Over the last few years, the term Internet of Things (IoT) has become one of the most frequently used yet misunderstood technology concepts within the business community.
While many industries may have already grasped and embraced its benefits, the financial services and banking industry is just beginning to see how IoT can propel the industry to the next level.
As banks begin and continue to implement IoT-enabled technology, it’s important that they first understand what it is and how it can augment their business capabilities in order to achieve maximum results.
The Internet of Things goes a step beyond Big Data (realizing the information) and analytics (understanding the information) by making information readily available and consumable by other systems and networks. The IoT acts as an intermediary tool that helps turn information into a force that can boost efficiency, increase productivity and drive fundamental improvements in customer experiences.
More Rewards in Real Time
It is clear that IoT is opening the door to the future of banking and financial services, and much advancement has already been made with IoT that focuses on an improved customer experience.
One of the most cited examples of how IoT can be used to improve the banking customer experience is banks using the technology to provide a more convenient and rewarding experience for their credit and debit card customers. A practical application includes banks analyzing the frequency of ATM usage within a certain area and targeting specific zones for ATM installation where foot traffic is highest.
Banks are also starting to partner with companies like Edo to reward customers for their purchases in real-time. This kind of IoT technology uses geographical data to identify offers and deals from nearby merchants that become active as soon as the customer swipes their debit or credit card at said merchant.
This use of IoT supports findings from a recent Accenture report stating that banks are increasingly under pressure to connect customers with other service providers such as retailers, insurance providers, health practitioners, airlines and hotels to deliver tailored offerings that meet customers’ needs and lifestyles.
To better understand consumer spending patterns and offer personalized reward programs, banks are continuing to use analytics to offer customized, rather than blanket, programs to customers. The ability to access data captured by smart devices of all kinds is helping banks provide customers with a holistic view of their personal finances in real time.
Pairing IoT with analytics is also enabling banks to provide location-based, real-time discounts. Using data- and location-driven insights, banks can anticipate customer needs and offer advice, products and solutions to help customers make smart and financially sound decisions. With benefits like these, the use of analytics-based reward programs is becoming a key differentiator for banks.
Looking to the Future
Wearables are another tech sector where IoT is projected to make an impact in the banking industry. Consumers and businesses are already adopting this revolutionary technology to be more efficient and informed, especially in professions where it’s necessary for individuals to work with their hands while referencing stored information.
Wearables also offer an interesting link between mobility and banking – as customers and employees continue to use their mobile devices at work and in all aspects of their personal lives, bankers and financial services professionals must find a way to remain present and relevant in this increasingly competitive space.
While banks are increasingly turning to IoT to improve the customer experience and gain market share, improvements in overall network infrastructure, Big Data analytics and cloud accessibility must first be completed before IoT can be implemented on a truly massive scale.
Intelligent devices and intelligent communication technologies are paving the way for the future of business. While industry regulations and red tape still exist in some areas, banks that continue to push the envelope in their technology adoption to improve the customer experience, engage their audience and boost productivity will be tomorrow’s market leaders.