Trust Is the Key to the Financial Internet of Things

17 April 2019

The Internet of Things (IoT) is coming to the world of finance, and improving security is essential. Outside of financial applications, the IoT has a reputation for security flaws. Tellingly, the IoT is most successful in areas of finance where it actually enhances the security of information. IoT devices may eventually replace credit and debit cards, but they must earn the trust of consumers first.

Real Estate

As the Internet of Things (IoT) evolved, financially relevant measurements became available for commercial buildings. It is increasingly possible to measure things like foot traffic in retail stores. Measurement makes analysis possible and generally leads to improvements in efficiency. New IoT measurements will also make it easier to buy and sell real estate. IoT enabled smart buildings with more foot traffic can prove it to potential buyers. That increases the resale value of the buildings. We can already see that more reliable information builds trust and that trust has clear financial benefits.


There is a strong argument for pricing insurance based on risk, but the technology for measuring risks is relatively new. For example, pay-per-mile car insurance became more practical after firms developed secure devices for measuring driving habits. The other side of risk measurement is consumer acceptance. A 2017 Lexis Nexis survey found that 78% of insurance consumers would share information for reduced premiums and faster processing. In that same survey, 70% of insurance carriers agreed that gathering IoT data was already important. 48% went further and said that IoT data collection and analysis would determine the leaders of the future.


Most digital wallets are on smartphones today, but it is easy to forget that smartphones are part of the Internet of Things (IoT). The app centered model is only one of several possible approaches. Near Field Communication (NFC) allows users to avoid some of the hassles of the traditional checkout process. There is even some speculation that smartphones might eventually replace physical wallets entirely. Another possibility is that credit and debit cards will become a full part of the IoT. Secure chips are already replacing the old magnetic stripes on cards. It may be necessary to transition debit and credit cards to the IoT sooner rather than later.

Security Concerns

Security concerns are holding back the Internet of Things (IoT), but the IoT can also provide security solutions. In 2018, Bain found that over 40% of IoT customers cited security as one of the most significant barriers to adoption. Many early IoT devices were insecure because of poorly designed firmware that was difficult or impossible to update. However, IoT devices can actually improve security. As computer programs become larger and more complex, it becomes more difficult to maintain security. Some financial firms, such as HSBC, responded to this challenge by developing dedicated security devices. Many firms also support the U2F standard. Most U2F devices are small USB, NFC, or Bluetooth keys that allow users to authenticate by pressing a button.

Building Trust

The Internet of Things (IoT) produced more reliable information for real estate and insurance, and that information increased trust and value. The IoT has the potential to speed up commerce, but that potential hinges on building consumer trust. The security devices that win in the marketplace are likely to be integrated with digital wallets in the future. Once trust is established, IoT devices could become more important than traditional credit cards.


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