IoT(Internet of Things) Waiting At The Banking DoorStep!!!!!

A person sitting in one corner of the world able to control things at the other end of the world merely through the gadget in one’s possession and able to receive the response in real-time. Remotely switching on the tube lights, fan or a music system. Getting reminder about daily dose of medicine or getting an offer for a restaurant you are walking by is happening and gaining popularity too. Banks too have started using this for creating a better customer experience by providing offers or knowing the personal profiles. The more data points you have more you can explore & offer. The question is how is this thing done, what is the underlying technology that lets these things happen?

The Internet of Things, or IoT as it is called, is slowly but surely taking over one industry after the other.It is a network of physical devices, appliances, vehicles, health monitoring sensors etc. that are connected through some network or embedded software sensors that can exchange data. The data thus gathered can be analyzed, optimized and result is customized services or operations.

Wi-Fi and sensors are changing our lives from the minutest to the biggest details, bringing in a whole new age of connectivity. The connectivity obtained due to IoT also gives people and businesses the chance to obtain much more data, which they can use for different purposes.

The IoT market is expected to grow to a staggering amount of $15 billion by 2020. And that is just the beginning. Europe has a 40% share of the global IoT market. Western European countries are especially promising in the IoT market.  There is a lot of unexplored potential within IoT is still unexplored, and one of the areas where it can potentially become a game changer is the banking industry. With the help of IoT and its concepts, the relationship that people share with their banks today will change forever. And that is just the beginning in a long list of benefits brought about by IoT to the banking industry.

Challenges using IoT in banking:

Even if this looks much promising and interesting there are certainly some concerns and challenges in implementing this especially in banking industry. Take a look at following challenges:

  1. Complex: The IoT system is extremely complex, because the number of possibilities for any situation is truly endless and nobody can think of and program every single possibility for every action and connect it to each possibility from another action, and so on. No matter how many possibilities you can think of, there will always be a couple of them left out. Therefore, sometimes it is better to simply steer clear of IoT when precision or completeness matters.
  2. Common Standards: Today we have so many kinds of devices it is tough to keep track of how diverse their technologies are. However, the basis for IoT is to have hundreds, and possibly, thousands of devices interconnected. Even if we consider only smartphones as the device, there are plenty of smartphone companies with multitude of service providers. What makes the matter worse is not having a common standard amongst these devices. In such cases, it is very difficult to create information that is universally compatible with all devices. Similarly, it is unsuitable to perform data integration among such varied devices to complete a certain assignment.
  3. Privacy: This is perhaps the most important concern of all. When all devices are connected to each other, and the data is available to organizations and businesses, where does the privacy of a person begin, and where does it end? Without the appropriate data encryption that needs to come with IoT, your personal bank details could fall into the hands of any interested party. Your personal details should never be available so easily on the Internet, as it becomes a sitting target for hackers. Giving your bank details out into the digital world is a lose-lose situation for you.

Now let’s focus on other side of the coin – Banks can utilize the sensors, analytics, and technology that comes with IoT to provide customers with more personalized services. This can happen only when the banks receive data about their customers and tailor their services accordingly.

IoT can bring an extent of change that was never previously thought of with regard to the banking industry. The only limit to the change is our imagination. Novel applications and services are already rolling out for trial followed by implementation. It is time for IoT to bring some revolutionary changes to banking.

It can help banks in dealing with the world of online banking, especially when it comes to incorporeal assets such as trademarks, contracts, patents, and more.

Benefits of using IoT in banking:

  1. Real Time offers: In a world where everything (including cities, stores, people, and even transportation) are connected, IoT empowers banks to interact with you real- time, for example- you are presented with offers available at the same store that you are passing by right now.
  2. Futuristic Solution: IoT can make payments as easy as a piece of cake for you. Instead of reaching into your purse/wallet, IoT along with your bank will give you the provision of simply entering a store, picking what you need, and paying as you leave, with the help of some biometric scanner or face recognition. Last year in the US, Citibank launched the trial of its beacon technology. This technology was Bluetooth-enabled and gave people the opportunity to access ATMs anytime using their smartphones. Customers also received offers based on their geographical location!
  3. Insights: IoT can also be utilized by banks to gather insights on the customer service provided at the physical locations of the bank, for example- how much time on average does a user spend waiting at the bank? Data that provides banks with the solutions to such questions helps them improve their service and go the extra mile for their customers.
  4. Track: Using IoT also lets commercial banks keep a track of their assets, and scrutinize whether their investments are working out as expected. This lets commercial banks open their doors to even those who lack a strong credit history.

IoT is a vast sector with many possible opportunities for investment and partnerships. Banks which utilize IoT can also make use of this to form partnerships with other sectors which have also invested in IoT.

Although there are a few concerns regarding the utilization of IoT in banking, the benefits it gets to the banking industry cannot be ignored. Since there is still a long way to go in integrating IoT with our lives, there is still time to work out the kinks before IoT becomes an integral part of our household. Banking sector in particular will have to take stringent rules regarding use of IoT as it deals with matters of personal data and money! People will love to use IoT provided the safe-guarding measures are ensured. Every sector is touched by technology and internet in particular. This is going to be the medium through which communications will happen in future.

Prasanna Chitale

Prasanna is Head of Innovation at Verinite and member of Leadership Team. He has worked across various locations including Europe, Middle east and India on projects providing services in retail and corporate banking domain. Outside his work, he is a photographer, a traveler, and a mathematics enthusiast.