Author: Katia Noble
Security models, targeted offers and an improved customer experience: using the IoT revolution in the banking sector
In Part I of this blog we outlined the importance of the Internet of Things (IoT) and the fact that banks are failing to realise and address it. Now we investiagte how the industry can take advantage of this popular technology. Banks need to digitally reimagine their businesses to embrace the opportunities that the IoT could offer them. They could do that by leveraging the IoT environment and converting the data into actionable insights. I envisage a number of opportunities:
An enhanced view of the customer could enable financial institutions to provide individually suited products. One such example might be providing car insurance, informed by the way a customer uses their connected car. While auxiliary services could know when a customer has broken down and proactively request recovery services, giving the customer peace of mind.
The established model of secure digital banking could be used by banks to open up their ecosystems to 3rd parties. A mobile wallet could be the conduit, to control not only your bank account, but also air miles, loyalty rewards, store cards, gym membership, library card, etc., combined with real time location-based prompts and offers.
New security models
A network of interconnected devices could provide a more robust view of a customer’s activities. Verifying a customer based on the fact that they are carrying more than one recognised (paired) device could simplify, or even remove, the need to authenticate a customer while reducing fraud at the same time.
Customer experiences based on the customer’s context
As multiple devices and form factors proliferate, there is a need to ensure that the customer experience is optimised for each touch point and usage context. Specific functionality, such as voice control for a connected in-car banking app, would provide a better user experience, while certain information, such as bank balance and account number, might be hidden so as to avoid another passenger seeing it. Moreover, displaying relevant content based on previous customer use would reduce customer effort and make them feel it’s “their app”. Extended customer service channels can not only help reach customers more effectively, but can also enrich banks’ knowledge of their customers by analysing usage data. This would create a positive snowball effect – the more the banks know about their customers, the better and more suitable the services they can provide.
There are many exciting possibilities, but extended use of data also comes with concerns. Customers may be worried how their personal information is used, whether it is consensual, and whether there might be higher security risks due to passing data between devices.
There is no doubt that the IoT is causing a massive shift in technology – a shift that will give rise to new opportunities, but also threats. It is not an overstatement to say that those who fail to adapt, including banks, could easily follow the well-documented fate of companies like Kodak and Blockbuster.
Preparations for the IoT revolution
Financial institutions should start preparing for the IoT revolution. I recommend they do this by:
- Making data protection a priority. Banks need good data management – knowing why they are capturing the information and what they are using it for (EU law stipulates you can collect only the minimum amount of data needed). This should be built on by following best practice guidelines on storage and access.
- Planning their IT architecture. IoT-enabled product data will require a coherent management strategy to ensure platforms are scalable to the volume and nature of the data passing through them.
- Testing and learning. Build awareness and understanding of the potential for IoT to further develop their strategy; wearable banking would be the natural place to start.