According to Gartner, there are around 21 billion connected “things” working worldwide right now. IoT has opened the door to endless opportunities for companies in virtually every industry. In the healthcare landscape, the internet of things can use wearable devices to transmit health data from a patient to a doctor in seconds.
In the industrial landscape, connected devices allow employees to automate crucial production tasks, increasing efficiency, and reducing waste. However, many people overlook how valuable IoT can be for the banking and financial sectors.
Although estimates suggest that around 50 billion people will own connected devices by 2025, banks are still struggling to make the most of this technology. However, as the world continues to change, and digital transformation happens at an incredible rate, this could all be about to change.
Let’s examine the potential of IoT in finance and banking.
Big Data and IoT in finance
Currently, around 40% of financial services businesses are experimenting with IoT – focusing specifically on Big Data.
To create secure, personalised, and effective experiences in any industry, data is a must-have. The amount of statistical data available from a range of devices in an IoT network makes it much easier for banking and financial businesses to track the customer journey and find gaps where security or customer service can improve.
For instance, retail banks can combine big data and IoT to offer personalised services to their customers. Rather than offering a one-size-fits-all approach, banks can create personalized offers using IoT capabilities to analyse various aspects of customer behavior. For instance, a bank might design an app that helps customers with budgeting based on their spending habits.
Data from IoT payments technologies could also have an impact on a bank’s ability to enable fraud detection and build detailed profiles for customers. The same data may also enable banking institutions to build partnerships with brands that could generate more relevant deals for clients.
The Benefits of IoT in Finance
The most obvious benefit of IoT for any business is access to valuable information. More data means better decision making, improved experiences, and enhanced opportunities for any bank or financial institution. You can even use data to predict how markets will fluctuate so that you can solve issues proactively. Other benefits of IoT in finance include:
- Improved customer service: Banking service providers are just like any other business. They need to deliver amazing experiences to their customers if they want to compete with other companies. Fortunately, service providers can use the real-time insights from IoT data to create more relevant experiences for clients. For instance, a bank might create an app that uses connections with a client’s mobile device to offer discounts from their favorite retailers.
- Better decision making: IoT helps businesses to collect useful data in the financial sector for things like credit risk assessment too. Through device-to-device communications, companies can gather vital information to determine what funding a client should access. Simultaneously, the overall data gathered through IoT ensures that banks and financial institutions can also make more informed decisions about where to invest in new technologies for the future.
- Improved payment security: IoT technology has the potential to improve payment security in a range of ways. For instance, using IoT, a bank could enable two-factor authentication whenever a client wants to withdraw money from an ATM. When the client presses a button on their phone, this tells the machine to accept the withdrawal. Some companies are taking this concept to the next level by implementing things like biometric tech. In the future, clients may be able to authorize payments with a fingerprint or eye scan.
- Fraud detection: In the same vein, IoT data gathering practices may reduce the risk of fraud for financial institutions. Using interactions between devices, banks, and financial institutions can see whether requests for transactions from a device are likely to be legitimate or not. It may also be easier to track where fraudulent requests are coming from. GPS technology on the phone may pinpoint exactly where a criminal is.
- Better monitoring: Smart interactions with IoT devices also help financial institutions to get more involved with the daily routine of a customer. For instance, insurance companies could potentially access better stats on how insured vehicles are working, and how frequently people are using each car.
What’s Next for IoT in Banking and Finance?
Right now, most companies investing in IoT for banking and financial perspectives are focusing heavily on real-time data gathering. The more information these companies collect, the safer and more relevant interactions with customers become.
Currently, the adoption rate for financial IoT alone is around 64% worldwide. IoT solutions are appealing to customers because they’re easy to use and convenient. These tools also support companies in collecting more valuable information about their clients.
Now that connected devices are increasing, with more people searching for “smart connections” in the technology they use every day, the economic benefits of IoT are growing. Financial institutions are gradually becoming more aware of the power that IoT has to offer. Some of the most promising use cases set to change the landscape include:
- IoT security systems: Security is crucial for any financial or banking company – and perhaps the biggest concern in this industry. The Internet of Things creates a secure and informative ecosystem for identity maintenance and access control. This ensures that connected devices can make financial groups more safe through everything from digital certificates, to two-factor authentication and biometrics.
- Wallet of Things: The growing security of IoT tools in finance means that companies can add apps and other tools to wearable devices, enabling improved contactless payments. Wallet-based tools in the digital landscape give consumers access to more convenient transactions, informative insights, and even shopping logs.
- Tailored products: To enhance their services, providers can track things like the safety habits of clients in real-time. In particular, insurance companies can base rates and rewards on things like driving habits and mileage. More data improves the precision of things like vehicle tracking and similar metrics.
- IoT-based contracts: IoT also has a connection with other disruptive technology in the banking and financial sector. Some vendors are beginning to add things like blockchain and smart contracts into IoT payment systems. This creates a more controlled, secure, and manageable environment for shares, money, property, and other essential financial exchanges.
Growth in Financial IoT is Greater than Ever
Ultimately, IoT has a part to play in virtually every industry right now. As the world becomes more digitally connected, empowering businesses means facilitating the right connections between teams and machines. The growth rate of IoT in the financial market is a testament to what technology like this can do in one of the most important landscapes.
Using the Internet of Things, brands can rapidly improve financial service offerings on a massive scale. The right connected technology improves risk management and introduces new strategies for security in a world of rapid transactions and eCommerce. At the same time, the IoT landscape supports better data gathering so that companies can collect important insights and support more relevant moments for clients.
Thanks to intelligent algorithms and tools, companies don’t have to compromise on customer privacy while collecting data, as they can avoid using too many personal identifiers. Systematic approaches to IoT also improves the shopping habits of customers with intelligent experiences and interactions.
If you’re ready to discover what your company can do with IoT, reach out to the team at Nice Network today.