Last updated: 16 June 2016
A message for banks: get connected, get innovating. The IoT is changing every aspect of our lives for the better, and it’s happening rapidly. The revolutionary technology is helping to tackle the greatest environmental problems of our age, assisting emergency services, making our homes smarter and more efficient and even improving popular sports like soccer, NFL and boxing. By 2020, analysts predict there will be 25 billion wearables, mobiles, connected cars and other smart devices. With consumers embracing the IoT revolution, it’s crucial banks stay in touch. Financial institutions can enjoy tangible benefits by embracing the IoT, but it’s also set to elevate cybersecurity to a new level of importance. Here are three ways banking is set to evolve.
Better understand customers
The rise of the smartphone and wearable means customers are demanding more from their banks, especially seamless access to their accounts via mobile apps. Unfortunately, according to recent research, less than a third (27%) feel their banks provide them with a high-quality personal service. Promisingly, the swathes of data made available by connected devices and M2M technology presents opportunities for banks to better engage with consumers, enabling the delivery of the customized, customer-centric service people desire. The information allows banks to better track customer behavior and respond to their needs, offering targeted advice and rewards, as well as context-aware offers and insight. In other words, the IoT can foster a more intimate relationship between bank and customer. The advantages don’t stop there…
Achieve better commercial results
Banks that embrace the IoT can make more intelligent decisions, thanks to being able to evaluate risks more effectively, and benefitting from more accurate market projections. The proliferation of connected devices means that financial institutions have more information at their disposal, allowing them to conduct more rigorous market analyses.
With IoT and M2M technology, banks can access data from across customers’ value chain. M2M sensors are set to enhance underwriting processes, since banks can better track physical performance of individuals, the shipping of goods and manufacturing quality control. Better informed lending decisions are also possible, since powerful IoT sensors can monitor the condition of retail, agricultural and manufacturing businesses. In short, the 21st-century banker is set to be more connected and knowledgeable than ever before.
Cybersecurity becomes top priority
While the IoT presents exciting new opportunities for banks, cyber-attackers could potentially benefit from the increase in data. Addressing security concerns has to be a top priority for banks, since 37% of all cyber-attacks target financial institutions, and 78% of customers demand effective cybersecurity over service and accessibility.
As a consequence, banks need to adopt a layered approach to cybersecurity, using techniques such as multi-factor authentication, encryption, key management, digital signing, transaction authentication and application security. Biometric data – fingerprints, voice-recognition and iris-scans – are set to play an increasingly important role. Banks must prepare for cyber-attacks as if they are an inevitability; brushing the issue under the carpet simply isn’t an option.
Clearly, the IoT is set to have a major impact on the banking industry. It’s important banks embrace the connected revolution while putting the proper security infrastructure in place to defend themselves from hacks. The recent FinTech revolution means that banks need to stay ahead of the curve, leveraging their extensive access to client data, one of the key advantages of traditional financial institutions.
What do you think about the potential of the IoT in banking? Let us know by tweeting to us at @Gemalto, or by posting a comment below.