Defining IoT as Everything Does Not Help a Bank Plan for It!

by Tim Sloane 0

Recognizing that sensors sprinkled around the house, car, merchant, and manufacturer makes definitions problematic, does it help to call IoT the universe of everything in an attempt to focus the attention of executives:

““By enabling the collection and exchange of information from objects, the IoT has the potential to be as broadly transformational to the financial services industry as the Internet itself,” said Jim Eckenrode, executive director of the Deloitte Center for Financial Services.”

IOT Graphic

The article goes on to provide slightly more concrete examples that are also far too generalized to be helpful:

“According to a Paga survey, executives expect consumers to start using connected devices for payments in the near term.

Wearables: Usually including smart watches and bands, 59% of global banking and insurance executives expect wearables to become a common payment device for consumers within two years.

Wearables beyond the phone: While most wearables are tethered to a smartphone, stakeholders are pushing the boundaries to include rings, key fobs and even clothing and VR devices.

Smart home devices: 24% of respondents said they believe consumers will commonly make transactions using appliances or smart home controllers in the next 2 years. These categories range from voice-first devices (Amazon Echo) to the Amazon Dash and even Internet connected appliances.

Connected cars: 20% of executives said they think people will pay for things through their cars in two years. Beyond just tolls, fuel and parking, car-based payments could eventually include drive through restaurants and other applications using the car’sinfotainment systems.”

Wearables have been a concern in banking and payments for years and by lumping them into the IoT bucket is a disservice.

So what must banks worry about?

1) Develop a strategy to collect and analyze external data in order to improve the financial advice that can be offered to customers. This challenges current thinking about partners, privacy, and security but don’t be last!

2) Develop a strategy for provisioning devices that will need payments and prepare all channels to handle reporting and management on a per-device basis. This will have a large impact to online banking and payment systems sometime in the future. Since making changes to online banking systems takes years, now is the time to plan!

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

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