What Role Will IoT Play in Transforming Banking Sector’s Future?

By CIOReview | Friday, November 1, 2019

Today’s world is almost entirely connected to each other. All thanks to the Internet of Things (IoT). Banking sectors are integrating IoT technology into their systems for reducing fraud cases, identifying risks, staying ahead of their competitors, and delivering better services to their customers.

FREMONT, CA: Technology has transformed the world into a global village where folks can connect through laptops, phone, and other machines that make business transactions and communication much easier to carry out. Multiple sectors of the economy are making use of the technologies for simplifying their tasks, automating actions, and automating processes. One such sector is the banking and financial sector, where stakeholders are constantly looking for new ways of enhancing customer experience while delivering better services.

Internet of Things (IoT) plays a significant role in the banking domain. It possesses the capability of transforming the financial and banking sectors. In fact, according to research, there will be considerable growth in the usage of IoT in the financial industry. It is estimated that the market will increase to $25 billion by 2020. Since banks deal with the collection of data and huge data transfer, IoT will empower the banks and financial institutions to work smarter and save time. IoT enables banking enterprises to improvise customer experience, secure funds from cyber attack, manage risk and enhance the entire banking security system.

Below are some of the shifts that IoT will cause in banking and financial sector.

Improvement in Automatic teller machines (ATMs)

There are billions of ATMs across the globe. People interact with them in their towns, as well as when they are on a journey. It is usual for non-banking businesses, like convenience stores, nightclubs, and hotels, to have on-site ATMs as conveniences for clients.

ATM’s have been existing for decades. However, they are undergoing many improvements. With IoT, sensors are embedded that detect potential tampering that can indicate ATM theft attempts. Others allocate data, for instance, by tracking that which ATMs are being mostly used by people and when. Then, the responsible parties respond accordingly to keep these machines stocked with cash.

In addition, some ATMs are linked with other connected services such as smartphone apps. Today, many banks are leveraging the customers' facility to retrieve money without using their bank cards. The customers get single-use codes on their smartphones which serves a similar purpose as inserting a card.

With the support of IoT, banks offering these services are able to obtain statistics that reveal the number of people using their card-free service. Then, those entities later can make use of that data for marketing or client interaction enhancements.

People will have more ways to keep track of their spending

Budgeting is something that almost everyone gives priority to. With IoT, many applications have been introduced that link themselves to the bank account and enable the folks to set spending alerts. The apps send notifications when people reach too close to the defined upper limit; thus urge them to control their expenses. In this way, IoT assists people in staying within their budgets. For example, ieDigital company has service called Interact IoT that enables the banking customers to log in to their accounts and link them with an assortment of IoT devices intended to keep track of their spendings. There have been two devices compatible with the platform so far, i.e., Pavlok, and the Nest Smart Thermostat.

Specifically, Pavlok, initially, sends smartphone notifications if people are getting close to their budget. It provides stimulus, i.e., mild electric shocks to the wrist when folks cross their set spending limits. In Nest Smart Thermostat, people set the amount they want to spend on home heating every month. When they use up the whole amount, the app automatically turns itself down to a user-designated temperature, thus helping the user to save money.

Since the need for monitoring expenses is rising among people, financial institutions have begun to follow the lead of ieDigital. The institutions are finding ways to leverage IoT gadgets as tools to the customers to help them monitor their expenses.

Increasing personal banking services options

Many leading banks provide various personal banking services like checking accounts, taking automobile loans and many more. These services empower the banks to offer the best of its services to their customers. Some customers look for specific banks that fulfil the amenities required for their business.

Using IoT, banks have started adopting virtual assistants. People can make use of the technology to inform the banks about the loss of their debit cards, thus letting the institution block them immediately and prevent fraudulent transactions.

IoT has also made it easier for people to set up an account in a bank. For example, in the Irish market, AIB has provided its customers with the facility of opening their accounts via their smartphones. The app enables people to have a video chat with banking agents.

Supporting Banks in streamlining their communications

Banks have multiple departments which take care of the specific needs of the customers. For example, a loan specialist is available for the people who want to take a business loan.

Good communication is vital between different departments of the banks without any problems to maintain a high level of customer service. This is why wearables such as Gear S3 are designed for enhancing interbranch conversations. Preset messages like ‘your 9 a.m. appointment is here’ enable the bank employees to inform their colleagues without the need to walk to other departments or make phone calls. The wearables also have built-in microphones and speakers.

The technology has provided the banks with a better insight into their systems and have better control over their business and things around them. IoT in the financial sector is still at its planning stage. However, this powerful technology will soon revolutionize the whole industry and leverage the banks as well as its customers with amazing benefits.

Check out: Top Banking Analytics Solution Companies