A broad term often thrown around without explanation, the Internet of Things (or IoT) refers to connecting everyday items, like watches, cars or fridges to a wireless network. In doing so, the world is becoming increasingly connected and massive data sets are being collected and leveraged.
How does the Internet of Things affect the finance sector?
To put it frankly, as a technology phenomenon that analysts predict could be worth up to $15 billion by 2020, the Internet of Things is simply too big to ignore. The basic principle of the Internet of Things involves using sensors to collect comprehensive real-time data. Data sets can be based on human activity like behaviour, health or fitness, natural events like rainfall or industrial markers like shipment deliveries. It is predicted that of all the sensors used within the Internet of Things, 50% will provide relevant data to the finance sector by 2020.
How are finance brands leveraging the Internet of Things?
The Internet of Things is already having an impact on the finance sector, particularly in the areas of insurance and payments.
The Dubs wrote recently about insurance companies leveraging wearable fitness trackers to help determine health or life insurance cover by using real data about policyholders. The trend is continuing as Tesla recently announced a similar set up using data from their cars’ Autopilot setting to adjust policy rates. Other interesting pairings are taking place between car and finance brands. Honda and Visa are working together to develop car-based apps to help simplify payments at places like gas stations.
How should finance brands leverage the Internet of Things?
There are a few key considerations for financial organisations looking to use the Internet of Things.
- Decide what is appropriate for your brand. While the data collected by the Internet of Things opens the door to countless possibilities, getting involved in connectivity doesn’t need to be a huge gesture. For ASB in New Zealand, a series of wireless enabled piggy banks brings the Internet of Things into the home, teaching children the value of money and making handing out pocket money a cashless process.
- Keep it secure. Needless to say, every new connection in the Internet of Things presents a data security vulnerability. If you are going to get involved with connected devices (as an organisation or an individual) then ensure you account for security risks.
- Always add value. The Internet of Things might be trendy, but if you’re going to incorporate it into your business processes, it must add real value to the end user. Consider how you can collect and analyse data to improve or personalise customer experience and make sure your venture into the Internet of Things is meaningful.
Last but not least, think about where your brand sets the boundaries when it comes to tapping into the Internet of Things. Read our article about Black Mirror for a taste of how a connected world can get very strange very quickly…
