The Internet of Things (IoT) is considered to be the next big thing in financial services. IoT is a network of internet-connected devices that collect and transmit data. The IoT is the independent communication between objects that enables operations to be optimized, costs to be decreased, productivity to be enhanced, and improved life. The connecting dots in the IoT domain and the resulting devices turn customer experience in the banking environment. In recent decades, the internet has grown from a collection of documents or interlinked hypertext to a network of objects, individuals, applications, and devices.
There has been a considerable increase in devices from just millions to billions in only a few years, while also increasing the time people spend on the devices. It was estimated in 2016 that 75 percent of the world’s population had internet access, often connecting more than 6 million devices. With 4.5 billion people retrieving the internet in 2019 and raising the amount of devices linked to the internet, the IoT becomes a fascinating thing. IoT developer teams are helping banking institutions develop apps that help transform the customers’ experience of utilizing IoT data.
So how do the banking services get benefited from the IoT, and what are some of the solutions it provides?
Banking Facilitated by IoT
There are billions of devices that have something connected that provides an intelligent system of other systems. Through the cloud, these systems and intelligent devices share data that is analyzed to help transform businesses, people’s lives, and the world in different ways. Banks can have a full view of customer finances in real-time because the customers used smart devices to access data. The data is easily shared between millions of devices, from the customer’s end to the bank’s end side. Through the data collected by banks, they can anticipate customer needs and provide solutions and advice to help customers make sound and smart financial decisions. The ‘Bank of Things,’ therefore, becomes a powerful tool to facilitate the banks’ increase in customer loyalty, which in turn brings more business to the banks. In addition, banks engage and communicate with the customer frequently providing advice via cell phones. In terms of the purchasing patterns of the consumer, you can see a similar approach. Banks can communicate with their customers in many ways – by providing advice, for example, and by rewarding customers in certain areas of life, not just in finance.
Advantages of IoT in Banking
IoT provides many advantages when it comes to banking. This offers not only debt but also credit cardholders with reliable, easy-to-access services. The banks can determine how customers use ATM kiosks in various areas and decrease or increase the installation of ATMs in those places, depending on the usage volumes. In addition, banks can also use IoT to bring on-demand services closer to customers by installing kiosks and enhancing customers’ access to banking services. IoT provides customer data that helps banks identify their customers ‘ business needs and value chain, e.g., retailers, suppliers, and distributors. The data also lets the banks gain insights into customers. The customer information accessible via IoT allows banks to provide value-added services, personalized banking services, and products, and financial assistance to ensure that the parties involved, the consumer and the bank are in a win-win situation.
In the agricultural sector, farmers who are the banks’ customers can gain solutions from the IoT. For instance, banks are able to analyze agricultural output in addition to other crop farming conditions that allow the banks to estimate the crop output value. Based on the crop yield calculated via IoT, the banks can provide flexibility based on expected yield, frequency, and crop performance, when it comes to financial terms. Such knowledge will help the farmer and the banker develop a stronger relationship.
In addition, banks can also predict credit card fraud and debit transitions that will allow them to take appropriate action to prevent the problem. When a consumer swipes their card, they provide the account holder’s verification via system location, and the bank may easily refuse or accept the transaction based on the information obtained. Besides, sensor devices can be mounted within borrowers’ warehouses to monitor both raw materials and inventory. The monitored data will help the bank minimize the account balance or make sure that when the inventory sales occur, a loan that had been lent is repaid. By doing so, banks can mitigate overhead tracking costs and prevent borrowers from indulging in shoddy practice. Banks wanting IoT apps will recruit IoT developers to help build not only the apps but also manage them. The apps can be tailored to suit the banks’ needs and solve a particular problem.
Other advantages of IoT in Banking include:
Improved Financial Practices for Customers
Utilizing connected devices can enable bank customers to change their financial habits and tackle the over-spending problem. One of the earliest IoT banks, Interact IoT started to use shock wearables as a part of a user’s education program. If a user has set a credit card limit, the wearable will monitor the customer’s spending all day long. An alert will be elevated as the limit approaches. If the user ignores the signal and continues to spend, the wearable would send a shockwave to their wrists, which served as a potent reminder that their spending and the daily limit are not all very well.
Enhanced Banking Experience
IoT affects customer service banking in different ways. It gives customers timely insights and individualized experience. Device connectivity enables a visitor to schedule an appointment and be able to check it inside their smartphone. What this means is that customers know when it’s their turn to stand at the counter, instead of waiting in a line. Not only that, but the bank also keeps the customer’s visits in their database, the services they use whenever they visit the bank, and their questions.
Expanded Range of Service beyond Banking
Banks can use IoT technology to expand their range of services beyond traditional ones offered to their customers. For example, U.S. banks began using IoT initiatives to help motivate their clients to keep fit. Bonuses and financial rewards are granted when the customers complete achievements. This helps foster a robust Bank-Customer relationship. This helps foster a strong Bank-Customer relationship. It makes customers feel their bank is looking after their health.
Efficient Branch Banking
The modern branch system in banks is under threat from mobile banking. While banks are keen to maintain the traditional banking approach and ensure that it adds value, financial institutions need to use technology to meet demands.
Banks use the IoT and other banking applications to resolve the conflict with mobile banking that is seen in traditional branch banking. Biometric sensors, for example, can be used to gather user data while entering the bank and relaying the information to the primary system. Utilizing smart branches allows bank managers to reduce both the number of staff and the maintenance costs while also reducing the waiting time for the client. The managers create a connected system of communication between different branches at different locations. BMO Harris Bank tested the smart branch, where there are no real employees. In this case, a user often gets guided by a system or chatbots based on technology. There are random questions, so the chatbots can use video conference tools to contact a real human consultant.
Improve Credit Card Experience
IoT also allowed interactive credit card development. Instead of having a piece of plastic card, a bank customer interacts and engages with a digital display that will enable them to pose questions to the bank in real-time and, among other things, tweak their credit card limit settings right at a shopping site.
The increased use of devices by bank customers had led to an increase in IoT data usage. Banks now use IoT data to improve their customer interactions and deliver personalized services and products. Today, banks need to turn the IoT-derived data into useful information that will help them make informed decisions. The banks can increase their market share through the data obtained, while also offering better services for the customers. Companies may consider hiring an IoT developer to get the affordable Internet of Things app development.