'Internet of Things' in banking: The vital links

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The banking industry has gone frombrick and mortar to digital, and with the advent of ‘Internet of Things (IoT),’ the future is looking very interesting.

The banks have conceptualised an omni-channel approach for customer engagement, and significant importance has been given to customer experience. So, what we have experienced thus far is evolution and stabilisation; we are yet to see the full blow of disruption in this space.

Customer touch points are increasing and customer interaction channels are changing. The banking industry is adopting IoT in significant scale and has also implemented in certain functions to enrich customer experiences, such as in KYC, lending, collateral management, trade finance, payments, personal financial management and insurance. IoT technology ensures that customer and financial data are potentially kept secured. IoT-led banking can actually help banks reduce the overall cost of banking, and enrich the customer experience and be more contextual and conversational.

How IoT is disrupting banking
Today, in the IoT-driven digital banking space, customer onboarding and KYC processes have become faster. As more and more devices acquire digital interfaces, customers can now access their bank accounts from any ‘thing’ and ‘anywhere’ through a device with a digital-enabled interface.

Banks and financial services organisations can provide appropriate contextual services. Biometric voice or touch have enabled account access in the new era of digital channels. Certain processes allow customers to remotely sign through any touchscreen device and the same signature can be cloned onto the physical paper using technology – such as “wet ink”.

Collateral tracking
The IoT-led technology solution can enable banks to have better control over mortgaged assets, retail assets business such as cars, trucks and bikes and monitor their health and whereabouts.

In fact, the entire agriculture lending system can be automated—right through the life-cycle of the loan. The bank can monitor the performance of the loan, including agronomy.

Payments automation
We have already started to see the use of connected devices and wearables in the banking space—for example, payments through smartwatches. Similarly, other payments methods such as the QR Code, digital wallets and UPI are real game changers as far as the payments domain is concerned. There is a huge adoption of technology across the spectrum, including the rural segment. We also have WiFi-enabled cards and RFID-based payment processing.

Boosting AI-driven contextual and conversational banking
Contextual banking, along with conversational banking, will create the right rhythm for customer engagement and enrich customer experience. To give a perspective, the assisted devices can help the customers converse with the bank virtually. For example, an existing customer looking for a very short-term loan can communicate with the bank with the assisted device, and the bank can create a tailor-made offering for the customer, maintaining the overall relationship with the bank.

IoT-led digital transformations will create great opportunities for banks, with new products and services. It will help them attract NTB (New-to-Bank) clients and thereby increase their market share. This is an era of Internet of Things in Banking—which, soon, will be known just as the things of banking.

The writer is, Executive Vice President - Banking & Payments at FIS.

The thoughts and opinions shared here are of the author.