In an increasingly connected world that is increasingly dependent on technology and all its benefits, one innovative area of digital is contributing to its mass adoption worldwide; the Internet of Things. IoT basically pertains to common things in our daily lives that are now connected and online. Wearables are seeing more commercial appeal and popularity, and everyday appliances and objects around our homes are connected more and more, enabling ‘smarter’ homes and easier lives. According to Business Insider, 64 billion IoT devices are estimated to exist by 2025, an impressive difference when compared to 10 billion in 2018. McKinsey also states that 127 new tools are connected to the Internet every second.
Where FinTech is concerned, the most affected areas with IoT-related changes are customer service, security/safety, repayments, internal procedures, and facilities. IoT can provide a unique edge to financial institutions through several touchpoints, and offers many benefits in banking & FinTech.
FinTech as an industry has been deploying AI-powered solutions for some time now, albeit not without human assistance in most cases. Collaborations with banks and traditional FIs enable them to provide instant access to FAQs and general support for customers, and this direction is further empowered by IoT devices, as smart gadgets act as a platform to leverage IoT technology for enhanced efficiency and quicker serving times, raising overall customer satisfaction. A personalized experience and customized care are crucial to establishing loyalty & trust, and are achievable by using context-aware smart solutions.
IoT and FinTech can be utilized in all sorts of ways inside physical bank branches or any other financial institution. From queueing apps that enable virtual lines to save time & effort to instant messaging services with suitable agents that provide quick solutions on the spot, a visit to your bank is becoming much easier and less time-consuming. A basic example of using IoT technology in branches is to perform electronic ticketing, where a customized solution and destination inside the branch are given to customers based on their specific need. It’s also logical to assume that, as these services evolve, the need to make actual physical visits to local banks will diminish and people will be able to do most of their banking operations online. Should they need to go to the bank, technology will also be there to help them reach their goal faster and more efficiently.
Electronic payments are slowly but surely becoming the preferred method of payment for most people with access to FinTech services, due to their speed, reliability and ease of use. Today, wearables like smart watches and smart wallets are replacing smartphones and physical credit cards in digital payments and even cash withdrawals. Reaching over 1.1 billion devices and up from 526 million in 2016 in an estimate by Statista, it’s obvious that wearables today are in fashion and are here to stay, as people are adopting their convenience and safety around the world.
IoT gadgets are being used today as verification methods in FinTech, as biometric authentication can make use of a person’s heart rate to identify them. What can be more reliable than that! This reinforces safety and security of banking through IoT devices, one of the primary concerns of customers when it comes to using FinTech applications. Another aspect of FinTech where wearables come in handy is self-checkout services. People today can swipe their smartwatch or smart wristband at cashiers in certain stores to pay for their groceries and just walk out the door.
The uses of IoT devices are plenty and as FIs continue evolving their digital strategies, IoT is participating more and more in those strategies. The general direction is that they will eventually take over mobile phones for payments and secure transfers, seeing as their convenience makes that much easier. IoT-enabled security systems are finding their way to consumers and they create a personalized access experience and reliable identification method for their owners. People are able to sign, pay and pretty much do everything that a smartphone offers using their wearables. This also provides many advantages to financial institutions, as they have an open channel with their customers and can relay all sorts of customized messages and financial updates about their accounts. Users in turn can get to see they transaction history and expenses on their wrists and around their necks on the go.
It seems that the Internet of Things is an area of technology that will elevate the personalized aspect of FinTech to a whole new level. As banks continue to restructure their strategies and adopt innovative concepts and technologies, it would be smart to consider potential solutions using access to IoT devices to stay relevant and competitive in the digital finance market. Functionalities of smartphones are quickly being integrated in wearables and IoT devices, which entails that most operations currently done through mobile phones will eventually be available on smartwatches and wristbands. IoT is still a relatively new domain, and relevant expertise in developing its solutions is scarce when compared to other areas, however it is the great degree of customization and personalized experiences that could ultimately prove to be the most important factor to customers, and so FIs should prepare to deploy their solutions on those innovative platforms in the coming period.
IoT, Internet of Things, Customer Service, Digital Finance, e-payments, wearables, smartphone, smartwatch, Artificial Intelligence, AI, biometric authentication, security, COVID19, Coronavirus, Cashless