How the financial services industry can benefit from IoT

The financial services industry is a quiet giant. The tools it uses to interact with investors, account holders and other industries are frequently in the hands of users although we rarely hear of new or innovative approaches.

The most recent, significant change to the credit card industry was the development and adoption of the EMV liability shift that resulted in many credit card companies issuing new, chip-enabled cards to users. In order for merchants to process the cards in an EMV-compliant manner, new terminals were installed.

The EMV liability shift transferred the responsibility for fraudulent charges from the card issuing entity to the merchant accepting the payment when the credit card is “swiped” instead of “dipped”. The new, chip-enabled cards significantly reduce the likelihood of fraudulent charges by issuing a series of communication between the bank and the terminal. None of the customer’s payment information is stored, or even passes through, the merchant’s point-of-sale solution.

The Internet of Things (IoT) is bringing even more advancements to the financial services industry in the areas of banking, insurance, credit cards, customer relationship management, and data privacy and security.

Big banking

Big banks are already using connected technology to better serve their account holders. Mobile banking apps allow customers to snap a picture of a check and have it instantly deposited into their accounts. Users can also transfer money between accounts or even use apps to pay for products and services in the real world.

Now is the time to begin considering ways in which the banking industry may leverage connected home and business hubs to serve customers in innovative ways. What if your connected business solution could keep track of incoming shipments and automatically authorize payments drop-shipments?

Insurance sector

The newest application of connected technology in the automotive insurance sector is user-based (UB) insurance. Premiums are established based on the driving habits of the insured; which are captured using an in-vehicle sensor.

As more connected vehicles enter the mainstream, insurance companies have a tremendous opportunity to reward those drivers that adhere to safe-driving practices and penalize those that do not.

Credit card companies

With most stores providing reliable, high-speed connectivity credit card companies have the opportunity to issue time-sensitive offers to cardholders during in-store events. The installation of a Bluetooth low energy (BLE) beacon in a store could allow credit card companies to target cardholders entering the store. The credit card company could push special offers to customers for the use of their card to pay for purchases made in the store.

CRM

Customer relationship management systems in the financial industry have typically lived on protected, in-house servers. However, the proliferation of IoT technologies has dramatically increased the security tools available to developers; making it possible for those in the financial services industry to utilize cloud-based systems to manage customer relationships.

Connecting CRM systems with content management solutions enables financial advisors to provide customers with relevant and valuable information; strengthening relationships and increasing the total value of provided services.

Secure payment gateways

As the number of devices connected to the internet increases, end-users will have more opportunities to purchase goods and services through the web. However, providing payment credentials to each individual service provider leaves the customer’s personal financial information vulnerable on many fronts. By offering secure payment gateways, financial institutions are protecting the integrity of their own systems while simultaneously providing security services to their clients.

Incorporating connected technologies into every sector of their customer and business management helps big names in the financial industry remain relevant in a generation that rarely touches paper money. It is also necessary to capitalize on the many profitable businesses that exist solely in the cloud – where all transactions are accomplished without a cash register or a card reader.