Can the Banking Sector Benefit from IoT?
The fintech industry has transformed into the goliath of technological developments. Numerous startups have emerged globally because of the immense potential and demand for fintech. There has been an explosion of new technology and innovation because of the excessively growing competition in the industry.
IoT, short for the Internet of Things, is one outcome of the explosion that has gained tremendous importance because of its novelty, sense of originality, and practicality.
What is IoT?
IoT comprises a network of various devices connected to the internet. The internet link with these devices is the medium of communication, and the devices are varied objects like speakers, fridges, watches, locks, etc., that are internet-enabled. These devices are designed to transmit, store, and process data, for executing instructions and data analysis.
The number of devices currently connected to the internet is more than seven billion. IoT has become one of the hottest sectors within fintech, building a niche market in the consumer electronics department. Consumers these days are heavily reliant on technology, making them more receptive to novel technologies like operating the internet using objects other than their phones, tablets, and laptops.
IoT in Banking
Digital financial services and products have revolutionized the banking and financial industries. The first and most commonly used IoT platform is the ATM (Automated Teller Machine). ATMs have been in use for many years now.
IoT devices are the newest augmentation to the concept built around ATMs where consumers can use smart devices, such as their watches, speakers, and car systems, to conduct transactions and other activities.
The fintech industry has found an imminent addition with IoT stepping in.
How Banking Can Take Advantage of IoT
There is a lot for the banking industry when it comes to fintech. IoT offers several augmentations to the banking industry that could potentially become mainstream methods enhancing the efficiency of the industry, the variety and viability of services and products, and customer experience. Some of the ways by which the banking industry can benefit from IoT are:
Cashless and Cardless Payments
IoT enables consumers to pay digitally using smart devices without cash or cards. Some methods by which IoT consumers transact and conduct banking include paying for monthly subscriptions, placing online orders through prompt messages received on the devices, etc.
Wearable Devices
IoT comprises a diverse range of internet-enabled smart devices that come inbuilt with different functionalities, data storing capacities, and technologies. Some IoT devices come in wearable forms, which can be used longer, and for a wider range of functions like tap-and-go payments or e-wallets. Such functionalities supplement banking services in a more convenient and fun way.
Key Data Insights
The devices used in IoT platforms are designed to store and process data. Banks can use the data collected through these devices for analyzing human behavior, consumer needs, trends, and potential possibilities to enhance customer services. Artificial intelligence has become the go-to technology for most fintechs and fintech-powered banks.
Customer Experience
Banks and financial institutions can substantially enhance their customer experience by studying and analyzing their demands, queries, pain points, etc. They can also offer their customers personalized gamification experiences, which could help build stronger customer relations.
Automated Customer Verification
Banks can employ IoT devices to conduct verification, eKYC, user privacy, etc., to provide securer services and platforms. Innovative technologies like wearable digital identification, a concept by Nymi, are increasingly becoming a game-changer in the cyber security sector.
Improvement of Products and Services
By assessing the pain points and demands of their customers, banks have the opportunity to improve their products and services. Planning and strategizing products is an essential part of a successful business plan. Banks can considerably enhance their services and products by taking advantage of key insights into consumer behavior and needs.
Real-time Communication
Banks can employ IoT platforms to offer real-time 24*7 customer services to their consumers. Chatbots have gained prominence across different industries because of the enhanced customer experience. IoT platforms can also employ facilities like chatbots that provide real-time customer service for banking platforms.
Voice Instructions
IoT devices are operated through touchscreens, voice commands, etc. Nowadays, IoT devices allow customers to give voice instructions to their smart devices, through which they can also conduct banking and transactions.
The Challenges
Although the IoT industry is rapidly expanding its customer base, several challenges pose a threat to the industry’s growth and future. Cyber security is one of the main obstacles that hinder its success. Controlling cyber attacks and ensuring secure media and channels is essential with the growing cases of cyber crimes.
Another challenge the IoT industry faces is the lack of systemization across different IoT devices and platforms. Customers can choose IoT devices as per their needs and budgets. Most of these devices are designed differently, making way for countless ways of data storage, management, etc. Such an unoptimized system creates problems and leaves gaps for data manhandling, cybercriminals, etc.
Closing Thoughts
The IoT industry has become a rage in our digital age. Interacting with different devices to conduct transactions, make purchases, and carry out numerous other activities is convenient and fun. Consumers, especially younger generations, enjoy diversifying their engagement portals with technology. The growth of the IoT industry has seen incredible heights in the past few years. It is only a matter of time before the world of IoT expands enough to accommodate a much wider range of operations and commands, thus ensuring an impressive growth chart.
