The Internet of Things (IoT) has the potential to transform banking in ways we haven’t seen since the ATM was first introduced. Thanks to mobile devices, wearables, voice activation and artificial intelligence (AI), the pace of innovation in the banking industry is accelerating.
How we go about getting money and completing transactions is no longer a matter of making withdrawals from tellers or ATMs, or passing currency between individuals. The Uber model already has shown how it’s possible to run a whole business without cash ever changing hands or swiping a credit card. Call up the Uber app, and with a couple of taps, you can order and pay for a ride.
The process is fast, easy and convenient. And those are the attributes banks will be striving for as they leverage IoT and edge computing to make their business more appealing to customers. As in other industries, banking’s IoT goals boil down to the following:
- Improve the customer experience
- Boost agility and speed to market
- Reduce operating costs
- Increase revenues
As with any other industry, banking is under pressure to control costs and boost revenue. But any banking innovation that makes it easier to access money or complete transactions must be deliberate and cautious because security is a big concern in banking. Hackers constantly target banking institutions, and the industry can’t afford security breaches that will create distrust of electronic banking among users.
Security concerns notwithstanding, a deep transformation is under way. Voice activation and mobile apps are likely to replace – or at least supplement – at lot of the transactional tools we now use. For instance, windshield tags for tolls will likely be replaced by apps that communicate with the tollbooth through WiFi or Bluetooth.
Using cash or plastic to pay for gas or parking will feel antiquated once it becomes possible to do it through mobile apps in real time. These apps will be activated by voice or tapping – or, where it makes sense, they will use AI to automatically transfer payment for certain transactions.
The Uber model will become more and more common for everything from groceries with home delivery to paying for tickets at sports and entertainment venues. Merchants of all shapes and sizes increasingly will turn to electronic forms of payment and digital wallets such as Google Wallet and Apple Pay.
As millennials and post-millennials crowd out previous generations, it’s likely they eventually will never have to touch a coin or credit card. The whole IoT effort in banking will be focused on giving people easier access to their money and lines of credit. For instance, just checking an account balance will be accomplished by asking a voice-activated system such as Alexa or Siri to give you the number.
Banking innovations will require serious investments in digital transformation so organizations can plan to add the new capabilities they need while upgrading existing systems to handle new processes and functionality.
For IoT-enabled banking to succeed, banking institutions and payment processors will need to invest in edge computing, which places processing and analytics closer to where the action takes place – the “things” in IoT and their users – through strategically located micro sites. Without these micro sites, it will be hard to avoid latency in data transmissions between company headquarters, cloud infrastructures, corporate data centers and branch locations – all of which will have to work in unison to make IoT-enabled banking possible.
The innovation we are about to see in banking will surpass the introduction of the ATM. But for it to be viable, it will require robust infrastructure with reliable connectivity, data backup and power management systems – much of it managed at the edge. To ensure Certainty in a Connected World in your banking business, click here to learn more about IoT and edge computing.