IoT and the Financial Services Industry: A Revolution in the Making

The proliferation of internet-enabled devices in the contemporary world has created both the possibility and the necessity of integrating such devices across a shared network. It is no mystery that the internet of things (IoT) and its applications are on their way to being utilized in the mainstream for uses spanning almost all domains. One of those fields is financial services.

Dawn of IoT in the Financial Services Industry

IoT is on its way to changing how we interact with the financial services industry. From automation of pending loan repayment notifications to constant real-time adjustment in insurance prices and from automated or online transactions to a better in-person banking experience, IoT is set to leave nothing untouched by its revolutionary gaze.

It is not merely for the sake of sophistication but to reduce operational inefficiency, increase consumer satisfaction, and maximize the revenue that the IoT technology is being prepared for integration with the financial services industry.

As a result of the combined benefits, companies and financial institutions are investing heavily in IoT technologies. According to a report, the IoT market size in the bank and finance sector is set to reach a staggering USD 2,030.1 Million by 2023.

In this blog post, we will look at the significant ways IoT is set to impact the financial services industry in the coming times!

IoT Technologies & Devices Being Used in Finance

As implied in the name, the Internet of Things (IoT) is a technology that involves intelligent devices that connect with the internet and perform various functions that needed manual efforts before. As far as the financial services industry is concerned, we are already witnessing the adoption of many such intelligent devices. Let’s have a look at them one-by-one.

Chatbots:

The mass availability of viable internet and internet-enabled devices will allow companies to leverage even more data points and observations to build an all-encompassing experience for the client.

Virtual assistants or chatbots allow financial businesses to provide 24/7 customer service. Moreover, they incorporate language processing and machine learning to offer a personalized experience to customers.

Essential data regarding past interactions and new data, which is beyond the exclusive scope of finance itself, will allow the financial service industry to generate meaningful outcomes out of situations it was previously powerless to deal with.

Smart ATMs:

Rising financial cybercrime through ransomware hacking is also a problem that can be solved thanks to developments in the Internet of Things. Several banks have recently experimented with Smart ATMs, which require neither chip-based cards nor PINs.

Here’s how smart ATMs work:

Step 1: Schedule a cash withdrawal session on the bank’s mobile application and pick a slot at the nearest ATM

Step 2: Visit the nearest ATM

Step 3: Withdraw your money using a QR Code, Iris Scanner, or NFC technology.

Several studies have claimed that such transactions provide better security than PIN codes and chip-based cards!

Contactless Payments:

While we are on the subject of withdrawing money, completing online transactions is set to become even more straightforward because of the Internet of Things!

IoT can be deployed to authorize payment protocols through a user’s cardiac signature, which a remote EKG device can measure. Integration of such an operation that guarantees security in an era of wireless frauds is becoming a reality because of the IoT.

Smart Bank Branches:

IoT is also more likely to contribute to the automation of the in-person banking experience. Along with reducing the scope for human error for individual tasks, IoT also promises to bridge the gap between consumers and their financial institutions.

From efficient slot-booking to quick transactions and problem-solving, Internet-of-Things can tap into multiple avenues to make the banking experience smoother for its users while at the same time protecting their physical and fiscal well-being.

A smart bank branch allows customers to…

• Deposit and withdraw cash
• Issue new cards
• Provide live customer support through video
• Integration with mobile phones and other devices

Atlanta-based NCR company has developed a bank-in-box concept and they claim to perform up to 80 percent of tasks that a typical bank branch does. Such concepts are bound to proliferate as banks look to reduce huge investments being made in running so many branches.

7 Ways IoT is Changing Finance Industry

Personalized Customer Service:

One of the most critical consequences of IoT in the financial services industry is how customer services can be provided efficiently and effectively. Here, due to IoT scenarios such as the pandemic where mediation by a device can help save people’s lives, it can be played out in a much safer way without compromising the quality of the services being provided.

Further, such services can be accessed anywhere: in the comfort of your home, through your watch if you are on the go, and so on! Due to IoT, not only is the provision of primary customer services likely to improve, but companies will more easily be able to spot how and where the experience is not proceeding smoothly.

Improved Decision-Making:

It is common knowledge that investors and companies are constantly on the lookout for movement in the stock and financial markets regarding their stocks and other financial assets.

Here, funds and investment institutions have already started more efficiently observing the relationship between the market’s trends and its movements. Traders’ activities can be monitored in real-time across devices to create nearly perfect conditions for market trading and competition.

IoT helps investors and traders by providing the below features:

• Real-time data scanning for profitable investment opportunities
• Discovering originators of autonomous trades
• Create automated trading and investment strategies by performing data analytics

Increased Transparency:

One of the most critical features of the IoT is its contribution to increasing transparency between parties in a transaction. Experts believe that within the next 10 years, nearly all payment and financial transactions will become automated and online.

In such a world, transparency is likely to suffer in the absence of some way to integrate the collection of vast amounts of data points across different locations under a common network. Here, insurance and finance companies are likely to willingly make assumptions that might impact their price points or ignore the necessity of making assumptions at the profit cost.

IoT removes this false choice by creating and studying as many observations as possible. For example, an insurance company can check the legitimacy of a claim by analyzing the driving patterns of individual drivers.

Real-time Data Gathering:

Another crucial dimension of the IoT paradigm emphasizes automatic data collection and verification across multiple databases. Achieving operational access to various systems that might be running different platforms cannot be accomplished very quickly without IoT-based technology.

Access to multiple devices means a customer can check whether a bank branch is crowded at a given point in time, saving overall operational cost and time of each interaction or transaction while at the same time maximizing the value of the given interaction or transaction. This also means hassles such as verifying beneficiaries, authenticating transactions, or verifying identities are now likely to take significantly less time.

Improved Security & Fraud Detection:

Apart from enabling ultra-fast payment methods such as the cardiac signature or NFC, the Internet of Things can also serve as a ledge across which a transaction is recorded.

While the Internet of Things cannot rival the secure nature of Web3 based currencies, it comes very close due to the fact that a transaction is more likely to be flagged when appropriate when an entire network of devices recognizes its inauthenticity. Moreover, the IoT can also help trigger countermeasures such as blocking ATMs or even entire branches from making transactions or being even physically accessible to anyone but authorized personnel.

Automation in Transactions:

The Internet of Things is also likely to help with the execution of conditional policies which involve rights over assets. For instance, IoT is not merely used by financial institutions or funds to determine the risks involved in a given transaction but also for automating commands involving seizing or blocking stolen or invalid credit cards or other chip-based devices.

IoT can further help pinpoint the origin locations of transaction requests or billing addresses associated with a given transaction, leaving possibilities that it might also be heavily utilized for executing planned payments such as loans, mortgages, trades in future stocks, and many more!

Wearable Payments

Another exciting prospect of IoT is wearable payments. It is going to transform the way we pay bills, make payments, and do banking transactions. Here’s how wearable payments are going to be beneficial:

• Banks and stores can get customer data from their wearable devices and send relevant information/announcements. This helps them interact and build instant relationships.
• Wearable devices facilitate faster payments for crowded places like subway stations or stadiums.
• They can replace payment apps and pave the way for more convenient transactions.

Developed by Google, Google Wear OS allows you to perform transactions in 40 countries including US, Canada, UK, Australia, and Spain.

Concluding Thoughts

If all the above points sound like a revolution, we suggest you wait as what we’re seeing is just the beginning. The era of IoT in financial services is just getting started, and if you work for a company in this industry, you can ignore it at your own peril.

To keep your business toe-to-toe with technological developments, you must constantly educate yourself about the latest happenings. Moreover, you should be bold enough to try things even if nobody else has adopted things yet.