The Internet of Things (IoT), 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.
Regardless of the varying statistics, Microsoft has called the IoT “a game changer,” and experts have visualized IoT devices changing how people live, shop and bank by transforming big data into actionable information, providing efficiency gains and powering retail activities.
“It used to be only computers, but has expanded dramatically into all kinds of stuff from the scales in your bathroom to your watch, which is both interesting and convenient, and a security nightmare,” Stu Sjouwerman, founder/CEO of the Clearwater, Fla.-based security firm KnowBe4, said.
Ondrej Krehel, founder/CEO of the New York City-based cybersecurity intelligence firm LIFARS, added, “We can say that we interact with many devices that are in the building grounds of a 'smart revolution.'”
Creating an engaging experience for customers and members is at the top of many financial institutions' lists as well. Millennials in particular expect engagement on their terms, and because of these new expectations, financial institutions are seeking innovative ways to transform big data into valuable assets that provide a better consumer experience.
Potential banking IoT applications include beacons to track movement, mobile banking apps, wearables, and interactive ATMs and kiosks.
Some financial institutions are already using beacon technology, in which mobile apps aided by sensors in the physical world respond based on consumer-indicated preferences, with the goal of improving engagement and creating new revenue streams. Institutions are also exploring sending out branded, local offers to mobile banking users as a new income generator.
Read more about the Internet of Things in the Oct. 21, 2015 print issue of CU Times.
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Roy Urrico
Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).
