Franklin Templeton: 5 Tech-Driven Megatrends Transforming Modern Society

Preview

Successive waves of new technologies have emerged since the commercialization of computers began in the 1960s. These innovations have become a foundation of the modern economy. Miniaturization allowed computers to shrink from the size of a factory floor to a laptop and then to smart devices. Computing power has grown even as the costs of processing and memory have declined. Network technologies and public key cryptography have fostered the emergence of the internet, the World Wide Web and the cloud. Mobile technologies have provided us smartphones and other smart devices that offer “anytime, anywhere” connectivity to access, upload and download content. Database design has progressed to allow for more robust inquiries on ever growing amounts of data at ever increasing speeds. Artificial intelligence (AI) algorithms predict our behaviors and personalize our displays to foster engagement, and machines can now learn and improve upon their own behaviors and outcomes through deep learning.

Part I¹ of this series explored the origins and milestones for each of these technologies and how the adoption of these innovations required institutions—governments, the military, commercial enterprises, service sectors, educational facilities, community groups, and more—to reimagine their capabilities and iteratively upgrade the infrastructure upon which they ran their networks and enterprises. This paper—Part II of the series—looks at how these new abilities and technologies were deployed, how they impacted modern society and how those impacts built upon themselves, generating a set of five megatrends over time. 

1: Democratization of access to the commercial transaction rails
2: Growing reliance on intangible assets to drive business value
3: Expanding power of the crowd
4: Quantification of behaviors to shape commercial outcomes
5: Institutionalization of the individual participant

Each megatrend represents a foundational shift in the way that modern society now operates. This type of profound change does not happen all at once, but rather incrementally. Each successive cycle of tech-driven innovation altered behaviors by a degree or transformed, creating unique capabilities and driving a shift in expectations. It is only with the distance of time that the collective impact of these changes can be appreciated. Many of these trends have been building for 60 or more years. Where we are today already marks a significant shift away from how modern society operated when the megatrend first emerged. 

Taking stock of where we are today is critical because a fourth tech-driven innovation cycle is beginning. New technologies are slowly gaining momentum. Digital currencies and cryptocurrency-backed payment networks, layer 1 blockchain development platforms, programmable tokens with self-executing smart contracts, oracle networks, ZK (zero-knowledge) scaling solutions and even newer innovations are running 24/7/365 (24 hours a day, 7 days a week, 365 days a year) proofs-of-concept in an ecosystem already valued at more than US$1.0 trillion.²

The capabilities that these new technologies can deliver are becoming better understood, and the ways that individual users and institutions might utilize the new offerings can be anticipated. Each megatrend can be extrapolated to frame how the next set of changes may alter modern society and behaviors.  Indeed, based on the nature of both the emerging technologies and already-accomplished behavioral shifts, it is reasonable to expect that the unfolding fourth tech-driven innovation cycle may represent the realized fulfillment of each megatrend. 

Conclusion

While each megatrend has developed along a unique trajectory and worked slowly over time to alter behaviors and expectations, one common thread runs through them all: The role of the individual participant has been strengthened and modern society’s institutions and enterprises have been forced to rethink their value proposition and their engagement model to remain competitive and relevant. The gaps that used to favor institutions—including commercial enterprises—over individual participants are reducing, and the ability of many individual participants to use tech channels to band together and pursue long-term goals are allowing them to amplify their own voices and powers.

Understanding that these shifts in behaviors and expectations have been building for 60 years helps to underscore the likely inevitability of where the next tech-driven innovation cycle may take us. 

Web3 technologies are ideally suited to put a financial model into place that could provide power and voice for the economic interests of individual participants. This possibility likely puts more burden on businesses to reorient the delivery of their goods and services to better cater to individual consumers’ needs. Increasingly, the experience that a transaction offers and the influence and status payoffs it can provide may inform the value of a product or service. Engineering the optimal offering may require a new type of multi business cooperation made possible by the composable and interoperable nature of Web3 development and by the advancement of AI algorithms that are moving toward being able to build personal intelligence about a specific individual. 

As has been the case with other institutions, the wealth and investment management industries have been reshaped by the megatrends and reoriented over the years to offer more individual investors access to a more fair playing field. The range of monetizable assets and new passive income opportunities that could be directly accessed and controlled by individual investors in emerging Web3 models—together with options to utilize sophisticated, permissionless investment techniques to augment portfolio returns—are likely to further transform financial opportunities and blur the lines between investment management, wealth management and banking in the future. 

The brief introduction to new financial models provided at the end of this paper will be explored in more depth in the final part of this series, which will be released later in 2023. With that work, we will have completed our examination of how disruptive technologies have transformed modern societies and our industry and laid out a vision that can inform our partners and customers, as well as Franklin Templeton itself, on how to evolve our offerings for the future.

Endnotes

1. Source: “Evolution of commercial technologies and impact on business delivery”, Franklin Templeton, September 2022.
2. Source: CoinMarketCap.

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