The advent of the net-banking system and e-wallets have increased the use of personal devices, usually mobile phones for banking transactions. This drastic shift has lead to the generation of huge data from these devices giving banks and other Financial Services Institutions (FSI) easy access to customers in-depth insights. Apart from this, data can also be collected through a network of bank-owned assets, such as ATMs and other financial transactions points such as debit/ credit card readers.
The technology has made its way into the industry but the rate at which it is being adopted by banking and financial institutions is low. This pattern too will gradually change with an increase in mobilization of financial services and innovation of use cases leading to outright adoption of IoT.
IoT will advance the services in the finance industry beyond recognition. For those who will adopt this transformation timely will have various opportunities to grow awaited.
Let us explore the areas that can benefit from IoT in the financial sector.
Simplification of debt collection
The financial institutions lending money to individuals and enterprises have to take on overhead costs and make considerable efforts during debt collection. In such cases, IoT sensors and networks can monitor the operations and supply chain activity of debtor businesses. This will allow FSIs to determine their readiness to pay back without involving excessive overhead costs, associated with cheque failures.
On the other hand, an IoT network of ATMs, card-readers, and other point-of-sale devices can also be used to assess the borrower’s expenditure and income. This way, the institutes can determine their ability and intent to repay along with curbing further expenditure by defaulters until repayment.
Customized offerings and rewards
The data analytics based on IoT will increase customer engagement and loyalty by offering customers loans as well as investment options based on their assets value,
spending habits, and periodic income easier. Offering highly customized loan and investment options will increase the probability of the client considering the product.
IoT based intelligence can too be used to lure customers by rewarding them relevant redeemable options based on their shopping activities and demographics. Such type of targeted rewarding will contribute in improving customer engagement and loyalty.
Enhancement of fraud prevention
The biggest concern for any financial institution is the prevention of fraud which is prevalent in the industry at large. To overcome this challenge, institutions are implementing AI based anti-fraud systems. However, for fraud prevention, IoT too will be an effective game changer.
The IoT enabled security systems can prevent misuse of debit/ credit cards at points of use, such as ATMs. Techniques like eye-scanning and tracking of users mobile location before approving transactions are in use in the industry already.
Optimization of capacity management
IoT enabled monitoring can track the number of customer units per day at offices and ATM s. However, the average queue time can be measured and used to determine the optimal number of personnel and counters at each branch.
The distribution of customers data according to their respective geography can make decisions regarding new branches easier and also lead to optimization of number and location of cash dispensing machines based on their usage.
Moreover, IoT in finance can have a major disruptive impact with the innovative redesign that can enable users to save money by connecting their bank accounts to IoT enabled objects.
Blockchain with IoT can help in having a more reliable and secure network.
With these opportunities, IoT is here to stay and make a difference for the future.