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Banks and the ‘Internet of Everything’


Banks have little to do with physical space anymore; it’s all been digitized. If everything is digitized, then any new technology could disrupt banking. So what will that new technology look like?

Well, mobile will continue to change things but it goes further than that. Mobile allows anyone to socialize with anyone on the planet. Add into this social mobile equation the idea that cloud computing allows companies and government agencies to sift through the massive amounts of data that the mobile, social world is creating and you will see new markets and new business models emerging.

That is why this perfect technology storm will continue to disrupt the banking markets, as financial institutions adopt and incorporate the mobile social world into their core offers, leveraging their data analytics through the cloud. This will change banking fundamentally as Personal Financial Management becomes Predictive Financial Management, with alerts and offers relevant to your lifestyle.

Imagine an alert appearing as you walk past a television shop: “Buy this TV now and ABC Bank can give you a loan at a low APR of just 4.9%.” The alert appears because you Googled that TV last night on Amazon and the electronics store has a deal with ABC Bank to give you incentives to visit. ABC Bank has a data agreement with Google and all of this analytical capability is tied together through the cloud.

That’s pretty much what Google Wallet does today but it’s going to get into a real frenzy as banks and their partners start to digest these capabilities. And just as they do, we will see the real disruptions occurring as banks rollout services through the “Internet of everything.” For example, I remember a bank talking about using branch windows to broadcast personalized advertisements a few years ago and that additional layer of personalization is what the Internet of Everything brings to the table.

Forget about getting a text alert or in-app advertisement for the TV in the store; I don’t need a TV anymore. That’s old technology. Instead, my Internet-enabled viewing system auto records any program that is associated with my preferences and presents it to me on a menu system when I get home. That pretty much happens today except that I have to set up the pre-record. By the end of this year, preference-based recording by a bot will be the order of the day. The bot will learn my tastes and preferences and will automatically configure itself to suit my style. I can’t wait.

How will that disrupt banking? Well, maybe the proliferation of so many capabilities from printing my viewing system at home from my desktop to renting movies for 50 cents a view via an automated bot will see the rise of money through every breathing moment of the day. I will literally be dripping dollars and cents through the day without noticing as all the payments are made wirelessly through chip-enabled devices.

Take this story from a recent issue of Wired magazine:

Steve Sande’s household fan is now self-aware. Sande, a Colorado-based tech writer, had noticed that his cat, Ruby, was suffering on hot summer days. His house doesn’t have air-conditioning, and he wasn’t always around to turn on the fan.

So Sande bought a new gizmo called the WeMo Switch, which connects to the Internet so you can turn on an outlet remotely. It’s also programmable. Using the free web service If This Then That, Sande created a script that monitors information from Yahoo Weather. If the temperature in his neighborhood hits 85 degrees, the fan turns itself on and cools the house. “This entire thing,” he says, “revolves around a 17-year-old cat.”

Great story, but think about it: the intelligent, smart world of the Internet of Everything will have billions of tiny transactions taking place every nanosecond of the day. Those billions of transactions will need aggregating, accounting, clearing and settling. So, we now have gazillions of transactions to monitor and deal with, rather than a few transactions per hour or minute as before.

Just as stock markets have seen trades explode through automated systems, banks will see transactions explode through wireless systems as consumers and corporations adopt the Internet of Everything. That’s what excites me the most for banking technology disruption in the next few months and years.

Mr. Skinner is chairman of the Financial Services Club, CEO of Balatro Ltd. and comments on the financial markets through his blog the Finanser. He can be reached at [email protected].