The Internet of Things (IoT), which revolves aroundmachine-to-machine communication, embedded sensors, the cloud andmillions of connected objects, could bolster member engagement forcredit unions but also create security, privacy and systemconcerns.

The machines include mobile point of sale and wearable devices,home appliances, health monitors, body scanners, intelligentshopping carts, and security and environmental control systems.

Estimates of the size and value of the IoT market vary. Gartnerpredicted there will be nearly 26 billion devices valued at $1.9trillion by 2020, while the International Data Corporationestimated nearly $9 trillion in annual sales by 2020. Cisco put thenumber of IoT devices at around 14.8 billion today and some 50billion by 2020, and Microsoft estimated there will be 30 billionor more IoT devices by 2020.

Regardless of the varying statistics, Microsoft has called theIoT “a game changer,” and experts have visualized IoT deviceschanging how people live, shop and bank by transforming big datainto actionable information, providing efficiency gains andpowering retail activities.

“It used to be only computers, but has expanded dramaticallyinto all kinds of stuff from the scales in your bathroom to yourwatch, which is both interesting and convenient, and a securitynightmare,” Stu Sjouwerman, founder/CEO of the Clearwater,Fla.-based security firm KnowBe4, said.

Ondrej Krehel, founder/CEO of the New York City-basedcybersecurity intelligence firm LIFARS, added, “We can say that weinteract with many devices that are in the building grounds of a'smart revolution.'”

Creating an engaging experience for customers and members is atthe top of many financial institutions' lists as well. Millennialsin particular expect engagement on their terms, and because ofthese new expectations, financial institutions are seekinginnovative ways to transform big data into valuable assets thatprovide a better consumer experience.

Potential banking IoT applications include beacons to trackmovement, mobile banking apps, wearables, and interactive ATMs and kiosks.

Some financial institutions are already using beacon technology,in which mobile apps aided by sensors in the physical world respondbased on consumer-indicated preferences, with the goal of improvingengagement and creating new revenue streams. Institutions are alsoexploring sending out branded, local offers to mobile banking usersas a new income generator.

Read more about the Internet of Things in the Oct. 21, 2015print issue of CU Times.