It’s safe to say the finance and banking sector hasn’t had the best decade (or two). Faced with a lagging economy, the industry is being pulled from multiple directions—from an increased demand for convenience and an always-on personalised service from consumers, to increased competition from FinTech startups, and all the security, legacy technology, and just simply not making enough money in between.
However, like in many other sectors, IoT looks to be the next big disrupter that could promise a more personalised, frictionless, and safer service at a much lower cost. And the mass adoption of online banking, mobile banking apps, and contactless payments has just been the start.
Using data to prove and approve
IoT is primed to help the traditionally risk averse finance sector with a host of opportunities that could redesign how risk management, insurance, application screening, and credit collection work.
The insurance industry has already successfully positioned itself at the centre of IoT innovation, adopting sensors, devices, and machine learning programmes that collect, monitor, and analyse high quality risk data on individuals. Driver classification models are already being used in car insurance to formulate prices on a “how well you drive” model, rather than statistical data related to your age, driving history, or type of car you own. Reliable drivers can therefore benefit from a reduced annual premium, whilst insurers can set higher premiums for more risky drivers.
The development of telemetry solutions has also allowed insurance companies to collect data by monitoring drivers’ behaviour, including excessive acceleration, harsh braking, lane swerving, and accident notifications that can be used to reconstruct accidents and settle claims in vehicle collisions.
It’s theorised that a similar process of data collection and analysis can be applied to the credit underwriting process for banks. Banks can now also use devices, sensors, and RFID to track the assets of businesses, meaning they’ll have an accurate account balance and be able to ensure loans are paid once inventory has been sold, effectively eliminating fraudulent practices.
Using data for automated decision making in investment and trading
If you haven’t heard of Internet of Value, you’re about to! A lot of focus in IoT is on the transferral of information across the Internet. That information is typically transferred at the drop of a hat… unlike when it comes to financial trading. Step forward the Internet of Value. Looking at the specific relationship between finance and the Internet, it aims for money to be exchanged as quickly as information using bitcoin, apps, and sensors.
Companies are already looking at how information on stock market activity, social media, and physical goods can be converged into a real-time market surveillance tool that can aid, or even automate, decision making when it comes to trading and investment.
This idea of converging data from multiple sources is a major strength of IoT (read more about how this works and how to set up your own multi-source analytics platforms here), but what’s most interesting here is the monitoring of both the tangible and intangible, effectively signalling IoT doesn’t always have to be about monitoring physical ‘things’.
Making payments and managing money easier
We’re all familiar with ATMs, online banking, mobile banking apps, POS machines, and contactless payments—all of which have made making payments and managing money as easy as a few swipes, button pushes, or clicks. However, IoT can not only make banking and paying even more easy, but a much smarter experience too.
You might already know we’re a sucker for a connected beer pump, but trials in London are taking it one step further, adding payment to the mix. Users of the pumps can order, pay, and pour in under 60 seconds, cutting down those agonising waits at the bar for service.
Meanwhile banks are ditching cards for payments. And while there aren’t any chips being implanted under people’s skin yet, banks are creating their own wearables for payment that avoid the dreaded moment you realise you’ve forgotten your wallet or phone. bPay by Barclays gives you a choice of a key fob, wristband, a loop that goes around your watch band, or even a sticker so you can pay with pretty much anything.
So what about managing your money? Banks can now come to you when you need to deposit cash with fleets of cars kitted out with deposit boxes and ATMs. Idea Bank has reported that deposits are three times higher using the connected cars compared to in branch.
Finally, we’re back to using all that data collected by connected devices. Information on buying habits and finance status can be teamed with machine learning to give personal suggestions and updates on how best to manage your money.
Using sensors to secure transactions
Security and privacy are unmistakably one of the biggest challenges for the finance industry. On the one hand there are the concerns from consumers who want to ensure their transactions and data are secure, and on the other are the banks themselves who have to look after everybody’s money and are traditionally reluctant to take risks.
A plethora of software and gadgets are tackling the challenge of making payments safer and more secure including tokens, location tracking, biometric authentication programs, and even cardiac signatures. You can now book appointments with smart ATMs from you phone that will give you your cash in less than 10 seconds after a quick tap of an NFC, QR code, or an iris scan—all of which are deemed to be much safer than traditional chip and pin.
Improving customer experience
Finally, just like IoT is on track to save the brick and mortar retail store, the same can be argued for the brick and mortar bank. Smart branches can operate in a similar way to smart retail stores, using the data IoT collects to improve customer engagement, generate cross sell opportunities, and make experiences more reactive and personalised.
IoT can bring customers walking by inside branches using beacons that send out targeted offers and loyalty rewards, whilst others can receive personal welcomes to appointments and tailored recommendations based on previous data collected by other smart devices.
Where’s the opportunity for Pangea Partners?
So, what are the major considerations for partners wanting to succeed, or indeed be more successful, in IoT within the financial and banking marketplace?
Largely, it’s all about if your existing capability lends itself to the opportunities presented within a particular market sector. You then essentially have three principle options:
- You can develop the capability, which will take time and you may miss the opportunity.
- You can acquire the capability, which can be expensive, risky, and take time to integrate.
- Or you can partner with other organisations in order to collaborate and use the combined strengths of both businesses to create compelling and market-leading solutions.
Here at Pangea we firmly believe in the power of collaborating. In fact, it’s the very thing our business is built on. We operate through a channel of more than 125 resellers and technology partners, meaning our partners our essentially our only customers. As the Channel’s Choice for IoT, our partnerships have been core to us delivering those bespoke, market-leading IoT solutions in finance and banking.