Five Prime Changes that the Internet of Things (IoT) will bring

Paul Cobban, Chief Data & Transformation Officer, DBS

Paul Cobban, Chief Data & Transformation Officer, DBS

The rise of digital technologies and internet connectivity has breathed new life into otherwise digitally inert objects. From smart grids to the placement of RFID tags onto a retail item, to IoT-enabled medical devices and voice-controlled faucets, IoT has gained enormous momentum as businesses, government, and consumers alike reap the value from smarter decision-making.

Already we’ve seen how data about an object (or person), whether it be a location, a temperature reading or a heart rate pouredacross the internet yield all kinds of new value and openthe doors to incredible opportunities.

According to Gartner, there will be an expected 20.8 billion IoT devices out there by 2020 – contributing to the fundamentally changing nature of the interface between the digital and physical worlds.

The implications of this happening at scale are well documented and profound. The rate of change will only keep accelerating as advancements in Cloud, Robotics, Artificial Intelligence (AI), Blockchain technology contribute to a ripple effect on IoT-enabled technology.

While we can expect manufacturing, transportation, utilities, and healthcare to extract the majority of early value from IoT, most if not all industries will see a fundamental shift in their operating and business models in 2018. Banking, for example, has been changed forever by the mobility afforded by smartphone as we move towards a new era that combines the best of brick-and-mortar branches and smart banking.

It might be early days of 2018 but here’s my take on the next five areas to be impacted by IoT in the coming years.

1. Customers may no longer be just humans– anticipating the emergence of an Object-to-object relationship

Some countries have already explored the use of autonomous vehicles which are expected to become widely used in cities. In the near future, these cars will typically be a shared resource serving as highly efficient taxis. They would be able to receivepayment from fare-paying customers, pay for fuel (automakers are already developing self-fuelling cars) and even pay taxes. To this end, autonomous vehicles may very well require their own bank account, and we will likely see the rise of a new type of business model emerge – object-to-object.

With IoT And Other Emerging Technologies, It Is Increasingly Possible To Seamlessly Embed Banking Into Overall Customer Journey To The Point Banking Becomes

2. Traditional business triggers will move closer to customers

The introduction of the ATM in the seventies saw the first redefinition of the interface between physical and digital banking worlds – where the digital record of an account balance became physical cash and vice versa.

As more and more physical items get connected, we can expect to see payment “trigger” moments be continuously redefined. Take for example, Amazon’s GO stores with their “Just walk out” technology. There are no cash registers. Payment of goods istriggered simply by the act of taking an item off a shelf using computer vision, AI, and IOT sensors. In the future, we will see a move to more “on demand” models where payment triggers are based on the point of consumption.

3. In true Moneyball style, data will become the most valuable asset

Data about money may become more valuable than money itself. Margins in banking are increasingly becoming compressed as tech companies large and small eat into the traditional business of banks. But where banks continue to shine is in the amount of financial data they have about their customers- that enables the development of customized products and services, better credit decisions and a reduction of servicing costs.

While this has made banks valuable partners for other companies, including FinTechs who-do not yet have access to such data (although regulation is changing that), the rise of IoT may transform that relationship as more open sources of data become available through connected devices.

4. Banking will become invisible

Banking is generally part of a larger need whether it is buying a fridge where the payment or credit is a small slither of the job or buying a house where the mortgage is just one of the steps in the process. With IoT and other emerging technologies, it is increasingly possible to seamlessly embed banking into overall customer journey to the point banking becomes invisible.

5. Security will be an escalating risk

While sensors such as biometric scanners and even smartphone accelerometers that detect movements unique to each of us can offer an improvement in authentication functions– it is also a cause of concern for potential security threats.

With the explosion of the variety and quantity of IoT access points (known or unbeknownst to users) within our networks, it has become more challenging to put in place appropriate security controls to prevent hacks and leaks. You don’t have to look far to find well-publicized incidents of black and white hat hacking through physical objects.

It’s difficult to know how best to engage with so many new emerging technologies when the potential changes are so profound. The most powerful use cases are where several technologies work together to solve long-standing business problems.

Incumbent companies need to continually track developments and experiment incessantly to understand the technologies while remaining focused on the problems that can be solved. Still, to ensure that they don’t get left behind, they will do well to conduct rapid experimentation with new IoT devices and technology that will be the key for them to flourish in the digital age.