IoT in the bank

The once-conservative and cautious to innovations banking sector has become one of the most automated in recent years, and this has largely been due to the Internet of Things (Internet Of Things, IoT) solutions. Bankers see this technology with many potential opportunities that can help the banking business to move to a new, digital level.

Monetization of information

The emergence of a generation of more “advanced” and demanding customers has forced banks to adapt to the rapid pace of IT development and introduce appropriate innovative solutions. Staying at the same level meant for them a quick loss of competitiveness before the rapid pressure of FinTech companies. The emergence of the concept of the Internet of things had come in handy, and contributed to a radical transformation of the banking industry.

Today, new digital technologies and innovations form the current operational models of the banking sector and its ecosystem. The most popular innovations are cloud technologies, Big Data, AI, ML, process automation, blockchain and IoT. The transition to a more reliable digital base has become a priority for those banking institutions that are striving for development and competitiveness in the financial market.

As a result, customers now have the opportunity to communicate with the bank and manage their accounts through tablets, smartphones, laptops, and even smart watches.

The advantages offered by wireless communications motivate the development of new banking IoT applications that allow the collection of information about the preferences and needs of bank customers.

As customer demand for a comfortable and mobile banking service grows, banks try to satisfy it as quickly as possible. The use of IoT technologies provides them with the collection and analysis of large amounts of banking information, which, in turn, allows us to provide customers with an individual line of necessary services, or offer discounts on existing ones. The same data helps bankers to develop individual programs to reward customers and thus increase their loyalty.

The large-scale collection of information provided by the Internet of Things is used today by banks not only to better understand and track customer behavior, but also as a tool to improve internal processes, especially in terms of making decisions on product strategy or in the field of credit. Data on consumer preferences is used to predict targeted offers for banking products and to determine individual credit risk of potential borrowers (especially those who do not have their own credit history) and make weighted commercial decisions.

All this allows banks to monetize the data in profit, and quite predictable and quite manageable.

Thus, with the advent of innovative solutions in the field of the Internet of Things, banks were able to raise personalized banking services to a qualitatively new level.


The practical plane of using IoT in the banking environment is quite diverse. Today, biometric and positional sensors installed in the department, together with improved video cameras, make it possible to recognize the client from the moment he entered the premises. Analysis of information from sensors located on ATMs makes it possible to determine the optimal zones for the installation of devices. Using information based on customer and location data, banks can now predetermine their needs by offering their products and helping them make financial decisions that are acceptable to both parties.

However, bankers believe that in the next two to three years, customers will begin to massively conduct transactions with home and wearable smart devices. Options include the ability to perform basic operations through special applications using wearable (fitness trackers, smart watches) and voice (Amazon Echo) devices, invisible payments for transportation and restaurant services (like Uber, Dine and Dash, Dash Replenishment Service and others) and automotive GPS systems.

These are fairly simple examples of the enormous opportunities that digital technologies give traditional banking services. We can say that the digital banking revolution is just beginning to gain momentum. At today's first stage, most banking institutions already offer service through websites and mobile apps. This is followed by a full transition to remote maintenance and care in mobile services, allowing you to perform almost all operations, ranging from opening an account to payments of any complexity. Since there will be no physical need to visit bank branches, the need for large networks will disappear even today, as banks leave the network, there is a steady trend towards their closure.

By the way, competition in the financial services market is becoming, perhaps, one of the main engines for modernizing banks. Having entered the market of mobile payments, they encountered telecom operators actively working there and such IT monsters as Facebook, Google and Apple. Therefore, in this fierce competition for the customer, only those banks that will be able to properly use the data streams generated by IoT devices will survive, developing new products and solutions based on them.

Security questions

Of course, the use of vast amounts of confidential information has brought banks and new problems related to data security. The presence of a detailed personal “picture” of the client and many different types of IoT devices will mean that they need additional levels of security for the entire used IoT ecosystem.

Therefore, the need for security of banking services, tied to work with "smart" devices, will be permanent. Like other areas embedded in the IoT system, the banking sector is obliged to guarantee customers the safety of their funds and personal information. Today, cybercrime has the ability to penetrate and break the network using connected IoT devices.

Banking data is very sensitive to outside interference, whether it is the client’s credit history or his property status. Regardless of where they are stored and how they move around the network, this data must be reliably protected. Today, banks use a fairly large set of tools for this, including encryption and authentication of persons who have access to data. Also, many of them began to introduce the biometric component of client authorization to make sure that he is who he claims to be. And, of course, the use of IoT-devices with a high degree of built-in protection against hacking. Unfortunately, today so far many manufacturers do not bother much about this problem, preferring to shift it to users or suppliers. Part of the problem can be leveled out by carrying out explanatory work with clients to protect “smart” devices and their data from external attacks.

Looking to the future

The Internet of Things has opened up the banking industry at the door to the digital future, where they are already waiting for the most advanced generations of customers. But in order for the realization of IoT's capabilities to become large-scale, many banks have yet to reconsider their network infrastructure, analytical systems and cloud availability. The focus on the provision of traditional services did not require any special changes in the settings, but in order to move to a new innovative level, they will need global remodeling of processes and the early introduction of new technologies.

Of course, the world is on the verge of a new technological era, which will bring tremendous changes to all industries, including banking. Their consequences can be felt in the coming years. For various reasons, the huge potential of the Internet of Things today is still hidden from the user, but digital transformation is already gaining speed and is seen in the strategies of many banking institutions and groups. Their implementation will depend on the innovative activity of each particular bank and the readiness of its owners and management to make changes.

The world practice of “digital restructuring” has already shown that those who are in the forefront of the transformation will receive serious competitive advantages, and those who are late will remain on the sidelines of financial flows.


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