According to Fortune Business Insights, the global IoT market size in banking, financial services, and Insurance (BFSI) was valued at around US$17.85 billion in 2018. It is estimated to reach US$116.27 billion by 2026, with a 26.5% CAGR between its forecasting periods.
The application of IoT in banking refers to a network of connected smart devices such as wearable, smartphones, and others. It has been a great help in streamlining processes and fetching real-time data for better decision-making in financial services.
IoT is an advanced technology assisting the banking and finance industry in efficient data collection and embraces digital automation. With IoT-driven solutions, BFSI firms can improve their operations and services while increasing the security of transactions.
By analyzing real-time IoT use cases in banking and finance, we unleash the future possibilities IoT holds. By addressing various challenges, it provides numerous advantages such as better customer experience, and digitized processes.
Let’s take a closer look at the specific use cases and examples of IoT in banking. Keep reading:
Key Takeaways
- The worldwide IoT market in the BFSI market is predicted to grow from US$249.4 million in 2018 to US$2,030 million by 2023. It will escalate with a 52.1% CAGR during its forecasting period.
- Increasing IoT investments worldwide and emphasizing services with real-time data flow will provide various opportunities to service dealers in the future.
- The market growth will lead to the massive adoption of IoT devices in connected banking and the union of IT and operational technology.
- The IoT in the banking and finance market worldwide was valued at US$1.53 billion in 2023. It is anticipated to reach US$36.65 billion by 2032 at a 42.32% CAGR from 2024 to 2032.
- The global IoT in banking market size was around $12.7 billion in 2021. It is forecasted to reach $237.4 billion by 2031 at a 33.9% CAGR from 2022 to 2031.
How is IoT Used in Banking and Finance?
IoT in banking refers to a vast network of connected devices to gather data for a wide range of banking services. Applying IoT helps banks and financial institutions track human activity in different environments to know their customers better.
IoT also offers real-time data gathering and analysis to augment customer experience via personalized services including custom-made financial products. Talking about security, IoT empowers advanced fraud detection by observing device activities and transactional patterns, eliminating the hazard of breaches. Moreover, IoT manages assets with real-time tracking and predictive maintenance of existing infrastructure.
In retail banking, it is beneficial to facilitate smarter ATMs and branches providing automated services. Financial institutions also leverage IoT to drive operational efficiency by improving processes and alleviating downtime. Some of the best IoT solutions in banking are Smart ATMs, mobile PoS systems, wearable devices, and mobile banking app development.
IoT Use Cases in the Banking and Finance Industry
To understand how IoT helps in banking, it is required to go through its use cases. From optimizing financial operations to providing customers with easy access and higher security, these use cases are helpful to attract new possibilities for the banking industry.
1. IoT-enabled Smart ATMs
The application of IoT in banking has enabled Smart ATMs to increase efficiency, security, and customer experience. From cash deposits & withdrawals to transfer funds, these are beneficial to improve service quality. These Smart ATMs are equipped with sensors and connected devices for instant fraud detection and real-time monitoring.
These are among the best IoT use cases in banking that optimize cash management, track usage patterns, and decrease downtime by forecasting the need for repair. Overall, they contribute to a more secure, connected, and responsive banking ecosystem. IoT application development plays a crucial role in enhancing these capabilities, ensuring that banking technology continues to evolve and meet customer needs effectively.
2. Autonomous Wearable Devices
To know how IoT helps in banking, look at autonomous wearable devices such as smartwatches that track their physical and mental health. It impacts their insurance policies and credit assessments. Also, there are biometric authentication apps facilitating secure and automated payments for customers.
With these, customers no longer need to put all the account details to log into the app as they can use their voice or fingerprint. Wearable IoT devices in banking also eliminate paper-based transactions, human intervention, etc., while providing more responsive services with better control over their financial events. Additionally, insurance mobile app development leverages IoT data to enhance personalized insurance offerings and streamline policy management.
3. Stimulating Security with IoT Solutions
Security is paramount in every industry that customers look for. In banking, IoT devices provide better security by performing as an attentive protector and monitoring banks and ATMs. IoT also helps connect and control CCTV cameras, vehicle telematics, smart alarm systems, and other technologies to ensure the security of equipment and property.
Consistent data collection and analysis with IoT devices in banking assist financial institutions in forecasting and preventing possible threats, decreasing the risk of cyber-attacks and fraudulent activities. The IoT integration in banking enhances complete security, making financial operations more reliable and robust.
4. Smart Branch Ecosystem
A smart branch ecosystem enabled by IoT allows financial businesses to provide better customer experience through customization. The integration of connected devices, AI-driven analytics, and sensors provides minimum waiting time, monitors branch environments, and automates routine tasks for customers.
This branch ecosystem also improves security and workflow by sharing real-time data. Banks can offer a data-driven and smooth experience leveraging IoT while making bank branches more adaptive and responsive to changing needs.
There are also introduced smart branches placed in hard-to-access areas. These are equipped with IoT devices that offer personalized assistance based on customer preferences.
5. Cardless Transactions
Mobile banking apps integrated with IoT have enabled customers with cardless transactions, making the process easier and more convenient for them. They can use the “Tap-to-Pay” feature in digital wallets, leveraging Near-Field Communication technology to make contactless payments from their smartphones.
It allows customers to make payments quickly and seamlessly without the risk of card loss or fraud. It results in elevated customer experience while making a step towards digital transformation in the banking and finance sector.
6. Biometric Authentication
Looking at the examples of IoT in banking, biometric authentication holds immense significance as it is a leading contributor to enhancing security. IoT-based biometric authentication includes face recognition, fingerprints, voice recognition, etc., to collect data for identity verification. This technology is helpful for real-time authentication and alleviating the risk of unauthorized access and fraud.
With this, financial institutions can validate users across different locations and devices while optimizing user convenience and upholding higher security. The integration of IoT with biometric systems enables consistent monitoring and security measures to ensure only valid users can access financial data.
7. Mobile Wallets
IoT-based mobile wallets transform the banking and finance industry by enabling smooth transactions across different devices. With these, customers can access their bank account via the wallet app and make transactions by tapping their smartphones.
It empowers customers to carry fewer things with them as they no longer require carrying their wallet, cash, or anything else. They can always go out just with their smartphone. Moreover, IoT mobile wallets offer personalized financial services via data analytics, improving customer engagement. It is one of the best IoT use cases in banking to manage processes like loan approvals and identity verification, resulting in a secure and user-friendly banking system.
Read More: IoT in Transportation and Logistics: Top Use Cases and Benefits
8. Asset Monitoring
Banks and financial institutions always struggle with asset management, including equipment and vehicles. However, they can easily track their assets’ conditions and detect anomalies via IoT sensors and connected devices. This technology can proactively predict maintenance and reduce risks and downtime.
The integration of IoT technology enables optimized resource allocation using data-driven insights, reduced costs, and improved operational efficiency. Additionally, it is also helpful to predict any equipment failure to prevent loss or damage. This is highly significant for distributed or on-lease assets, ensuring their reliability and security.
9. Blockchain-based smart contracts
IoT integration with Blockchain helps banks enhance security and trustworthiness among customers. Blockchain can make transactions faster, reduce fraud, and streamline audits by using Smart Contracts. Here, Smart Contracts development involves creating self-executing agreement terms installed on a distributed ledger (Blockchain).
IoT devices can activate Smart Contracts by meeting specific requirements like asset transfer or payment processing. This integration guarantees verifying data, minimizing fraud, and reducing the need for intermediaries. It results in quicker and more transparent financial transactions while elevating trust and confidence in financial operations.
10. Automated and Smart Insurance
Smart insurance is also included in IoT use cases in banking to offer customers personalized, usage-based insurance policies. Auto insurance claims risk assessment, such as driving record or applicants’ age and fraud detection, optimizing efficiency and accuracy.
For instance, in auto insurance, IoT devices in banking track driver behavior to regulate premiums vigorously. In health insurance, wearable observes health. Home insurance checks fire alarms, smart thermostats, and security systems data. As a result, financial institutions lead to provide more personalized financial products and services.
Benefits of IoT in the Banking and Finance Industry
By embracing IoT in banking and finance, we can see a lot of improvements in the sector. IoT-driven solutions are helping banks and financial institutions in process automation, increased security, and data-driven customer services. Let’s explore more benefits:
- Better Security and Fraud Detection
IoT in finance provides better security via real-time and continuous monitoring, as well as the application of sensors and the implementation of smart alarm systems and CCTV cameras. Banks, ATMs, etc., are covered with IoT-based devices to maintain the security and reliability of financial transactions.
- Improved Services at Bank Branches
Banking branches are applying customer-centric approaches to provide customers with personalized services. The integration of IoT technology helps them to monitor queues, reduce wait time, and streamline all operations.
- Real-Time Data Monitoring
IoT devices in banking help collect and monitor data in real-time, strengthening banks and financial institutions to analyze customers’ requirements. With this, banks can detect fraudulent activities and assess risks.
- Intelligent Business Automation
IoT-enabled systems in banking assist to optimize productivity by automating specific operations. It is also helpful to automate other business processes such as open bank accounts, process customers’ requests, and transactions successfully.
- Elevated Customer Experience
Banks emphasize providing their customers with personalized and secure financial services using IoT-powered mobile banking solutions and connected devices. IoT integration helps them have a 360-degree view of their customers, knowing their preferences, availed bank offers, etc., to deliver them the best experience.
Final Verdict
IoT has introduced tremendous changes in banking and finance. It has also helped various financial institutions and banks enable real-time monitoring, cardless transactions, fraud detection, and more. The benefits provided by IoT demonstrate its usefulness, but you need to be careful with its implementation.
By addressing current minor issues, IoT in banking and finance provides new ways to enhance customer experience, improve security and operational efficiency, automate operations, and more. As customers demand more digital services in banking, the future of IoT in banking is secure.
To help financial institutions with more IoT-based solutions, Octal IT Solution provides exceptional services by experienced developers. From choosing the right technologies to combine with IoT to implement it successfully, we will help you throughout the process. Contact us for further guidance.
FAQs
IoT in banking helps to improve security by enabling real-time monitoring of bank branches and ATMs. It is possible via biometric sensors to verify identity and use connected devices to analyze and respond to spam activities promptly.
There are some regulatory concerns such as compliance with financial regulations, data privacy, and security. To address them, banks and financial institutions must ensure IoT devices adhere to guidelines like PCI DSS, GDPR, and other relevant standards.
IoT in banking and finance holds a prominent future. It comprises highly extensive acceptance of connected devices, the use of Blockchain for secure transactions, integration with AI for predictive analytics, and new IoT-based financial product development and services.
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