IoT in Banking
Banking and IoT
The earlier recognized use cases for IoT were based on solutions for inconveniences with mobile banking and financial technology. It comes as no surprise that the market for fintech solutions has grown these past years significantly.
While some of us may fear additional security concerns with many of these IoT solutions, some IoT applications are game-changing innovations in the authentication and encryption of data.
The widespread adoption of IoT solutions by banks, insurances and their customers is only going to increase in the next couple of years, as more traditional institutions recognize the potential for IoT technology, which is virtually at their fingertips.
IoT enabled Smart Contracts
IoT-enabled smart contracts run on the blockchain and can verify and enforce the negotiation or execution of an agreement. By setting up a smart contract, using IoT devices, and possessing a digital identity, one can make payments that are fully self-enforcing.
For instance, paying after a 30-day trial or controlling access to a house based on timely payment of rent. While smart contracts have not been incorporated as much as other solutions in this article, their potential is enormous, when it comes to convenient automation and risk mitigation.
More ways to manage accounts
As more common devices and appliances receive GUIs (graphical user interfaces), customers will be able to access their bank accounts from such devices sooner or later.
From smartwatches and smart cars to entertainment systems. Virtually any device with a GUI and networking capabilities will be used for online banking. Using biometrics, such as voice or fingerprint recognition, will simplify account access and security across these new channels.
Wet Ink technology will solve challenges related to in-person, paper-based transaction agreements. People can sign contracts and agreements virtually, while a physical copy of the signature gets printed out immediately.
The potential for banking through wearables is particularly exciting. Many banks nowadays offer applications for popular “smart wearables”, such as Fitpay and Apple Watch. Some banks, just like Barclay’s bPay have even launched their own devices allowing for contactless payment.
For smart car manufacturers, making useful applications available to their customers via a Car’s on-board computer is one way to gain an edge over traditional car manufacturers.
Smart vehicles are also an excellent opportunity for banks. Idea bank, for example, has a fleet of cars that feature built-in ATMs and security deposit boxes. With the help of these cars, the bank can now come to its customers.
The Canadian company Blueshore is currently considering the possibility of having bank data displayed on autonomous cars’ windscreen, so passengers/clients can check on their portfolio while being on the commute.
More convenient home banking
US Capital One customers now can pay their monthly bills through Amazon’s Alexa. In the meantime, the UK bank Starling has integrated its API with the Google Home smart speakers, which enable users to query their balance and make payments using voice commands
While the security of this aspect is up to debate, conducting banking operations using IoT-enabled smart home systems, such as Amazon Alexa or Google Home is undoubtedly convenient to the average client.
Customized Car Insurance
Some insurance providers already began offering devices, which can be plugged into a car’s on-board diagnostic tool. These IoT-enabled devices record data about the car’s driving behaviors and send feedback to the insurance company. Based on the car driver’s habits, the owner’s insurance costs will be determined.
Careful drivers may be eligible for discounts. Tesla cars have an operating system based on Linux, which continuously, fully automatically, updates its set of features. New metrics will be established that can provide tailor-made car insurance to customers based not just on driving behavior, but also engine health or wear and tear of a variety of crucial components.
The datasets about the driver’s driving speed could be overlayed with GPS data in order to determine the driver’s speed relative to the speed limit in that location (for example, while 50km/h does not seem fast, it would be considered reckless driving if it happens to be in a residential area of a school zone).
Insurance companies will gain crucial insights that will serve as the foundation of estimating the likelihood of accidents.
Instant Life Insurance
Fitbit provides integration with Wellcoin, which allows users to buy rewards based on healthy exercise routines, sleeping habits, and beverage preferences using Wellcoin’s virtual currency. Similar to the IoT potential in car insurance, the data gathered by fitness watches can be used to help determine the “wear and tear” (prognosis of a person’s health) of people.
While it may seem futuristic to issue life insurances completely automatically, IoT solutions would already empower us to do so. By overlaying data gathered by IoT wearables with a person’s medical history, a biometric digital identity could be created and stored on the blockchain.
People could use their digital identity to request and receive life insurance instantly, from anywhere, at any given point.
When it comes to lending money, different P2P (peer-to-peer) models have demonstrated to be particularly disruptive. In the future, IoT technology, may expand P2P models to a variety of new areas and disrupt other traditional services. (such as leasing). One may be able to lease assets to other individuals completely online, using services that directly connect lessee with lessor.
By leveraging the functionalities made possible by digital identity, the leasing process can be conducted in real-time, as asset ownership is changed only seconds after receiving payment confirmation. The potential here may disrupt banks in some of their key service areas, such as mortgage or leasing, by enabling financial transactions based on digital assets to be carried out, using a peer-to-peer solution.
IoT may completely change the way we see banking. If banks want to keep their position in the mortgage, lending, and leasing sector, they will consider embracing new peer-to-peer technologies following their customer’s preferences.
Dedicated Smart Wallets
As more everyday or household devices, such as fridges, watches, and cars, are turning into digitized “smart” devices, having dedicated pre-set wallets associated with a particular device may become a new emerging trend.
For example, an autonomous car’s wallet could be used to pay for rental, parking, gas, or maintenance costs. Every single appliance or device with networking capabilities could host a pre-funded wallet that will manage expenses associated with the devices.
Besides convenience, this provides a clear view of costs and expenses and may help people become more aware of their spending patterns.