What is Internet of Things?
For decades, we as humans have been interacting with devices. Internet of Things (IoT) enables the devices to communicate to other devices through internet. In IoT scenario objects, animals or people are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. Simply put, it is the communication between various 'things' over the internet.
How is it achieved?
It is achieved through various mechanisms. The data could be obtained by sensors, smart phones, wearables (For example: google glass) or from social media interaction. Data received by such mechanism is sent across the internet to interested parties. This data is then analysed to make tailored solution for the one who sent it.
IoT in Banking
The data from a banking customer sent across the internet can be consumed by the bank to do realtime analytics and provide the customer with tailored banking solutions that meets his/her needs. It could be a solution for a loan that the customer is looking for to buy a property. It could be an offer for managing his debts/investments effectively.
Role of Banks
Banking customers are now well-informed through various channels and they demand focus and attention. They want to be treated on an individual basis. Banks should gear up to provide solutions that are tailored to meet the need of the hour for their customers.
The advice provider
While retaining traditional ‘Trusted advisor’ role, strive to deliver tailored personalized advice
The Value aggregator
Develop special alliances and partnerships to provide value added service
The access facilitator
Provide access to non-banking services (eg: Insurance, airlines, hotels) to deliver relevant offers.
Benefits of IoT in Banking
Fosters customer experience
Enables cross-selling
Better KYC – Know your customer from various data channels
‘Behavioural Banking’ – banking based on customer’s transaction pattern enabling fraud detection, financial planning etc.
Extended banking eco-system
IoT and Big Data/Analytics
IoT presents a tremendous opportunity for financial services, but it also presents a serious challenge. In addition to the countless new applications for Internet connected banking, IoT is also expected to generate a plethora of data. This data is coming from a variety of new sources, at high-velocity and in increased volumes (also known as Big Data).
The data is received from various channels
- Analytics provide real time information to the customer based on various sources of data eg: Crowdsourcing
IoT Scenarios in Banking
IoT can be applied in various scenarios. Few of which are given below. In reality the options are unlimited. Some of the day-to-day life activities may seem to exclude banking, if they are thought out deeply, the backend of those activities involve banking to an extent.
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Retail banking
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Loans and Mortgages
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Forex based on geo location
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Drones
Payments based on sensors while shopping online or instore.
Offer loan options based on the interest shown by the customer on the property information published over the internet.
Enable forex and mobile payments based on the geographical location
Deliver products and services with the help of drones using GPS positioning.
