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Interacting without human intervention - the Internet of Things (IoT)

Every second, 127 devices connect to the internet for the first time. The volume of connectivity is increasing rapidly, driving innovations in the field and cybersecurity solutions that are becoming increasingly necessary as we make the leap from the physical to the digital. This area also offers growing investment opportunities.

The Internet of Things (IoT) is defined as the grouping and interconnection of devices and objects through a network, either private or public (internet), where all of them can be "visible" and interact, the goal being to offer enhanced services and processes. This term, first used in 1999 by tech pioneer Kevin Ashton, originally described a production line optimization system where sensors act as a computer's eyes and ears, enabling it to see, hear, touch and interpret, thus converting information from the physical world into digital information. Today, production line connectivity has given way to superconnectivity — all kinds of objects or devices in everyday life contain sensors.

Any imaginable thing can be connected to the internet and interact without the need for human intervention; the goal is machine-to-machine (M2M) interaction. The Internet of Things is making the world around us smarter and more responsive, merging the digital and physical universes. According to McKinsey Digital magazine, 127 devices connect to the internet for the first time every second.

One example of IoT applied to mobility is autonomous driving. Although driverless cars are not yet an everyday item, the technology behind fully autonomous vehicles is undergoing rigorous testing and development. Statista predicts that around 2025 we will see a jump in partially automated vehicles, when the market will reach $36 billion.

As the IoT ecosystem continues to grow, cybersecurity systems and innovations in connection technologies will become increasingly important. We can identify three areas of progress:

Main innovations in Internet of Things (IoT)

1. 5G networks

5G is the fifth generation of mobile networks. According to National Geographic, the fundamental difference with respect to its predecessor, 4G LTE, is a significant increase in connection speed and a sharp reduction in latency, i.e., response time.

Previous network generations (1G, 2G, 3G, 4G) were created with the aim of improving human communication. In contrast, 5G has the additional goal of simultaneously connecting a greater number of devices — vehicles, robots, urban furniture (traffic lights) — and enabling them to exchange information in real time.

2. Cloud computing

Cloud computing is the only technology that has the potential to quickly and flawlessly process the volumes of data that are produced by the Internet of Things.

Identity management platforms are one such solution for providing data security.

3. Sensors

Sensors are sophisticated devices that are used to detect and respond to electrical or optical signals. A sensor converts a physical variable (e.g. temperature, blood pressure, humidity, speed, etc.) into a signal that can be measured electrically.

Sensors are among the core components of the IoT. For example, automatic doors respond to motion sensors.

As always, these trends offer numerous investment opportunities. Our experts at Santander Private Banking actively track the performance of companies involved in these fields, such as the Internet of Things, enabling them to identify new investment opportunities, all with the support of the Future Wealth advisory framework.

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