• Natalia Kharchenko, Technical Writer at Cleverroad


• 23.05.2018 08:00 am
undisclosed

It is not a secret for anybody that the Internet of Things today makes a great revolution in the world. Different types of electronic devices can connect with each other and make life easier and more convenient. 

Apart from the common use of IoT in our life, business field like financial sector can also use the Internet of Things usefully. Let’s find out main strong sides of using IoT in your financial business.

Challenges you can solve with IoT in FinTech area

The Internet of Things may be something new for financial area, but it doesn’t mean that it still has no any strong benefits. We can emphasize on 5 main advantages of IoT in FinTech.

Real-time data collection

Insurance business can really benefit from IoT since people can get all important information about their insured objects no matter where they are at the moment. For example, if you insure your house, using special sensors you can get all necessary information about all changes in insurance policy directly to your smartphone. Or, if you want to insure something in another country, you can easily receive local rules of insurance on your mobile device. And it is one example from thousands of possible options.

Improved customer service

All financial institutions like banks or P2P lending organizations and others always try to provide their customers with the best solutions and offers. To implement it wisely, it is necessary for them to know all preferences of customers, what services they are interested in. Due to special sensors installed in these organizations and the large number of mobile devices people use, it is possible to collect more information about each customer and find out about the all financial nuances that can be interesting for him or her. Then, financial organizations will target useful tips for each customer and it will improve customer service on the whole. 

For example, smartphones of customers can connect to sensors installed at the entrance of the bank. When customers enter the bank, sensors can authenticate their identity that increases security and send all required information personally for this client. Is it amazing, yes?

Decisions come faster

When banks gather information about their customers, it helps them create a structure of all financial capabilities of each customer. If bank analyzes personal preferences of the customer using his/her social media and credit history, it can make a faster decision whether a customer is reliable and his/her creditworthiness is high. If everything is good, the bank can make a good offer for the existing customer or potential customer. Using special analytical software together with a bunch of sensors, banks can succeed in it. 

Besides that, with the help of IoT, it is possible to get all important information about changes in other fields of the market.

Devices connect people

Everybody knows about contactless payments when you just wave NFC-based smartphone or credit card over PoS-terminal and make your payment. It is a much faster way to pay which is also very secure. The future of IoT in FinTech can give us even more opportunities. Imagine that sensors integrated into the cash desk will allow you pay for all products you’ve collected automatically. The payment will be done from your mobile wallet when the cost of all products will be calculated. If your wallet is out of funds, the payment will be rejected.

A new level of interaction

Returning to the issue concerning sensors installed at the entrance of the bank that can read all information about the customer, we can say that financial field with IoT can bring a new level of interaction between devices and people. For example, when people pass by banking sensors, they can notification that their credit payment is overdue and they need to make monthly payment urgently. All if you will spend your money thoughtlessly, you will receive a notification from your personal banking assistant that you exceeded the limit of purchases for today and you need to stop, otherwise there won’t be enough money to pay for utility bills and make other important payments.

4 good ways of application of IoT in FinTech

All FinTech organization do their best to integrate IoT in their services. And they show real success in it. Let’s check it out how the Internet of Things can be applied in the financial field. There are 4 really working ways:

Fraud detection

Among all FinTech trends fraud detection takes one of the first places. And this is where IoT and FinTech can become a successful combination. Using software with artificial intelligence and IoT devices, it is possible to monitor all financial transactions more properly and detect all possible deviations that don’t meet a common behavior of that or another customer. Thus, the level of security will be increased exponentially.

Automated payments

As in the case with the cash desk that reads the number of goods in your cart and what these products are, it is a very convenient way to make payments automatically that will save your time. RFID sensors and wearables like beacons and smartwatches in taxi cars, cafes and shops will let you make payment easily. It is worth noting that more than 20% of large financial organizations expect to see automated payments in taxi cars in the next 2-3 years.

Pay from your household appliance

And household appliance is not the only product that can be used for payments. But this is one more good example of the IoT and FinTech combination. Using smart refrigerator that has special software installed, you can not only store your products but also make payments from a special display on a refrigerator. A kettle or multi cooker can play the same role as well.

Standalone wearables

Yes, we use today smartwatches or smart glasses to perform some daily routines. But in the nearest future, we will be able to use absolutely autonomous wearables like rings, VR devices, helmets and others that can work without any additional hardware like a smartphone. 

As you can see, the future of IoT in FinTech can be really amazing. But don’t forget that apart from a special hardware you need to have a relevant software where good software development company can help you.

Shortcomings of IoT in Fintech

And, unfortunately, we cannot ignore pitfalls people may face if they plan to integrate IoT in FinTech field. Apart from obvious advantages, there are disadvantages that you should know about.

Security

The matter is that the Internet of Things is the network of different connected devices and a large number of appropriate software. So, it means that malefactors can hack one software and break the link in this chain. It will lead to serious losses since FinTech field is tightly connected with finances. Apart from funds that can be stolen, personal information is also under threat. Thus, security should come first.

Lack of one common standard

All hardware that is created for the IoT is built by different manufacturers, and it means that they all cannot work identically. So there is a probability that some devices can function improperly with each other due to different standards. Unfortunately, this problem cannot be solved for today, since if there will be only one manufacturer - it will have a great negative impact on the world economy.

Complexity

The larger network is, the more troubles and malfunctions may arise during the maintenance. Especially when it concerns financial sector. If one sector in this network will be broken, it can become a serious failure in the system and the reason for great losses. To avoid it, you should better choose skilled and experienced manufacturers along with software developers that have large experience in the development of the IoT software.

In the conclusion, we would like to note that despite the fact that IoT in FinTech has both strong and weak sides, it can be a really beneficial technology if it is used wisely and if it is created with a serious approach. Be clever and everything will be alright!