The Internet of Things Opportunity for Financial Institutions

The Internet of Things Opportunity for Financial Institutions

Elina Mattila

Executive Director at Mobey Forum

Views 746

The Internet of Things Opportunity for Financial Institutions

30.10.2019 06:45 am

Engaging with the Internet of Things (IoT) and the data generated by it, presents a real opportunity for financial institutions (FIs) to innovate and transform their own products and services. On the flipside, failure to do so may, in time, jeopardise their future prosperity, by leaving them vulnerable to competitors and new, agile players. 

The workings of this emerging ecosystem are intricate and quite different to the conventional world of financial services. Billions of connected devices, seemingly unlimited possibilities and a huge tidal wave of data are converging to bring new complexities. Now is the time for FIs to consider the different positions they can take in the IoT ecosystem, the roles they can adopt and the initial use-cases which will give them a commercial foothold.

Power comes from within

With something as hyped as IoT, it’s tempting to focus on grandiose visions of ‘what could be’. Yet, closer-to-home, IoT applications promise to have a big impact on the internal processes and back-office operations of large enterprises, including banks. This is a sensible and realistic place for FIs to start, and one that is often overlooked. 

Back-office operations are foundational to the existence and performance of the FI, so optimising them to yield more productivity at a lower cost should be one of the first objectives of the organisation. IoT-based solutions can be used to manage FI branches, head offices and employees’ daily work more efficiently.

What’s in it for the customers?

Customer experience could also be improved through IoT. If customers had IoT-enabled digital financial companions that could receive instructions, such as the Amazon Echo or Google Home, they could automatically trigger appropriate back-office workflows. Services such as opening an account, capturing and verifying know-your-customer documentation and making payments could all be simplified and made more convenient for customers. Supporting the integration of a financial services digital companion could be a stepping-stone to adding value to existing services and products, as well as unlocking new revenues generated from data.

In line with this, FIs can use IoT to move past their basic value proposition and get customers excited about their bank relationship. Collaborating with the wider industry, such as mobile service providers and payments processors, and engaging with data, are key to creating seamless and more personal consumer experiences.

How do you deal with data?

The real value of IoT is the data it generates and its huge potential. Making sense of this data, however, isn’t easy and requires institutional commitment. With so much data comes great complexity over ownership, hosting, processing and understanding how to utilize it to best effect. FIs may be starting to look at putting in place the right talent to help them get their heads around how they can translate this data into better products and services for their customers, as well as navigate all the related compliance and regulation complexities.

Utilising data can improve decision making for credit scoring, mortgage applications and lending practices, with benefits for both the customer and the FI, through higher approval rates. Just like we’ve seen in the insurance industry, where sharing driving or health data can result in reduced premiums, with customer permission, FIs could gather real-time data from specific things, such as wearables, and other interfaces, like open banking APIs. Doing this would enable them to understand lifestyle behaviour, spending patterns and choices made, and provide personalised products and services based on this data.

FIs could also capitalise on other IoT trends, such as geolocation services to offer enhanced customer interactions, enabling them to locate and navigate to their nearest branch via a smartphone app, and learn how long the wait is to see an advisor there.

FIs also have an opportunity to commercialise their data, by anonymising it and selling it on.

What about security?

This is one of the biggest challenges, and not just because of the massive number of devices connected to a bank’s network through APIs. Data sharing can be a risky business and even though consumers may be willing to share their data in exchange for better products and services, questions remain over the inherent risks of doing so. This is where FIs are primed to build on their reputations as trusted entities by adopting the role of identity and data guardians for their customers.

Where to go next

The IoT opportunity for FIs is explored in more detail in Mobey Forum’s report on IoT, entitled IoT in Financial Services: Role and Opportunities for Financial Institutions and is discussed in the organisation’s latest podcast, moderated by Dave Birch form Consult Hyperion and featuring Mobey Forum IoT Expert Group Co-Chairs, Veronica Lange, Head of Digital Engagement, UBS and Sasa Skrgic, Group Retail Strategy, Erste.

Latest blogs

Nish Kotecha and Noslen Suárez PhD Finboot

How blockchain can help us have trust in the food we eat

Today’s food supply chains are global, connected and generally efficient, but the COVID-19 pandemic has shone a spotlight on areas of weakness. The urgent need for robust and resilient systems and processes has been brought sharply into focus, and Read more »

Chris Miller RSA Security

Back to Normality: Five Steps to Stay Resilient After Disruption

The financial services sector has lived through many global disruptions, but the nature of recent events has put an unprecedented strain on operational resilience; from needing to ensure critical functions could continue with skeleton staff and Read more »


How Technology Has Disrupted the Used Car Buying Experience

We’ve seen many fields change rapidly as a result of the integration of modern technological advancements over the last couple of decades. And it looks like more is coming on the horizon as well, judging by current trends. One of the markets that Read more »

Shuvo G. Roy Mphasis

Reboot 1.0: How financial services technology can enable the supply chain to support a post-lockdown boom

Ground control and Captain Tom When veteran Captain Tom Moore decided to walk one hundred laps of his garden before his 100th birthday to raise funds to support NHS heroes battling Covid-19 from the frontline, he never imagined that he would Read more »

Lisa Gutu Salt Edge

Building a PSD2 compliant channel: challenges and opportunities for financial institutions

PSD2 obliges ASPSPs including banks, e-wallets, prepaid cards and other companies that offer payment accounts to provide at least one channel for secure communication with third party providers (TPP). Even neobanks or e-money institutions, including Read more »

Related Blogs

Quinn Perrott TRAction

Why further Brexit delay creates greater reporting uncertainty for fund managers

There is a funny sense of déjà vu when it comes to the latest twist in the Brexit saga. The trouble is that whenever the can gets kicked down the road, market participants put Brexit to one side and allocate IT, process management and compliance Read more »

Christian Damour FIME

Flying solo with mobile payments: Why choose HCE?

Smartphones are central to our daily lives. We manage our personal and business affairs, watch movies, track our health and, increasingly, make payments. Adoption of mobile payments is rising considerably worldwide, with predictions estimating it’ll Read more »

Lars Sandtorv MeaWallet

A Star is Born: EMV SRC Takes the Spotlight

With the first implementations of EMVCo’s EMV SRC specification entering the ecosystem, now is the perfect time to ask ‘what is EMV SRC and how will it interact with tokenization?’, not least because the specification has been making waves since its Read more »

Luiz Guimaraes OSPT Alliance

Why consider open standards for ID solutions

Driving licenses, transport cards, employee access control, health services… governments and associated bodies across the world are faced with a number of ID solutions to be developed, managed and delivered. And in an increasing effort to streamline Read more »

John Ocampos Mega Media Internet Advertising

Biometric Authentication: The Best Solution for Information Security

There is no doubt that the biometrics system has become one of the most popular security solutions. Before, you may only see the use of biometrics security system in offices, and commercial properties. Today, even phones, gadgets, and other mobile Read more »

Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel