As the number of connected devices slowly creeps past unnoticed catching up with the number of humans on the planet, we are beginning to rely on them increasingly.
The possibilities as much a cliché as it would be – are endless:
¡ Connected cars will pay tolls automatically, not require you to get your cards out of your wallet to pay at drive-through restaurants, make reservations, book service appointments, do just about everything that need a credit or debit card
¡ Smart refrigerators, smart home automation systems will analyze your behavior and replenish your groceries and fulfill your other shopping lists including music, magazine subscriptions, and the works
¡ Smart watches and phones of course, will allow your trusted partners to give you contextual and hyper-personalized offerings based on where you are, what you are doing, and what you did in similar situations before. They will help you connect with your partners at a level that was never before, possible
¡ Smart TVs will handle the payments for paid content without your involvement – although only once you do issue the instruction to do so. They will also be connected to your bank – giving you purchase and investment suggestions in context with the content you are viewing. Like what stocks, insurance, or investment products to buy, based on the news you are watching, market movements etc.
But how will IoT impact the way banking is done in 2020 and beyond?
Earlier, before the digital explosion, there were definitive guides to decision-making. Rotten tomatoes, yelp, word of mouth, financial advisors, fashion experts – there was a place to go or a person to approach, who would give us the basis for making our decisions. Today, analysis and reporting are no longer the realm of the experts. From restaurant menus to mutual fund performance, everything is analyzed thread-bare by a multitude of experts, each offering a unique, or a deeper perspective. This information, when personalized and contextualized can serve as a powerful influencer. This is where banks would like to be. And IoT will help them get there.
But there are also the questions of privacy, protection, and prevention of misuse. With so many devices connected, people often lose track of which information, which card, which bank account, or which line of credit is available to whom. Banks of the future will use IoT data such as geotags and multi-factor authentication using the different intelligent devices of the user to validate, authenticate, and process transactions smoothly. Likewise, we would need a robust governance layer regulating and monitoring the manner in which the Internet of Things deal with the little things in your wallet and your life. Furthermore, the data generated by these devices will also need adequate protection to prevent fraud and misuse.
Unlike market studies, which take weeks to present their findings, IoT offers real-time insight. This means banks can continually evolve and personalize their products instead of maintaining a static portfolio. As financial ecosystems connect among themselves and with other ecosystems on the IoT, banks can facilitate customer journeys around products from end to end and thus intensify engagement. An example comes from a challenger bank in the United Kingdom. The bank’s mortgage smart app also offers property insights to customers on their connected device. In addition, when a customer applies for a loan, the details are automatically forwarded to other agencies in the ecosystem, such as the local council and legal advisors, activating a logical chain of events. In 2020, expect a growing number of banks to use insights about device usage patterns to not only develop contextual portfolios but also build loyalty with effective loyalty programs for their products and services.
We will also see a sound governance framework evolving around IoT in 2020 and beyond.
What will be the landscape of IoT in the future? How will banks, marketers, service providers, enablers, aggregators, and users interact with this intricate web of devices and connectivity? If these questions are on your mind, do read our report on top 10 banking trends to scale digital in 2020.
This piece gives you a glimpse into one of the 10 trends that I believe will reshape banking in 2020. Click here to read our full report “Scale Digital: 10 Trends Reshaping Banking in 2020”.