Finance and the Internet of Things

Author: Geoff Walsh

Capitalising on the IoT

For those not in the know, the ‘Internet of Things’, or IoT, is the network of physical objects (or, um, things) embedded with sensors and software which are connected to the World Wide Web. A Thing can literally be anything, for example a house, car, washing machine, heart monitor or toy. The term IoT was coined back in 1999, but has only recently passed into common usage.

We all know about mobile phones, laptops and tablets, but what else can utilise an internet connection? The rule of thumb is that any word that can be preceded with ‘smart’ can be converted into an internet-ready Thing. Hence we now have smart phones, smart houses, smart thermostats, smart watches, smart toys, smart TVs, and even the enigmatic-sounding ‘smart robots’.  The obvious exception is the smart car, which is copyrighted by Mercedes, and so we have the rather less snappy ‘connected car’, which is now so smart it can drive itself.

The financial prospects of IoT

In 2015 the American research firm Gartner had this to say about the Internet of Things:

“Endpoints of the IoT will grow at a 31.7% CAGR from 2013 through 2020, reaching an installed base of 20.8 billion units. In 2020, 6.6 billion “things” will ship, with about two-thirds of them consumer applications; hardware spending on networked endpoints will reach US$3 trillion in 2020.”

Note that an ‘endpoint’ in this case means an internet-capable Thing. Research by the Deloitte Centre for Financial Services produced the following forecast graph for endpoint/device usage in October 2014:

From 2013 to 2015 the compound annual growth rate (CAGR) was an already respectable 23.5% year on year, but this is set to increase to a staggering 61% in 2017. So how can the financial services industry capitalise on the current trend? Smart phones have turned the way we do banking on its head, so what is next?

How secure is the Internet of Things?

From a security point of view, wearable technology could be used as a biometric authentication method, although we are not quite there yet. A security question of the future could be to do with physical location. “Where were you on 1st March at 3pm” could replace the traditional mother’s maiden name, although this does raise a host of new questions such as whether a bank has the right to this knowledge, whether anyone can remember where they were at a certain time, and various privacy issues.

Ownership of a device is now used by various mobile apps as an authentication method. For example if you log into Amazon on an iPad, you can use your fingerprint. The only thing this can be authenticated against is the device itself, and no biometric data is sent to Amazon. Following the same logic, anyone wearing the correct internet-enabled device should be able to access their money provided they can prove the device is theirs (i.e. with a fingerprint).

Financial services and smarthome technology

Smart homes have lights which switch off and on depending on human presence, and burglar alarms can call the police without the inefficiency of having to alert the homeowner first. Smart meters can already alert consumers about their water/gas/electricity usage, and all of these utilities must be paid for, so could this also be a possible avenue for financial services?

The next step could be a consolidated app for viewing and paying bills (paperless of course), with a view to eventually bypassing all human activity and having the smart meters take money directly from the relevant bank accounts. Along with the added convenience, this has the added advantage of taking away a layer of administration and reducing costs. If this is the pattern of things to come then the IoT is set to make us all richer. 

Want to learn more about the Internet of things and how the digital age is changing financial services? Read our White paper How far can digital go? [pdf]

04 Mar 2016

Author: Geoff Walsh

Capitalising on the IoT

For those not in the know, the ‘Internet of Things’, or IoT, is the network of physical objects (or, um, things) embedded with sensors and software which are connected to the World Wide Web. A Thing can literally be anything, for example a house, car, washing machine, heart monitor or toy. The term IoT was coined back in 1999, but has only recently passed into common usage.

We all know about mobile phones, laptops and tablets, but what else can utilise an internet connection? The rule of thumb is that any word that can be preceded with ‘smart’ can be converted into an internet-ready Thing. Hence we now have smart phones, smart houses, smart thermostats, smart watches, smart toys, smart TVs, and even the enigmatic-sounding ‘smart robots’.  The obvious exception is the smart car, which is copyrighted by Mercedes, and so we have the rather less snappy ‘connected car’, which is now so smart it can drive itself.

The financial prospects of IoT

In 2015 the American research firm Gartner had this to say about the Internet of Things:

“Endpoints of the IoT will grow at a 31.7% CAGR from 2013 through 2020, reaching an installed base of 20.8 billion units. In 2020, 6.6 billion “things” will ship, with about two-thirds of them consumer applications; hardware spending on networked endpoints will reach US$3 trillion in 2020.”

Note that an ‘endpoint’ in this case means an internet-capable Thing. Research by the Deloitte Centre for Financial Services produced the following forecast graph for endpoint/device usage in October 2014:

From 2013 to 2015 the compound annual growth rate (CAGR) was an already respectable 23.5% year on year, but this is set to increase to a staggering 61% in 2017. So how can the financial services industry capitalise on the current trend? Smart phones have turned the way we do banking on its head, so what is next?

How secure is the Internet of Things?

From a security point of view, wearable technology could be used as a biometric authentication method, although we are not quite there yet. A security question of the future could be to do with physical location. “Where were you on 1st March at 3pm” could replace the traditional mother’s maiden name, although this does raise a host of new questions such as whether a bank has the right to this knowledge, whether anyone can remember where they were at a certain time, and various privacy issues.

Ownership of a device is now used by various mobile apps as an authentication method. For example if you log into Amazon on an iPad, you can use your fingerprint. The only thing this can be authenticated against is the device itself, and no biometric data is sent to Amazon. Following the same logic, anyone wearing the correct internet-enabled device should be able to access their money provided they can prove the device is theirs (i.e. with a fingerprint).

Financial services and smarthome technology

Smart homes have lights which switch off and on depending on human presence, and burglar alarms can call the police without the inefficiency of having to alert the homeowner first. Smart meters can already alert consumers about their water/gas/electricity usage, and all of these utilities must be paid for, so could this also be a possible avenue for financial services?

The next step could be a consolidated app for viewing and paying bills (paperless of course), with a view to eventually bypassing all human activity and having the smart meters take money directly from the relevant bank accounts. Along with the added convenience, this has the added advantage of taking away a layer of administration and reducing costs. If this is the pattern of things to come then the IoT is set to make us all richer. 

Want to learn more about the Internet of things and how the digital age is changing financial services? Read our White paper How far can digital go? [pdf]