FINANCE

THE APPLICATION OF IOT IN FINANCE

Banking will continue to evolve as the Internet and the IoT continues to grow in prominence. Those customers and financial institutions that do not stay ahead of these retail and mobile banking trends will be left behind.

ISSUES IOT CAN SOLVESOLUTION PROVIDERS

ISSUES WHICH CAN BE SOLVED WITH INTERNET OF THINGS

Data from IoT devices allows banks, insurers, and financial services firms to improve the customer experience, product development, and back-office performance:

Payments via wearable devices

Near field communication (NFC) to enable mobile payments and banking via wearable devices (i.e., smart watches, rings, fitness bands)

Authentication

Fingerprint authentication (TouchID) to access bank accounts via mobile apps and make in-person transactions

Risk assessment

Plug-in sensors used by auto insurance companies to gather data about an individual’s driving style (i.e., quick accelerations and hard stops) and typical drive times to determine personalized rates/discounts

Credit card fraud

Intelligent analytics to reduce credit card fraud at fuel stations.

Benefits of IoT in the Financial sector

By 2025, the Internet of Things will generate over $11 trillion in economic value – and the use of IoT in the financial services industry seems inevitable.

Increased transparency

By using IoT solutions, banks and financial organizations gain real-time data on their own and their clients’ assets (which leads to effective risk management). Some of the early examples come from the auto insurance industry.

Progressive, one of the largest US car insurance providers, employs OBD devices and machine learning algorithms to study driver behavior and adjust insurance pricing accordingly. The company has made over 1.7 trillion observations and claims its prices are based on “how well you drive – and not the type of your car”.

Also, smart sensors help companies reduce building management system deployment and operating expenses by 30% (and manage property based on the actual foot traffic and room occupancy data); as of now, it costs up to $250 thousand to install a BMS in a 100 thousand square foot office building!

By analyzing biometrics and sensor data, retail banks can also improve the credit underwriting process and target customers with no credit history (although it remains to be seen what type of data will help them evaluate someone’s credit worthiness best);

Automation of trading and investment activities

According to Dr. John Bates, CMO for Intelligent Business Operations and Big Data at Software AG, the future of the financial services industry lies in real-time market surveillance and pricing engines enabling companies to monitor traders’ activities on stock markets, social media and communication platforms and adjust their policies accordingly.

Brett King, CEO of Moven, believes most payment and financial transactions will be fully automated in the near future.

Chris Skinner, Chairman of the Financial Services Club, claims the world’s leading financial organizations are currently building the Internet of Value – a global connected environment facilitating M2M trading through bitcoin, mobile apps and smart sensors.

FinTech opinion leaders have high hopes for IoT; why shouldn’t you?

Payment transaction security

Smart gadget manufacturers offer multiple tools to secure payment transactions. These include tokens (Visa Token Service), biometrics-based authentication programs (Precise BioMatch Embedded) and the Magnetic Secure Transmission technology paired with mPOS terminals.

Diebold, a US financial and security services corporation, went even further and designeda smart ATM! If you want to withdraw some cash, you should simply schedule a session via a mobile app, walk up to the nearest ATM and choose one of the available verification options (NFC, QR code recognition or iris scanner). The transaction can be completed in just 10 seconds and is much safer than traditional PIN verification.

Forward-thinking software developers even leverage cardiac signature (data gathered through EKG sensors) as a payment ID! In a world where ransomware can bring thousands of computers down, you can’t be too serious about payment data security, right?

Improved customer services

There are several ways to increase customer satisfaction with IoT financial services solutions. For example, you can pull a Barclays and bring your mobile app to a smart watch. Some retail banks (Westpac Australia) install beacons to engage customers who walk past their office or come for an appointment. The beacon strategy includes a personal greeting, product offers based on a customer’s previous activities and surveys.

With a totally new approach to loan collateral tracking, smart contracts and risk-free investment decisions, financial organizations can significantly reduce the costs of personal and business loans, thus giving a boost to the global economy.

USE CASES OF IOT IN THE FINANCIAL SECTOR

While IoT in banking is still more in a planning stage, we can be sure that there is ample scope for innovations. Starting from an increase in revenues to better customer services, banks are always on the hot seat to bring out new and better innovations. Here we have created a small picture of the scenario of IoT in Banking.

Product Planning & Management:

By using the data collected from sources like mobile apps, banks can launch better and more targeted service offerings. What services and products to launch? Who will be the key targets? When is the right time to launch the products? – All these questions can be answered using data about the past service offerings and the reaction of customers for the same.

Tailored Marketing:

Customers across the industries are demanding personalized solutions for their varying needs and BFSI is no different. In order to tailor a banking solution to a client, information is needed about his present economic condition, buying behavior & individual needs. IoT has made it possible for banks to keep a track of all consumer activities and present a solution specific to the needs and desires of the client.

Proactive Service:

Service faults and upcoming products changes can be handled much easily using IoT in banking and financial industries. If there is an underlying concern about a product then it will come to notice quite easily and steps can be taken to handle the issue before it becomes too serious. Along with this, a record of the past activities of the customer can help service representatives provide better solutions.

Wearables in Banking:

Wearable technologies are now getting popular day by day. Due to wide adoption, enabling banking in wearables has become a primary target for banks across the world. Right now most of the watches are connected with the phone but there have been plenty of innovations to allow for independent wearables. This has made wearables a hot seat for banking innovation as well.

Along with wearables, remote devices like Amazon Alexa are also a focus area where innovation banking is necessary. Basic banking like balance check and transaction history are some must-haves in every wearable and remote assistant device.

LEADING PROVIDERS OF INTERNET OF THINGS SOLUTIONS FOR THE FINANCIAL SECTOR

R3 CORDA

R3 builds blockchain technology to transform the way the world does business. Our global network of partners works with us to develop innovative apps for finance and commerce on our blockchain platform, Corda.

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Fenergo

Fenergo KYC is an out-of-the-box, rules-driven solution for all Know Your Customer policy requirements to support regulatory needs across multiple jurisdictions and business lines.

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Digital Asset

Digital Asset is the leading provider of Distributed Ledger Technology to regulated financial institutions 

Digital Asset combines unparalleled financial markets leadership with world-class technologists across multiple fields in one of the fastest growing fintech companies in the world. The Digital Asset Platform is the only Distributed Ledger platform to have been developed according to the production requirements of the world’s largest financial institutions.

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Ripple

Ripple helps banks’ customers send money to their loved ones in many emerging markets like Mexico, India and Thailand, to name a few. The opportunity: increase share of this large and growing market.

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