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Banking has become more convenient than ever, thanks to IoT. The future of the banking industry is growing increasingly digital, and the Internet of Things has played a vital role in this rapid evolution. Financial institutions and consumers must adapt to these mobile banking and retail trends.
Below, we've listed how IoT is helping the banking industry.
1. 24/7 Customer Service
The IoT has led to the development of a 24/7 customer service experience through virtual assistants, also known as chatbots. A customer service chatbot relies on artificial intelligence (AI) to mimic human customer service. Businesses have long been adopting chatbots and integrating them into their customer service models to automate routine tasks and answer customer queries in real time.
Chatbots utilise machine learning and natural language processing to improve every customer interaction and provide a more personalised customer service experience over time. For instance, Capital One has a chatbot called "Eno", which was the first natural language SMS text-based assistant among US banks. Eno can also alert customers regarding possible fraud and potential double charges. While chatbots have limitations, they can help provide customer service tasks.
Some businesses have reservations about using chatbots. But research shows they have a 28% satisfaction rating. They may not have yet won the hearts of all consumers. However, younger generations and millennials believe that customer service chatbots allow an easier and faster way to get issues resolved.
2. Process Automation
Regardless of the industry, business process automation has been in great demand. It means using advanced technology to accomplish business processes with less human intervention. Business process automation can refer to activities used to achieve a specific organisational goal, such as bringing in new clients and producing a product.
Banking and financial organisations can rely on business process automation to resolve some issues they face in this tech-savvy world. It can help them optimise the cost of operation and ensure high efficiency. In the same way, it also curbs the scarcity of skilled resources, improves the quality of processes, and minimises the cost of hiring personnel. The integration of permanent IoT jobs in banking can solve issues through process automation, allowing banks to minimise manual efforts, enhance customer experience, and offer better compliance.
Business process automation is beneficial in various areas of banking, including operations, management, HR and marketing. High-volume tasks, recurring tasks, and time-sensitive projects involving multiple people and those that need compliance are the perfect candidates for automation.
3. Fraud Detection
Over recent years, there has been an increasing number of fraudulent incidents in the banking industry worldwide. IoT may help curb these incidents by making transactions more secure. One example is by requiring biometrics to finalise a purchase using mobile phones.
Fraud prevention has become a significant concern among banks and financial institutions that need to constantly look for ways to prevent misuse of their products and services. Integrating IoT-enabled security systems may help prevent credit card or debit card fraud. Another way IoT can help prevent fraud in banking is by sending authentication codes to the user's phone number when making online transactions to ensure that it's them who made the purchase. IoT also sends notifications to the user each time a card is debited for purchase, which allows the user to be mindful of every transaction and instantly flags a purchase as fraud if they do not recognise it.
Along with AI-powered analytics, IoT helps to identify fraud and hacker attacks by identifying and analysing user account data. When suspicious activities are detected, the user can be alerted promptly, and their account will be temporarily disabled.
Security is an essential factor for banking consumers. In-branch security helps keep assets secure, while payment procedures are a must-have to meet the changing demands of consumers. Thankfully, IoT can handle both. From alarm systems to CCTV cameras and surveillance systems, IoT helps banks monitor their vicinity.
Security systems work by collecting data and matching patterns. These systems will alert authorities or contact the police when it detects a potential security threat. In the same way, smart payment methods encrypt transaction details that ensure payments are secure. IoT in banking also works by collecting data to detect patterns of fraudulent transactions. When a series of suspicious activities take place, the system will immediately alert the authorities.
When integrating security systems, banks should consider undertaking business compliance training for all employees, this will help keep team members up to date with security systems, cybersecurity, alongside GDPR and more. Specialists can also serve as information security analysts who can monitor the flow of information and prevent hackers or unauthorised users from accessing sensitive data. For large corporations, such as banks and financial companies, sensitive data can pertain to their customer's personal information, such as bank account details, addresses, phone numbers, credit card numbers, etc.
5. Improved Analytics
IoT analytics helps organisations leverage the massive amount of data that IoT devices generate using analytical stacks. It's often considered a subset of big data combining heterogeneous streams and transforming them into accurate and consistent insights. Insights produced by IoT streams can help organisations in various ways, such as improving many aspects of their operations. However, it can be complicated to integrate different types of IoT devices into the existing ecosystems. Because of this, organisations deploy industrial IoT, a technology that can collect and analyse data from sensors.
In the banking industry, IoT can offer banks the latest information on the project or individuals they are investing in, which helps them measure the ROI accurately. For instance, in the real estate industry, they can leverage data from satellites and street cameras to monitor economic activity in the area.
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In consumer loans, banks can leverage data from various sensors and applications to come up with accurate insight into the spending history of the client. For securities, banks can leverage data from several analytics platforms, such as Bloomberg Terminal, to view how much trading is done with government bonds compared to privately issued bonds.