Imagine a world of smart machines. It’s a place where you don’t have to care about repair of appliances, car maintenance, home upgrades, food delivery, and other routine things. Interconnected gadgets interact with inbuilt sensors via online networks. They can detect the smallest issues, identify the best solutions, leave requests for details or call specialists, and even pay on behalf of you, the owner. Well, it’s just a sci-fi dream. Or no?
According to Deloitte, there will be more than 12 million connected sensors in the finance sector by 2020. Among them, 3 million will relate to banking itself. It doesn’t sound too impressive as the world population approaches 8 billion. In other words, there are around 1.2 smart financial gadgets per 1,000 people on average. However, the trend is growing, so we can expect more and more inclusive ecosystems that will engage new banking users.
Non-financial figures are much more impressive, however. Statista projects the number of Internet of Things (IoT) gadgets overall will reach 30.7 billion by 2020. It means that each person will have almost 4 devices, statistically. Such a high surge shows a considerable interest in connected systems. Particularly, they can be highly beneficial for businesses and customers in the finance industry as they form the Bank of Things (BoT).
The Financial Internet of Things
In the first section, we’re going to talk about traditional IoT systems for financial markets. Here, the guide uncovers the tech basement of the Internet of Things for banking, as well as the most notable use cases in this sphere.
Technology Basics
In a nutshell, the IoT ideas refer to a network of connected gadgets and sensors that exchange data freely. Even the tiniest thermometer has its own identifier, so machines recognize each other. The end goal of IoT is to get rid of redundant human/human or human/object interactions by replacing them with efficient automated object/object relations.
In banking, the modern Internet of Things conception refers to data usage only. Financial companies can gather Big Data from connected devices like smart cameras or smartwatches, then process these packages, and understand customers better. This helps in delivering more relevant offers like interest rates, evaluating creditworthiness, and addressing each client’s needs.
Today, three new tech approaches rise. They can change the banking IoT landscape and lead to quicker transformation to BoT:
- Biometrics. New verification and identification options rely on biometrical data, often. These include fingerprint detection, face recognition, and retinal scanning. Such ID methods help to maintain KYC policies and keep the clients’ data private.
- Blockchain. Decentralized financial solutions are on the rise. There are still challenges to solve, but banks can benefit from blockchain-related transparency, privacy, and protection. Last but not least, this tech can attract new customers.
- Next-gen integrations. By bringing traditional IoT schemes to a more global level, banks can expand their reach. Alliances with Visa, PayPal, and FinTech startups enable the benefits of open banking and generate new values.
Prominent Use Cases
Apart from technologies, there are several significant benefits delivered by IoT ideas implemented in the finance sector. When a company decides to move from traditional financial service software models to IoT-based analogs, it should have some goals in mind. Study the next list to have a kind of reference points for your journey:
- Automated transactions. Basically, it’s possible to make all payments automated and handled by smart gadgets. We will talk about this way further.
- More control over data. IoT systems bring higher transparency. With them, customers can control which info to share and how to do it.
- Optimized branches. Smart cameras and sensors also help employees. Office managers can process customer data in real-time and optimize services.
- Personalized management. With tons of valuable info about each client, banks can deliver tailored products/services and respond to requests quickly.
- Voice assistants. The heart of IoT ideas, voice assistants simplify bank-customer interactions as users can ask smart assistants about almost everything.
Of course, IoT systems come with challenges, too. They require perfect protection from potential breaches as they are considered as weak links that store sensitive data. Also, it’s essential to implement IoT initiatives that comply with regulatory requirements. But all the mentioned ideas are already well-known. What about more innovative stuff?
An Evolutionary Path from IoT to BoT
The second section shows how we’re moving towards new infrastructures united in the so-called BoT. While this term is less familiar than IoT, it can become a game-changer for financial companies at an early date.
Understanding the BoT Concept
The Bank of Things isn’t a stable and generally-accepted concept. It’s only emerging as a development strategy based on IoT and automation ideas. There are different definitions, but we will focus on the significant features only. While financial service industry players refer to BoT as a material structure that facilitates data transfers, we’d talk about more precise things.
For instance, the Bank of Things is the next stage of IoT development in the finance market. Apart from just the facilitation of data exchange, it delivers new functions to smart gadgets. Being integrated into appliances, cars, walls, clothes, and even human bodies, these tools can “talk” with each other on behalf of owners, make payments, and so on.
Benefits for Banking
Finally, it’s time to check out the advantages of BoT systems for banks and their clients. In addition to the already mentioned use cases of IoT, look at more advanced potential impacts:
- Better fraud protection. Even today, mobile-only banks integrate various security features like dynamic CVV, geolocation analysis, and biometric identification. With the development of new systems, they will be even safer.
- Fully automated payments. Smart tools from sci-fi films handle all daily activities, from wake up calls to food delivery to repairs. Well, IoT gadgets can wake their owners. But BoT analogs will do much more, including automated orders and payments.
- New FinTech apps and wearables. Based on existing apps developed by banking corporations and startups, new strategies may feature branded trackers, smartwatches, and other sensors. Of course, their main feature should be related to payments, too.
- Smart branches. Remember that managers can analyze visitors’ data and optimize in-office processes today? With BoT sensors, entire departments will become autonomous, removing the need for human operators.
Final Thoughts
Get us right: it’s barely possible to predict the development of IoT in banking. We can’t say that it will evolve into BoT for sure. However, if the trend of global simplification and automation continues, IoT devices will get more and more power distributed by central processors. The rise of edge analytics also shows BoT perspectives. To be honest, we want to see new fantastic science/tech tricks. Do you?
