Are we moving into a more efficient cashless, digital payments & seamless taxation system?

We truly live in interesting times. The pace of technological changes has become so mind numbing that we have come to recognise disruptive changes as routine. To make a count on fingers, how many of the following products you have used in recent past - Things like typewriter, letter, telegram, VCR-VCP, music tape-recorder, roll camera, Walkman, to name a few? All of these products have been replaced by a technologically superior products, and in some cases, the entire industry has vanished.

The point is simple. The rate of change in technology is creating many new industries, and is retiring many others. I recently read an interview that featured ‘futurist’ Robert Tercek. And he made many straight-forward points, some of which I have come to agree with.

One of the points that emerged is that devices are increasingly getting commoditised. And it is the ‘software’ which is making the product ‘valuable’. As per this futurist, this commoditisation bug may hit the transportation industry, the pharma industry, and also may come in the financial industry as well.

The number of connected devices is multiplying fast and increasing far more than the normal economy as devices get cheaper and cheaper and networks get better. The onset of block-chain supported crypto-currencies like ‘bit-coin’ has posited many possibilities already. The growing of this technology in Northern Europe and the US may make many processes and services redundant over time.

Similarly, works in artificial intelligence (not artificial sentience) and robotics may make manufacturing highly precise, individualised to consumer needs, and much more cost efficient. Then, there is the impending likelihood of self-driven cars, hyperloop, hitting the market within 5-10 years. This may again change the way we commute. The cost gap between solar energy and hydrocarbons is narrowing too. This will have a momentum of its own.

Also, reports that not just nuclear, but even the nuclear waste can be utilised to produce power - would also make this energy source increasingly acceptable and increasingly threaten to make fossil fuels less relevant.

Talking about the financial sector, alternative financial services such as peer-to-peer lending could redefine business in future. Simply put, it’s the practice of lending money to individuals or businesses through online services that match lenders directly with borrowers. Although it has a long way to go, low overhead costs and a more customised lending and borrowing experience could make these popular in the future.

The industry may consequently have to realign itself more actively in future, than it has done in the past.

Technological changes may not surprise us overnight. Rather it would be an incremental test of companies and its leadership to recognise the evolving trends; and to align themselves more productively. Companies unable to do so may only become less effective and may lose their relevance gradually.

From the point of view of an investment professional, the challenge is to distinguish a strong trend from hype, because there is growth in the former and expensive learning in the latter.

But recognising a trend is not the only thing. Facebook was not the first social networking site. Google was not the first search engine. Apple was not the first phone company. YouTube was not the first video hosting site. Point is, while identifying the trend is necessary, the more important thing would be to identify the potential winner of that trend, and not necessarily the first mover.

Back home, remonetisation and GST would be two most crucial changes that will certainly make some impact on the way businesses are done. We may be moving to more efficient cash-less, digital payments and seamless taxation ensuring higher efficiency and disclosure. The entrepreneurship of Indians would ensure that cost of these disruptions are minimal and adopt technology to emerge stronger.

The only conclusion I could draw from such technological disruptions is that, “change is the only constant.”

(Nilesh Shah is the Managing Director of Kotak Mahindra Asset Management. Views expressed in this writeup are his own and do not represent those of ETMarkets.com)