Are we immersed in the internet or has internet engulfed us? The question is ambivalent. Whatever is the answer, the applications of Internet of Things (IoT) in the real world has made human existence simple and easy; as simple as pouring hot coffee in the cup, as easy as sipping it in next five seconds. Pick any research paper on the impact of internet of things, and you will see how tremendously the technology has increased the productivity in industries and growth in market economic value. Internet of Things is better known as an effective network of interconnected devices that collect data through micro-sensors, and share it with the cloud storage using the internet.
And, why call it a network of devices only when even people can be connected to this fast-paced network? When millions of such electronic and non-electronic devices connect with each other, trillions of data sets can be shared in milliseconds making it a necessity for the rapid development of businesses worldwide. The futuristic business scenario has already started emerging as Mckinsey’s latest research on IoT affirms “the Internet of Things has a total potential economic impact of $3.9 trillion to $11.1 trillion per year in 2025.”
Basically, IoT becomes a foolproof copy of human intellect when IoT devices or sensors begin analysing the data to suggest precise decisions for a particular situation in our businesses quite better than a human brain. In the financial sector, specifically, IoT plays a remarkable role in real-time data collection and analysis to make bigger and important financial decisions which creates a win-win situation for both customers and financial institutions.
Tailoring custom-services for distinctive customers
IoT would significantly help bankers as they often find themselves trapped while designing their financial services such as ATM installation, debit/credit services, loan processing, fixed deposits, and investments. A data-driven decision-making or strategic planning through IoT leads to higher productivity and favors better asset management.
Infallibly, the “internet things or sensors” collects the data from the customer’s smartphones and stores it on cloud database in organised manner which helps bankers identify the customer’s finance-related choices and interests. The banks can, then, design their varied services useful for niche target sectors such as retail, agriculture, hospitality, etc.
Curbing the shortage of cash dispensers
Apart from designing bespoke financial services, the banks can strengthen their customer loyalty by putting up the ATMs or cash dispensers in the deprived areas. The customers’ IoT data will give the banks insights about the usage of ATMs in various areas to increase or decrease the installations accordingly.
The financial security and services firms, like Diebold Nixdorf, are consistently making efforts to save the fraudulent menace and facilitate on-demand financial assistance to the customers. For this, the exclusive RandD teams at financial security companies are making just use of IoT technology. Seeing the scandalous looting or card-skimming of ATM, a US-based firm Diebold Nixdorf designs intelligent ATM which scans user’s eye and behavior for security, remembers preferences and efficiently responds to the commands made through smart phones. Diebold’s ATMs come with encrypted touch screen PIN entry option and NFC authentication of credit or debit cards issued by the banks.
Simplifying loan recoveries
A customer always expects personalised financial assistance from non-banking financial companies in a way that a bank is unable to offer. As already discussed, the IoT data, if assessed watchfully, gives enough room to the finance industry for customising the value-added services on the basis of region, age, interests, credit behavior and financial requirements. NBFCs can use IoT for timely recovery of mortgages or loans repayment, fraud management, and payment services.
IoT sensors can be installed in the retail borrowers’ warehouse which would enable the NFBCs to track the stocks and inventory. The moment complete inventory is sold; NFBCs can approach the borrower for the loan payments. Similarly, NFBCs can install sensors in the vehicles and keep a complete check on the usage of vehicle. Also, they are informed whenever someone shows suspicious behavior with the vehicle like trying to remove the sensors or stealing the vehicle. This reduces theft menaces, overhead security costs and makes it easy for NFBCs to ask borrower for loan payment on time.
Are there any challenges?
Many challenges are brought complimentary with the countless benefits of IoT that could harm it more than profit to financial services sector Because IoT mainly works on the real-time data collection and analysis, sensors may collect the sensitive data from user’s devices. Utilising the users’ personal data for commercial purposes is a data breach and cause massive damage to banks and NFBCs. Therefore, they need to educate the staff on strategic data management, data security, and privacy of users’ data. Latest but secure data technologies must be incorporated by finance institutions to avoid the repercussions of data infringement.
The views expressed in this article are of Rachit Chawla, Founder and CEO, Finway Capital.