The Internet of Things, which revolves around machine-to-machine communication, embedded sensors, the cloud and millions of connected objects, could bolster member engagement for credit unions but also create security, privacy and system concerns.
The machines include mobile point of sale and wearable devices, home appliances, health monitors, body scanners, intelligent shopping carts, and security and environmental control systems.
Estimates of the size and value of the IoT market vary. Gartner predicted there will be nearly 26 billion devices valued at $1.9 trillion by 2020, while the International Data Corporation estimated nearly $9 trillion in annual sales by 2020. Cisco put the number of IoT devices at around 14.8 billion today and some 50 billion by 2020, and Microsoft estimated there will be 30 billion or more IoT devices by 2020.
With the Internet of Things moving from an industrial setting and making its way to Banking and Financial Services, financial institutions need to be aware of the potential security threats that can come from unprotected networks, many of which may be outside of their direct control. For example, the entry point for Target’s highly publicized security breach was an HVAC subcontractor, according to The Wall Street Journal and Reuters. To this point, banks and credit unions should be mindful of security threats that can emanate anywhere across their networks. FIs should thoroughly understand best practices for managing their data, solutions, and networks, and be ever-vigilant of areas where their data could potentially be compromised.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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