologies can also provide access to markets for people who have previously been excluded from the global economy. Trade portals like Export Portal enable companies worldwide, including ones in developing countries, to trade in the international market. Our blockchain-based platform delivers the transparency and security all involved parties need to engage in trustless transactions. Before blockchain technologies, trading with unknown players in developing countries was deemed too risky. With blockchain, the risk and the cost of global trade transactions have decreased significantly.
E-commerce, or digitally-enabled trade, has already changed and will continue to change the global trade industry. More and more e-commerce providers are integrating AI and blockchain into their platforms to make e-commerce more secure and efficient. That will further fuel the expansion of e-commerce in services. Already, nearly 50% of traded services are digitally enabled, compared to 15% of traded goods.
Even in developing countries, the majority of people now have internet access. With the advancement of global interconnectivity and new technologies such as 5G, an increasing number of people will be able to access online services, providing the foundation for companies to supply digital services as the potential market size grows. The more profitable digital services become, the more businesses will begin to offer them.
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