Today we learn all about the Internet of Things. Unless you have been living under a rock (and that rock didn’t have Wi-Fi) you have probably heard this term. The Internet of Things is easily defined as our physical devices that are becoming connected to the Internet. Refrigerators, cars, washers, dryers, TVs, electrical outlets, thermostats, cameras, microphones, garage doors, front doors, even your young child’s or grandchild’s (if you are old like me) baby monitor is likely connected to the Internet. It’s tempting to dismiss the Internet of Things (IoT) in the financial space as mere hoopla or fad, something that is getting in the way of our real business of finance, so today we are going to talk about why it’s important to understand this new platform from the perspective of your financial institution.
In This Episode:
Devices That Are Gaining Ground
Nest: Nest is connecting cameras, thermostats, carbon monoxide detectors and smoke alarms to your home Wi-Fi. If you wake up in the middle of the night and don’t want to get up and go downstairs to change the thermostat, no problem. Open your Nest app and change it from your bed. When you hear the heat kick in (or AC, depending on your situation) go back to bed and rest peacefully.
Family Hub Refrigerator: Jim Herrington Vice President of Consumer Electronics at Samsung, introduced a new refrigerator at this year’s Consumer Electronics Show that can order food for you. In fact, they partnered with MasterCard. The important part of this announcement isn’t really the fridge, it’s the new “family hub” focus. Think about your refrigerator both as you grew up and as you use it now. If you are anything like me, your mom hung your drawings there, you had your notes for school there, and maybe you had those magnetized letters that you could arrange into things and words. Now my refrigerator has notes on my new diet (thanks to my wife), pictures from Christmas, and it’s also where my wife puts my prescriptions (reminder I am old).
Samsung recognized a need for a large device to be the center of all of these connected things, your thermostat, your garage, the cameras you have to watch what your cat does while you are away, and what better place than the fridge? All of us are trained to go there. Another important aspect of this announcement is the fact that they have partnered with MasterCard to allow you to order groceries from the interface, and of course, it’s Samsung pay and MasterCard working together.
This is where you should start to get nervous. What if suddenly people start using the Samsung pay and MasterCard information embedded in the refrigerator to pay for their groceries? What if your financial institution were to lose dependable monthly transactions to payments generated through the family hub? We have already seen Amazon take a bite out of the retail business, how do you make sure you are represented in this process so that people will buy groceries with your tender?
I will submit to you that it’s all about utility at this point; people are looking to protect their most valuable asset in this fast pace world. THEIR TIME. I will also tell you that is followed closely by THEIR MONEY. So, if you can save them TIME and MONEY...it’s a win! The utility of not having to go to the store to buy groceries is nice for many reasons. Don’t want to be tempted by the crackers and candy aisle? Don’t go. Don’t want to go out in the snow? Don’t go. The list of reasons is limitless. When you go to pay, which would you rather pay with? A system that monitors the grocery budget setup in your financial institution’s Web site? Or, maybe you just wave your phone at the fridge? It will be utility over antiquity (Thank you Brett King. I use this quote all the time)
We also have an Amazon Echo demo in this week’s podcast. Listen to hear the future of new financial institution utilities.
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