Internet of Things (IoT)
The ‘Internet of Things’ (IoT) is all about connecting devices to the Internet: telephones, washing machines, lamps and wearables, but also things like an aircraft engine or an oil drilling rig. Together, these ‘things’ form an enormous network of devices and people. ABN AMRO is investigating the impact of IoT on the financial world.
The Gartner research bureau is predicting that by 2020, around 26 billion devices will be connected to the Internet. Why do we want all these machines to be able to communicate with each other? Suppose you are on your way to a meeting. Your car has access to your diary and knows precisely which route is the quickest. If it’s busy en route, your car automatically tells the other participants that you will be a bit late. Or imagine an alarm clock that not only makes a noise, but also sends a signal to the coffee machine. The IoT office innumerable possibilities and opportunities.
Banking and IoT: the ultimate client convenience
The main result of all this connectivity is user convenience. Naturally, IoT is also going to change the way we manage our banking affairs. If we allow our devices to do so, they will be able to make our financial lives even easier. For example, in the future we could save on our energy bills as the dishwasher purchases electricity autonomously when it is cheapest. Or think of a health app which notices that you could do to take a bit more exercise, checks which fitness centres there are in the neighbourhood and suggests taking out a subscription. It consults your diary and sets up a direct debit automatically.
Cybersecurity and privacy
IoT can also bring risks. The most important thing is the experience of the end user, but of course never at the expense of security. Privacy and cybersecurity are therefore key focus areas. In addition, it is wise to make clear arrangements on how information is used: which data is collected, who has access to it, exactly what is done with it. To ensure that personal data is processed carefully and responsibly, data minimisation must be the starting point – in other words, keeping the amount of data used to a minimum by processing only the data that is genuinely needed.
Growing security measures
The first steps towards a secure IoT are being taken. Clients are becoming increasingly aware of cybersecurity and digital privacy, and are therefore keeping a closer eye on their data. Use of ad blockers is also increasing, making it less easy to track clients online. Then there is the ruling by the EU Court of Justice, encompassing the ‘right to be forgotten’ by a search engine.
Familiar bank in a new landscape
Financial institutions can play a key role in this necessary process of change. Traditionally, banks have had the task of protecting the assets of their clients, including their digital identity. By embracing the principles of security-by-design and privacy-by-design and exploiting the added value of IoT, banks can build on this core competence. This means that security functions in IoT must be given priority at every stage of the development process, from concept to application.
A ‘wait-and-see’ attitude is not an option; the flood of IoT-connected products is already under way. Failure to take action quickly will mean falling irrevocably behind. By experimenting with different IoT techniques, such as iBeacons, ORBneXt and Little Bits, ABN AMRO is getting ready for a future in which client convenience and security go hand in hand.