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Banking of Things (BoT):- Building a strategy for Banking + IoT

 
May 26, 2017

The Internet of Things (IoT) is shaping up to be one of the most prolific and ubiquitous technological revolutions of this century. It is expected to have an enormous impact across all walks of life with the explosion of the devices and connections generating enormous amount of data in real time. The intelligent interconnected devices are seamlessly getting integrated in our day to day activities and have started impacting significantly on our financial lives.   Banks have been using an initial prototype of an IoT device fordecades  now: The ATM or the automated  teller machine. Some ATMs are enhanced to “Smart ATMs” with live stream video support that enables customers to speak to the tellers for additional assistance. These “Smart ATMs” help drive down costs, improve operational efficiency and increase customer satisfaction.

Some of the banks have started using beacons to send customized, relevant cross selling/upselling offers to their customers on their smart phones and devices as soon as they step into a branch based on their needs. Banks can also track customer footfall and make changes in their engagement strategies based on such insights.

While many banks have made great progress, all banks need to start planning for the upcoming changes – the sooner the better, to make the best of these emerging technologies and opportunities. On one hand, the banks are looking out for technologies that could reduce the operating cost and increase revenue, on the other hand they are examining new ways of engaging with their customers for convenient, contextual and personalized services to attract or retain customers. Location based offers, personal financial management and proactive advisory are instances of solutions that depend on customers’ willingness to share personal information in exchange for customized advice and services.

A survey found that 64.5% of global banking executives monitored their customers through mobile apps on smartphones, tablets and other digital devices, 31.6% of banking organizations used IoT to monitor retail bank locations, 21.1% used digital sensors to gather product performance data and 15.8% used IoT sensors in wearables to track customer product usage.

‘Banking of Things’ can help banks improve customer loyalty and bring in more business. Banking of things, if executed effectively will transform the banks with an unprecedented level of data and data-driven customer insights. An intelligent environment will improve several KPIs in banking – detect overspending habits of their customers, improve customer stickiness and in turn customer satisfaction scores.

But despite the hype, there have been very few early adopters who have started integrating IoT. Banks are treading very carefully and being extremely cautious about making changes. So will it be wise for the banks to remain immune to this technology?

Certainly, innovative technology shouldn’t be the reason for considering it. The real benefits of any new technology can be evidenced through identifying practical use cases it will enable. Looking at BoT, there are many scenarios where IoT can transform banking and benefit not just the customers but the banks themselves. The increased amount of real time data available to the banks from the abundant IoT devices will provide a far more detailed and useful picture of the customers so banks can make better commercial decisions. For example banks can send shopping offers, real-time updates of balances, debit and credits on their customers’ smart devices so those customers do not have to navigate the bank’s web portals and apps. Banks can use a similar approach to provide alerts to their customers that make the customers life better and easier. For example, alerts can be sent when customers have exceeded their spending limits for the month, when to delay going home to avoid peak toll fees caused by a congestion, and even when not to buy a pizza as exercise was skipped for the day.

Extended use of biometrics to customer authentication at branches and ATMs are getting introduced so that the customers don’t have to carry documents to identify themselves during banking through physical channels. The geo-location data from the user’s mobile can be used in real-time for fraud prevention. The user’s device location data is matched with the transaction location at the POS (point of sale). If it matches, the transaction can be approved – all in a matter of milliseconds.

The possibilities of IoT is only limited by the imagination, but it needs a proper plan to be effective. Is your bank ready to address how to engage customers in their own “Bank of Things”?

Click here to find out about the Key Success Factors for Digital Transformation in the Banking Industry as per IDC in our whitepaper.

Learn how retail banks can deepen customer engagement using cloud computing with TCS Digital Software & Solutions Group’s Customer Intelligence & Insights for Banking and Financial Services.

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Siddhartha is Product Manager of Customer Intelligence & Insights for Communications at TCS Digital Software & Solutions Group, a next generation analytical solution for telcos to help them deliver superior experience, improve their wallet share and increase cost savings through operational efficiency. Embracing the core values of innovation, learning and growth, he has driven complex business intelligence solutions & consultation programs successfully across varied domains and industries including banking and financial services, healthcare, retail and telecommunications. Prior to joining TCS, he had extensive exposure on offerings for revenue assurance and fraud management solutions with clients in telecommunications to reduce the impact of revenue leakages on their profitability.