Fourth Industrial Revolution and financial big bang

Finally, an internet-only bank has started business. The "big bang" in the financial market has started.

Without any branches, the internet bank that does not have face-to-face operations is competing with various services distinct from existing banks. With lower loan interest rates, faster money transfers and 24-hour operation, its subscribers exceeded 200,000 just two weeks after its launch.

Although it does not pose a great threat to the existing bank business now, it is predicted to act as a catalyst in the financial market big bang soon given its growth potential.

The launch of the internet-only bank bears extraordinary significance because its impact is not limited at technical differentiation -- it is shaking the fundamentals of the financial industry. We should understand the impact on those banks in the flow of the Fourth Industrial Revolution.

Artificial intelligence (AI) technology represented by AlphaGo has penetrated into our daily lives. The pace was so fast that we may have to worry about the future of humans.

From automatic vacuum cleaners and unmanned automobiles to AI physicians and secretaries, the technology's effect goes beyond the level of curiosity and poses impacts on industry in general.

At the Davos Forum in 2016, this technical innovation was named the Fourth Industrial Revolution, which is "the revolution into a society where everything is connected and intelligent."

The Fourth Industrial Revolution means an introduction of an intelligent information society. Big data and AI are the core technologies of such a movement.

Advanced countries use these technologies to improve productivity in their industries -- such as manufacturing, services and agriculture -- and create new markets.

As of 2017, the top five companies by market cap in the United States were Apple, Google, Microsoft, Facebook and Amazon. All of them are based on core technologies of the Fourth Industrial Revolution.

Their dominance is in a stark contrast with the top five companies 10 years ago -- Exxon Mobile, Gazprom, Citi Bank and GE. The contrast shows how aggressively and formidably the wave of the Fourth Industrial Revolution is coming.

What we should not forget is the Fourth Industrial Revolution is taking place for the sake of making human lives happier and more convenient. The revolution's core technologies are for freeing humans from cumbersome labor and providing new experiences for them.

The examples we saw from the AlphaGo phenomenon and Pokemon Go craze clearly show the main domain of the revolution. While the second and third revolutions had expanded the material world through the steam engine and electricity, the fourth one is paving new ways for our daily lives.

The role of finance should not be excluded in discussing the revolution of human lives. The two biggest events which enabled people to overcome poverty and bring about enormous productivity improvements were the industrial revolution and the introduction of finance.

While the industrial revolution explosively increased the volume of goods produced through developments in manufacturing, the introduction of finance effectively distributed these goods and let people engage in international trade and dream of giant projects, such as oil refining, civil engineering or massive construction.

For example, the emergence of stock markets paved a new way to do massive businesses -- let's say trade between Europe and Asia in the 17th century -- by allowing involved parties to disperse risks such as trading ships' failures due to typhoons or piracy.

Without finance, perhaps a cottage industry would be the only industry that would exist today. The fact that finance plays a crucial role in most of advanced economies reflects how important finance is in the operation of a country.

As time flies, however, the focus of finance has changed. Internet-only banks, bitcoin, block chain and other technologies of fintech that are at the center of huge attention these days concentrate on effective financial transaction between individuals, not running for the sake of massive capital.

The advent of the internet-only bank in Korea also demonstrates that the country's finance has changed its course from large capital to individual transactions. The authority of the financial markets is being transferred from experts to individuals. A paradigm shift is taking place.

After the 2008 global crisis, finance has become the symbol of greed and the main culprit of polarization after being criticized by many economists including Thomas Piketty.

Under such a depressed circumstance, hope is high that internet-only banks and other fintech firms can serve the role of the vanguard of the Fourth Industrial Revolution to lead the financial industry as the centerpiece of the people's economy.