Capitalizing IoT Roaming for Data and Financial Clearing Houses: the Role of Cloud and AI
We're about to witness a huge connectivity revolution. Juniper Research predicts that roaming connections will soar by 350% in the next five years, thanks to the explosion of IoT devices and the rollout of 5G networks. With the number of IoT devices growing, the amount of data they generate and the complexity of managing that data are skyrocketing along with the number of financial transactions. This presents both a challenge and an opportunity for financial clearing houses.
Why a challenge? Operators struggle to make enough money per connection, and the average revenue will be even lower over the next five years, from $0.08 a year in 2023 to $0.05 in 2028. As a result, revenue per connection is shrinking for data and financial clearing houses as well.
As a software development team experienced in automating financial clearing operations for roaming services and building an IoT platform for a major national provider in Europe, we at Flyaps try to keep our finger on the pulse and carefully monitor the market. In our opinion, the time to prepare your technical infrastructure for upcoming changes is running out, so if you want to come out on top, better arm yourself with some insights.
Keep reading, as we’re about to discuss the role of cloud and AI tools in capitalizing on IoT roaming. But before that, we must cover the key drivers of IoT roaming in 2024 and onward.
What drives IoT roaming in 2024?
According to Juniper Research, two main drivers are causing the rise of IoT roaming. Let’s take a look at them.
The rise of IoT roaming
Our everyday lives are becoming saturated with IoT devices. Our coffee makers start brewing as soon as our alarms go off, thermostats adjust to the perfect temperature, robot vacuums tidy up houses by schedule, and cars communicate with traffic systems – all thanks to IoT.
And there's going to be more: the number of these IoT devices is set to explode from 2.9 billion in 2023 to 6.4 billion by 2028. And it’s not just about having more physical devices; it’s more about advanced devices that move across different networks. Roaming IoT devices will jump from 146 million to 595 million in the same period.
So what’s driving this surge, except for our convenience in day-to-day life? Enterprises and companies that operate globally. They rely on IoT to keep complex supply chains that span countries and even continents running smoothly. For example, a global retailer can track shipments in real-time, ensuring that products move efficiently from factories in Asia to stores in Europe and America, reducing delays and minimizing costs.
Want to know more about how IoT becoming a game-changer for telecom? Read our dedicated article “IoT in Telecom: How It's Impacting the Industry.”
Permanently roaming IoT devices
Have you ever wondered how your packages seamlessly travel from one country to another or how farms in remote areas manage to stay so high-tech? The answer often lies in permanently roaming IoT devices – devices that stay connected away from their home network for over 90 days. They often come pre-configured with a ready-to-go setup, complete with an established home network. This means they can be deployed quickly without needing experts to set them up.
Let's say a logistics company manages a fleet of refrigerated trucks transporting perishable goods like fresh produce and pharmaceuticals. Using permanently roaming IoT devices, they can continuously monitor the temperature inside each truck. If a truck's cooling system starts to fail, the IoT device sends an alert, allowing for immediate corrective action to prevent spoilage. This capability ensures that goods arrive fresh and intact, saving the company from potential losses.
In agriculture, imagine a vineyard using advanced IoT sensors. These sensors continuously keep tabs on soil moisture levels and instantly send updates to a central system. From there, the system automatically adjusts the irrigation, making sure each vine gets just the right amount of water. This not only boosts grape quality but also amps up overall vineyard efficiency.
You may be wondering, if IoT is becoming so widespread and beneficial to all kinds of businesses, why did we say that operators aren't generating enough revenue? The answer lies in low-power wide-area networks (LPWA), which we will discuss in the next section.
The problem with LPWA networks and how they affect IoT roaming monetization
LPWA networks are specifically designed to connect IoT devices that don't require much energy to operate over large geographical areas. For instance, consider a fleet of delivery drones equipped with LPWA technology. These drones can travel long distances and provide real-time location updates while consuming minimal power, making them perfect for large-scale logistics operations.
Researchers predict that by 2028, LPWA networks will account for over 80% of all IoT connections globally. Still, the average revenue per LPWA roaming connection is expected to decline over the next few years, dropping from $0.08 in 2023 to approximately $0.05 in 2028.
So, why does it happen? It is challenging to generate substantial revenue from LPWA devices primarily because they typically transmit small amounts of data, which limits the revenue operators can earn per connection. According to Juniper Research, there are competitive pricing pressures in the telecommunications industry. Operators are forced to offer increasingly lower rates to attract and retain IoT device connections. As more operators enter the market and the number of IoT devices continues to grow, the competition intensifies, leading to a race to the bottom in pricing.
The challenge with LPWA may look unsolvable. However, in 2024, businesses in the telecom domain still have a chance to improve their financial results from IoT roaming. They can do this by focusing on increasing scalability which will allow them to provide high-quality services. It will be crucial, especially for those who work with large operators in emerging markets. In the next paragraph, we will discuss how exactly they can become more scalable.
How to improve scalability and expand capacity to monetize IoT
Without scalable and flexible solutions, clearing houses risk becoming overwhelmed by the data influx IoT devices generate. Moving to the cloud and adopting micro-segmentation techniques are just the right ways to solve the problem.
Move to the cloud
Let's say you own a financial clearing house and you face significant challenges managing the exponential growth of IoT data with your traditional on-premises infrastructure. Your existing setup struggles to scale efficiently, leading to performance bottlenecks that hamper your ability to provide timely and accurate clearing services.
To address these issues, you can move to a cloud-based solution. For example, you can partner with AWS, a leading cloud provider, to use their scalable infrastructure. Like all top providers, AWS has many supporting services that you can use to build your cloud infrastructure. You can deploy Amazon S3 (a storage service) for scalable and durable object storage that can handle huge amounts of IoT data. You can also use Amazon EC2 instances to provide the necessary computing power. Amazon Kinesis Data Streams can be used to capture and store real-time data streams from IoT devices. And the list goes on and on.
Such a transition to the cloud brings several key benefits. Firstly, automatic scalability allows you to handle fluctuating data volumes without performance degradation. Real-time data processing capabilities improve the speed and accuracy of your clearing operations, enabling you to offer more timely services to your clients. The cost-effectiveness of the cloud's pay-as-you-go model significantly reduces operational expenses compared to maintaining and upgrading on-premises hardware. Additionally, cloud-based solutions require less maintenance effort, freeing up resources for strategic initiatives.
As an example, for our client Yaana Technologies, replacing a legacy desktop system for roaming analytics with a custom cloud-based solution has led to acquiring global clients such as Orange Group, Hutchison 3G, and VEON Ltd. All because cloud migration allowed us to enhance existing functionality and add new features, including interactive dashboards and advanced calculation algorithms, without compromising network performance.
For another of our clients, a global provider of roaming services and telecom BI solutions, cloud migration became the perfect solution to scale their operations. They had an old monolithic internal system and many different products. So we brought together all their separate applications, internal and external, into one cohesive system using microservices. These microservices introduced greater flexibility to add, remove, or change services as needed. As a result, the roaming provider is now able to deliver new solutions more quickly, and the performance of their existing solutions now improved, as well as the experience for their customers.
For more practical tips on how to move to the cloud read our article “A Roadmap to Telecom Cloud: A Comprehensive Guide to Embracing Telecom Transformation Through Cloud Adoption.”
Adopt micro-segmentation techniques
Imagine a financial clearing house managing IoT traffic from various sources, including smart meters, connected vehicles, and wearable health devices. Each of these devices generates different types of data with varying levels of sensitivity and requirements. The best way to handle such traffic is to adopt micro-segmentation. This technique involves dividing a network into smaller, distinct segments or microsegments to isolate and secure individual workloads. In the telecom domain, micro-segmentation is often used to isolate different types of traffic based on various parameters such as device type, application, geographic region, or data sensitivity. With this data, tariff strategies can reflect current market trends and consumer demands, leading to more accurate and effective tariff plans.
Using micro-segmentation for large, complex workloads like roaming, especially IoT roaming, can be challenging. That’s why AI is often used in this process. The use of AI for a financial clearing house starts with the selection of different AI algorithms, depending on the complexity and nature of the data. Clustering algorithms such as k-means and DBSCAN, classification algorithms such as decision trees and random forests, and neural networks are chosen to handle different aspects of the data. The AI model is then trained using historical data to learn patterns and relationships within the data.
Once trained, the AI model groups similar data points into micro-segments based on the patterns identified. For example, clustering algorithms can group customers with similar buying behavior and preferences. This detailed segmentation allows the clearing house to understand the specific needs and preferences of each micro-segment, enabling precise targeting.
Moreover, AI systems continuously analyze incoming data, allowing segments to be updated in real time. This dynamic approach ensures that segmentation remains relevant and accurate, adapting to any changes in customer behavior or market trends. Based on these insights, the AI system can personalize marketing messages, product recommendations, and offers for each micro-segment, leading to more effective and tailored communication with clients.
For example, if a particular micro-segment consists of customers who frequently make high-volume transactions, the clearing house can offer specialized services or incentives tailored to the needs of this group. This personalized approach improves customer satisfaction and increases loyalty and engagement, leading to better business results.
Planning to move to the cloud or adopt micro-segmentation? Consider Flyaps as your technology partner
After 11 years in software development, we've worked with many industries, but telecom has always stood out as a key area where we've had a lot of success. We've learned a lot from these experiences, and we're confident we can help you rebuild your infrastructure to meet new challenges. Here are just a few reasons why we believe we're the right partner for you.
Expertise in cloud migration
With a skilled cloud engineering team that successfully works with all of the top providers, we at Flyaps can help you move your infrastructure to the cloud. Our expertise ensures minimal downtime, data integrity, and efficient transition from on-premises systems to cloud-based solutions as it was with Yaana Technologies.
Automation and efficiency
Our expertise in automating financial clearing for roaming can be directly applied to streamline financial processes in clearing houses. With our solutions, we can automate your financial workflows, reducing the need for manual intervention, speeding up processing times, and minimizing errors.
Advanced analytics and AI integration
With a strong background in AI, Flyaps can integrate advanced AI-driven analytics into the financial clearing processes. This enables better decision-making, predictive analytics, and enhanced operational intelligence.
Looking for software developers who know industry best practices and have proven experience with cloud and AI? Drop us a line!
