As financial services institutions (FSIs) rely heavily on gathering, processing and creating value from data, the IoT may be as broadly transformational to them as the Internet itself. The benefits from having more comprehensive, real-time data about their own or their clients’ physical assets are related to improved operational performance, customer experience and product pricing.
Indeed, banks, insurance carriers and firms in the commercial real estate industry are capitalising on the connections between mobile payments, wearables and sensing devices. There are numerous use cases that the IoT can deliver to FSIs which have already proven themselves, from tellerless bank branches to embedded payment cards. Connected devices are also helping FSIs in using sensors and analytics to gather more information about customers and offer more personalised services, as well as to track assets and shipments.
Perhaps the most mature use case involves the development of usage-based insurance, in which telematics system in cars or, increasingly, smartphone apps, automatically provides insurance carriers with the information on vehicle driving history and driver performance. As a result, auto insurance companies can calculate drivers’ risks and offer usage-based insurance to align driving behaviour with insurance rates. This benefits not only insurers but also low-risk drivers because their reduced premiums are better representations of their safe driving behaviour.
The same logic can also be applied to home and health insurance. If the customers voluntarily agree on sharing data from their household devices or wearables, their insurance can be monitored and personalised according to how they manage their households and health. In order to receive information from the customers, insurance companies can reward behaviours that minimise the risks. For example, insurers can reward behaviour such as locking doors when leaving their homes to lessen the risk of theft or turning off their stoves when not in use to minimise the risk of fire. Until now, there was no measurable or reliable way to convey this information to home insurers. But now all of this data can be collected, managed and shared.
Card-Free Financial Transactions
Another benefit for customer experience in FSIs are card-free financial transactions. To reduce the hassle of carrying a debit card, banks have already started to enhance the ATM experience by augmenting it with users’ smartphones or wearables, while mobile wallet apps enable customers to make mobile payments effortlessly. Beacons can also conclude financial transactions between businesses and customers. The technology provides a range of uses including scanning codes and coupons, gathering information, and extracting payments without mobile devices even being presented.
Smart Sensors as a Source of Insight
Given that banks finance the purchase or lease of some physical items, there may be opportunities to tap into data from sensors monitoring the condition of these assets. For example, lenders could partner with electronics manufacturers to proactively make credit offers to individuals if their purchased items begin to show noticeable wear or face imminent failure. Leasing companies, too, could monitor the condition of leased assets to determine a more precise residual value of the assets at lease expiration.
Furthermore, sensors in commercial buildings can help real estate companies better manage energy usage, environmental comfort and security. With this information, commercial real estate analysts could value properties even more accurately.
WolkAbout IoT Platform allows FSIs to easily connect, manage, monitor and control disparate devices and applications, combining them into a complete solution, which is valuable since many pieces of information in the financial services industry have roots in the physical world. This way, the Platform enables FSIs to gather, analyse and transform real-time customer and sensor data into meaningful information, so they could be better at predicting financial risks, anticipating customer service needs, and offering personalised product offerings to each customer.
WolkAbout IoT Platform is used for a wide range of smart financial services use cases:
- More tailored products and services
- Card-free financial transactions
- Improved commercial loan risk management
- Improved risk management in commercial real estate
- Unbiased vehicle insurance management
- Health insurance premiums adjusted for lifestyle choices
- Using sensor data to provide smart cargo insurance
- Insuring assets in risk-prone areas
- Detection of natural hazards to spread risk and reduce claims
Still exploring smart financial services solutions? Contact us at firstname.lastname@example.org to find out more about the possibilities to digitise your business or pilot a test project on our free instance available at demo.wolkabout.com.