My fridge can disrupt your bank

The Internet of Everything, an emerging multi trillion dollar trend that embues a world where everything is connected to everything else and where inert ‘Dumb’ materials and products are embedded with technologies and sensors that make them ‘Smart’ isn’t ordinarily a trend that is associated with the Financial Services industry. Today the most connected financial services product is arguably the NFC enabled contactless credit or debit card.

If you and I sat down to have a drink together and I asked you to describe your customers to me I’d be very surprised if you didn’t describe a flesh and blood person, consequently when your organisation is drawing up its five year strategic plan we could say that your limiting growth factor is the total number of people in any given market and your ability to get them to adopt your organisations products and services.

However, what if a new customer segment was brewing, one that could double the size of your existing client base and it was sitting in your own back yard now would that be interesting?

What not Who

The Internet of Everything is what I call a mega trend, that is to say it is an overarching trend that includes nine smaller, albeit still multi trillion dollar trends like Connected Home, Connected Vehicles and Connected Cities so while there are multiple opportunities for Financial Services firms to find new routes to market and secure new customers one of the first things you will have to do is change how you define your customers.

In today’s market your customer is a Who but in tomorrow’s market they’ll be also be a What and in order to capture the most amount of new value your organisation will have to undergo a paradigm shift both in terms of culture and operating and business model.

Today more and more smart, connected products are hitting the market than ever before but while the Internet of Everything market is still in its infancy as it matures it will provide every organisation, of all shapes and sizes with a wealth of opportunity never seen before. For banks one of the first potential opportunities comes not from some fantastically complicated financial instrument but from the common a garden fridge.

Your new customer is six foot tall and five feet wide

In the past fridges were simply cool places where you stored your groceries but today they are intelligent appliances that can track, monitor and automatically order and re-order products as you run out of them but in order to be able to fulfil these tasks they need to have both access to your credit or debit card and to the online grocery stores and this is where it gets interesting.

While you’d expect that most grocery orders can be fulfilled transactionally what now happens if the manufacturer, the consumer or a third party gives the smart fridge the permission, or the ability to shop around for the best price for example, for milk?

The fridge is already connected to the net and all it would take would be a firmware update to let it and other fridges talk together to form a buying consortium. Now the fridge is one of hundreds of thousands ordering milk and the consortium can begin negotiating deals with suppliers to drive down the price and if your fridge can save you ten cents a litre every time it orders milk then interesting things can begin to happen.

What would happen if the fridge asked you if you’d like to deposit the ten cents you’ve saved into a savings account, or further still what happens if it asks you if you’d like to invest it in shares and what would happen if it wasn’t just ten cents, what would happen if over the course of a year it’s actually managed to save you thousands of dollars?

Scale it up and in the US alone if everyone had a Smart Fridge that could save them 10% on their grocery bills then these fridges could accrue ‘wallets’ that hold at least $65 Billion in assets. Now what if we extend that same principle to Connected Vehicles where cars can come together to form buying consortiums for gasoline? A 10% saving here could accrue another $40 Billion and Connected Washing Machines? Well a 10% saving on washing powder could accrue another $0.5 Billion and we’re just at the tip of the iceberg.

Conclusion

By stepping out of business as usual and by challenging your traditional perceptions or definitions it is often possible to spot new markets before your competitors do. The Internet of Things might not immediately look like a banks dream trend but with a little bit of lateral thinking it could be the biggest market you’ve ever played in.