The IoT has been evolving in different spheres in recent years, due to the advances in technologies that sparked the digital revolution connecting almost every gadget or equipment we use with the internet. With COVID-19 lockdowns the use of banking services online became inevitable. Banks and financial organizations have to utilize a variety of innovative technologies like IoT, AI, ML to enhance customer engagement. The Internet of Things (IoT) is considered to be the next big thing in financial services. In the current global scenario, we are seeing a growing number of banks and financial institutions develop policies and strategies to embrace digitization by incorporating IoT into their operations. IoT can help banks optimize and improve their practices to advanced levels of quality, not only through improving their current processes but also by inducting innovation-driven techniques.
There are many possibilities and opportunities that IoT brings to the world of banking software solutions. And it goes on to get bigger as banks anticipate needs to solve problems and improve efficiency.
IoT Facilitating Banking
The global IoT market in the banking, financial services and insurance (BFSI) sectors is expected to reach $2030 million by the year 2023, registering a growth CAGR of 52.1% between 2018 and 2023. The growth in the banking industry can be attributed to the fact there has been an increased use of IoT devices.
IoT can significantly enhance the accuracy and speed of data collection and provide more accurate results. Due to IoT, banks can get real-time financial data for facilitating and improving the decision-making process.
Better Security of Payments
IoT can foster newer forms for payment, such as smart cards and biometric tokens. Since most devices are already using smart card technology, ATM-based transactions may become obsolete. IoT can also enhance wearable payment methods allowing to make payments via wristbands rather than carrying cards.
The conventional definition concept of payments will become outdated in many use cases as transactions become automated and integrated into other services – when machines are able to perform transactions with machines in real-time, practically any “thing” could provide automated payment experience.
Eventually, not only bank clients can benefit from this opportunity, IoT-based automated payments will provide greater convenience to banks, payment companies, retailers, and technology manufacturers.
The future of IoT in banking lies with the fact that lenders will be able to collect detailed data on customers thus providing some insurance and helping banks to stay away from the risk of unreliable debtors. Because of this, financial organizations will have a better decision-making process for giving credits.
What is more, with the use of IoT, banks will be able to offer a variety of customized solutions based on a customer’s behavior, motivations, and, most importantly, credit records.
Improved User Experience
IoT has a positive impact on banking customer services by providing regular insights and personalized experience. Thanks to IoT, bank clients can now use their mobile devices to schedule appointments and monitor their statuses. This way, customers check their status and don’t have to waste their time by standing in long queues.
Chatbots are commonly used in retail banking because they are an easy and relatively inexpensive way of automating customer service queries.
Expanding the Services Beyond Banking
IoT also enables financial institutions to become more customer-centric by expanding their services beyond the traditional ones. They can motivate customers by providing something beyond traditional banking services and rewarding them for achieving these goals.
Enhanced Security and Privacy
IoT integration has enabled banks to incorporate blockchain technology as part of their security risk management. Blockchain can prevent hackers from changing customers’ identity credentials during authentication, thus reducing the risk of identity theft and brute-force attacks.
On the other hand, the greater the number of physical security devices and connected systems integrated into an IoT network, the higher the risk of data theft. This has led to banks investing in IoT encryption and vulnerability testing tools aimed at securing data in transit.
IoT has pushed banks to prioritize cybersecurity at every level, from core networking infrastructure to mobile banking applications and beyond.