How IoT Solutions Can Transform the FinTech Industry
How IoT Solutions Can Transform the FinTech Industry
Check out this post where we explore IoT solutions that enhance customer experience, payments, security, operations, and infrastructure in FinTech.
Join the DZone community and get the full member experience.Join For Free
IoT has changed the world in the past few years, and the world of FinTech is no exception. IoT is expected to see a $25 billion growth in the finance sector in coming years, thus making this technology impossible to ignore. The landscape of the finance industry can be transformed completely with IoT solutions. The major areas that will benefit from this technology are customer experience, payments, security, internal operations, and infrastructure.
Let’s dive in deeper into this technology and comprehend its importance in the world of FinTech.
The Benefits of IoT in the FinTech Market
The benefit of FinTech IoT is instant data collection and processing. IoT sensors provide valuable insights into users’ preferences and behavior.
This data can be very valuable for the service providers and FinTech companies, as they can now offer:
- Improved customer service
- High-grade risk management and decision making
- Enhanced security
IoT solutions are helpful in internal business applications. Business processes can be automated, thus leading to improvement in business efficiency.
How IoT Can be Used in the Finance Industry?
The micro section of the Finance sector, i.e. Retail banking, can benefit a lot from FinTech IoT adoption. To begin with, they can offer improved customer service and enhance their client engagement. Internal operations can be automated, and efficiency of the business processes can be improved.
Banks can put IoT to use in several other ways as follows:
1) Personalized Service
The best example of this is Beacons, which is a context-aware smart device that has the potential to transform banks' customer services. It can welcome customers as they enter the branch or send them personalized messages.
2) Indoor Navigation
Alternatively, Beacons can also be used to assist the customer by navigating them around the branch. To minimize efforts, the customers can simply specify the reason for their visit to the branch and immediately get assigned to the concerned officer.
3) Queue Management
Another notable use of smart devices is that they can be used as an electronic ticket. This electronic ticket will serve as the queue number and the customer won't have to stand physically in the queue.
IoT-based security solutions have the potential to transform the FinTech world by making the financial operations transparent and safe. Today, there are several wearable devices that offer biometric authentication for money transfers and wireless payments.
With the Internet of Things, not only are wireless payments convenient but also faster and more secure than conventional card operations.
Amazon has a widely-adopted concept of self-checkout services across its stores. Self-checkout services are only possible after wireless transactions using smart devices.
IoT has a major role to play in usage-based insurance. Insurance service providers are already testing devices that track vehicle maintenance and performance so that they can adjust their insurance plans accordingly. Similar devices can be put to use for health and real estate insurance.
How to Implement IoT in FinTech?
Here we are explaining the implementation process and possible difficulties that you may face while implementing IoT solution in FinTech business.
The following are aspects that should be taken care of while implementing your IoT solutions:
1. Concept and Audience
Thorough research should be conducted about customer demand and acceptance towards IoT solutions before investing hundreds of thousands of dollars into a IoT project. The demand verification provides you with the confidence you need to move forward and expect a handsome return on your investment.
2. Data Collection
You need to clearly define what type of data is absolutely necessary for your business and how you propose to store this data. Data protection policies are very strict these days, so it will be wise to collect and store only the necessary data. Also, while developing a IoT solution for your FinTech business, you must define the processing methods and the desired outcome.
3. Hardware Design
Here, there is a choice between whether to integrate IoT solution with an existing device or to design an altogether new custom hardware for your IoT solution.
The challenge with new custom hardware is that customer might not be interested in buying another smart device apart from the one they are already using. Here you will require some serious marketing efforts to convince them to buy your hardware in order to collect the desired data.
4. Software Development
IoT solutions usually have up to seven layers of software including APIs, communication protocols, data collection, cloud infrastructure, analysis algorithms, and finally the consumer-facing app.
Also, this involves the choice of technology, inner infrastructure, and your target platform. All of these choices depend upon the type of product and purpose of the IoT solution.
For smooth and remarkable performance, your device should be in perfect sync with the app and backend infrastructure. For this to happen, you need to work on hardware and software integrations.
Also, you can add third-party APIs to improve the performance. For instance, you can add tools for advertising, analytics, or customer support.
6. Continuous Improvements and Support
It is essential for marketing, even after launching the product in the market. For your product to sell, you need to continuously improve your product as per the customers’ feedback. Also, continuous support is required to build trust in your customers' domain.
The Future of IoT in FinTech
The finance industry is slow in adopting this technology, but today's scenario demands this industry to be tech-savvy. Customers these days have a very busy lifestyle and seek to carry on their banking operations from the comfort of their home. Hence, IoT solutions, if used the right way, have the potential to disrupt the FinTech industry.
Opinions expressed by DZone contributors are their own.