IoT in Banking and Finance: Making Bigger Changes in Financial Landscape

Undoubtedly, the advent of the Internet of Things (IoT) is bringing a new era of industrial transformation, which is reshaping our daily lives and technological experiences. In particular, IoT in the banking and finance industry is making some big changes. With the widespread connectivity provided by the Internet and various interconnected devices, banking services are becoming increasingly convenient. As technology continues to advance, the utilisation of IoT in banking and financial services can gain significant popularity.

The banking sector is mostly known for being slow, risk-averse, and burdened by bureaucratic processes. As a result, it tends to lag behind in adopting technological innovations. Unlike industries such as retail, automotive, and manufacturing that have embraced IoT advancements, the banking industry is gradually on its way to embracing IoT technology.

According to Blueweave Consulting, the global market size of IoT in banking and finance is expected to grow at a value of USD 17,090.26 million by 2029 with a CAGR of 53.16%.

Major Applications of IoT in Banking and Finance

Major Applications of IoT in Banking and Finance

Here are the crucial applications of IoT in the banking and finance sector, which redefine the customer experiences, enhance security measures, and streamline operational efficiency for financial institutions.

1. Smart Asset Monitoring

IoT empowers banks to effectively monitor their own equipment, evaluate branch assets, and enhance decision-making processes, especially in high-risk areas such as loan provision and risk management.

Here’s how asset monitoring helps banking and finance.

• Data collection on ATM usage can ensure optimal efficiency and strategic placement of machines. Hence, it minimises downtime through IoT-enabled information gathering.
• Collecting and analysing data about the personal records of clients identifies pain points which enable them to offer customised services that benefit both the users and the bank.
• Real-time collection of market fluctuation data allows banks to expand their presence in favourable locations.
• IoT in banking sector can strengthen security measures and enhance the monitoring of borrower activities and collateral.

One of the important aspects of IoT in banking and finance is that it can efficiently collect and process large volumes of data which may require the integration of AI systems and investments to enhance security further.

Implementing smart asset monitoring via IoT in banking can have a positive impact as it reduces operating costs associated with branch operations and improves customer retention rates.

2. Customer Insight

In today’s customer-centric business landscape, providing personalised experiences to both new and existing clients is crucial. The Internet of Things (IoT) is a valuable technology for banks to gain insights into the behaviour of their clients and debtors, as it allows for a deeper understanding of their requirements.

Here are some benefits of utilising IoT to collect consumer insights:

• Monitoring customer habits and financial behaviour allows for the accurate evaluation of their creditworthiness.
• Assisting clients in locating nearby branches saves them valuable time and minimises travel efforts through IoT-enabled branch identification.
• IoT can empower consultants with real-time customer data which results in faster and more accurate customer support.
• Gathering customer-related data and establishing patterns enables banks to efficiently manage their relationships with customers.
• By integrating IoT in banking and finance for collecting consumer insights, banks can enhance their ability to offer personalised services and foster stronger customer relationships in an increasingly proactive and efficient manner.

3. Wearable Payments

IoT can make a significant impact when combined with wearable devices for the banking industry. IoT in finance industry can upgrade how service providers facilitate bill payments, accelerate transactions, and enhance their overall quality and security.

Here are a few uses of IoT-driven wearable technology in banking and finance.

• When a client arrives at a branch, an IoT system can send finance-related announcements and news directly to their wearable device. It enables banks to foster a valuable connection with their customers which improves brand visibility and engagement.
• Wearables can replace transaction apps offered by platforms like Google or Apple. Wearable devices are currently emerging as the preferred method for conducting transactions.
• Contactless wallets integrated into wearable devices allow bank clients to conveniently check their account balance or loan status in real-time.
• The banking IoT solutions can enhance customer experiences, streamline transactions, and stay at the forefront of technological advancements by leveraging wearable technology.

4. Fraud Detection

In recent years the cases of hacking have increased even for industry giants such as Facebook and Quora.

Understanding the importance of safeguarding sensitive data, financial institutions are improving their efforts to mitigate security risks. The IoT in banking and finance serves as an opportunity for detecting and preventing potentially compromised accounts.

For example, an IoT system can collect user data and analyse their online activities. This data is then transmitted to the cloud, where it is compared against the user’s typical behavioural patterns to ensure consistency. If any suspicious activity is detected, the account will be temporarily disabled, and the user will receive an immediate alert.

By leveraging IoT technology with artificial intelligence, banking and financial institutions can address security concerns by enhancing their ability to detect and respond to potential threats as well as safeguarding customers’ accounts and sensitive information.

5. Improved Investments and Capital Market Visibility

The ability to monitor the market’s real-time condition is extremely important for banks to make informed investment decisions. The Internet of Things (IoT) holds immense potential in enhancing capital market visibility which is beneficial for both individual private investors and global corporations.

Here are the major IoT applications within the capital market

• Real-time data scanning

IoT enables the scanning and analysis of real-time data to improve the assessment of investment opportunities. It helps investors to stay updated with the latest market trends and make more informed decisions.

• Autonomous trades

The IoT integration allows the development and implementation of autonomous trading systems. These systems leverage IoT data to implement trades automatically based on predefined parameters and algorithms.

• Collecting and generating trade strategies, ideas, and recommendations

IoT can facilitate the collection and generation of trade strategies, ideas, and recommendations by analysing market data, trends, and patterns. It helps investors in creating effective trading strategies and identifying potential opportunities.

With various Fintech IoT trends tapping the capital market, there is a rise in real-time data analysis, automation of trading processes, and the generation of valuable insights. It further enhances investment decision-making capabilities for both individual and corporate investors.

6. Efficient Customer Service

The Internet of Things (IoT) gives banks the opportunity to anticipate and cater to customers’ needs by analysing data collected during their interactions. From data collection to automated service, there are numerous ways how IoT can enhance customer service.

Here are some benefits of IoT for effective customer service.

• Task management efficiency

A client can be directed to an available counter or informed about the estimated waiting time through an IoT system that sends relevant data directly to their mobile phone. It helps in improving their ability to manage tasks effectively.

• Beacon-based location services

Utilising beacons, bank clients can easily locate the nearest branch, even when they are in a different city or country which enhances convenience and accessibility for customers to reach the bank physically.

• Instant data sharing across branches

Branches can instantly share user data to provide a fast and personalised experience irrespective of the location the customer visits. It ensures consistent service delivery and customised interactions.

• Enhanced payment and account security

Biometric systems integrated with IoT can improve payment and account security by utilising biometric data such as fingerprints or facial recognition for authentication purposes.

• Automation of branches

Banks can establish fully automated branches that operate without a human workforce with IoT technology as it streamlines operations and provide efficient self-service options for customers.

With IoT, banks can significantly improve customer service by offering personalised experiences, optimising task management, ensuring convenient access to services, enhancing security measures, and exploring automation opportunities for seamless banking experiences.