The Internet of Things and Financial Services

Had the pleasure of sitting on a panel at the #LDNTechWeek Internet of Things Week #IOT event considering the intersection between IoT and Financial Services.

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My initial feel as there was not a natural intersection between the IoT & Financial Services, and it would be generally 2nd order implications.  Obviously all industries are under-pinned by finance, but the specific impact of the Internet of Things was not apparent.

So what were my point of view on the day?

 1/ Equity, Fixed Income & Energy research & trading that relies on underlying IoT data is a credible use case.  It’s a classic big data promise…loads of instrumented trucks, plant, ships etc. with some analytics to derive a trend in the data that impacts financial investment decisions.

2/ New financial products & business models that rely of the underlying IoT platform have been seen in the marketplace.   For example, if Universities and Offices open up their electrical controls to other companies e.g. the ability to turn air conditioning on/off for say ten days a year, then when pooled together an intermediate power company between the wholesale & the end user market can create a new business than reduces the overall energy demand and reduces the end-users costs, whilst only slightly impacting the comfort on the individual.    I’ve simplified the model considerably, but the automated IoT controls & the intermediary financier are tightly coupled to deliver this service.

3/ Potentially there is a model for a home insurance product that demands a maximum non-occupation period say for 30 days per year.  Right now the insurance company trusts the end-user to conform to this rule – maybe there is an IoT enabled model where the alarm & door systems are tightly linked to insurance product, and the insurer receives a report of actual occupancy usage?  This model could also be applied to mortgage/loan products that could link to flood water levels or ambient temperature requirements.

4/ Banks offer trust as a core value proposition, especially from a security and custodial viewpoint.  Potentially an end-user’s IoT & biometric data could be stored under safe custody within a Bank – and the bank offer tokens/proxy services for others to access.

5/ Banks have already embraced the intersection between Finance and IoT….take for example Citi and their Citi for Cities initiatives.    They focus on value co-creation in the Finance/Advisory, Digitisation and Optimisation domains working with local governments, cities, port authorities etc.   This is good proof it can work especially in a co-creation model – consumers, cities, Banks and technical service providers working together.

6/ Securities Services / Investor Services functions could benefit too.   Maybe through the use of secure e-Voting technology within mobile phones there is an opportunity to more efficiently and more frequently manage corporate actions & AGM voting requirements through technology.

7/ Conditional Contextual Money – my name for a type of programmable money.    Given the growth of virtual currencies I see a world where contracts can be embedded in the mechanism of value exchange – e.g. digital cash.   I use an example of donating to a charity to supply water to a troubled region e.g. as a result of a natural disaster.   I envisage a world where your conditional charity donation is such that you wish to ensure the donation is used within a time period, within a geographical region, to a specific type of person (shop keeper), and spent on a specific group of items (water pumps and filters).   I believe IoT enabled technology will allow these contracts to occur in the future.

8/ Semantic standards – there is need to link industry semantics together between say the IoT world and the Financial world, and I see the use of industry specific semantics such as FIBO Financial Industry Business Ontology facilitating the linkage between these diverse worlds.

Also heard presentations during this session from VumblMenigaUtilidex and LogicalGlue

Thanks for the invite…

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