The Internet of Things (IoT) is, without a doubt, one of the biggest technological transformations on the horizon. In developing countries most of the promising retail business organizations are already claiming that we are entering the second major digital revolution.
According to Gartner’ assumption and statement, there will be 25 billion smartphones, smartwatches, smart ATMs, wearables, connected cars and other connected devices by 2020. An amazing forecast that strongly indicates the influence that machine-to-machine (M2M) connectivity is going to have on our society, culture and business and of course on economy.
In a very short space of time, we are all going to be surrounded by intuitive connected devices, from our smartphones and wearable tech, through to millions of sensors in our homes, on our roads and in our workplaces. For consumers, the real promise of the ubiquitous connectivity of the IoT era is to help us save time, work smarter, drive safer and live a healthier and more active lifestyle. For business, there are multiple opportunities to benefit from IoT, with $2 trillion of economic benefit predicted on a global level by Gartner.
Today’s consumers demand always-on convenience and a personalized service whenever possible, as is clear from the mass adoption of online banking, mobile banking apps and, most recently, contactless payment technologies. Additionally, they also want the highest levels of digital security from their banks, with any data breach or security threat posing a major problem to banks in the IoT era.
Machine-to-machine connectivity that enables the mass collection and exchange of information from sensors and objects also opens up multiple opportunities for banks, which will be able to better track and analyze the behaviors, wants and demands of their customers. This, in turn, will allow banks to provide customers with a far more personalized experience, with targeted advice, context-aware offers and insight. The bank is able to achieve a new level of understanding of the needs of both consumer and business clients, attaining a new level of customer intimacy.
Billions of devices are connected to each other, and in doing so, they become an intelligent system of systems. When these intelligent devices and systems share data on the cloud and begin to analyze, they can transform our business, our lives, and our world – in countless ways. Customers use smart devices for accessing data, which allows banks to provide a complete view of customer finances in real time. Banks can anticipate the needs of customers through the data collected and offer solutions and advice that can help customers take sound and smart financial decisions. In this way, the ‘bank of things’ can become a very powerful facilitator to increase customer loyalty, and in turn, bring in more business to banks.
Banks might use IoT technologies to create more engaging and context-aware customer rewards, or to generate more intelligent and personalized customer cross sell opportunities. IoT will help banks to innovate and devise better ways to improve risk management, reduce costs and improve overall operational efficiency.
In Bangladesh few new banks were established in the last few years, the number of banks in Bangladesh is 56 now; at least 40 commercial banks open 400 new branches each year. On the other hand in developed countries bank branches have been in a modest decline over the past several years. In most of the first world countries when bank branches are disappearing by the hundreds, many folks don’t seem to care. In fact, an expansive survey shows that when it comes to the banking experience, institutions are far better off concentrating on creating great mobile experiences than on upgrading their physical locations.
The preferences show up in a variety of ways: customers are one-third more likely to enjoy a mobile transaction than a bank visit; those who use branches are three times more likely to switch banks than those who are infrequent visitors; a branch visit is 2.3 times more likely to end up with an annoyed customer than using an mobile banking apps.
Those results came from a Bain financial services practice survey of 114,696 consumers in banks across the world.
The successful bank of the future will have fewer branches but better branding, with technological advancements getting priority over the traditional neighborhood touch, according to an analysis that sees an industry “inflection point” at hand.
Amid shifting customer needs and demands to find new ways to make money as regulatory pressures increase, banks are adjusting their models toward improving the mobile experience and continuing customer service with less of a physical footprint.
Whether discussing the future of retail banking or the future of mobile banking, technology is playing a larger role in our everyday transactions. The Internet of Things (IoT) is part of this rapid evolution toward the bank of the future, and both consumers and financial institutions need to adapt to these retail and mobile banking trends.
Below, we’ve detailed the past, present, and future of the banking industry as it relates to the IoT, and how these emerging technologies will transform the way we conduct our financial business.
Retail Banking through IoT
Retail banks have actually been using an early prototype of an IoT device for decades: the automated teller machine (ATM). Since their widespread adoption, ATMs have been one of the top IoT devices that make banks far more efficient by removing the need for long wait times to see a teller at the bank. There were 3.5 million ATMs installed around the world by end of 2016, up from 2.5 million in 2010.
Along with this surging volume comes more security features and lots of functionalities, customer can deposit notes, coins and cheques to the ATMs. One can deposit cash straight into his/her account in real time, so he/she’ll have the money to do the things as they need. Cheques will be credited just as they would be if you were to deposit them over the counter.
The Smart ATMs are easy to use, with step by step instructions to guide you through the process, teller-assist functions, and more. These “Smart ATMs” should help drive down costs for banks by reducing the number of employees needed inside traditional branches. Furthermore, a recent Chase survey showed that younger generations are more likely to use ATMs than older people.
As we move forward, banks are turning toward new IoT technologies to enhance the user experience and reduce costs. Some banks have started using beacons (wireless technology to create a
different way of providing location-based information and services to smartphones or devices); for example, to send customized offers right to customers’ smartphones as soon as they enter the branch. And some ATMs now have live stream video support that allows customers to speak to tellers if they need additional assistance.
Mobile Banking Apps
Perhaps no technology will disrupt our financial transactions in the future more than mobile tech. The introduction of SMS into the public gave banks an avenue for mobile banking, but the explosion of Smart Phones in the last decade has truly caused mobile banking to go main stream.
Today, mobile banking apps are not an extra benefit in consumers’ minds. They are a necessary part of the bank-customer relationship, and their absence could convince customers to switch to another financial institution. But banking apps were just the beginning. Apple, Samsung, Android, Wal-Mart, and more all have their own mobile wallets that allow customers to simply wave their smartphones and be on their way. Peer-to-peer payment apps have also exploded thanks to their ease of use. The fact that much of the public uses “Venmo”(Venmo is a service of PayPal, Inc., a licensed provider of money transfer services) as a verb speaks to the widespread influence of P2P apps. These services eliminate the need for consumers to visit an ATM to take out cash, which removes an extra step from the payment process.
Small businesses are adopting IoT technology and increasingly installing inexpensive mobile point-of-sale products in order to accept credit and debit cards when they previously could not. This technology further eliminates the need for cash.