Innovation, Sustainability, and Technological Megatrends in the Face of Uncertainties

The recent surge in artificial intelligence (AI) technologies and applications across domains has brought the algorithm economy into the spotlight like never before. The chapter explored major AI-tech trends and advancements in this context, focusing on sectoral innovation diffusion and country-level AI readiness. The analysis depicts a high intensity of adoption, mainly in risk management and products and service development domains across different sectors. Here, we identified government, the economic value embedded within the tech, and the proliferation of data combined with tech advancements in the field as the core drivers of the AI hype. In the AI readiness sphere, we have observed regional and country-level disparities between the USA and Singapore from the Americas and Asia, respectively, depicting higher average readiness levels. African countries remained the laggards (except for Mauritius and South Africa, which performed relatively better in their data and infrastructural readiness), while Western European countries like the UK, Finland, and Germany, along with others, depict better preparedness. In this regard, the economic capacity with data availability and AI infrastructure of the countries showed a positive association with the countries’ AI readiness. We have also observed higher carbon footprints for countries with significant government AI readiness index (greater than 60), mainly China and the USA.

Industry 5.0 is revolutionary in the sense that it proposes a very different approach for industries and economies to succeed in a sustainable manner. Industry 5.0 emphasizes the need for an eco-friendly and human-centric production system that promotes workforce well-being and empowerment using flexible and adaptable technologies. The technologies in Industry 5.0 are agile and resilient and offer sustainable development while respecting planetary boundaries. In short, Industry 5.0 is based on the integration of the four Ps principle, people, planet, profit, and processes. The key elements/drivers of Industry 5.0 are (1) Reduced cost due to resource efficiency, (2) Improved safety and well-being, (3) Empowered workers remaining in control, (4) Competitive edge in new markets, (5) Adapted training for evolving skills, and (6) Competitive industry by attracting the best talent.

Although Industry 5.0 is still a new concept, and the technologies used in it are still being developed and refined, it holds great value for both businesses and society as a whole. From the introduction of a range of environmentally friendly technologies to offering flexibility through customization and personalization, from addressing workplace safety concerns to increasing the efficiency of manufacturing processes, Industry 5.0 promises a significant impact on the future of mankind and the planet.

There are several megatrends in the finance industry that are shaping its evolution and driving significant change in the sector. This trend is being driven by a combination of factors, including technological innovation, regulatory reform, and the rise of fintech companies. The finance industry is subject to increasingly complex and stringent regulatory requirements, with a focus on consumer protection, financial stability, and risk management. Some other factors contributing to this change are shifting demographic patterns, such as an aging population, and changing consumer preferences for digital and mobile financial services. Overall, these megatrends are shaping the finance industry’s future and driving significant change in how financial services are delivered, consumed, and regulated. This chapter covers the most significant innovations and recent developments in the finance industry like Mobile Banking, Digital Wallets, Cryptocurrencies, Peer-to-Peer Lending, Robo-Advisors, Open Banking, Blockchain and cloud computing, CBDC, and sustainability. The chapter explores how these developments are changing the face of finance and shape finance industry of future.

The chapter analyses fintech 4.0 and financial systems navigating through the latest developments in the industry starting with a high-level introduction to the fourth-gen technologies and financial principles in this sphere. It further explores the factors that affect the development of fintech, the integration of technologies with finance principles, the transformation of fintech from product-focus to scenario-focus, and the discussions on the future of fintech toward—control-oriented Vs. credibility-oriented directions.

This chapter explores some technological breakthroughs in financial services since the 2008 credit crunch. Intriguingly, no aspect of the financial services value chain, i.e., payment, loans and advances, and deposits, is spared in this technological revolution. Payment services have witnessed most of these innovations. Attributable to the increasing consumer demand for faster payment services, which attracted the attention of other service providers. This renewed interest in payment services has resulted in highly competitive financial services with an attendant impact on the banks’ margins. Some innovations in the payment service industry discussed are Mobile payment, Mobile Wallets, Online Payment, Debit/Credit Cards, and Cross-border payment. Also, the chapter briefly examines Buy-now-pay-later (BNPL) services offered by retail giants and the Central Bank Digital Currency (CBDC), a low-cost payment digital currency backed by Central banks. The chapter further explores how financial institutions develop strategic alliances around payments, loans and advances, and deposit services with other service providers.

In this work, we cover technological megatrends for sustainable business with a focus on the notion of sustainability and trending technologies for energy efficiency, waste management, supply chain management and operations, sustainable manufacturing, and predictive maintenance. Topics of coverage under this chapter include product-based, customer-based Vs. scenario-based Fintech 4.0, Fintech evolution from gen 1.0 to 4.0, Financial Technologies as a tool, service, or a system, the impact of Fintech 4.0 on key functions of the financial system, and operations. The chapter further navigates through the benefits and challenges and further explores the human factor in Fintech 4.0 through the lens of Industry 5.0. While the advancement on the sustainability front is promising, sustainable digitalization of practice can be impacted by various factors, including but not limited to lack of awareness, limited resources, financial constraints, and outdated infrastructure and replacement costs. Steady, sustainable digitalization requires support not just from local governments but the involvement of international bodies advocating for climate change.

This study highlights the importance of sustainability, green tech, and clean tech to achieve the Sustainability Goals of the United Nations. Also, to realize the negative impacts of environmental factors, such as the COVID-19 pandemic, on the effort to eradicate poverty, enhance education, and conflicts in different parts of the world; climate-related impacts, such as global greenhouse gas emissions and economic inflation, are severe challenges on the road of achieving sustainable development and driving green tech and clean tech innovations. The chapter aims to show the progress on the selected key United Nations Sustainable Development Goals from 2015 until the end of 2022.

This study analyses the history of sustainability accounting, from its emergence in the 1970s to the modern-day adoption of a global set of industry-specific sustainability accounting standards.

Besides, the study navigates sustainability accounting’s noticeable impact on businesses’ seeking of investment, hiring practices, and sales strategies. Generally speaking, finding innovative ways of becoming more sustainable and communicating the improvements well tends to benefit organizations. Larger and more diverse investments can be sought if popular sustainability measures are enacted. Better employees can be attracted and retained by the company, leading to better performance and innovation in future. Customer satisfaction can be maximized, resulting in higher revenues and earnings.

In addition, the limitations of sustainability accounting when left in the hands of businesses are further explored with consideration for corporate profit goals and dynamic environmental and economic conditions (such as rising wealth inequality, diminishing union power, elevating global pollution levels, and the like), which are typically left unconsidered. To continue making progress with sustainability, we must push for things such as advancement of unions, better disclosure of information from multiple sources, and overall pressure on corporations to focus on corporate social responsibility over profit.

This chapter provides an analysis of the real business cycle (RBC) theory and its implications for employment in the context of technological advancements. It examines the criticisms of the RBC theory, particularly regarding the impact of technology on recessions, and presents the responses put forth by RBC proponents. Additionally, the chapter investigates the relationship between technology shocks and employment, considering different viewpoints and empirical evidence. The findings suggest that while technology can lead to job displacement in certain sectors, it also contributes to overall economic growth and employment opportunities. The chapter concludes by discussing the proposed solutions advocated by RBC theorists, emphasizing the importance of minimizing government regulations and promoting a deregulated economy to mitigate economic recessions.

The chapter considers how financial systems are converging with respect to financial service players, big data, and regulations. The role of influential players such as FinTech, Neo-Banks, Big Tech, and Big retailers is increasingly important. These new players are flexing muscle with the established financial institutions to win customers’ minds and market share. The days of holding and keeping consumer data in a silo are gone as technology has made data mining of this big data a veritable source of service and product innovation through optimization. On the regulation side, the regulatory environment is becoming more permissible allowing for increased collaboration and convergence between the market and the regulators to safeguard the soundness of the financial system. This convergence is, however, without its own challenges because attaining and sustaining coordinated uniform global financial regulation are ongoing efforts that require careful consideration. Meanwhile, achieving financial inclusion and sustainable financial environment are hinged on a uniform financial regulation standard.

The world faces unprecedented environmental and social challenges, and industries have major impacts on our planet. For a sustainable future, it is crucial to embrace sustainable innovation and advance toward Industry 5.0, a model that integrates environmentally responsible business practices into its core operations. Considering this, this study addresses sustainable innovation and Industry 5.0’s importance and potential benefits. Additionally, the study examines the difficulties associated with implementing sustainable innovation and provides examples of sustainable business practices from a variety of industries. The conclusion of the study focuses on environmentally conscious innovation and Industry 5.0, as well as the roles of stakeholders in sustainable industrial development.

In this chapter, we explore the regulatory environment engendered by recent developments in the tech space. Many people would consider such regulations a Luddite view, putting one’s head in the sand, trying to hold back innovation, and stifling progress. Many people also consider a Luddite to be reactionary, one who is anti-technology, but the real Luddites were highly skilled artisans in the late eighteenth and early nineteenth century who destroyed the newly invented Jacquard loom machines that put them out of work. In recent years robots have already displaced many workers in highly paid blue-collar jobs. What will happen to them and now to white-collar jobs in banking, accounting, and financial planning when the job can now be done by AI assistants? Is regulation the answer? Or is it a knee-jerk reaction to a wave change in technology that only delays the inevitable? The emerging areas of Artificial Intelligence, Machine Learning and Robotics technologies have ramifications and affect our entire society, including labor market disruptions and job replacement effects, the chapter fleshes out the potential threats these developments bring with policy and regulatory insights for a smooth techno-economic landing. The topics in this chapter navigate through the downsides of Artificial Intelligence by focusing on the implementation and operational concerns including ethics, the Black Box problem, dataset and algorithm bias, privacy, safety, security and re-enforcement of malicious user behaviors, job displacement, and economic impacts. Building on these, it further explores the implications of autonomous production models by taking the cases of Autonomous Weapon Systems and Self-Driving Cars.

The potential opportunities for financial services innovations are enormous. Like a double-edged sword, though society desires the convenience, ease, and speed of financial innovation, the threats are always there. This chapter explores socioeconomic and regulatory concerns in financial service innovations, including consumer privacy and protection, cybersecurity, financial stability and safety. Addressing both social and economic concerns require deliberate action including designing a security architecture that serves as a surveillance tool to monitor horizon issues either positive or negative that each innovation brings. Additionally, the chapter discusses effective management of regulation concerns by balancing the need for financial services innovation and the desire for the financial systems’ safety and stability. The chapter concludes by exploring possible collaboration mechanisms for regulators and financial service stakeholders for the common good.

This study presents a novel approach to Open Innovation (OI) as it applies to small-and-medium-scale companies (SMSCs) suffering from multilayer constraints to benefit from such a collective tech value creation model. Building on the decades-long practice of OI, the chapter looked into the model’s evolution, development, and application constraints for the SMSCs and presented a refined concept note that meets the dynamic business and tech environment. Based on this, an OI model that encompasses different stakeholders is designed. The proposed IO model that applies to the SMSCs is built on the Consortium model principles that enable ease of entry and exit for each of the stakeholders, keeping members’ best interest for the common good.