FinTech: IoT, a potential game changer?

It was the year 1999 when Kevin Ashton was working with FMCG giant P&G as a supply chain & logistics expert. A new technology by the name Radio Frequency Identification (RFID) had emerged which was being tested in P&G warehouses. A small tag installed on P&G boxes could communicate with a receiver and transmit the data related to the contents of these boxes wirelessly and that too without any human intervention or prompting. This made inventory management much easier.

Kevin saw huge potential in the RFID technology which went much beyond inventory management. Since the Internet too had made its presence felt by then, Kevin believed that if such RFID devices could be connected through the Internet, then the outcome would be revolutionary. Hence, in one of the internal presentations to the P&G management, he coined a new term ‘Internet of Things’ (IoT) to denote machines or things which would ‘talk’ to each other through the internet.

Over time, the scope of IoT expanded to include multiple industries, devices and uses. Today it has become one of the hottest technologies of the future with immense applications.

From just a few connected devices back then, an estimated 8.74 Bn IoT devices got connected across the world by 2020. By 2030, this number is likely to cross 25.4 Bn! More than 60% of these IoT devices will be in the consumer segment, signifying human dependence on IoT, which will keep rising at a rapid rate.

The Fintech sector was one of the earliest sectors to realise the immense potential IoT offered. Be it the customer-facing side or the back-end processes, IoT has found many useful applications and has played a crucial role in making this sector one of the most happening sectors today across the world.

Here are some examples of how Fintech companies are using IoT to change the way the world transacts:

• Amazon Go allows users to simply pick up the goods that they want to purchase from the shelf and walk out of the door instead of standing at the cashier in a queue. The IoT device instantly scans the users' card at the exit and accepts the payments.
• Metromile, a US-based insurance provider installs IoT devices in its customer’s cars which tracks the mileage clocked by the car and then charges the insurance premium on this information instead of the conventional flat annual premium. This helps the users save on the premium based on their actual car usage.
• Traditionally, refrigerators are used only to store food. But MasterCard has developed an app that works well with Samsung refrigerators which can reorder groceries from the stores whenever it senses that the stocks have gone beyond a set threshold. It even pays for it.
• Even wallets have become smarter. Instead of just storing cash and other small-sized items, wallets developed by Dynamics are battery powered and come with a display. This display can answer questions related to transactions easily.
• Earlier, farmers in the US had to physically monitor the moisture and other conditions of the food grains stored in silos in their farms. Quite often these grains used to rot due to the changes in the moisture levels. Amber has developed IoT devices that not only help to track the moisture conditions inside the silos but also help in selling the grains before they rot. Farmers can control the entire process through their smartphones.
• With the rise of the Fintechs, cash transactions are getting replaced by digital payments. Today, the smartphone is making digital payment possible. But with IoT, wearables like smart-watches, fitness bands etc., even the smartphone is facing a competition now!

Besides the ease of conducting the transaction, IoT is making the lives of users easier in many other ways too. They are making the process safer, faster and healthier. Today, wired devices are getting replaced by wireless ones and wireless ones are becoming contactless. Eventually, the developments in biometric technologies will make IoT devices even smarter and safer than the current contactless devices.

What started as a means to make inventory management easy, has today played a key role in the rise of the Fintech sector. Now that’s a great example of humble beginnings leading to a giant outcome!