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While most IoT adoption scenarios in banking seem excessively optimistic and impractical, the rapid speed of IoT growth demonstrates that connected banking is feasible.
FREMONT, CA: The banking industry has a reputation for being sluggish, conservative, and bureaucratic. As a result, the industry could be slow to adopt technological advancements. Although the retail, automobile, and manufacturing industries have paved the way for IoT developments, the banking sector is still lagging behind. The IoT has the potential to take the financial sector to new heights.
Here are four ways how IoT is transforming financial services and banking:
Optimized Payment Security
Smart cards, biometrical tokens, and other new payment forms and tools will be empowered by IoT in financial services. ATM-based transactions as we know them are likely to be phased out in favor of smart card-enabled devices.
Wearable payment systems would benefit from the IoT. You would be able to pay with a wristband instead of carrying credit cards, which are easily misplaced or stolen.
Personalized Wealth Management
It is a standard practice to use data processing algorithms to generate wealth management insights. In financial services, the Internet of Things can not only improve the quality and speed of data collection while also expanding the range of available insights. IoT-enabled wealth management solutions will notify users if their financial security is threatened.
The future of IoT in banking means loan providers will have access to comprehensive information about their borrowers, including credit debt and history, asset details and value, and the yield of commodities they generate (important for agricultural companies depending on banks for loan services).
Thus, financial institutions will have a better credit-granting decision-making mechanism. Banks would benefit from IoT-induced transparency because it decreases the possibility of dealing with untrustworthy debtors in the future. The data given by IoT would, among other things, provide banks with the versatility that they currently lack.
Each payment transaction can be technologically regulated with this type of IoT application in banking. The technology would eventually allow for the creation of the ‘Internet of Value,’ a stable and monitored international trading network in which all payments are managed by a system of smart sensors and connected apps. IoT will play a critical role in this area as a safety regulator.