How IoT Will Transform the World of Banking Things
In a hyperconnected world, effectively measuring the maximum number of variables is imperative for any organization. The so-called Internet of Things (IoT) is the most straightforward and affordable technology. In the case of banking and the financial sector, understanding its usefulness – such as taking advantage of the data provided by customers, improving the digital banking service, and creating new business models – starts from this called Banking of Things (BoT).
What is the Banking of Things (BoT)?
Although there has yet to be a consensus for its definition, the simplest way to explain what the BoT is would be an infrastructure that takes advantage of device information to offer more and better financial services to people and companies. In this way, IoT technology improves both the products and services offered.
For example, if we have an appliance connected to the Internet and linked to a bank card when a material is about to run out, it would be in charge of placing the order.
The range of opportunities with this growth of IoT technology gives an exciting number in which the financial sector multiplies its operations throughout this demand for interaction with everyday objects that connect to the Internet, capable of sending and receiving data, and that any of these devices could become a point of sale.
The BoT is changing the financial industry by creating an infrastructure that leverages connectivity to deliver benefits that appeal to a broader demographic, especially younger generations, because it facilitates simplified and personalized interactions with banks.
Banking of Things: 4 transformations in the world of banking
1. Automation and efficiency in the management of banking services
Banking of Things will allow financial institutions to automate several business operations, including loan and application management, credit transfer assets, and collateral tracking while reducing the number of ATMs and traditional bank branches.
All these possibilities start from data management in real-time, thanks to the connectivity offered by the IoT. We can automatically manage the ATM network and security systems even if we think about our organization. If there is the slightest failure, the sensors will send the information. This way, we can act almost instantly and prevent the system from functioning incorrectly for longer than desired.
2. Personalization of customer experience through real-time data
Customers increasingly use smart devices to bank, and data collected through apps and mobile banking, for example, allows banks to anticipate client’s needs and provide them with advice and solutions that help them make wise decisions regarding their finances.
Financial institutions use IoT functionality to forecast future trends and market conditions through data analytics and predictive models. These valuable insights can be used to create new products and services. Decision-makers can also use data to judge the value of different application features and where to invest in development.
3. Increased security in financial transactions
For the banking sector, initial attention was focused on video surveillance to reduce fraud and improve customer service and internal training. However, security measures must be developed as more IoT devices are introduced. Encryption and vulnerability testing are essential to ensure secure data transfer, while regular updates and firmware should be installed on network devices and proper password hygiene.
Thanks to devices with geolocation systems (smartphones or wearables) such as bracelets and smart watches), it will be possible to help combat fraud cases. It will be enough to cross-reference the location data of a person’s device with that of the ATM or bank branch where a financial operation is being carried out to prevent crimes such as identity theft.
4. Expansion of access channels and banking services
No matter whether the consumer visits a physical branch or bank online, IoT technologies are enabling more convenient and personalized experiences. ATMs are one of the prototypes of an IoT device, which enables real-time transactions and eliminates the need to queue at the bank to access accounts, which translates into lower personnel costs.
Banks are turning to new IoT technologies to improve the customer experience while reducing costs. Some banks have started using beacons to send personalized offers to customers’ smartphones as soon as they enter the bank, while some ATMs have live video streaming that allows customers to speak to someone at the bank if they need to. Additional support.
Banking of Things: A solution for the present (with a lot of future)
It isn’t easy to ensure that we face a new revolution in the financial sector thanks to the so-called Banking of Things or BoT. There is little doubt. However, technology like IoT offers infinite possibilities to improve data analytics, provide better customer services, increase security, and automate countless processes.
Like other activities, banking must decide whether to adapt to a trend that is difficult to return to and continue with the exponential progress of the financial industry or choose to remain stagnant. Banking institutions must consider how and when to adopt the BoT to prevent this from happening.