Data has become more important to both consumers and institutions. It is convenient for devices to share data as it allows consumers to receive more personalized and efficient services. It is also helpful to businesses as they can offer innovative services, share data with other institutions, and track user behavior to create services that meet the needs of their customers.
As many companies try to adapt to technology and IoT, some companies are leading the charge in creating innovative financial services using IoT as a major source of inspiration.
Examples of innovative financial services
Interact is one of those companies. They are presumably one of the first IoT banking platforms. Created by Intelligent Environments, Interact is able to send data to other devices like home thermostats and wearables. Using this system, your bank could help you save money by adjusting the temperature in your house or alerting you when you are spending too much money.
Saving money: bank account and thermostat
Interact was created because Intelligent Environments found that a third of Millennials were too scared to check their bank accounts. Built to cater to their needs, the system takes saving money seriously and even gives consumers a shock on a wearable device when they start to overspend.
More specifically, customers log into their accounts and connect a device. They set a spending limit for themselves. When they go near the limit, they receive a notification. When they go over the limit, the device actually shocks the customer's wrist.
With the thermostat system, data from the user's bank account is sent to the thermostat. When the account is below a certain amount, an alert is sent to the thermostat telling it to turn down the temperature in order to save money. Many estimates states that turning down the thermostat by only 3 degrees can results in savings of hundreds per year.
While this may seem drastic to some, Intelligent Environment sees this as a way to connect to consumer demand. A third of Millennials want their bank to provide them with tools to stay out of debt. 22% stated that they would probably not be in debt if their bank had provided better finance tools.
Interact bank is just one example or how IoT is changing how banks to business.
The U.S. Bank
And here's another example worth mentioning. The U.S. Bank, based in Minnesota, has been on the forefront of many innovations in the banking industry. They were one of the first to test contactless payments and photo banking services like mobile check deposits, photo bill bay, mobile credit card transfer, and person-to-person payments. They are also trying to connect people's finances with their everyday lives using IoT. In their research center, they have been testing how to connect bathroom scales to weight-loss goals. They feel that people will be more motivated if they see that their progress on the scale results in a credit to their account. They also feel that a red, yellow, and green light system could help customers know when they need to slow or stop their spending.
Another example of the use of IoT is the incorporation of sensors into many aspects of finance. Sensors called beacons have been used since 2016 in many banks. Citibank, for example, uses them in their branch in New York. These beacons help to increase the efficiency of the bank's services and offer a more personalized experience. These types of sensors are known for being stuck on the wall of a bank, but they can also come in the form of keychains, USB sticks, and cards.
Banks can use the stationary, wall mounted beacons for multiple purposes: communicating with customers in the bank, promoting banking offer and collecting data about customer use and behavior.
The different types sensors (beacons)
- USB beacons could be plugged into various machines like ATMs, cash registers, and POS machines in order to transfer payments with mobile apps, communicate with other devices, and collect data about users.
- Card beacons could easily be kept in wallets or used like name tags. They would provide user recognition in bank branches and at ATMs. They could be used to find people or lost items.
- Beacons in the form of keychains or other accessories would allow for more mobile app interaction and interaction with customers in bank branches and at ATMs.
Extra security measures
The use of these types of sensors also increases the potential for extra security measures when customers complete bank transactions. By some estimates, card-not-present (CNP) fraud will amount to over $7 billion by 2021. In order to combat this type of fraud, companies like U.S. Bank have implemented IoT technology into some of their credit cards. They are able to connect user data from the user's phone with data from the credit card, allowing the system to check in both are in the same location. This will allow the system to check to see if the card is being used by someone other than the owner. Australian bank, Westpac, has used a similar system to track the location of customers and transactions overseas to make sure that fraudulent activities are at a minimum.
The use of sensors, in general, are important to security as they allow financial institutions to connect users with their accounts and the physical location of a bank, ATM, or POS machine. This constant exchange of data allows banks and other financial services to increase security regarding the exchange of money or other financial materials through increased scrutiny and oversight.
The future of IoT in the banking industry
There are already many uses of IoT in the banking industry, but there is likely more to come as IoT technology evolves and other aspects of the industry catch up. We are just experiencing the beginning of how devices can interact with each other and how data can be shared to improve user experience and bank processes.