Ўзбекистон республикaси иқтисодий тaрaқҚиёт

THE PERSPECTIVES OF DIGITAL FINANCE IN THE PERIOD OF 
INDUSTRY 4.0 
 
Makhmudaliev F.F. 
–
 Senior lecturer, GSBE 
 
Four industrial revolutions have taken place up to now in global history, and each 
one of those have led to a breakthrough that was not unprecedented. The first revolution 
took place in eighteenth century, with the invention of water and steam engine the 
production industry saw a great boom. The second one was caused with the 
introduction of railways, telegraph and electricity. The production and the global 
knowledge increased with extreme speed. The third revolution was triggered with 
invention and employment of computers in the manufacturing. This was further 
enriched with the usage of internet, automation, robotics and IT systems. The last 
revolution has started just recently. It was named as Industry 4.0 and it includes 
development not only in the production fields, but in all the areas of modern life.
1
Industry 4.0 has brought development in the usage of internet and technology in 
completely new level. It has found its bases in the Internet of Things (IoT), Big Data 
and its analytics, Artificial Intelligence (AI), autonomous systems, machine learning, 
smart systems, smart sensors, cloud computing and many others. All those novelties 
are influencing on the lives of people and business environment. All of them are 
interconnected. Thanks to IoT all the gadgets and technologies are connected to the 
internet, they are constantly collecting user data and saving it in the clouds or other 
data centers. That data it creating a mixture of various pieces of information which is 
addressed as a Big Data, and deriving a useful information for the businesses and future 
developments is constituting the Big Data Analysis. This process is controlled by the 
AI, thanks to which humans are not involved in the process of analytics, and production 
control, but they will be asked for assistance if the anomalies will be identified, which 
is making the efficiency very high. The AI can make the trivial decisions without 
human intervention and AI is constantly developing and getting wiser thanks to 
machine learning and smart systems. 
One of the recent developments influenced on how the financing of the businesses 
are conducted. Now the financial technologies are involved in the process of attracting 
capital and servicing the financial needs of people. This has even resulted in a new 
direction that is called as FinTech from the words Financial Technology. It can be 
easily guessed that it bases on employing certain kind of technology in financing 
process. It is truly so, although the technology employed does not only consist of huge 
machines like ATM (automotive-telling machine), but laptops, mobile phones, smart 
watches and other gadgets make up major part of the overall mass. Over the period of 
5 years the adoption of FinTech services increased by 4 times, from 16% in 2015 to 
64% in 2019
2
. This increase can be explained by the ease of access to the technology 
1
Spectral Engines, (2018) Industry 4.0 and how smart sensors make the difference, available at: 
https://www.spectralengines.com/articles/industry-4-0-and-how-smart-sensors-make-the-difference 
2
Ernst and Young (2019) How FinTechs are a world of choice for small and medium-sized enterprises, Available at: 
https://www.ey.com/en_gl/banking-capital-markets/how-fintechs-are-a-world-of-choice-for-small-and-medium-sized-
enterprises 

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which has provided new ways of making payments, money managing and acquiring 
financing to the personal or business use. 
Fintech has a several areas of operation. There are P2P 
–
Peer to peer financing, 
crowdfunding, online banking, blockchain, cryptocurrencies and others. each one of 
them can be divided into further smaller constituents that are becoming popular in the 
financing of companies in particular small and medium enterprises (SMEs), as they 
require less time and documentation compared to traditional methods of financing. 
Keary argues that 56% of the SMEs are using fintech services in their payments, while 
46% of them obtain financing through fintech. Moreover, the companies who are 
usually prone not to disclose private information with outsiders are willing to share 
their data with fintech companies
1
.
P2P financing is the financing provided by other users of fintech, so they can 
provide loans to one another on a small or no cost. Special platforms have been 
developed that can make this take a form of investment. When one company is in need 
of some hefty some of money instead of entering a bank loan acquiring process, that 
can be quite time and cost consuming; or issuing debt securities by employing a 
financial intermediary, who will take significant part of the collected capital as the 
commission, it can be more beneficial to acquire the capital using P2P financing. As it 
is happening directly between the peers 
–
the person or a company that needs the capital 
and a person/s or company/ies that have extra capital the process can be much faster. 
The cost of the capital can be negotiated and it is not the same big amount usually, as 
the interest is much lower compared to that of banks. Although the P2P platform 
charges some commission for the services, yet it is minimal compared to bank or 
financial intermediary charges. Currently some money management applications such 
as PayMe, Click Evolution, Paynet, Upay and Oson are providing P2P like services, 
people can transfer their money online to one another at a cost of 0.05% or 1% from 
the amount of transfer. The commercial banks have developed their own applications 
that are providing similar services along with bank specific ones, some of which 
include transfers between the people, if both of them are clients of the same bank then 
the transfer can be provided free of charge at some banks or the cost is cheaper 
compared to the transfers to non-clients. Only shortcoming for this method of financing 
is connected to the limit in the amount of the transfer which can constitute 5,000,000 
to 10,000,000 soums in some cases. Also, the transfer is usually between the debit card 
holders of the bank clients. If you do not have a card then the transferring can be 
impossible unless you ask someone to the it for you in return for a cash payment.
Another form of sourcing is called crowdfunding, which is becoming more and 
more popular. It also requires usage of a certain platform where people or companies 
with financial need can showcase their project to potential investors. If the project is 
attractive for them then the needed amount can be collected fairly quick and with 
smaller cost. There are several types of crowdfunding 
–
1. donations-based, 2. reward-
based, 3. pre-purchase, 4. lending-based, and 5. equity-based crowdfunding.
2 
While the 
1
Keary, T., (2020) How Fintech Is Changing Banking for SMEs (+Trends for 2020). Available at: 
https://learn.g2.com/fintech-banking-for-smes 
2
Cumming, D. & Groh, A. P., 2018. Entrepreneurial finance: Unifying themes and future directions. 
Journal of Corporate 
Finance, 
Issue 50, pp. 538-555. 

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first one is totally charity based, the other types can provide some benefit for the 
investors in forms of some limited items, extra shows or inclusion of them in the 
process of the production later on. However, the fourth and fifth types are more directed 
at providing financial return to the investors. As a result, this kind of campaigns are 
attracting the attention of investors who were willing to buy the securities of publicly 
listed companies (PLC). Of course, the risk level of those projects can be higher than 
the PLCs’, yet the investors trust the judgement of the platform in allowing the project 
to be enlisted there. 
Recent developments have paved a way to cryptocurrencies to be used in 
financing of the businesses. As they are now not only investing in the digital securities 
to hold their extra capital, but also financing their needs by issuing their own 
cryptocurrencies which is addressed as ICO 
–
Initial Coin Offering. Although, most of 
the cryptocurrencies market is based on Bitcoin and Ethereum, two of the most popular 
currencies, nowadays it has become popular to issue its own currency among some 
popular companies. For example, Facebook is planning to issue its own coin 
–
Facebook Libra in the January of 2021. With more companies joining this initiative, 
the financing using the cryptocurrencies and blockchain technology can become of the 
important source of financing in Industry 4.0 period. 
In conclusion, the new era of financing 
–
digital financing using fintech is 
becoming more and more popular. Some forms of it are already in use in Uzbekistan, 
although others need further development of the infrastructure and popularization.