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The IoT and the Financial Technology Industry

March 17, 2019

Paul Araman

The following is the first post in a continuing series surrounding the Internet of Things (IoT). Throughout the series, we will discuss the impact of the IoT today and how it may shape the future of the financial technology industry.


The Internet of Things (IoT) is a phrase that has become popular to describe the machine connectivity phenomenon. Small sensors and computer chips are placed on a variety of devices or things, which enable them to communicate via the internet or other network to computer systems. This initially started out as machine tracking and automation for industrial purposes such as manufacturing robotics and industrial equipment monitoring. 


Connected devices are becoming more common in consumers’ everyday lives—connected refrigerators, home assistants, and connected vehicles, to name a few. Connected door locks serve as a great example of how consumers are using this technology in their homes today. Doors will automatically unlock when they sense a connected cell phone close by, and electronic door “keys” can be sent via cell phone to others to access the home within specified parameters on time and day. Consumers can even receive a notice from the connected locks when their children come home from school. 


This movement of IoT to the consumer mainstream is facilitated by four major trends: lower technology cost, technology advancements, greater consumer connectivity and increased consumer demand.


Around 1970, a computing concept termed Moore’s Law originated, stating that computing power will double about every two years. This law has generally proven to be true and is accompanied by a significant decrease in cost of technology. Cost of electronics and computer-related systems has continued to drop over the last few decades. The cost of a small micro sensor that can be placed on virtually any device is now less than a dollar— and is projected to be about 38 cents by 2020. This makes it very affordable to track all kinds of things, including the things consumers buy, carry around and have in their homes.


 Technology advancements that have facilitated the IoT movement to mainstream include IPV6 and Big Data. IPV6 was a technology change made in 2012, which resulted in a nearly unlimited number of IP addresses. This enabled every device with a chip to be connected to the internet. The advancements made with Big Data—the data sets revealing consumer patterns, trends and associations—enabled companies to actually manage the information coming from all the sensors attached to devices. 


Technical capabilities like distributed file systems across multiple nodes let companies make sense of the flood of information and take action, providing business justification for the connected devices and an optimized experience for consumers.


The capabilities that consumers have today with the advent of connected cars and cities computer were inconceivable 20 years ago. 


The number of smartphone users is projected to reach 2.53 billion by the year 2019. The average smartphone today has 1,000 times more computing power than the Cray supercomputer, which filled a room in 1976. The ability for consumers to connect to the internet via their smartphones and cars enables them to manage the connected devices in their lives. This includes connected devices in their home like thermostats to transportation needs like ride-share services, and parking. It even enables consumers to interact with their surroundings at sporting events and in communities.


Increased consumer demand likely does not need much explanation. Consumers continually want more for less and they want it now. In a 2015 Harris poll, customer service expectations were 35 percent higher than just three years prior. Companies are looking to technology solutions to answer that ever-increasing customer demand. Everything from automated checkout, to drones delivering burritos or a robot bringing room service—this is made possible by the Internet of Things.


As the Internet of Things moves more into daily life, it creates exciting opportunities for consumers and companies alike. Companies benefit by offering these new connected solutions to enhance the customer experience, while new capabilities provide consumers greater convenience and control. Join us for our ongoing series, where we’ll be discussing the many fascinating aspects of the IoT and how to leverage it through financial technology. 



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