How banks can profit from IoT

Banks have been moving to the intangible for years. Customers today depend less on physical money, checks and stock certificates. Most financial institutions make it easy for their clients to accomplish all major operations and account monitoring through a computer. However, despite the move to digitization, banks and other financial organizations can greatly profit from the use of very tangible internet of things devices.

The internet of moving things
Sameer Kishor, the president of banking, financial services, securities and insurance at NTT DATA Services, believes banks should focus on a particular subset of IoT known as the internet of moving things. In a piece for Insurance CIO Outlook, he wrote about capturing the data of clients in transition.

Banks can already track customers through geolocation software contained in phone apps and with sensors attached to physical bank locations. Using these tools allows a financial organization insight into how client moves, when they decide to spend money and where they are when those transactions take place.

Doing this paints a personal picture, one far more in-depth than demographic data surveys. Banks tracking this information can create personalized lending and mortgage models that are ideally suited to a client's payment structure, reducing the likelihood of missed or incomplete payments.

Customers more prone to expensive shopping sprees will likely receive less credit than individuals proven to show financial prudence.

Increased automation and stronger customer service
These IoT-enabled sensors already installed at many bank locations are the key to smoother transactions within the establishment. They can read the customer's smartphone upon entry and immediately log the individual as on-premise. This will enable bank staff to assist the client without spending time retrieving personal information.

Advanced automation technology will also enable real-time market surveillance - letting companies invest, divest and make payments whenever a set of predefined conditions are met. This model has taken root in the stock market, where automated trading already accounts for over 75 percent of all trades, according to Reuters.

With basic financial transactions being increasingly handled by algorithms and software, banks and financial institutions can free up resources to spend on customer satisfaction. Continued investment in mobile and wearable technologies like smartwatches and augmented reality glasses will allow clients to monitor their financial information more conveniently, reducing the downtime they have to spend weighing numbers before an investment.

More transparency for fairer payment plans
Monitoring the internet of moving things does more than help individual consumers. Progressive, a U.S. automotive insurance company, teamed up with Zubie, an organization specializing in car data-tracking hardware to better customize insurance plans. According to Internet of Business, Progressive has used Zubie hardware to make 1.7 trillion driver observations.

With this data, the insurer has completely restructured its payment plans, moving away from traditional factors like car model and home location to rely more heavily on an individual's driving ability.

Progressive's success story is just one of countless possibilities. Banks and insurance firms utilizing sensor data can better support profitable businesses while avoiding unwise investments. Pivoting to agriculture, many data sensors already exist and have been implemented to monitor factors like soil richness and moisture levels. Banks with access to this information will know which farms are performing best and which would benefit from increased resources - allowing them to strike lucrative partnerships with prolonged evaluations.

Banks can monitor factory accident rates, allowing them to personalize worker insurance costs per company.

Being mindful of cybersecurity concerns
Of course, all financial institutions must be mindful of the security concerns still surrounding IoT devices. Deloitte stated that, while a lack of federally mandated security standards harms innate IoT security, it is still not an excuse for companies to invest heavily in IoT sensors without also putting money into effective information security solutions.

A data breach is expensive on multiple levels - including legal fines and significant loss of reputation. SFax data concluded that the average cost of a successful cyberattack was $3.6 million in 2017 and this number is expected to go up.

Banks and other financial institutions have a lot to gain from successful, thorough IoT implementation. However, this investment cannot be made lightly. Infrastructure is vital to effectively using enhanced network abilities consistently and securely. Perle has the expertise and hardware to help financial organizations upgrade quickly, without sacrificing quality in the result. Contact us today to find out how we can help outfit your bank for IoT optimization.