Banks and financial institutions are looking to exploit the trends in the Internet of Things by using data streams from devices and cloud computing to develop new financial products.
According to a report from American Banker, banks could use IoT to find out more about their customers than ever before.
Geri-Lynn Clark, vice president and head of client services and partnerships at NextAngles, told the publication that less than 20 years ago, banks had to rely on when customers made applications for mortgages and the like to have any idea about what they planned financially, but the Internet of Things meant that the collection of data from devices such as smart fridges meant a “much more personalised experience to their customers.”
For example, smart fridges could detect when food was running out and re-order food and debit bank accounts. It is this information that is useful to banks.
Clark said the banking of things could be the most disruptive force in financial services since the credit card.
The cloud also meant that banks have better infrastructure to analyse data to serve customers better, according to Clark.
“For the retail bank [at Citi] a large percentage of the budget was essentially earmarked for infrastructure: data centres, mainframes,” said Clark who was previously chief information officer for Citigroup’s North American retail bank. “But now being able to offset in-house costs and move to the cloud for that stuff provides tremendous opportunity.”
Internet of Things in the financial world
Oleg Kapustin, data solutions architect at DataArt, told Internet of Business that the demand for data analytics and business intelligence in the financial world has never been so overwhelming.
“Continued necessity and unrelenting innovations have ultimately transformed data analytics into the key indispensable management tool that it is today,” he said.
Alexey Utkin, finance practice lead at DataArt added that it’s quite likely that some incumbent big-name banks will partner with innovative fintech companies, bringing new AI-powered capabilities into their offerings.
“However, the real challenge for an incumbent bank developing new financial products is to bring all this valuable IoT data into a single platform to be able to analyse it. Challenger banks, with newer systems built from the ground up, may have the edge.”
Graham Lloyd, director and industry principal of financial services at Pegasystems, told Internet of Business that as consumers in a new, digital age, our behaviours and expectations have changed, we now expect organisations to be able to understand our needs and predict what will appeal to us.
“The key to this lies in the increased use of connected devices, such as smart phones, smart watches, connected cars and other Internet of Things enabled technology. These devices all provide enough data to enable businesses of all shapes and sizes to analyse and understand their customers, their behaviours and their preferences – and even to predict what they might like,” he said.