It is difficult to deny that the world today is constantly connected. Thanks to the Internet, information is available to us in nanoseconds, and it seems that smartphones are penetrating every area of the globe. Since its emergence in the mid-90’s, the Internet has revolutionized everything from completion of daily tasks, to health care, to education, to payment methods.
We are still seeing the astounding effects of this groundbreaking shift today. Now that the hype of Internet has died down, and its banality has settled in, we are ready for the next big technological leap: enter the Internet of Things.
What is the Internet of things?
What exactly is the Internet of Things, (or IoT)? The Internet of Things pertains to a network of physical devices, vehicles, and home appliances embedded with network connectivity. This connectivity allows for the exchange of information and data, and accomplishes tasks through Internet usage. This essentially means that any device with an on and off switch can be connected to the Internet. It is estimated that IoT will connect nearly 25 billion devices by 2020 with a nearly $2 trillion global economic benefit.
The Internet of things blurs the lines between the physical world and computers, as human effort becomes less necessary, and wireless networks carry out tasks with greater efficiency and accuracy than people. The application of IoT devices is far-reaching. From collecting information on natural ecosystems, to syncing to energy systems such as heat and Internet, to interconnectivity of medical devices, there is virtually no realm that has been untouched by this new phenomenon.
From Smartphones to Smart Homes
Who hasn’t panicked at some point after leaving the house and worrying that the lights have been turned off, or the garage door is closed? With the advent of smart homes, it is now possible to control these activities from outside the home. Smart homes are entirely connected, meaning that everything from activation of electronic devices, to monitoring inventory in the refrigerator is regulated by wireless activity that can be accessed by users on the go.
Smart homes can eventually lead to greater ease when overseeing usage of appliances and conserving energy. IoT can detect whether a light has been left on, and the homeowner can turn it off remotely using this technology, eliminating the stress they inadvertently are wasting energy and money. Furthermore, smart refrigerators can even send photographs to the homeowner of the contents inside the refrigerator, what is missing, and what needs to be bought.
The Internet of Things and FinTech
Because the Internet of Things is essentially a mega data network, and financial technology relies heavily on analyzing data, there is an undeniable connection between the two. According to Eyal Nachum, Chairman of the Board at financial technology company, International Fintech UAB, “The moment that Fintech will penetrate into IoT, we will see a huge push forward and a dramatic shift in accessibility”.
If homes equipped with IoT can track the usage of energy being used, financial technology can be used to grant consumers the opportunity to pay accordingly. This concept is called pay-by-use. Pay-by-use allows users to pay based on the amount of data they use, rather than paying large monthly bills with a set sum that does not fluctuate according to usage.
The elimination of large monthly bills means that more users can gain access to this technology. Pay-by–use allows access to IoT to a wider range of populations, not just the wealthy or tech-savvy. This could be especially useful for the elderly or disabled populations, who can greatly benefit from IoT.
Let’s take an example of a man with impaired memory who forgets to turn off the air conditioning in the summer. Through IoT, he can be alerted to turn off the air, which would reduce the amount of energy being wasted. If it would be possible for him to pay only for the amount he used, he could freely utilize this technology, instead of being hindered by unfeasibly large bills.
To pay by use rather than a fixed price not only increases accessibility to these products, but also increases the quality of the services offered as well. If the service provider knows that it will only receive revenues based on the high quality of service they provide for a limited amount of resources, hey will be more inclined to provide more accurate and thorough service.
The Internet of things could just be the next big revolution. With its profound applications, and far-reaching benefits, it has the capacity to change the way we live. There is almost no realm that has been unaffected by IoT, including Fintech. The next challenge is to make it accessible, so that like smart phones, we can all reap the benefits.