Whether we're keen runners tracking our time, commuters checking our route home, or selfie fans, endlessly checking into our latest destination, as a society we share information about our whereabouts and lifestyle choices on a daily basis. And that's just the data about ourselves we choose to share. Elsewhere our interactions online are building up an ongoing picture of how we live our lives. It's no wonder that tech innovators are working to establish how best to maximise on this wealth of data through the Internet of Things (IoT).
By connecting the devices we use every day to one another, this data can be taken one step further. Rather than stopping at knowing our commute, our phones could tell our kettles when we'll be home, and have our chosen drink waiting for us.
If all devices suddenly become connected devices and with that all of those connected devices suddenly have the capability for ecommerce, the explosion in data and opportunity is infinite. This will have a huge impact on the future of finance and specifically payments.
Imagine if every time your lightbulb blows, a new one is ordered – this is a completely different commerce and payments model. Payments will be generated from completely different places.
How does the payment industry deal with that?
Increasingly in a world of digital transactions, the payment itself is simply a ‘necessary evil’ in accessing the product or service we want. This 'invisible' payment process has already been driven in part by services such as Uber. Rather than proactively paying a driver, we simply stop and start the journey, while the transaction is completed for us in the background, via direct debit or for some business models, a subscription model.
As more devices become connected, this will be further exacerbated. As such, digital platforms are increasingly streamlining payments for both consumers and businesses – reducing the physical process involved with making a transaction and consequently making the payment function more ‘invisible’ to the purchaser.
Data is power
The potential for innovation in this space will be boosted further as the government pushes through its initiative to encourage traditional banks to open up their APIs to emerging financial technology solutions. Niche financial tech players and established brands will be able to combine their expertise to uncover business opportunities to mine the data for knowledge – and use this to produce new innovations that can disrupt the future of financial services.
The potential here is almost infinite – from health monitors informing insurance decisions, to smart critical infrastructure updates supporting investment analytics.
The term IoT has been floating around the tech space for some time, but in recent months we have started to see a marked step-up in the movements and developments in this space, with everything from robotic pet toys to connected cows entering the market this year. Nonetheless, the industry is very much still in its infancy and there is some work to be done to figure out where the real value lies and how this impacts existing infrastructures, such as payments. The financial sector, both established players and their younger counterparts, will be closely monitoring these developments and considering how best to adapt to continue to thrive in a connected world.
By Mike Laven, CEO, Currencycloud.