Digitalisation is defined as the process of using digitisation (converting physical formats to corresponding digital ones) in business operations. Digitalisation began in the 1950s with the first business usage of a computer by General Electric in Louisville, Kentucky. It has since been a large part of the creative destruction process that has shaped the economy into what it is today. A few key trends are explored below. 
Shift in industries
Digitalisation has led to the automation of a lot of manufacturing and other manual processes, allowing for efficiency improvements throughout certain industries. These include manufacturing and agriculture. However, these now make up a smaller percentage of GDP, as other industries have progressed further and are seen to create more value. (Arguably, this is also due to factors such as deregulation, increased foreign competition and outsourcing).
For example, the US has seen the Finance, Insurance and Real Estate industries double their percentage of GDP from 10.5% to 21.4% between 1947 and 2009. Professional and business services have seen a similar increase from 3.3% to 12.1%. Information and education services have also increased in this same time period as a percentage of GDP. This is partly due to the higher rate of exponential growth they have benefitted from due to technological advancements; changes in value added by industry is detailed in the chart below. 
 It has also led to the rise of industries and businesses which did not previously exist. The internet for example, was first developed in the late 1960s, however, it was only decades later that it became accessible for the general public and eventually became a staple in the home (albeit this may still be yet to be the case in certain developing nations and rural areas). This has paved the way for inventions such as the iPhone and iPad, as well as home integration, such as Alexa. All of these have contributed to these companies becoming the largest ones in existence, with Apple now having a market capitalisation of $2trn. This has also led to the existence of many e-commerce businesses (which also benefit from the increased globalisation caused by technology, as reaching about half the world’s population  across the world is now instant and relatively cheap, due to the widespread adoption of the internet) and changed the way retail works, in terms of bricks and mortar stores no longer being necessary to make a sale and in fact, their online presence may contribute to the sales they do make in person. E-commerce businesses have transformed the shopping experience and proven very competitive by offering convenience and lower prices, in correlation to their lower cost-base.
The pandemic has accelerated some of these effects
This has come to light during the pandemic, where more people have been forced to adapt to this shift to e-commerce in a short span of time. This is because lockdowns prevented consumers from physically visiting stores amid fears of catching the virus. They were therefore, incentivised to stay in and even refrain from grocery shopping. Online shopping remained an option for purchasing necessities and luxuries. While this prompted many to get used to the process of online shopping and introduced them to the convenience of it, potentially encouraging them to continue making purchases digitally beyond the pandemic, it may not have been as much of a boost to profits this year due to the pandemic stifling consumers’ income and creating uncertainty.
The various degrees of lockdown have also had a similar effect on payments, where cash was suddenly the non-preferred method of payment in the interest of hygiene. This has led to contactless payments becoming more popular, as well as digital payments in the form of paying from smartphones and apps. This has led to further technological developments by firms, in order to increase convenience for customers, which they previously may not have thought necessary or worth the investment. PayPal for example, has taken this opportunity to develop a QR code for people to make payments in stores.
Digitalisation has also led to creative destruction
On the other hand, many businesses have suffered at the expense of technological advancement and the growing revenues of those businesses benefitting from it. Home telephones, radios and fax machines have become a thing of the past, with the majority of people using them being in the older generation or being young people owning items considered ‘vintage’. Another example here is the death of video stores, both for rental and purchase, as smart TVs and streaming services have grown in popularity, with the latter likely to cannibalise the former as well as time goes on. This is also the case in other industries such as transport, as self-driving cars are further developed and become more affordable and popular; as well as new technologies which have enabled the Virgin Hyperloop to develop being likely to be implemented widely in the future. In the UK, high streets have struggled to compete with online e-commerce counterparts, since before the pandemic.
Longer term impacts caused by digitalisation
Another thing to consider is how technological growth is distributed amongst society. While many workers have been made redundant as a result of increased efficiency due to automation, as well as due to machines replacing humans in certain jobs, this has disproportionately affected workers in manufacturing and other labour intensive industries (coinciding somewhat with the proportion of GDP they make up from the above graph). It has also impacted lower-skilled jobs, thereby prompting the upskilling of the labour force in developed countries (as either machinery replaced workers, or work was outsourced to other countries, as technological advancements makes it more convenient and accessible). Unfortunately, government upskilling initiatives may not always be accurately and successfully implemented, resulting in certain workers (and their surrounding communities where unemployment is structural) being left behind as a result of this. Conversely, this has led to perhaps more opportunities in developing countries, where labour is cheaper. Furthermore, certain developing countries have really been able to take part in these technological advancements and profit from it, such as with Huawei somewhat leading the way with 5G technology; this has potentially helped bridge the gap between living standards in these economies, by allowing them to access and share in the economic growth caused by digitalisation.
Another shift in the economy, aided by digitalisation, is the percentage increase of the labour force in the gig economy, where the work is based on short-term or temporary contracts rather than permanent ones. While this has brought increased flexibility into labour markets, it has also left many workers open to exploitation and without a steady source of income.
Effect on the Finance industry
Digitalisation affects the Finance industry in terms of FinTech and in terms of it replacing workers in certain functions. Already one third of jobs  in banks are tech related, increasing by 46% in the past three years in the UK and up from just 23% in 2017. This trend is expected to continue as AI (Artificial Intelligence) is used in areas such as trading and in retail banking, to provide more efficient customer service and sort through a wider range of potential options for customers in order to ensure they really do get the most suitable solutions. The US is expected to see over 10% of bank roles cut in the next decade, as automation takes over existing functions.  In the investment management industry, in particular, Robo advisers are the digital replacement to traditional asset and wealth managers. However, many firms have been able to use it to aid and assist existing and new capabilities, rather than having it simply replace old ones. Other firms have decided to partner with FinTech firms, in order to benefit from the increased efficiency and capabilities provided by them. The main impact here though, is on the types of things the industry focuses on investing in.
From some of the previously mentioned points, it is clear how digitalisation has given rise to certain industries, directing economic growth from manufacturing and agriculture to Big Tech, cloud computing, and data centres used in technology and professional service industries. It has also accelerated economic growth in developing countries, to provide high growth opportunities for investors. It also perhaps affects the clientele of the industry, where younger generations tend to be attracted to automated processes and assistance. It has also made the industry a lot more accessible to potential clients, by providing them with a larger range of services, many of which reach a larger socio-economic group, with lower-cost services and lower minimum investment requirements available to meet their needs.
Issues also may arise due to the immense amount of speculation that now easily enters markets, with all sorts of investors, from an everyday retail investor to a high net worth individual to large multinationals investing money in the same interrelated markets. With the addition of AI and electronic trading, this also does make active investing perhaps less sensible, as security prices become less closely linked to underlying fundamentals. However, with the plethora of information available, arguably, it makes for a more transparent market and therefore, allows for more informed investment decisions and more efficient markets. Overall, though, it simply changes the conditions of the market and the nuances as to how investing takes place rather than altering it completely, as well as shuffling about who the winners and losers are.
I am a second year student studying BSc Mathematics with Economics at UCL.