So you’ve decided to get the benefit of IoT, but don’t know how it can be useful for your fintech company. With the growing risk of frauds and doubts about payments security, you might have lots of questions to ask. Whether turning to an IoT development partner or developing IoT system on your own, it’s vital to know its benefits and applications before you begin.

From this article, you will learn how the Internet of Things can be used in fintech sector and how it can help you to stand out. Down below, are the key ways how banks & consumers can benefit from the IoT systems & connected devices:

1. Improve financial habits with smart IoT systems 

Banks can tie up wearable and smart home devices with bank accounts to help their users break bad financial habits.
IoT development solution

Pavlok device

To give you the idea of how IoT systems can improve consumers lives, Intelligent Environments launched the first IoT bank, making IoT devices react to user’s bank balance. To activate the IoT system, users need to set up a credit card or bank account and tie it up to “Pavlok” shock wearable.  When approaching spending limit, “Pavlok” sends a notification. When going over this limit, “Pavlok” sends electric shocks to a user’s wrist as a reminder to stop spending too much.

2. Use wearables for convenience & personalization

By using wearable devices ranging from smartwatches to eyewear and connecting them to the Internet, banks can get tons of useful data about their customers’ location, financial activity and behavior. This data is invaluable for more personalized services.

For example, when specific client enters a jewelry shop or a travel agency, the bank can automatically increase their credit card limit & send a notification to their device. When leaving a store, a client will get to know that his limit has been reset to the primary value.

Another example: via wearable devices, the bank app can automatically send an alert when the client has exceeded their usual monthly spending and offer them personalized saving advice for the next month.

IoT devices for financial managementWearable devices

Wearables might become a new powerful channel to do business. IoT devices eliminate the barriers of in-person, paper-based transactions, allowing consumers speaking to their bank assistants from their car, home or even plane.  

With biometric authentication apps and wearables connected to the Internet, you can also automate & secure payments. For example, when it’s time to pay a bill, your IoT device could remind you about it and you can do it instantly, via the IoT-connected device. Since consumers use their fingerprint or voice instead of a credit card, they don’t need to expose their account details anymore. This greatly reduces the risk of data breaches & unauthorized account access.  

3. Offer services outside traditional banking

The Internet of Things offers a great opportunity for fintech companies to go beyond their traditional banking services, becoming even more customer-centric.

For example, U.S. Bank decided to launch the IoT project motivating customers to stay fit. The bank innovation labs introduced smart scales connected to financial rewards scheme.

Smart Scales IoT project

Connected scales

Each time a user steps on scales, it makes measurements and sends them to the cloud. A user can track his weight loss progress via a specialized app. Synchronizing client’s fitness data with his/her account balance, the bank offers financial remuneration for every weight-loss goal gained.

Just like that, banks can differentiate themselves from the crowd, attracting more clients.

4. Improve branch banking

The number of bank branches could decline up to 75% in the next 5 years. Not to be fully replaced by mobile banking solutions, bank branches need to bring more value to consumers. That’s where Internet of Things can help. Biometric sensors identify a client once he enters a bank branch, sending alert to the bank system. Then, with a special mobile app user can be either guided to the necessary counter or trigger automatic processing of required services by the bank software systems.

Here are a few great examples of how bank branches can benefit from IoT projects.

Citibank launched a Bluetooth-enabled system with beacons to let customers access branch ATM 24/7 by simply using their smartphones.

Or consider Smart Branches. These are special types of bank departments normally installed in hard-to-access or unprofitable spots. No need to hire employees for these branches, since any client’s request is handled through the connected system. 

A set of smart branches is connected to a centralized dispatch center through virtual waiting lines. Client requests are processed by a dedicated virtual assistant. With the biometrics technologies in smart branches, a consumer can access his bank account using his fingerprint and make any necessary financial transactions on a remote basis.  A user can also speak to a bank operator if necessary via video conference technology.

Like that, banks can offer their services in new interesting places, expanding their reach and growing revenue.

Smart Branch IoT systemSmart Bank Branches

5. Upgrade ATMs

ATMs should be among the key focus points for banks willing to improve their customer experience. By creating smart ATMs, banks can free up the employees time, grow their revenue by 30% and differentiate themselves from the crowdBanks need to transform this old-fashioned channel, making it a part of the omnichannel banking network.

Integrated with mobile devices, connected with in-branch devices & software and online payment platforms, smart ATMs offer a wide range of services – from transferring funds between accounts to cash deposits and clear of checks.

Banks also use motion tracking sensors in different city areas to find out the most optimal spots to place ATMs.

Sensors embedded in ATMs can record performance metrics and, in case of downtimes, automatically send notifications to the in-bank systems. Remote access to ATMs from a centralized control center allows avoiding expensive call-outs. This reduces machine downtime since engineers can identify problems instantly and fix technical issues in real-time.

6. Improve credit card experience

With the help of Internet of Things, banks can also improve credit card experience of their customers without making costly changes in point-of-sales infrastructure.  

IoT-connected interactive Wallet card by Dynamics provides a two-way communication between banks and clients in real time. Via the card-embedded display screen, clients can ask bank a question and get a response immediately. As a result, a client can make quicker account changes and get more informed services.
For example, if the payment sum exceeds the pre-defined limit, a client can make any upgrades directly and finish the purchase. 

Credit card notifies the bank through the IoT system when and where the payment is made, and through which channel. By saving the receipt on a phone, a client can automatically inform his bank about a newly-bought car, for example. Based on this data, the bank then sends an offer for monthly car insurance at a highly discounted rate. This results in a highly customized marketing and clients support. 

Credit card connected to the Internet of Things

Interactive Wallet Card

7. Enhance bank security

Many banks connect devices to better secure their branches. By installing cameras, motion sensors and connecting them to the Internet, they can prevent money losses.  
The main benefits of such IoT security systems are:

  • centralized monitoring & control, 24/7

A set of sensors for motion, gas and smoke placed around distributed bank branches allow to create strong security layer of the overall system and monitor various branches remotely.

  • instant reaction to thief intrusion

With the help of this system, you can react instantly to any suspicious activities. The system automatically sends an alert to your phone and to corresponding services ( such as police ), detecting and blocking the thief in a bank or ATM.

  • most sensors consume a very small amount of power and require little space.

8. Automate business processes

A system of IoT devices allows banks to automate important business processes.

For example, If a person has a credit payment delay, the bank can disable the card remotely. The same works for the leased asset management: when a contract finishes, the leased asset can be locked automatically, through a system of connected devices and sensors.

Specialized IoT networks allow to automate financial requests handling, transfer of ownership of a specific asset and other processes. Loan processing happens instantly, and banks can monitor the collateral with no need to having them physically present.

What the future holds

By 2020, there will be between 4 and 6 Internet-connected devices for every user.

This has to be a strong motivation for banks and fintech companies to ride the IoT wave. Simply find an experienced IoT development company in Ukraine and discuss how you can take advantage of global IoT fever and stay ahead of the competition.