Share this post

Industry 4.0, the name of a current trend regarded as the fourth industrial revolution, is universally known as the ‘small factory’. It is the evolution of automating processes which includes cloud computing, cyber-physical systems and a whole lot of the Internet world.

Since this revolution is global in reach, it will have an equal impact on every large and small scale industry that comes in its way. This means that it will also have a major impact on the financial industry, and if you are a part of it, you need to prepare yourself for what this revolution brings with it.

The Origin of Industry 4.0

This fourth transformation of industries and manufacturing has its origination from Germany and is inspired by Germany’s government initiative to encourage digital and technological concurrence between different industries, business, and processes.

At the heart of Industry 4.0 lies the basic concept of the Internet of Things (IoT). If you don’t know what IoT is, it basically includes all devices that are enabled through the internet and have an on-off switch. Furthermore, it isn’t limited to devices such as computers, laptops, cell phones, but also consists of other electronic items like coffee makers, automotive parts and parts of machinery.

IoT represents the integration of all sorts of information, communication and automation technology, which lead towards actions in the future.

Impact of Industry 4.0 on Accountants and Financial Analysts

The Internet of Things and Industry 4.0 will have a huge impact on the financial function of industries and businesses and on the financial industry itself. Every device that can be connected through the internet and is accessible to other devices would facilitate the accessibility and sharing of real-time financial data.

This means that you as an accountant will now have to ready yourself for receiving and working with this enormous amount of useful data instead of regularly checking with your bookkeeper. Auditing, particularly, would become much effortless and smooth as you can now monitor transactions actively, detect financial frauds quickly thus minimizing the damage.

If you are a financial analyst it would be much easier for you to access data, predict the profitability impact and analyze the return-on-investment. You would be able to help companies with pricing analysis for a product that improves in functionality and can determine how the company’s production can be more effective and efficient.

Although this connectivity of devices to internet provides a plethora of benefits to you, it also poses an equal amount of threats. As famously said in the financial world, ‘With high return comes high risk’.

Hence, you need to be vigilant at all times, as recent ransomware attacks have shown that connected devices have a higher level of vulnerability. This is because the more it is connected the more data sharing and accessibility is possible. This could lead to product misuse or inadvertent use. Because of this, companies need to license their ownership of data and lay down standards for transmission in their policy books.