The Internet of Things (IoT) is evolving at a rate of knots. Bricks and mortar banks need to respond to the dynamism in the payments arena by providing online and mobile services that meet exigencies of the market. FinTech innovation has created an entirely new paradigm that can render old-school methodology defunct.
If banks don’t keep up with the current changes with the Internet of Things, they could find themselves at the back of the line. Digital devices, novel technologies and widespread innovation are driving the banking industry in ways never seen. In the days of old, checkbooks, credit cards, and bank visits were necessary. Today, none of that is.
How is the Internet of things reshaping the banking industry?
For one thing, cloud computing technology is here. Throw in AI (artificial intelligence), big data and machine learning, and it’s a whole new ballgame. The interrelatedness of these types of technology ensures that constant upgrades, analysis, and technical expertise is needed in the banking industry. Banks have the wherewithal to meet these challenges head on. They are operating at the forefront, with vast resources at their disposal. Ironically, it’s the smaller FinTech companies that can navigate these volatile waters more easily than the big banks.
Banks are making up for their shortcomings by cutting back on unnecessary activities, investing heavily in tech development, and improving the customer experience. Other ways that banks are constructing an IoT strategy include increased speed to market and agility, a focus on customer engagement, and a reduction of operations costs. These methods are designed to allow banks to become market leaders in the tech age.
Banks Seriously Lagging When It Comes to the IoT
When it comes to the interconnected network of devices, sensors, and computers, presence matters. Banks certainly want to be a big part of this network. The easy sharing of data across the Internet makes it possible to disrupt e-commerce and many other industries. Within a few years, experts anticipate that as many as 25 billion IoT devices will be operational.
This means that the average person will have up to 6 devices that are connected to the IoT. It is estimated that by 2018, individual banks would spend on average $153.5 million on Internet of Things (IoT) services. Unfortunately, current statistics reveal that banks are not as engaged as they ought to be. According to the IDC, only 43% of the banking community are au fait with the Internet of Things.
Already, we are seeing the benefits of the IoT with multiple banking services. Less face-to-face engagement is needed for routine banking activities. This includes online money transfers, currency exchange requests, receiving a credit report, credit limit increases, and many others. The Internet boom has made many land-based banks redundant, and there are now cases of online-only banks in operation.
The Internet of things is evolving so rapidly that it can connect any business or any service in the world. It also operates across all networks and parts, at any time. Some of the most successful Internet of things platforms include Oracle Integrated Cloud, Amazon Web Services, Salesforce, and Microsoft Azure. For the banking industry, there is tremendous benefit to integrating with the IoT.
What Do the Numbers Say?
Most banking executives (64.5%) monitor clients through tablets, mobile apps, digital devices, and smartphones. 31.6% of banks use the Internet of Things to keep tabs on bank branches. In terms of wearable technology, 15.8% of banking executives track product usage in this way, while 21.1% gather product performance data by using digital sensors. The IoT relies heavily on big data to aggregate large volumes of information from multiple sources. This data is both structured and/or unstructured.
Banks will need to work hard to understand where to prioritize their efforts. They need to be concerned with what the customer is focused on, and whether they have the available technology to deliver. Safety and security of data remains vital, and banks will need to ensure they remain ahead of the pack with multifactor security authentication, SSL encryption technology and various other IoT security measures.
