The IoT Iceberg

The Internet of Things. A bit of a buzzword since it’s inception in the late 1990’s by a guy called Kevin Ashton (a Brit by the way). Almost every day we hear some companies hot take, hear about some start-up developing new hardware, hear about an incumbent building 'yet another IoT innovation lab’, and almost every time we dismiss it as nonsence that no-one would ever need. There’s good reason we’ve thought this. IoT products have largely been a bit pointless, security has almost completely been ignored, and lots of the backend systems haven’t been developed properly, if at all. There’s even a dedicated, and quite successful, Twitter account (@internetofshit) posting about the (mostly funny) failings of IoT. However, I think we’ve now reached an inflection point where the ‘usefulness’ of IoT is on the up.

You see, most of the IoT is actually behind the scenes, it’s under the water, it’s the bits that the average consumer doesn’t see, and it is recently started being developed at an astonishing rate.

Specific Internet of Things networks are going up all over the world. Countries such as South Korea and the Netherlands have country wide IoT networks based on LPWAN (Low Power Wide Area Network) technology such as LoRa and LoRaWAN. Additionally, nearly all of France, Spain and the Czech Republic have Sigfox coverage thanks to their private investment in those countries. Sigfox is another LPWAN based technology. In the UK we have a bit of piecemeal approach to IoT networks. For example, Sigfox is present in some of the larger cities such as London and Liverpool while rival LPMESH based technology such as ZigBee is present across Hampshire.

The Hampshire network is quite a good example of what I’m talking about actually. I’ve lived in Southampton, a city in Hampshire, for about 3 years and had no idea that the whole county was covered by a ZigBee network. It was not until I went to a conference in Berlin that I learnt about this network. It happens that since 2010 every one of the 150,000 or so street lights in Hampshire have been replaced by a ‘Smart Lighting’ system where each lamppost has a ZigBee sub-node on it allowing each street light to be centrally controlled and for new IoT sensors to be added. The main aim of this was originally to save money and its provided around a 40% reduction in lighting energy consumption so far which equates to about £2 million/year - in part due to more efficient lighting and in part due to smart control. Now though this network is being used to test and trial a whole host of other ideas such as monitoring available parking spaces and environmental monitoring. The point I’m making here is that this huge enabling network now exists and most people don’t know about it - it’s the part of the iceberg that’s under the water.

In the news recently was the huge £24 Billion acquisition of ARM by SoftBank. ARM are well known for being ahead of the field in terms of processors for mobile. Their processors are the most power efficient on the market which is a huge advantage for IoT devices where potentially years of battery life are required. It think it’s no coincidence that ARM have been purchased at this point in time.

So, all of this stuff that the consumer doesn’t see is starting to enable consumer facing products that actually offer some benefit. We’re starting to see a number of the big players get seriously in to IoT and actually develop useful products. I don’t normally have good things to say about Samsung but in IoT they’re probably leading the way with their SmartThings product line. One of the major advantages of this is that the SmartThings Hub works with a wide range of products other than those developed by Samsung. This means that your Philips Hue Lights, Bose SoundTouch, or your Yale Smartlock all work off of one hub and one smartphone app. One of the key pillars of IoT will be interoperability.

We have an interesting few years ahead of us as the IoT networks get rolled out behind the scenes and useful consumer products start to slowly enter the market. This is all even before the behemoth that is 5G comes our way by 2020.

I’ll leave you with this great tweet from @BenHammersley:

A Month with Mondo

UK FinTech (Financial Technology) is on fire at the moment and one of the start-ups at the forefront is a challenger bank called Mondo. Mondo is still a relatively small start-up with somewhere in the region of £7 million of Venture Capital funding with Eileen Burbidge's Passion Capital funding £6 million and the other £1 million being raised in a record breaking 96 seconds on Crowdcube earlier this year. Mondo is currently in Beta with apparently around 20,000 customers and a waiting list even longer. Now Mondo isn’t a bank just yet and as such gives customers what is essentially a pre-pay MasterCard but they say they aim to get their banking license (at least a restricted one) in a few months time. What the Mondo Beta has shown so far though is a glimpse in to the future of banking and I have to say it’s quite bright.

To understand why Mondo is great, oh and this isn’t in any way sponsored by the way, Mondo won’t know I’ve published this post unless they read it themselves here, you have to look at what is wrong with the traditional banks and it all ultimately boils down to the fact that they don’t understand mobile and they don’t understand UX (User Experience).

The traditional banks saw mobile as a way to simply provide a bank statement, in fact, if you look at your mobile banking app it’s pretty much the same as getting a paper statement in the post in that it’s just a list of transactions, search is limited if it exists at all, and if you want to do anything even mildly useful you generally have to logon to the desktop website or even phone them (what the?).

Mondo, like most start-ups, have adopted a mobile first philosophy. They don’t have a banking website and they don’t have phone banking either and why would they? Everything you could ever need to do is or at least will be done through the app, and that is one of the major things missing from traditional banks. If you read some of the Mondo founder’s blog posts and listen to/watch some of his interviews then you’ll notice that the way they think about mobile is completely different to traditional banks, for example, using your mobile’s location services to determine whether or not transactions are fraudulent i.e. if your phone is in the same location as the transaction it probably isn’t fraudulent - particularly useful when you’re abroad. Mondo seem to realise that mobile allows them to overcome some of the biggest annoyances we have with consumer banking.

It’s not just their attitude to mobile that makes them great though, it’s their entire ethos to customer experience. A recent trip to Paris is a perfect example. My traditional bank charge a 2.75% fee for non-sterling transactions and another 2% fee for using a cashpoint abroad - crazy right? Mondo don’t charge a penny for either. This completely changed the way I travel. I used to search online for the best exchange rates, order currency online and then go to a physical store to get a big wod of cash - hundreds of Euros or Dollars. Now you’d never have £400 in cash when you’re at home (unless you want to be mistaken for a drug dealer perhaps) but somehow we do it when we're on holiday. Well as you can imagine with Mondo I didn’t need to do any of that, I behaved as I do at home and paid for 99% of things with my card and had about €20 in my wallet for those few times I needed cash. What’s more I could see immediately what the cost in both £ and € was straight on the app. You get none of this transparent experience with a traditional bank.

There’s a few other really good features of Mondo too. Merchant info is crowd sourced, you can see your entire history with a merchant including total and average expenditure in just a tap. If you misplace your card you can freeze it immediately from within the app. You get a breakdown of your monthly expenditure by category, and you can manually change the category of each transaction individually. Search though is one of the major features of the Mondo app for me. Search in Mondo seems to use somewhat of a natural language processing technique to allow search over time periods, locations, merchants, category and more just be typing. So, a search for ‘Lunch in London last month’ will show all transactions marked as ‘Lunch’ that happened in June and that look place in London.

Mondo also provide an API for 3rd party app developers to interact with the platform and develop new tools.

Now that I’ve banged on about all the good things I do of course have to discuss some of the improvements that need to happen. Something that’s missing but seems really simple is a low balance notification with an action to top-up the card. I’ve had multiple occasions where the card has declined due to insufficient funds. It would be great if there were a ‘suggested top-up amount’ based on previous spending habits and perhaps an auto top-up option.

Another major let down is the lack of Apple Pay. There’re a lot of things I don’t use Mondo for because I can’t use Apple Pay. For example, I use Deliveroo almost daily and pay on their using Apple Pay just because it’s the most convenient and secure method. Same with Uber, same with Tesco. Apple Pay is on the roadmap for Mondo but I’m amazed that such a mobile focussed company hasn’t supported Apple (and Android) Pay since the start.

Next up is London Transport payments, they’re confusing AF. For some reason Mondo shows all of Transport for London’s ‘active card checks’ and seemingly all sorts of other transactions that ultimately become you’re actual tube fare. This means that various transactions appear, disappear and change over the course of a couple of days. Please Mondo just show the actual fare.

User authentication is also missing which seems to be a bit strange. There’s no app login at all. This means if someone is using my phone, whether I’ve let them use it or otherwise they can just tap the app and see all of my transactions and freeze my card. You do need to know the card’s PIN to transfer money though. This isn’t necessarily a major issue as if I’ve let someone use my phone I probably trust them and if it got stolen they’d need to know my phone’s unlock code or have my fingerprint (if they had either of these I think them being able to see what I spent in Waitrose would be the least of my worries). It does just seem a little relaxed on the security/privacy side.

Just as I was about to post this they updated the app to include TouchID login.

Something I haven’t tried/need to use yet is the customer service side to Mondo. With what I’m presuming is a relatively small team I’m not sure how good it’d be in particularly urgent situations. In fact the app does say ‘… we try to get back to you within the hour, evenings and weekends may take a bit longer.’. I could see many people being put off by this and actually finding it quite concerning that they can’t speak to/message somebody immediately, particularly as Mondo is dealing with people’s personal finances.

So as I said at the start of this post Mondo has so far given a really good insight in to what the future of consumer banking should look like. I’ll certainly continue using it and I’m looking forward to seeing new and useful features.

Now I should also say that Mondo aren’t the only ones doing this. If you have a read of my previous post you’ll see there’s quite a few other. In fact, I’ve just received an invite for Atom Bank which I’ll to try out.

Have you tried Mondo or another Challenger Bank? What did you think? Comment below.

Why I'm so Bullish on Uber

In case you didn't know I like Uber. Actually, no, I love Uber. I love Uber as a customer and I love Uber as an analyst, for many reasons. It's a disruptive company which has brought about huge innovation in an industry that has been largely unchanged since its inception in the early 1600s. Any company that has the ability to almost single handedly disrupt a worldwide industry as big as the taxi industry is certainly one to take notice of and investors have. The company is valued at over $60 Billion, the highest valuation ever for a private company. In it's 7 year existence Uber has surpassed the likes of Honda, Ford and Nissan, and is quickly catching up to BMW and Volkswagen. This is something that can't be ignored.

This massive valuation doesn't come from nothing though. Uber has something, it has the business model. I always believe innovative and successful companies need two things; the business model and the technology. So far I think Uber has the business model, and that's by far the most difficult bit to get right. Think how many times you've heard people say the 'Uber for X' when talking about new ideas and start-ups. 'Uberisation' has become a commonly used term, it even has it's own Wikipedia page: https://en.wikipedia.org/wiki/Uberisation

As I write this Apple has announced a $1 Billion investment in Didi - Uber's main rival in China. This is a massive technology company investing in a business model and customer base.

Innovation Quad

In the quad above it's easier to move right along the x-axis than it is to move upwards along the y-axis. Right now I see Uber being in the 'Business Innovators' sector.

So if Uber has got this huge valuation without the technology imagine how it will develop once it has it. But what is the technology? Well it's autonomous cars of course.

All Uber has to do now is sit and wait until fully autonomous cars become available in the next 10 years. Once this happens Uber can eliminate one of it's biggest costs, the drivers, and the service then becomes available to a much wider audience as it can charge much less. It could become as cheap as public transport for many journeys. Right now a journey from Vauxhall to Waterloo would cost £2.40 on the London Underground, and it would cost £5 on Uber Pool. Imagine how much that cost would drop if there was no driver and the vehicle was electric (It's not just about paying a drivers wages as with autonomous vehicles you potentially get much higher asset utilisation).

Now, almost every vehicle manufacturer (and some tech companies) is working on autonomous vehicles but so many of them are forgetting about the business model that comes with it. Remember that personal car ownership will die away as autonomous vehicles are introduced (Link) so how are they going to make their money? Uberisation.

You see once Uber has the technology it already has the worldwide customer base to take advantage of it while others may have the technology but have no one to sell it to.

It's true that some incumbents understand this. We've seen General Motors invest heavily in and partner with Lyft while BMW have their Drive Now on-demand service. The question is though; is this enough? And when comparing these to Uber they don't even come close.

Should the High Street Banks be worried?

The internet, coupled with mobile, has been a force to be reckoned with for almost every industry. Travel Agents have been made obsolete by Expedia, SkyScanner, Kayak and a whole host of others. The traditional taxi business has been massively disrupted by Uber and Lyft. Retail is now a very different beast thanks to the likes of Amazon. Newspapers, TV, Fast Food, Music, Hotels, the list could go on and on. There are however a few industries that are yet to really feel mobile internet's effects and one of these is banking (automotive is another but that post is coming soon). For as long as I can remember there's been one constant on the British High Street - the 'Big Four'. The 'Big Four' is a term given to the four biggest banks in the UK, these are Barclays, HSBC, Lloyds, RBS, and between them these banks own around 75% of the market [1]. This general lack of competition is bad for consumers as there's little incentive for any of these incumbents to change or do anything particularly different. In fact, if you look through their offerings not one of them stands out as giving anything above the rest.

Thankfully this might be about to change. There's a big, and quickly growing appetite by young and innovative start-ups to disrupt the old and traditional banking industry. These start-ups under the umbrella term of 'Fintech' are being built from the ground up with large investment from Venture Capitalists. They have none of the baggage that the incumbents have such as large overheads and legacy systems.

This new breed of financial business understands the frustrations and annoyances that a generation who have grown up with technology at their fingertips have. Companies such as Monese, Mondo and Atom are building banks made for the smartphone. They don't have branches, they don't even have website banking, everything is done from your smartphone. The sign-up process is made so simple, you sign-up on your mobile and scan your ID for verification which means you don't have to go into a branch to set-up your account as you would now with the legacy banks. Transfers abroad? No problem, all done from your phone and with zero fees. Going on holiday? No need to get foreign currency, just use your card as you normally would and pay no fees for foreign transactions.

It is this ease of use and transparency that the smartphone generation really understands and wants from everything they use, and why shouldn't they?

Unfortunately though this isn't something the high street bank seems to understand, and those that do can't do anything about it due to their legacy systems and costs and risks associated with building new ones at their scale [2].

"Replacing that tech is just so risky that no one else is going to try to do it. It is a multi, multi billion pound project that is going to take five to ten years, and even then risk failure." - Tom Blomfield, Monese CEO.

I recently switched to a bank that is supposedly 'different from the rest'. Except it isn't really. The app is horrible to use - it's design is terrible and if I want to do anything more than view my balance or transfer money to an existing payee I have to login to their website which takes about a million hours to get through the security (seriously, it's ridiculous). To set-up Apple Pay I had to phone them, yes actually speak to a human being who asked for my every intimate detail just to complete an action that should be so simple.

As I mentioned earlier, it is these annoyances that the start-ups understand and can use technology to do something about.

It's not just the high street bank that's being disrupted either. A whole range of financial services are being switched to mobile. Take Curve for example. Curve is a service that puts all of your cards in to one and guess what, it's all controlled from your mobile. Just scan all of your cards including Visa, MasterCard and American Express and set one as your default. Then just use your Curve card (which is a MasterCard) anywhere. If you want to use a different card just select it in the app. You can even use your American Express in places that don't accept it, and importantly get the same rewards and protections. It even lets you get cash from your credit card without paying fees.

Investments and stock market trading are another financial services area being disrupted. Take a look at Nutmeg or Robinhood who are offering free or very low rate investment and trading platforms all built around simple and easy to use mobile apps.

So, back to the exam question, should the high street banks be worried? Absolutely.

 

What do you think of the current banking industry, can it change and keep-up? Leave your comments below.

If you enjoyed this article or found it useful please do hit like and share :)

 

 

Sources:

[1] http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11212515/Full-investigation-into-the-dominance-of-big-four-UK-banks-confirmed.html

[2] http://www.techworld.com/mobile/mondo-ceo-tom-blomfield-explains-how-build-next-generation-digital-bank-3618866/3/

 

The Road to Autonomous Vehicles

We all know that autonomous cars are coming but a question that is often asked is when. Well the following is how I like to think about how the development of autonomous vehicles will unfold. I like to think of it in four stages:

Stage 1 - Feet-off:

This stage has already been reached, in fact, it was reached a few years ago with the introduction of adaptive cruise control and slightly more recently traffic jam assist where the vehicle will slow down even to a halt and then progress again once the traffic moves. Currently the majority of a journey could be completed feet-off.

Stage 2 - Hands-off:

We're almost at this stage as most higher end vehicles allow the driver to take their hands off the wheel for a minimal amount of time and the car will steer along the motorway. Full hands-off is something that is certainly technically viable right now but is limited by safety concerns. As has been seen with Tesla's Autopilot people are idiots behind the wheel (or not in this case). This means that all manufacturers currently require a hand to be placed back on the wheel within 10s of seconds.

It'll likely be around 12-18 months before manufacturers allow full hands-off driving for extended periods of time.

Stage 3 - Eyes-off:

In this stage there still needs to be a driver behind the wheel ready to take over in case of emergency but that driver does not need to be concentrating on the driving or be doing any of the driving. Here you could see the driver perhaps in the drivers seat but reading a magazine or using their phone. This will be largely during motorway type journeys.

As with feet-off driving the technology is pretty much there with manufactures such as Volvo going through thorough testing and refinement. Interestingly, Volvo have pledged that by 2020 nobody will be killed or seriously injured in their cars and in the US since 2009 this has already come true for the XC90 and 9 other models.

Full eyes-off driving is probably another 3-5 years away for the mainstream manufacturers. Perhaps two years away before Tesla puts out a Beta product.

Stage 4 - Driver-off:

This is the final fully autonomous stage where no driver is required to be in the vehicle. This requires some quite substantial developments to happen not only in vehicle technology but in infrastructure, legislation and importantly culture. Following several years of eyes-off testing and refinement it's likely that the vehicle technology will be there and legislation will probably have caught up to an extent that innovators will find a way to bring driverless vehicles on to the roads.

Infrastructure is something that is a concern currently. Given how different roads and associated infrastructure is around the world there may be difficulties, for example, road works are often ad-hoc with no real standard way of closing off lanes and roads, how will autonomous vehicles navigate around ad-hoc road works? Autonomous vehicles will enable great changes to our cities as large car parks become unnecessary and a thing of the past there will need to be large drop-off areas created which currently doesn't exist.

The other thing that needs to happen is a culture change. People today are generally unsure about autonomous vehicles with many say they wouldn't trust or use one. However, as autonomous features are slowly introduced through stages 2 and 3 this nervousness will wane.

This level of autonomy is around another 10 years off, perhaps 15 years for the majority.

So that's how I think about the development of autonomous cars. Don't forget to follow for more posts in the future.