For the banking industry, the Internet of Things (IoT) could be the Best…Thing…. Ever. While financial institutions have traditionally focused on products, in this Age of the Customer they are increasingly challenged with delivering compelling services and experiences to stand out in a crowded market. That’s where IoT can have the greatest impact. Financial providers have a major role to play in facilitating the payment streams associated with connected devices and services. With IoT, banks can also gain deeper insight about customers, and use these insights to fuel new product innovations.
Fintech isn’t new, but it’s the new black
As more and more consumers adopt a digital lifestyle, they’re latching onto mobile banking and mobile payments. IoT can rocket that to new levels with endless possibilities for streamlining processes, increasing marketing effectiveness, preventing issues and reducing support costs, even delivering in-the-moment opportunities to drive new revenue streams.
Most banks already derive actionable insights from data analytics to improve customer experiences, product development, and business performance. But the power of “always on” IoT connected devices and services is dramatically redefining what’s possible. Now banks can capture data (with numerous layered nuances) as it happens and in unprecedented circumstances, and act on it immediately. Here are a few examples of how the financial industry is capitalizing on the Internet of Things.
How are banks using IoT?
- Telematics. Insurance companies are increasingly embracing IoT technology to offer usage-based auto insurance. Customers can install sensors in their car that allow the insurance provider to monitor driver behaviors such as how fast and hard they accelerate or brake, how fast they take corners, average speed on different types of road, and more. Not only does this data help pinpoint issues related to accidents to reduce fraud, it helps identify safe drivers, who may be rewarded with lower premiums. The inherent gamification of usage-based insurance may encourage safer driving, which can translate to lower costs and higher profits for carriers.
- M2M (Machine to Machine) solutions. Many large banks are already employing M2M technologies to capture mobile interactions, strengthen identity management, improve customer service, and more. As an example, M2M-enabled ATMs are collecting data to help banks better understand customer needs, while remote monitoring and troubleshooting allows banks to quickly resolve and prevent maintenance issues. Although many financial institutions are getting on board, progress is slow – the complexities of implementing M2M solutions are the primary challenge for 92% of banks, according to a survey on banking and IoT. In particular, nearly 70% lack the data management strategies required to really make it work.
- Beacons. Proximity marketing isn’t just for retail. Banks are getting in the game, using beacon technology to deliver more relevant, personalized experiences for customers who opt-in. Westpac Bank in New Zealand is using Apple’s iBeacon to send tailored, location-based messages and enable tellers to personally greet customers. Banks can also use the beacons to monetize. For example, mobile banking app users can choose to receive offers from certain retail stores and be prompted to pay with the bank’s card. It’s great for increasing spend, while adding another layer of engagement with customers.
Bottom line: The Internet of Things is really about enabling smarter business decisions and transforming experiences. That’s where financial institutions can win by harnessing the power of IoT as part of their fintech strategy. From leveraging unique insights for enhancing services to delivering personalized engagement solutions that build more profitable customer relationships – the Internet of Things could redefine banking as we know it.
Read more in our IoT series:
Pt 1: Five things you need to know about the Internet of Things
Pt 2: 4 ways the Internet of Things is transforming customer experience
Pt 4: How the Internet of Things will change the future of marketing