Internet of Things – Mobile Financial Services


This post was originally published on 26-April-2015 on Linkedin (https://www.linkedin.com/pulse/internet-things-mobile-financial-services-vinod-sharma)

IOT-3

This article explores the different scenarios  for Internet of Thing – IoT ; which the industry has a solution at hand, how to present/position the solution – Mobile Payments gets married to IoT and to discusses the growth of the Internet of Things (IoT) and the ways it could impact financial services. As more consumer devices connect to networks and people, new opportunities and challenges arise. can we call this as Revolution.

New technologies, the way I am trying to understand and their contribution to the formation of our day-to-day activities, work and life. At-least my day that is usually long began to contribute almost 90 percent of time towards Internet or on Internet & Mobile. The arrival of 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. We will no longer sit on our computer or browse on mobile phone. Internet will become essential component of our life like Air, Water and Food and would get into our life so much that we can’t be separated from this. Difficult to say will it be good or bad thing.

What is the Internet of Things?

IoT (Internet of Things) is a network of physical objects embedded with software, sensors and connectivity. The “things” within this network, can sense, process and share data with each other. Current examples of this technology include shoes with gps tracker, Apple technology with watch and Google technology with wearable glasses. From different research and market inputs and studies the estimated size of the IoT (Internet of the Thing) market vary with huge gap, For instance, Gartner expects it to include nearly 26 billion devices, with a “global economic value-add” of $1.9 trillion by 2020. Others optimistic are; The International Data Corporation (IDC), for one, estimates that the universe of things connected to the Internet will generate nearly $9 trillion in annual sales by 2020.

IoT-2Just to reconfirm , the IoT is not really a new concept. We had and have machines like point of sales (POS) machines at retails or store since long etc. The technology transformation lies ahead in ways humans and machines interact with each other. The Internet of Things includes anything and everything that is connected or can be change to connect to the Internet and able to communicate and share information with other “smart” devices. These include home appliances, fitness and health monitors & devices, all electronic gadgets, home security systems, Mobile Phones, Tablets, PC/laptops, Cars, water tabs, plugs in nut shell any thing and everything including your banking and financial portfolio details holding machines, lights, fans, audio systems, temperature control equipment, via any means in range from smart cooking pots and toothbrushes to GPS tracked shoes to wearable technologies like watches and clothing etc.

People from other background might wonder whether this is just a hype or an inevitable evolution in how people, devices, objects, financial system with dollar value data, financial portfolios and networks will interact in the near future and what wonders or blunders will happen or could happen to their day to day life and personal data. We the aliens (IT or Financial Technologists) know where we are moving and how we are going to achieve it. Imagine my personal connected health planner/devices is connected to my investment banking or personal banking system makes decision to add more liquidity to my Mobile Payment instrument & wallet on the basis of sign of a serious health hazard, like a heart attack or stork. My personal health planner makes a decision to add more liquidity and ask my investment bank portfolio to sell off my stock or long term cash stones without my intervention can also add too much risk.

 ideas-1Those in financial services who have already implemented digital practices, such as Bank of America, will be in the best position to benefit from these new IoT technologies quickly. Increasing investments in wearable and sensor technologies indicate there’s a major shift developing.

The IoT movement is now coming up and taken a shape as separate industry and revenue stream got attention from professionals and experts, and older technology is being updated. Experts in domain designing solution and architecture to give technology smaller (Size) and cheap enough to put in almost anything. According to Gartner research – There will be nearly 30 billion devices wirelessly connected to the internet by 2020. Which it self declaring dollar value of 3 trillion with assumption of average cost with 100 dollars each device and this is only device marker services and support is on top of this. According to PwC’s 6th Annual digital IQ survey, a financial service is one of the top ten industries investing in sensors for devices like beacons in store for coupon etc.

As on date the most common use for sensors is telematics, which allows devices installed in cars (car tracking devices) to transmit location data to owners and insurers. This also includes ability to track-stolen vehicle and help in recovery, automatic crash notification, and vehicle data recording force full actions by controller over telematics infra. Telematics also extends to tracking ships, car and trucks for fleet management and route optimisation. IoT merged with mobile financial services can ensure you can get fuel by giving your telematics number at fuel station & tracking company can monitor fuel consumption as well as any fuel leakage or stealing, able to pay your parking tickets, renew your car registration and buy discounted oil changes and you will authorise every from your smart phone or any normal phone by SMS or USSD.

IoTApple introduced, Apple pay in 2014, which is again not new, or any innovative thing in mobile payments industry technology, but gave renewal chance to IoT (Internet of Things) within the mobile financial services industry. Apple Pay users send secure mobile payments without compromising subscriber personal data (at-least expected and claimed). More seamless transactions make a big difference in creating a better customer experience. Apple iBeacon technology allows retail customers to access location-specific coupons, product info or recommendations while browsing in stores. Imagine you walk in to store to buy some cloths with your friends but store manager him self comes to great you and take you to the section of your choice & taste as well as pocket size, now remember that small beacon thing; that will notify store manager about your entry give your CV to him to treat you like special guest and bill again is paid upon your confirmation via phone. This digital ecosystem of physical objects will change the way financial institutions, systems, banks or even your mobile wallets interact you’re your self at the most basic levels. Bringing “things” (IoT) online will eventually make payment transactions implicit rather than explicit as explained in previous example.

The seller will have easier access to financial data and personalised user interactions that weren’t otherwise available (Off course only of your choice and after permission / authorisation) because of the lack of user data needed to support it. The annexation of so-called big data will revolutionise the way the customer interacts with different platforms and how information is presented. Now if we take another example and imagination – You are trying to buy stuff online and your total purchase is for 1000 dollar but at the same time your account/wallet/balance is only 800 dollar in this scenario the system under IoT will make decision weather you should be allowed to continue this purchase based upon your historical records, your monthly expenditure, salary data, expense habits, kind of credit rating system will create 200 dollars of credit or loan on the fly and let your transaction go through and advise you on 3 instalment(70 dollars each , means 10 dollars of fee for 200 dollars of loan) to recover 200 dollars in next 3 months.

You enter in to shopping mall and based upon your cell phone your mobile network service provider picks up your location and on that basis flash you Personalised ads, specialised webpages, and recommendations based to shop in that location for an instance you get message you there is 30% discount on your favorite cloth brands on 2nd floor, 3rd wing at ABC cloth store and you still have 300 left for your personal shopping from this month budget so go and enjoy so I think this kind of user data experience will fundamentally change business models and revenue systems, customer service, day to day life smoothing transactions and engagement at every touch point.

With so much data available, the potential benefits are exciting. Seamless transactions and a more personalised customer experience is just a couple of advantages that will arise from the adoption of the IoT. So long as there’s transparency, data can enhance customer satisfaction. Investors, marketers and designers, take note and imagine the possibilities! But it may one-day appeal to the self-tracking health junkie or tech-obsessed millennial covered in wearable tech.

Some applications are ATMs, information kiosks in bank branches and credit/debit cards that may use sensing technology to monitor and take action on the consumers’ behalf. Another big potential may be the connection of financial services (such as checking, credit card, or investment accounts) to some of the common household devices could automatically rebalance to limit your downside exposure, or transfer your holdings to more liquid securities, in anticipation of future cash needs. This may sound a bit far-fetched now, but is not completely out of the realm of possibilities. It is predicted that eCommerce sales in 2015 will reach $276 billion this year.  That is a lot of sales it does not seem to be slowing down. And 90% of this payment will come though mobile payment method with combination of IoT and Mobile Payments.

Sign-tConclusion: Innovations also come with new risks. The deluge of new data is likely to complicate data management for financial services firm. And of course, cyber security may become an even greater challenge. The question that remains is how far will the Internet of Things go? How can other sectors such as banking and investment management leverage the IoT technology?

Hash Tagas : #payments , #mobilepayments , #mobilemoney , #IoT , #internetofthings

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