The banking industry has a reputation for being slow, conservative, and bureaucratic. As a result, the industry may be hesitant to adopt technological advancements. While the retail, automotive, and manufacturing industries have pioneered the way for IoT improvements, the banking sector is still lagging behind.
Fintech firms and upstart banks are among the first to take advantage of the Internet of Things. Is it worth investing in these innovations? What are some financial applications based on the Internet of Things? Is IoT-enabled banking the way of the future?
IoT Technology and the Future of Financial Services
According to Reports and Data, the IoT in banking and financial services market would be worth more than USD 12.17 Billion by 2028. Banks and financial service providers are expected to make use of this technology’s possibilities.
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IoT Applications in Banking
Without a doubt, the Internet of Things has the potential to take the financial industry to the next level. While most IoT adoption scenarios in banking appear unduly ambitious and far-fetched, the expanding number of IoT development solutions in this industry demonstrates that connected banking is possible.
Here are some of the most promising IoT in banking instances that are just around the corner.
1. Individualized Wealth Management
It’s customary to use data processing algorithms to get wealth management insights. In financial services, the Internet of Things will improve the accuracy and speed of data collection while also expanding the range of possible insights. Users will be notified if their financial stability is threatened by IoT-enabled wealth management tools.
2. Payment Security Has Been Improved
Smart cards, biometrical tokens, and other new payment formats and tools will be enabled by IoT in financial services. ATM-based transactions are likely to be phased out in favor of smart card-enabled devices.
Wearable payment systems will benefit from the Internet of Things. One will be able to pay with a wristband instead of carrying credit cards, which are frequently misplaced or stolen. Barclays already offered wearables for contactless payments a few years ago. PingIt (formerly bPay) allows customers to send and receive payments via wearables, as well as check their balance and credit history.
3. Automated Transactions
Each payment transaction can be technologically regulated using this type of IoT application in banking. The technology will eventually allow for the creation of the ‘Internet of Value,’ a secure and monitored international trading environment in which all payments are managed by a system of smart sensors and connected apps. IoT will play a critical role as a safety regulator.
4. Increased Openness
The future of IoT in banking means loan providers will have access to precise information about their customers, including credit debt and history, asset specifics and worth, and the yield of commodities they create (crucial for agricultural companies relying on banks for loan services).
As a result, financial institutions will have a better credit-granting decision-making system. Banks will benefit from IoT-induced openness since it minimizes the danger of dealing with untrustworthy borrowers in the future. The data offered by IoT will, among other things, provide banks with flexibility that they currently lack. Banks will also be able to accurately determine the worth of commodities held by a debtor, which is currently impossible.
5. Optimized Capacity Management
Optimizing capacity management at bank branches is one approach to take advantage of the Internet of Things. Branch managers will be able to track the number of clients visiting a bank per day, how much manpower is needed to achieve peak performance, and how to optimize the counters by capturing, processing, and exchanging customer data in real time. Managers will be able to forecast the amount of cash that needs to be routed to cash dispensing machines at each site thanks to the Internet of Things.
6.Voice Assistants
The Internet of Things will assist banks in adopting voice-driven communications. Capital One released a one-of-a-kind skill for Amazon’s Alexa in 2016, allowing bank customers to use the voice assistant to handle sensitive financial data. Clients may then go into their accounts in real time and examine their credit card balances as well as the status of their current loans.
Google Home has also gotten its own set of integrations. Capital One isn’t anticipated to be the first financial institution to develop connected systems that work with voice assistants in the future.
IoT Benefits in Banking Services
Many fintech firms that want to get started with IoT implementation are hesitant because they are unsure if the investment will be beneficial. While the Internet of Things’ possibilities in the banking business and a few other industries are well-known, the financial sector has yet to find out how to best employ such a powerful technology.
The good news is that, regardless of the size or location of a company starting a connected project, integrating IoT in banking has some common benefits. The following are the most promising:
Improves Financial Habits of Users
Users can use connected gadgets to develop better financial habits and cut overspending. Interact IoT, the first IoT bank, has used shock wearables as part of a user education campaign.
A wearable will track a user’s spending throughout the day after they’ve established a credit card limit. Users will be warned when they get closer to the limit. A wearable will transmit a shockwave to a user’s wrist if they ignore a notification, reminding them not to spend any more.
Improves the Quality of Banking Services
By providing clients with timely data and a personalized experience, the Internet of Things has an impact on banking customer care. A guest might arrange an appointment and verify it on their smartphone thanks to connectivity. Customers will not have to wait in line if they know when it is their turn at the counter.
A service provider, on the other hand, will be able to keep the client’s visit history, as well as the list of services they utilize and frequently asked questions. Citibank, for example, has already implemented a Bluetooth-enabled system with IoT beacons that allows users to use ATMs at any time of day or night.
Increasing the Number of Services Available Outside of Banking
The Internet of Things enables banks to become more consumer-centric, increasing their service offerings beyond typical banking services. For example, U.S. Bank has launched an IoT program to encourage its customers to maintain a healthy lifestyle. Users will receive bonuses and financial prizes for fulfilling achievements.
Branch Banking Efficiency Is Improved
The modern branch system is at peril as a result of mobile banking. Financial service providers are turning to the Internet of Things and banking applications to ensure that a traditional approach still adds value. As soon as the user enters the bank, biometric sensors will collect data and inform the main system.
Improved Credit Card Usage
The Internet of Things also allows for the creation of interactive credit cards. A bank client interacts with a digital display instead of a piece of plastic, which allows them to ask the bank a question in real time, change credit card limit settings at the shopping site, and so on.
Interactive credit cards will result in marketing personalization and increased client assistance speed for service providers. While smart credit cards have yet to become widely used, a project to that end was announced during the 2018 Mobile World Congress.
Upgraded ATMs
At times, modern ATMs can appear antiquated and inconvenient. By connecting ATMs to bank branches and making them completely manageable via a smartphone, the Internet of Things has the potential to change this experience.
A user will be able to find the closest ATM to their present position using motion sensors. In the event that a machine fails, a connected model will send the information in real time. A service provider will be able to call an engineer as quickly as feasible as a result of this, reducing equipment downtime.
Business Procedures That Are Automated
IoT systems can handle requests, automatically disable credit cards in the event of late payments, and transfer asset ownership, among other things. Instant loan processing and collateral monitoring will be possible thanks to the IoT as a tool of automation.
