IoT: Lower in the Zeitgeist, Because It’s Happening Now

The term “Internet of Things” peaked in the Google Zeitgeist in October 2016, and for at least part of 2018, has hung below 50% of its high point. This is anecdotal, behavioral data at best – but what is interesting to consider is why the term in decline.

Rewind to 2016. Amazon was the only game in town for in-home, voice-activated devices with its Echo and Alexa ecosystem. Google was hot on its coattails with its burgeoning Google Home product line, and Apple was already pushing Siri on its handsets and macOS devices. Meanwhile, Nest Labs, Ring and others were only just starting to achieve more widespread market penetration with their connected home appliances and devices.

In just a few short years, smartspeakers – considered to be cornerstone IoT devices because of their ability to control other pieces of IoT technology – are on fire. Manufacturers like Google are showing 700% year-over-year growth in the category. Not since the iPhone launched the smartphone industry in 2007 have we seen a device type attain such rapid adoption among consumers.

This is significant because the adoption of these devices makes the premise of IoT accessible and affordable to the masses. Before the digital assistants and the smartspeakers, applications of IoT were often clunky, unintuitive and almost invariably expensive. At a lower price point, the market has landed on the interface to control all of it: The spoken word.

What does this mean for credit unions?

While general consumer adoption of IoT devices is high, the financial services industry has a bit more time to prepare. We aren’t providing smart lighting or the ability to pre-heat the oven before you get home – we’re providing on-demand, often voice-activated access to individuals of money and information. And because money is more personal to us than our lighting choices or casserole preparation, people are taking time to adopt.

In the just-released “Expectations and Experiences: Channels and New Entrants” study from Fiserv, the concept of voice banking – for now the primary intersection between IoT and financial services – displayed modest growth overall. However, among those who used voice banking (unsurprisingly, millennials lead the way), usage jumped over 40% between 2017 and 2018.

This paints a picture similar to what we saw with mobile banking adoption a decade ago, with a focused group of “power users” riding the crest of a broader trend. The initial adoption in these segments suggests that credit union leaders should be paying attention and looking at their members to gauge demand for IoT banking services. Importantly, the study found that when people enroll in digital services, they engage with their finances much more frequently than they do in other channels. Voice banking, for example, is about on par with mobile banking, averaging about 11 interactions within a month.

Given these upsides, what is keeping people away from IoT banking is worth noting.

About a third of the study’s respondents said they were worried about some form of security, and around 20% said they had encountered bad experiences with voice activation in the past, meaning that any application of IoT to banking should take a privacy-first approach.

The biggest factor: 45% said they didn’t yet feel a need for voice banking, meaning there is a lot of room for members to discover IoT banking functionality. Rather than causing credit unions to pause, this should prompt further consideration – none of us knew we wanted an iPhone, iPad or Alexa when they first became available. Now, we can’t live without them.

In-home banking may follow a similar trajectory. Perhaps we’re seeing the term Internet of Things fade because we’ve already entered a time where digital connection and convenience at home is the new standard. It’s up to financial institutions to stay ahead of that curve.

Scott Hess is Vice President of User Experience, Consulting and Innovations Teams for Fiserv. He can be reached at scott.hess@fiserv.com.