IOT: mobile financial services based on the Internet of Things This IoT industry has a solution to a problem that is not fully understood to date. IoT is playing a key role in shaping FinTech and MFS, along with other technologies like artificial intelligence, machine learning, big data, data science, cloud, and many more. How does this solution present help and support for “mobile financial services”? MFS is a kind of bundle for financial services solutions. This bundle includes mobile payments, money, banking, commerce, and many more. We will discuss the growth of the Internet of Things (IoT) and the ways it poses risks and opportunities to the financial services industry.
This blog post is an attempt to explore the different scenarios for the Internet of Things (IoT) under the MFS segment. The idea of this blog post is to understand how IoT-based MFS will impact and change normal people’s lives.
What Change IOT-MFS will Bring
As more and more consumer devices connect to networks and other people, new opportunities and challenges will arise. Can we call this a mobile revolution? Understanding the contribution of emerging technologies tightly packed with artificial intelligence, machine learning, data analytics, etc. is not easy for the normal consumer. These technologies are becoming critical factors in the formation of our day-to-day activities, work, and lives. At least my day, which is usually long, began to contribute almost 80% of my time towards the Internet or on the Internet and mobile.
The arrival of a new era, IoT, in the coming period will spread so much that it will enter into every area of our lives; we will become units in the internet world. Which eventually will become life as usual when we enter the world of quantum computers, 5G and beyond networks, artificial intelligence, etc.
We will no longer sit on our computers or browse on our mobile phones. The Internet will become an essential component of our lives like air, water, and food. This would get into our lives so much that separation would not be possible. As of now, it’s difficult to say whether that will be a good or bad thing.
What is the Internet of Things?\
The Internet of Things, or IoT, as it is known, is a network or mesh of physical objects embedded with software, sensors, and connectivity. Anything that can go online is part of the IoT. The “things” within this network can sense, process, and share data with each other. Current examples of this technology include shoes with GPS trackers, smartwatches, wearable glasses, etc.
The estimated size of the IoT market varies significantly, with a wide gap in figures due to collective research, market inputs, and studies. An example of this would be how Gartner predicts there will be approximately 26 billion devices with an economic value of $1.09 trillion worldwide by the year 2020. There are those who hold a positive perspective. According to the IDC, Internet-connected objects are projected to generate almost $9 trillion in yearly revenue by 2020.
To validate this, the idea of IoT has been around for some time now. For a considerable period of time, we have possessed machines such as retail store point-of-sale (POS) systems. The future holds a shift in the manner in which people and machines will communicate and collaborate as the domain of technology evolves. The term Internet of Things encompasses all objects and entities that either have connectivity capabilities or can be adapted to go online, facilitating communication and information exchange with other devices.
These devices on this list include home appliances, fitness and health monitor devices, all internet-enabled electronic gadgets, home security systems, mobile phones, tablets, cars, water taps, plugs, etc. Even banking and financial portfolio details are held on holding machines (mobile phones, etc.). We can control our home or office lights, fans, audio systems, temperature control equipment, smart cooking pots, toothbrushes, GPS-tracked shoes, and wearable technologies like watches and clothing, etc. But what else are we generating here on these devices? It’s the data that kills our privacy.
Internet of Things Framework for MFS
As of today, there is no framework or control over the fact that we are putting everything online. After the device goes online:
- What data it generates?
- Who owns that data?
- How that data can be used?
Most people as of today are still confused and not sure, and they wonder whether all this is just hype or an inevitable evolution. How people, devices, a financial system with electronic form-value data, financial portfolios, and networks will interact in the near future What wonders or blunders could happen to anyone’s life and personal data? Only a few aliens (IT or financial technologists) know where we are going and how we are going to achieve it.
Imagine a scenario where a personal connected-health planner device is connected to the banking system. On the sign of any health issue like high blood sugar, a heart attack, a stroke, etc. It makes the decision to add more liquidity to the mobile payment instrument in order to pay off expenses later on. In the second scenario, the personal health planner will be able to make a decision to add more liquidity by asking the investment bank portfolio manager to sell off stock or long-term cash without the owner’s intervention for adjusting medical bills. I guess it’s too much to imagine and also too much risk for the money. But this all is coming to our financial services system, which will have an IoT connection to support us in our time of need.
Financial services institutions that have already completed or are nearing completion of their digital transformation goals will benefit the most from this beautiful relationship between IoT and MFS. FinTechs are far ahead of banks and the banking system, so without a doubt, these new IoT technologies will be supported quickly. Increasing investments in wearables, machine learning, big data analytics, and sensor technologies indicate there’s a major shift towards this betterment, i.e., development.
Digital Transformation i.e Machines based Financial Services
The year 2015 can be called the year of the IoT movement. The IoT industry is coming up and taking shape as a separate industry. This is becoming a new revenue stream for many IT companies, professionals, and experts. Many consumers and business users are now upgrading and updating their older technology and CVs. Experts in the domain of solution design and architecture are now shaping the technology and making it cheap enough to make it available to anyone and everyone.
- There will be nearly 30 billion devices wirelessly connected to the internet by 2020 (Gartner research).
- According to PwC’s 6th Annual Digital IQ Survey, financial services are one of the top ten industries investing in sensors for devices like beacons in stores for coupons, etc.
If we go with the projections above, then IOT will be a $3 trillion industry with the assumption of an average cost of $100 per device. This is only a device manufacturing market projection. We can now do another projection for the software, services, and support markets.
Insurance companies are becoming InsureTech by investing heavily in technologies like sensors, i.e., telematics, which allows devices installed in cars (car tracking devices) to transmit location data to owners and insurers. Insurance companies can decide the premium or change the premium for each trip a vehicle makes. Can track a stolen vehicle and help in recovery; automatic crash notification; and vehicle data recording force full actions by the controller over telematics infra. Telematics also extends to tracking ships, cars, and trucks for fleet management and route optimization.
The bundle of IoT, AI, high-speed mobile data, and mobile financial services ensures that users can get cashless fuel at a fuel station, and the tracking company can monitor fuel consumption as well as any fuel leakage or theft. The driver is able to pay the parking fee, renew the car registration, pay the insurance premium, etc. On the other hand, the owner is able to authorize or control every transaction from a smartphone or any normal phone by SMS, USSD, etc.
Apple Pay – A re-invention of the Wheel
Apple introduced Apple Pay in 2014, which was not new or innovative; it was all about re-inventing the wheel with different measures. The mobile payments industry was shocked and happy at the same time. Apple Pay users started sending secure mobile payments without compromising their personal data (at least as expected and claimed). More seamless transactions made a big difference in creating a better experience for their consumers. Apple iBeacon technology allowed retail customers to access location-specific coupons, product information, or recommendations while browsing in stores.
Imagine a scenario where you walk into a store to buy some clothes with your friends, but the store manager himself comes to greet you. How joyful is that? After greetings and welcoming, the next thing is for him to take you to the section of your specific choice, taste, and pocket size. You complete your shopping and pay with Apple and save time, money, and energy. You walk out as a happy consumer.
Remember that small beacon thing? That will notify the store manager about the consumer’s entry and open up a limited CV on his handheld device. So it’s not magic, but logic. This digital ecosystem of physical objects will change the way financial institutions, systems, banks, or even mobile wallets interact with each other and us at a basic level. Bringing “things” (IoT) online will eventually make payment transactions implicit rather than explicit, as explained in the previous example.
IOT-as-a-Service – Technology and Operations Management
IoT as a service In my view, IoT as a service is nothing but either exchanging the user’s data with businesses or giving them access to the data lake where all data is being dumped. The seller will have easier access to the user’s financial and personal data for better interactions with buyers that weren’t otherwise available (off course only of your choice and after permission or authorization) because of the lack of infrastructure it needed. The annexation of so-called big data will revolutionize the way customers interact with different platforms and how information is presented.
Example 1: You are trying to buy stuff online with a value of $100, but at the same time, your balance is only $80. What would happen in a normal scenario is simple, i.e., the transaction will fail. But now imagine this scenario with an IoT data collection lake along with financial data, machine learning algorithms, superb connectivity, etc. The machines will rethink before rejecting the transaction. The machine will take a second look before making any decision on whether you should be allowed to continue the purchase based upon historical records, i.e., monthly expenditure, salary data, spending habits, etc.
In the example above, the machine might create a $20 credit for the transaction to go through and notify you about the calculation and recovery options. If this happens, the user experience will go beyond the wow factor. On the backend, the machine will recover $8 per month for the next 3 months, and I am pretty sure consumers will never mind or even notice.
Example 2: A consumer enters a shopping mall and, based on their cell phone’s location, the mobile network service provider sends a personalized advertisement via SMS. In the SMS, a recommendation comes out to buy a specific choice of cloth from the shop on the 3rd floor in the same building. This advertisement has almost 300% more chances to get conversions compared to the SMS, where the consumer is at home with no money and far away from the location. So tracking user data with IoT will change the user’s experience by changing business models a bit.
Summing up MFS with Data, IoT, & AI Equals to Fantastic MFS
With so much data available, the potential benefits are exciting and plentiful. The seamless transactions and more personalized customer experience are just a few examples of the benefits that MFS equipped with data, AI, and IoT can bring. As long as there is transparency and honesty, then data can enhance customer satisfaction. trust, and a complete change in the marketer’s job.
Machine learning techniques can learn and detect the behavior or transaction behavior of the consumer to provide the best and most secure experience. Any anomaly detected at an ATM (with a camera) during consumer interaction or online usage of credit or debit cards can be raised as an alarm for the next action.
Another big potential may be the connection between financial instruments, i.e., wallets, credit cards, investment accounts, etc., and some of the common household or health monitor devices, which could automatically rebalance. It can reduce or increase the exposure or transfer holdings to liquid securities in anticipation of future cash needs.
This may sound a bit far-fetched now, but the days are not far away when this will become business as usual for everyone. It is predicted that eCommerce sales in 2015 will reach $276 billion. That is a lot of sales, and it does not seem to be slowing down. And 90% of this payment will come through mobile payment methods using a combination of IoT and mobile payments.
Books + Other readings Referred
- Research through Open Internet – NewsPortals, Economic development report papers and conferences.
- Personal experience of @AILabPage members.
Conclusion: Innovations also come with new risks. The deluge of new data is likely to complicate data management for financial services firms. So these emerging technologies are boosting MFS and the entire financial services business. For sure, the industry is using AI and machine learning to increase returns, lower costs, and improve customer experience. The companies that are still not open to welcoming and adopting changes brought about by new electricity called artificial intelligence will slowly die because there is no power. The questions that remain are: how far will the Internet of Things go in MFS and banking? How can other sectors, such as banking and investment banking, leverage IoT technology? Of course, cybersecurity will become the biggest and greatest challenge of all time.
#payments , #mobilepayments , #mobilemoney , #IoT , #internetofthings
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