How does the Internet of Things affect digital banking?

Another reason to accelerate your digital-first strategy    

Try to answer this question: In 2019, how did your typical customer access your banking services? It might take a minute to remember, but it was likely a mixture of online banking, branch visits, the ATM and mobile. But now, amid the COVID-19 pandemic, digital banking uptake has accelerated faster than anyone expected.

Now, your customers want a seamless and convenient way to digitally access your services, and the Internet of Things (IoT) works perfectly for that purpose. Let’s look at how the IoT supports and helps drive the banking industry’s move to become digital-first.

The IoT might be fascinating, but why should banks care?    

First things first; what is the Internet of Things? The big picture answer is that nearly every “thing,” from doorbells to refrigerators to device sensors to TVs, can be connected to the internet (and share information with it)—hence the Internet of Things.

But why would anyone want to have, say, a water filter interacting with the internet? Brita did it so their customers don’t have to worry about reordering their filters when they’re getting low—it automatically does it by connecting to Amazon Dash via the internet. Now, new filters arrive right when they’re needed.

And that’s just one example. By 2025, experts predict devices connected to the internet will outnumber people by 400 percent.

In 2025, devices connected to the internet will outnumber people by 400 percent.  

But, why would you want to have any device in your financial institution (FI), other than people using computers and electronic smart devices, sharing information with the internet?

Because it’s soon going to become part of the new normal in nearly everything consumers do, including how they bank. And because consumers want to do more with less money, time and hassle, like having their smartphones make seamless, automatic payments for them.

Here are several ways the IoT can help banks accelerate their digital strategy:

Give customers the digital services they want    

The way that consumers pay for things has been revolutionized during the pandemic—and financial institutions are at the center of that. Ease, speed and convenience are expected at every touchpoint, along with the demand for uninterrupted access to funds and the ability to make payments and move money 24/7.

With the IoT, your customers can use your banking services with their connected devices, like their wearables (fitness trackers, smart watches and rings, and GPS trackers). With the ability to share information with these IoT devices, people can easily access their bank account details, make payments and handle other banking transactions anywhere, anytime—they don’t even need their smartphones, tablets or laptops to do their internet banking.

The IoT also supports the every-channel customer service experience they expect. With smart devices that are synched and working together, a person can start a transaction on a mobile or IoT device and then finish it in-branch—without any interruptions or having to repeat steps in the process. Even better, you can engage them along their transaction journey, increasing customer satisfaction.

Improve the performance of your bank    

While all the transactions happen out in front, it’s the FI’s back office that supports it all. And FIs must move away from siloed systems and towards a next-generation, digital-first enterprise architecture to enable new experiences. Back-office systems need to interlock seamlessly to enable easy transactions and information flows—which is what the IoT does.

The IoT also gives you the ability to integrate your enterprise resource planning (ERP) with your customer relationship management (CRM). This means you can combine the management of your main business processes in real time with the management of customer interactions in one smoothly integrated system. That makes for a much more efficient back office where collecting, storing, accessing, sharing and interpreting data is simplified.

Gain insights into customer and debtor behavior    

What if you knew what your customers needed before they even told you? While gaining customer and debtor insight with IoT devices might not get you all the way there, it’ll get you close. And the more you understand customers and their behaviors the better.

Some potential IoT-enabled insights that can help your financial institution include:

• Determining which services are most frequently used at the ATM
• Learning how customers are interacting with every part of your FI so you can make adjustments when needed
• Finding out if fees are turning customers away
• Discovering which technologies they’re gravitating toward and making innovation investments accordingly
• Uncovering any problems they may be having when interacting at any touchpoint and making fixes for a seamless omnichannel experience
• Understanding customer pain points and addressing them before a customer complains—using the IoT to apply data insights and anticipate customer needs

Get constant asset monitoring and real-time data    

How’s all your equipment working—particularly your ATMs? Answering that with certainty might not be so easy with so many moving parts and various interactions. But IoT devices can provide FIs with several benefits, including real-time, always-on equipment monitoring so there’s less downtime and friction, improving availability and your customer experience.   

With constant monitoring and real-time data delivered directly to you, you have better control over your assets and can more easily identify ways to save money, detect fraud and improve network security. IoT sensors inside ATMs can be used to detect skimming devices and trigger an automated, real-time alert. You can also reduce electricity costs and more quickly address malfunctions, low cash levels in ATMs, stuck receipts and problems your customers may be having.          

IoT sensors inside ATMs can be used to detect skimming devices and trigger automated, real-time alerts.

Another sign that digital-first banking is firmly planted    

The Internet of Things, like so many of the digital innovations winning over consumers, is further proof that digital banking is on its way to becoming well established—and preferred. And FIs are paying attention. A little over a month ago, for example, Wintrust Financial Corporation, a $43 billion bank holding company with 15 branded community bank subsidiaries, made an investment in a new, digital-first banking platform.

“Clients come first and increasingly our digital services are a key part of delivering our exceptional service to our customers,” said Tom Ormseth, executive vice president of digital channels and transaction banking at Wintrust.

It’s clear that banks that want to stay competitive will also need to dive into the digital-first world. And Internet of Things is just one set of technologies making that digital leap pay off.