Connected Finances: Top Benefits of Using IoT Technology in Banking

Technology has always been the main force behind changes in the banking sector, and now the Internet of Things is going to change the nature of banking itself. If we step back from such isolated technologies like blockchain or the smartphone and try to see the global picture, we easily notice that something is changing, and that’s the way of global digitalization in the financial sector.The Internet of Things is a flourishing field for innovations and it’s primarily designed to make our life easier. Yet, there are spheres that are only discovering IoT benefits. The financial industry is one of them.However, before we proceed, let’s see in the picture below where the IoT can be applied in general.IoT use cases an infinite number of articles can be written about any of the presented use areas of our beloved IoT. Let’s just sum it up.Smart Home is not just about smart lighting. You can easily extend any modern home appliances with the ability to place orders and making payments such as ordering food when your fridge shelves are empty. After all, it’s about comfort and reducing costs due to energy and effort saving.The scale goes up in the case of Smart Cities. Here we have traffic management, water distribution, waste management, urban security, and environmental monitoring. These are just a few examples. Basically, if you put a simple sensor in anything, it becomes smart, connects to the network and operates in the best interests of the urban population.Wearables are no longer used for solely data gathering. Many smartwatches, fitness trackers and smart rings have extended payment functionality. Banks are starting to embed various types of software for wearable devices, with some even developing their own gadgets and respective payment apps. As the Prime Indexes forecast, 60% of companies involved in finances are expected to switch to wearables as a typical payment tool.IoT devices in healthcare show much promise as well, making Connected Healthcare a new reality in combating illnesses. Gathered health data will assist in the personalized analysis of a patient’s health and making the treatment strategy more effective.The Industrial IoT (or simply the IoT) has a vast number of applications, all depending on the type of enterprise and business. Smart sensors, sophisticated software, and big data will further enable industries to optimize and automate their processes, adding value to the incorporated technologies.Smart Grids are about managing energy consumption and similar resources in an effective and traceable way. Not only will it help in analyzing consumer trends and behavior but it will also contribute to making our daily habits more reasonable and cost-effective.Farmers of the past could hardly imagine that one day their crops will be monitored by drones, humidity sensors, and growth analyzers. But that’s the way Smart Farming works now.The domain of Connected Cars is waiting for 5G or other high-speed technologies to kick in. With the super-fast data transfer, cars will become fully autonomous and assure their own maintenance, operation, and comfort of passengers. They will even be able to fill up the tank and pay for gas on behalf of the owner. In addition, smart vehicles can be used by banks as the opportunity to improve their customers’ experience and offer various services through them like integrated security boxes or ATMs.Marketing in general and in-store experience, in particular, can be considerably enhanced through additional connected devices, taking Smart Retail to a whole new level and making available solutions more personalized and convenient.Just imagine how billions of all those connected devices and clusters of networks incorporated into your payment system! The scope of opportunities and the amount of profit is just unimaginable.In our previous articles here, here and here, we touched upon some of the most outstanding use cases of the IoT in the financial sector. Below, we shed some light on the advantages of the IoT for banking systems, generally speaking, give you some real-life examples and warn about the barriers which are still there. Let’s round it up.Whenever wherever we look at what is happening in finances broadly, we will see that all have gone digital, with mobile becoming a must and basically just another channel for banks. Banking can be done wherever you are, you no longer need the physical bank.IoT in BankingThe pivotal point is that all of the essential features of digital banking are available to customers.BankingWhy So Beneficial?Fintech companies usually question the economic feasibility of IoT projects implemented in the banking and finance sector. Well, we can surely see their concerns since investments need counting and making sure that the project is a worthy one. Such a powerful technology as the IoT requires figuring out its appropriate uses.However, there is good news, since the Internet of Things has a few universal benefits irrespective of the location or scale of your financial endeavor. Let’s check out the most promising ones.Iot benefits in banking making It SimpleInternet of Things devices can considerably simplify day-to-day operations and reduce the dependence on the human workforce. As a result, we’ve got time-saving, enhanced productivity and balanced workflows. Gathered banking data can be analyzed much faster and more efficiently with the use of artificial intelligence and machine learning, so, in the end, making decisions becomes more transparent. When it comes to financial services, the Internet of Things will improve the accuracy and speed of data collection and expand the range of insights at hand.Since you can collect very detailed information about your clients, it allows you to perform a more profound analysis of their needs and see to their problems more efficiently, thus offering customized products. That’s an excellent approach to deal with business issues without bothering your clients directly analyze ThatIoT devices can collect and process data 24/7, providing the user with up-to-date information. Apart from analyzing your customers’ data to gain valuable insights into their needs, this technology is behind automation in trading and investment since it enables real-time market monitoring. Using technology to survey pricing engines, investors will be able to analyze market trends and select their respective business strategies.Moreover, the Internet of Things creates the possibility to manage risks in an effective way by gathering the above-mentioned real-time data about clients’ assets. It, in turn, leads to quality improvement of the decision-making process utilized by financial institutions smarter BranchesAlthough we are shifting away from bricks and mortars of the past, physical branches will still be present in the future. Well, at least some of them. So why not optimize them by using IoT technologies and ensure better customer experience?One of the most obvious benefits of integrating IoT devices is optimized capacity management at bank branches. Customer data is gathered, processed and shared in real-time, which enables managers to monitor the flow of customers who come to the bank per day and estimate the number of employees required to service them during peak hours. In addition, it helps you assess the amount of cash for ATMs at each location.In the end, bank owners will reduce the number of employees and cut costs, optimize waiting time for their clients and establish a communication system between different locations.Something similar was tested by a BMO Harris Bank. In their case, no humans were present on the spot, while users were primarily guided by chatbots and connected devices. Should any unpredictable question arise, there was the possibility to contact human employees using a video conference option.Digital BankingGood and BetterWe are pretty sure that you are already familiar with the universal banking truth: the more you know your clients the better services you can offer them. By providing clients with timely insights and personalized products, you raise the quality of their banking experience. You shouldn’t be an expert in psychology to understand that making tailor-made offers creates a sense of attachment to the bank that offers it.What is more, thanks to connectivity devices, a bank visitor will be able to make an appointment, check in via a smartphone and forget about waiting in a line. A service provider, on its end, will store the history of visits, know the range of services and FAQs. Citibank has already introduced a Bluetooth-empowered system extended with IoT beacons which provides users with 24/7 access to ATMs.Breaking Financial HabitsConnectivity can be the guardian angel of users’ positive financial habits and help them deal with spending indulgence. Let’s consider the example of Interact IoT, the first IoT bank, where users are equipped with shock wearables as part of an educational program.The user sets a credit card limit, and the wearable device tracks his or her spending during the day, sending a notification when he or she approaches the limit. Do not ignore this notification, or should we say the first warning, because the device then sends a shockwave to your wrist to stop you from further spending.The Internet of Things can also facilitate financial operations, e.g. saving patterns, balance estimation and budget planning.A safe and secure multitude of IoT authentication tools ensures robust data security. With the smart approach to implementing an IoT project in finances, we will be able to exercise technological control over each payment transaction, thus moving towards the Internet of Value. The latter can be described as a safe and monitored global environment where all transactions are controlled via a system of smart sensors and connected applications, with IoT technology functioning as a crucial safety regulator.In addition, the Internet of Things further improves the security of customer accounts due to the active use of encryption and authentication tools. It can also assist in lowering delinquency and default rates and cutting the black economy, because we tend to use cashless and less, with payments under stricter control, which minimizes the risk of fraud.Still, we should not forget that finances are one of the most vulnerable spheres that are prone to cyberattacks, and making your banking system secure is a must-have priority.Bonus. Smart ContractsSmart contracts based on blockchain technology are already in the focal point of the attention of many banks. The potential of this innovation to secure records of authenticated transactions is very appealing to financial establishments. For example, the Commonwealth Bank of Australia has completed the first global trade transactions between two banks with the use of blockchain contracts and the IoT.Internet of ThingsHow Do You Acquire Customers in the Digital Age?The landscape of financial services will certainly undergo some major changes. As we get smarter, banking and finances, and the tools associated with them are becoming more embedded in the world around us through technology. Basically, we can talk about behavioral change in managing our finances.About 2.5 to three billion people will come into the financial services space between the years 2010 and 2030. 95% of those will never visit a bank branch. They’ll get access to their value storage on a mobile phone. In the next decade, the bank account will be considered an artifact that is either in the cloud or on your mobile phone, not a physical artifact you got from the bank.We will no longer need plastic and a 16-digit number to make our payments. The volume of global payments via devices, including mobile banking, will definitely increase exponentially, along with the number of transactions done without conventional plastic card payments across traditional means.The next level of technology is voice-based artificial intelligence, personal smart assistants built into our home appliances, into our telephone and even into our vehicles. We may even think of smart glasses extended with augmented reality that will provide you with additional data you need to make decisions on the spot. These and similar technologies will increasingly embed banking into our world.Within that context, you cannot expect finances and banking to stay the same as they have been. Our reliance on the bank as a building, the bank as a place, has become less important because now we can bank 24/7. We start rethinking the way financial services should work.

Leave a Comment

Your email address will not be published. Required fields are marked *

Shopping Cart
Translate »