Less than 10% of the budget allocated for IT is invested in IoT related technologies by the finance sector. Leaders in the industry are having difficulty in realizing the monetization value of the information provided by IoT and the opportunities it provides in attaining and retaining new customers are vast.

Common fears of cyber-security, privacy and deployment, capacity and affordability of sensors as well as market penetration of IoT devices keep businessmen from investing in IoT technology. However, even they cannot ignore the possibilities encompassed by an IoT enabled world, including the change in trends it will bring. This is how BFSIs currently intend to tap into the potential of IoT.

Retail Banking and IoT

Retail banks are constantly looking for opportunities to increase savings, reduce counterparty risk and expand their credit base. They have heavily invested in IoT technologies which can be used to monitor their customers. Thus, their primary concern is customer creditworthiness. These devices keep banks informed on the financial status of their customer so they might intervene if a problem arises and resolve it quickly.

For example, monitoring the condition of appliances and homes makes it easier to lend loans to people. Ascertaining risks and maintenance costs involved in running a small business may encourage them to provide funding for such businesses.

Earlier, retail banks allotted personal account managers to each customer who provided highly personalized service. With IoT integrated systems that have customer recognition and segmentation capabilities, banks can provide tailored products and services to each customer. Smart ATMs that provide offers in real-time to a passerby customer are a small example of such possibilities, brought to reality by IoT.

Investment Banking and IoT

Investment banks are heavily invested in natural calamity detection sensors and high tech weather forecasting equipment, ensuring they make critical investments when (or before) disaster strikes. Digitally tagged goods give a depiction of flow of goods from manufacturer to retailer. This leads to accurate future revenue analysis of companies, leading to better investments.

Certain investment banks function in an advisory capacity to high budget investors. They can analyze investor interests and investing patterns, and offer tailor made investment strategies as well as better wealth management. Personal wealth handling can be automated by IoT technologies. For example, a person struck by paralysis can liquidate his assets via IoT enabled medical devices without relying on a third party.

Capital Markets and IoT

Real-time information flow provided by IoT will lead to high frequency trading and micro-investing, therein minimizing risk factors related to investing in capital markets. This is a big plus for capital markets as stock market fluctuations will be streamlined. An IoT enabled future will make more money for everybody.

The untapped potential of IoT in creating value from information is huge. With new technology coming into place, a digitized future is no longer a pipe dream. The concerns regarding IoT are small impediments against a large wave of possibilities and should not deter the finance sector from integrating IoT.