Apr 19, 2018

3 min

IoT: Digital Transformation Of Retail Banking


The Internet of Things is about launching the next phase of digital transformation. It involves various business areas including retail banking, in particular, the organization of bank branch offices and ATMs.

In the recent years, the digital transformation had a lasting effect on the financial services sector. AI, Big Data, Cloud Computing, Blockchain, and IoT are estimated to be used for developing new innovative customer services.

IoT rates as a much-promising technology, as it provides the optimal connection between customers and digital platforms within banking eco-systems.

Simple payments

Digital payment transactions will improve customer choice and extend payments landscape, involve new players e.g., mobile operator and hardware manufacturer.

Payments are expected to be driven by the following technologies:

  1. Mobile-based payments (NFS, SMS, QR-code)
  2. E-wallet and APIs
  3. Cash points/cash payments (cash deposits and crossed cheques)
  4. Point of sale payments (card machines, m-POS)
  5. E-payments (payment gateways, real-time payment processing), payments using wearables

The growing user-friendly mobile payments landscape will provide customers with seamless payment processing that makes banking and payment experience more convenient and simple.

Relevant Digital Transformation: Chances and challenges for banking


The traditional interaction with ATMs will be slightly modified due to the IoT integration.

IoT offers banks a better surveillance, ATMs optimization and management due to remote 24/7 device monitoring as well as instant messaging in case of threat or unauthorised physical manipulation.

All this will allow preventing ATMs attacks, increasing efficiency, providing continuous data feed based on user behaviour, and creating user-centered marketing campaigns using ATMs.

Enhanced customer experience

IoT plays a significant role in developing a strategy for bank´s digital transformation.

Digital branch offices will provide clients with an interactive customer experience. The main idea is to optimize benefits and personalize customer offers.

Wearables will enable even better personalization. The devices can be used to collect data in real time. Tailor-made offers can be then developed based on the real-time data collection, and sent depending on current situation.

Besides, bank staff can be equipped with laptops and tablets in order to provide services to clients at any place throughout the branch office.

Hence, IoT will build a bridge between customer generations. Step by step, elderly will adopt the new technologies, while millennial generation will be attracted by digital offers.

Real-time data collection

Smartphones and wearables are the ideal devices to provide customers with services anywhere.

Furthermore, they can help to collect a great amount of personalized data. Data collection performed using Data Analytics and AI allows developing new services. Thus, banks will be enabled to create totally new customer profiles.

Digital risk management

There are some difficulties in digital banking services to accurately authenticate digital customers. IoT can help banks to innovate risk management and platforms access. The authentication can be supported by biometric sensors and significantly enhance the existing authentication process. Based on generated data and social media information, banks will be also enabled to provide their services to underserved customers who are usually not able to use bank services due to their profiles.

Unlimited options for banks

With the IoT market entry by such giants as Amazon and Google (in particular for smart home devices and IoT eco-systems), the borders between private and public sphere, inside vs. outside sales will be very likely blurred.

Connected vehicles will extend the potential of IoT through transmission of important data while driving. This information can be used to create a more precise customer profile for banks and financial institutions.

The new EU regulations (GDPR) obligate banks and financial institutions to secure private data using cryptography and cyber-security.

At the same time, the IoT technology provides banking sector with a great opportunity to develop new innovative services and improve their competitiveness.

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