What exactly is this ‘Internet of Things’?
The Internet of Things is technology that provides a way for machines to communicate with each other. It combines big data, artificial intelligence and analytics capabilities to determine and solve problems thereby increasing overall efficiency, productivity and improving customer experience.
Using data from the Internet of Things, we can make predictions about the needs and wants of the future and prepare for them accordingly. The financial industry is only now beginning to see the potential of using this technology to its advantage. There are plenty of benefits that the IoT could offer to the banking industry in particular, and we’ll take a look at some scenarios to that effect.
IoT can improve risk management
Borrowers from the manufacturing industry tend to have a standing line of credit with banks, where the banks take raw materials and finished goods as collateral. In order to ensure that the loan agreement is being followed and there’s no fraud going on, the bank monitors inventory levels, cost of materials, sales and all that. This is done manually by loan officers, credit officers and loan administration staff which takes precious man-hours and is still not perfect.
The Internet of Things can facilitate installation of sensors in borrowers assembly lines to track and update raw materials and finished products. In addition, the bank can use its smart-phone application to take pictures of invoices and other documents and upload them to the borrowers’ online file.
This will track the loan repayments and ensure that it matches what is happening on the borrower’s end. As a result, time and resources will be saved while reducing the risk of fraud or mismanagement.
IoT can improve customer experience
Customer experience is critical for the success of any service being offered by the banking industry today. There are plenty of banks with competing products so how you make your clients feel is really what will make the difference between success and failure.
One such product is a mortgage. It is among the most popular products within the banking industry. The Internet of Things technology can improve this product by providing sensors that can be placed in homes to inform the homeowner of any damage to the structure of the home. For instance, following a flood, dampness may have crept into the wall but without the sensor, we would only be aware of it when large scale damage has been done.
By preventing large scale damage, we maintain the value of the home by making early repairs so that clients don’t have to go through a debt review when the value of their home plummets.
As an incentive, banks can partner with certified home repairs companies to offer discounted rates for repairs, insurance for unforeseen damages, preventive repairs and no paperwork for any home improvements.
Endless opportunities
There is so much more that the Internet of Things, technology can offer the financial industry and in particular the banking industry. From mobile banking to cross-linking services, banks and their customers have plenty to gain by embracing this technology.
