The advent of Internet of Things (IoT) is long gone, as now the boom is on the horizon. The statistics of the network calls for a staggering 25 billion gadgets and a worth of $2 trillion global economic benefits by 2020. This seemingly third industrial revolution automatically directs us to think about its effects on retail, manufacturing, energy, and transportation industries, while the financial services does not come to mind that easily.
Since the basic concept of IoT technology relates to the transfer of data, and the workability of financial sector relies greatly on the data gathering and analyzing, it’s not hard to imagine the impact of IoT-based solutions and devices on the financial services industry. Several global financial institutions like retail banks have invested significantly in creating their own internal infrastructure and consumer-oriented technologies. IDC Financial Insights has foretold that retail banks will invest about $16 billion and more on digital information technology workarounds, while the spending is not going to decrease any time soon. Further as per PWC’s 6<sup>th</sup> annual digital IQ survey, financial services is among the leading top 10 industries that are focused on spending in sensors for powerful IoT solutions.
The point of IoT is to make static objects and structures more engaging, intelligent and dynamic without literally moving them. Undoubtedly price’ is one of the most important factors when it comes to finalizing our purchase decisions, but revolutionary technologies like IoT have the potential to put the customer experience on top of the brand loyalty and price factors. In short, very soon customers will opt for the brand that provides the best convenience in terms of usage and benefits. Consider experiencing an ATM transaction moment when debit card will no longer be used, rather your own smartphone or smartwatch is incorporated with IoT features that provides you the convenience of transacting your desired cash at any instant. Similar to any store, retail banks can also work with the same features of placing sensors within the location that will provide relevant information to the incoming visitors regarding the bank’s products, services, and other special offers right on their smartphones. A recent study stated that companies that send personalized messages to their customers are likely to experience 20 times more purchases from them. By incorporating the IoT technology in retail banking, banks have the benefit of enhancing their adoption rate of extra services considerably through personalized messages.
The experience can also be extended to the point of purchase outside the retail banking world, for instance, when financing a car. With a large number of banks aggressively competing to provide the lowest interest rates, consumers will obviously opt the institution that has the maximum exposure and offers the best rates. When a consumer chooses a dealership, with the use of IoT it is likely for the banks to notify the consumer for the approved amount or deliver modified loan proposals within the committed date.
Opportunities in IoT can also be located in the insurance sector. Talking about risk management, some car insurers have started to provide usage-oriented insurance to connect the driving behavior with premium rates for car insurance. With the modern use of telematics, the device installed in the car carries the data related to driver’s behavior and performance back to the insurance company who in turn assess the driver’s risks and premiums respectively. The device and its features are beneficial for the drivers as well, especially those preferring safe rides as their reduced premiums depict their safe and customer-centric behavior.
Now consider a home insurance scenario. With the rising trend of smart homes, owners can seamlessly provide data regarding the management of their homes. In such cases insurers provide a plethora of benefits to the owners, for example, locking their doors in the absence of home residents to reduce the risk of theft, or turning off stoves when not use to eliminate the danger of fire. Up till now, there was no concrete and reliable way to transmit such information to the home insurers, but the increasing employment of IoT and smart homes, all the data can be safely and essentially managed and put into appropriate use.
Final thoughts
IoT is quickly gaining popularity and practical usage in the financial services sector. Several top mobile app development companies around the globe are competitively putting enough creativity and effort to fabricate unique IoT solutions and apps. To point is to elevate the consumer experience and provide unrelenting connectivity not only with each other, but with our surrounding structures as well.
