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The Internet of Things

Behind the hype is it just devices creating more data that will be under-utilised? 

With massive investments and staggering predictions about the Internet of Things “IoT” (Experts estimate that the IoT will consist of almost 50 billion objects by 2020), loan management software provider, Nostrum Group has looked at what the IoT is (and what it isn’t) and some of its applications.

The major growth in the wearables market or the evolution of smart homes is now shining a spotlight on the IoT with sensors becoming smaller and cheaper. Consider the potential of a washing machine that monitors its own performance and can transmit that data back to the manufacturer or can set the most efficient washing cycle based on the contents. Mass adoption is on its way and the number of devices compatible with the IoT is already growing, but it might take a little more time to fully see any of the benefits.

One question often debated is – ‘Is a smartphone an IoT device?’ Most people’s first response is YES! It is a connected object housing upwards of 20 sensors that can store and transmit data. Many argue that smartphones do not count simply because they do communicate in a common language i.e. many apps do not communicate with one another and the devices use different operating systems, therefore don’t meet the basic requirements for IoT. For the true benefits of the IoT to be recognised there will need to be a universal standard adopted.

The applications for devices connected to the IoT are so large that it would be impossible to try and cover everything. We have picked out some use cases that caught our interest:

Smart cities and transport

Traffic and parking – there are already examples of this in action with sensors placed on parking spaces which would allow you to navigate to an area near your destination with a high number of free spaces. Factor in weather monitors and traffic monitors and you could actively ease congestion and pollution in a city by avoiding accidents or traffic hot spots and providing the quickest route. Consider cars, with the number of sensors housed in cars increasing and connectivity being added all the time, your cars manufacturer could monitor the condition of key elements of your car and proactively offer better support. Your car could monitor your driving style and distances in order to adjust standard ride settings to increase efficiency or improve comfort.

Take it step further though and the connected car could pay for your parking automatically on entry and exit of the car park, for congestion charges, at fuel stations and, potentially, dynamically for road usage rather than the current vehicle tax approach.


We have all seen the growth of fitness and health monitoring devices, from tracking and heart rate monitors to sleep pattern analytics. This information could be shared directly with a health organisation to enable ongoing monitoring of a condition, allowing people to leave primary care facilities whilst continuing to be monitored. This sounds like a scenario that benefits the individual, but imagine that data being made available to an insurance provider; your activity may increase or decrease your premium, or even worse, mean that you’re not covered.


Merchants can already utilise beacon technology to drive footfall and specific purchasing behaviours but add to that the ability to assess credit worthiness and push purchasing offers, such as discounts or nance, when the customer is looking at a specific item. For example, a customer shopping for a new television may receive a message offering 0% finance on the purchase from their own bank and with a simple acceptance the funds may be transferred into a designated account and speeding up the purchase. Is it intrusive to remind a customer that they have an available balance on a credit card whilst they’re shopping in an electrical store, or is that a good user experience that removes friction? As with all push messaging, it needs to be handled sensitively and in a proportionate manner otherwise consumers will switch off.


The biggest risks surrounding the IoT are data protection and data ownership. Who owns the data? Is it the manufacturer of the washing machine or the owner? Will the customer feel their privacy is being invaded if they are pushed health messages from wellbeing organisations or pushed nance offers encouraging them to take out a loan when a product is due for replacement. There seems to be conflicting thoughts on what is benefiting the customer and what is intrusive.

People are much more conscious about how their data is used and shared now, even if it feels like we are sometimes forced to give more than we’d like, there are benefits to giving a little to take the rewards. Using the health insurance example previously, would a customer allow access to their fitness tracker to receive a reduction in premium? Would an insurer look at geo-location to see frequent visits to extreme sports venues and increase the premium?

Data privacy and ownership is already a concern for consumers so when that data collection and transmission is unseen and constant there will surely be nervousness and anger the first time a negative action impacts them. You also have consumers that will fear unscrupulous individuals will be able to hack their homes to determine when the occupants are out and take control of their security systems to delete the record of their burglary.

So the IoT is a network of connected objects, which contain sensors, and can transmit data. It is an enabler, an underlying architecture that allows devices to create, store and share data. The real end game will be how the data is used, which looking from a financial services background isn’t a new challenge. If anything, many companies don’t capitalise on the data they already hold, so will adding more data help?

It feels obligatory to mention User Experience in the current climate, but that is essentially what the IoT will bring into focus, whether it’s how you move around a city or your shopping habits. Companies will have more opportunities to interact with customers or potential customers and the challenge will be how to maximise those connections. The personalised marketing ideal will become an even more realistic target, but the amount of data processing and storage will be huge. There are clearly many other applications that enterprise will use, like stock management or maintenance of assets that doesn’t impact on individuals data but will impact user experience and operational performance.

IoT technology aside, this will be another Big Data project that sits on top of mining the extensive data that already exists. There may be a new opportunity for personal data storage where individuals can direct all of their data sources and then actively manage who has access to specific parts e.g. my wearable data can be viewed by a health organisation but not an insurance provider or my spending behaviour can be monitored by my bank but not by retailers.

IoT is all about technology enabling more data and better user experience. Is it any different to Fintech initiatives or health organisation programmes of work? We don’t believe it is; it’s another technology advancement to be added to the list of things to watch and embrace as they develop.



By Richard Carter, Chief Executive of Nostrum Group


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