The banking industry is known to be steady, conventional and vulnerable to bureaucracy. For these reasons, the sector can be comparatively slow in executing tech innovations.
While retail, automotive and manufacturing sectors have covered the way for IoT advancements, the banking industry is still slowly seizing up.
Fintech startups and newcomer banks are the first to apply the opportunities given by the Internet of Things. Are these innovations worthwhile? Let’s see some of the Internet of Things banking applications.
The financial Internet of Things is going vigorous and here are a few statistics to prove the point:
- The acquisition rate of financial IoT is 64% worldwide. Bank customers like End-To-End IoT solutions due to diminished transaction fees. IoT directly connects a business with a bank, hence there’s no requirement to use Visa and MasterCard gateways. Both are known for high credit card processing fees, ranging from 1.9% to 2.5% per transaction.
- Connected devices are on the boom as per Statista, there will be over 75 billion of such by 2025.
- It is calculated that the global economic advantages of the Internet of Things in finance will reach $2 trillion by 2020.
The financial IoT market growth rate is exponentially increased. However, some banking companies do not apply IoT innovations or do so on a small scale.
Uses of IoT in Banking
The Internet of Things can drive the financial industry to the next level. While most IoT acquisition scenarios in banking seem excessively difficult and far-fetched, the speed of IoT development shows that connected banking is within reach.
1. Wealth management personalization
Utilizing data processing algorithms to generate wealth management insights is a general practice. The Internet of Things in financial services will only improve the accuracy and speed of information collecting and extend the range of available insights. IoT-enabled wealth management solutions will also alert users in case their financial stability is under threat.
2. Improved payment security
IoT in financial services will allow new forms and tools for payment – containing smart cards, biometrical tokens and more. ATM-based transactions as we know them are probably to vanish in favor of devices that can use smart card technology.
IoT will allow wearable payment systems. Instead of carrying credit cards that can be easily lost or stolen, you will be able to pay using a wristband. A few years ago, Barclays has already unveiled wearables for contactless payments.
3. Transaction automation
Such an application of IoT in banking empowers each payment transaction to be technologically managed. Here, IoT will be a crucial safety regulator.
4. Increased transparency
The future of IoT in banking means loan providers will get thorough data on customers: credit debt and history, asset details and value, as well as the yield of commodities a client creates (essential for agricultural companies relying on banks for loan services).
As a result, financial organizations will have better decision-making system for granting credits. IoT-produced transparency will offer banks some insurance as it minimizes the risk of dealing with irregular defaulters in the future.
5. Optimized capacity management
One of the ways to hold the power of the Internet of Things is by optimizing capacity management at bank branches. By collecting, processing and sharing customer data in real-time, branch managers will be able to track the number of customers visiting a bank per day, how much personnel is required to reach up to the peak efficiency and what are the ways to optimize the counters?
IoT will empower managers to recognize the amount of cash that requires being managed to cash dispensing machines at each location.
6. Voice assistants
IoT will assist banks accept voice-driven communications. Back in 2016, Capital One presented a unique skill for Amazon’s Alexa those empowered bank clients to process delicate financial data using a voice assistant. This way, the clients could approach their financial accounts in real-time and examine the credit card balance as well as the status of current loans.
Similar combinations were evolved for Google Home as well. In the future, it’s assumed that Capital One will not be the only institution to generate connected systems that are combined with voice assistants.
IoT FinTech Applications
As financial institutions become more aware of the IoT’s power these days, more innovations and favorable use cases make it to the market. Let’s see where this industry is now.
- IoT-enabled security systems. Above all uses are ensuring secure users into multiple devices. IoT assists to generate an ecosystem for access control and rectify maintenance.
- Wallet of Things. Such apps add safer IoT payments to wearable devices. Moreover, Wallet of Things provides user's real-time access to shopping logs and generates expense patterns.
- Modified insurance. To improve their services, providers can trace the safety habits of clients in real-time. More connected data will increase the precision of vehicle tracking and improve the number of metrics for analysis.
- IoT-based smart payment contracts. In fact, adding the blockchain ‘smart contract’ concept to IoT payments is an excellent idea. This combo generates secure, controlled and manageable environment for money, shares, property and other financial exchanges.
The Internet of Things and the banking industry provides a variety of opportunities in customer management, business process automation, new forms of payments and much more.