Internet of Things is traditionally associated with wearable devices, connected cars, and smart homes. But IoT also transforms such a traditional and slow for innovation industry as Banking.
Consumers are demanding faster, frictionless service from anywhere and from any devices. That’s why financial institutions invest into R&D today to be competitive tomorrow.
IDC predicts retail banks to spend $16 billion on digital technologies in the upcoming years. While according to PWC banking is in top 10 industries investing in sensors.
If we look deeper into the nature of IoT we will understand why financial institutions are eager to innovate.
IoT-enabled devices can gather and share data, send signals to their peers and other systems. An appliance with the Internet connection can even become a potential ‘buyer’.
For example objects like light bulbs, refrigerators or coffee machines will be able to trigger replacement or maintenance service when it’s necessary.
Payment leaders Visa and MasterCard are planning to enable payments from smart devices.
Improved security and decision-making
With information coming from almost anywhere (social media, online transactions, smart shopping carts, health monitors etc.) Banks can make more nuanced and data-driven decisions.
They can precisely assess the risks, offer individualized products, and suggest relevant services once Data Processing mechanisms are integrated with the Customer Care.
IoT is often considered as a major security threat. There are legal and ethical requirements on how data can be gathered and treated. Like any other industry, banking needs powerful safeguards for sensitive information.
However, IoT may be a ‘security cure’ as well – with data on behavior patterns banks are able to spot suspicious ‘abnormal’ behavior (e.g. when a card or personal data is stolen).
User-centric loyalty program
The key to a successful loyalty program is to be individualized and relevant. That’s exactly what ‘Internet of Things’ is about.
Geolocation/ iBeacon technologies enable making contextual offers backed by cardholder profile and in-store information.
For example, if you visit a Mercedes Dealer, the bank may send you a special loan proposal while you are still in and surrounded by brand-new polished supercars.
All in all, IoT will cause dramatic shifts in every industry, and banking is no exception. Financial institutions can leverage IoT to keep up with the competition and provide more personalized, secure and quality service.