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In a digital world, companies have the scope to capture market share than ever before by leveraging technology. Today, in an era which has seen exponential growth in digital technologies, financial services firms are proactively turning to new technologies to reshape and transform the industry in new directions.
In the Nordics and Western Europe, the new digital wave has seen the emergence of start-ups like CrowdCube (crowdsourced equity funding), Coinify (digital currency platform) and SBDA Group (machine-learning behaviour-prediction platform). Driven by advanced digital technologies, these start-ups are challenging the incumbents in the financial services sector with a new approach to solutions.
Among the various emerging technologies, visionaries in leading financial services companies are exploiting the Internet of Things (IoT) to achieve efficiency and speed, and offer innovative products and services to customers. The Internet of Things (IoT) has enabled financial services providers to transform their business models through the availability of real-time data from sensors along with advanced analytics.
Such has been the impact of IoT on the financial sector that the IoT in Banking and Financial Services Market report by MarketsAndMarkets predicts that the global IoT in BFSI market will grow from $249.4 million in 2018 to $2,030 million by 2023, at a CAGR of 52.1% during the forecast period. Undoubtedly, IoT is fast emerging as the most ubiquitous technological innovation of the century.
Financial services have long transitioned from dealing in the tangible such as stock certificates to the intangible like online bill payments. In the modern-day financial ecosystem, even money itself has lost its physical form. So, when we talk about the Internet of Things – the ‘things’ part might not arouse any direct relevance. But like we have been witnessing, and the analyst has been predicting, IoT is slowly penetrating every realm of life, and financial services is no exception.
The Art of Possible:
The Financial Services Industry (FSI) leaders are fast realising the potential benefits of having access to more comprehensive real-time data from their own and their clients’ physical assets by leveraging IoT. Let’s know more about how IoT is disrupting the financial services industry.
Focus on Personalised Customer Service
Financial services companies are using IoT applications to gather real-time data about their clients and analyse it to predict their behavioural patterns and specific demands. These insights enable businesses to offer tailored experiences to their customers and improve engagement.
In today’s day and age, a variety of devices such as smartphones, smart devices and even smart houses generate a constant flow of data. IoT enables businesses to create value from this data by helping store, create and analyse it. IoT also allows organisations to scale up their productivity and improve operational efficiency.
Financial services providers can leverage the generated data for research and marketing activities. Furthermore, in the BFSI space, real-time data proves invaluable for risk management, fraud detection and transaction cost analysis. IoT allows organisations in credit risk assessment through advanced technologies such as D2D (device-to-device) communication protocols and sensor implementation.
IoT Devices for Connected Banking
With the help of IoT devices, banks are providing holistic and connected banking solutions for consumer finance. The available customer data helps banks offer their customers value-added services, financial assistance, and customised products. Furthermore, it allows banks to reduce operational costs owing to increased productivity and reduced technology cost.
A leading UK bank implemented an IoT-driven connected banking solution which helped them shelve their legacy core banking system and increase operational efficiency along with achieving agility to deliver next-generation innovative customer-focused banking services.
IoT enables banks to offer automated cashless payments to their customers. IoT tools also help banks to provide financial advice to their customers based on their previous purchase behaviour.
IoT-Driven Enhanced Security
Smart IoT devices such as motion sensors provide the financial services providers with the capability to prevent revenue loss. For example, smoke and heat sensors installed in buildings can help monitor and better manage energy usage and security.
With the help of IoT-enabled security systems, financial services providers can instantly respond to suspicious activities. The system immediately sends out an alert whenever there is an intrusion in a bank or ATM.
A comprehensive network of IoT devices helps banks to automate their business processes. Customised IoT applications allow financial services providers to automate business processes such as financial requests handling, transfer of ownership of assets, among others.
An advanced network of connected devices and sensors enabled by IoT can help asset management firms to lock leased assets as soon as the contract finishes automatically.
IoT is acting as an enabler for next-generation ATMs that are vital for improving customer experience. Smart ATMs with mobile device integration offer services from transferring funds between accounts to cash deposits.
Enhanced Credit Card Experience
Leveraging the Internet fo Things, banks can enhance the overall credit card experience for their customers without the need to make costly changes to their point-of-sales (POS) infrastructure. IoT helps banks to enable two-way communication with the customers in real-time.
The emergence of the Internet of Things (IoT) in the financial services space has ushered an era of radical transparency which will threaten the business models of the incumbents in the industry.
The ability to access the large volumes of data generated by IoT devices would pose a formidable challenge for most of the financial services players. If at one hand, the opportunities provided by IoT are limitless, so are the challenges.