It is no secret to anyone that the Internet of Things brings a great revolution to the world today. Various types of electronic devices can be interconnected and make life more comfortable and more convenient. Gartner estimates that by 2025 there will be more than 25 billion Internet of Things solutions in use. This rapid proliferation has created a lot of awareness among top fintech start-ups and banking organizations intending to innovate use cases and industry occasions.
Before considering "How IoT revolutionizes the financial sector,"? First, let's discuss what benefits IoT provides to the financial sector?
Early fraud detection – Fraud detection ranks first among all fintech trends. And this is where IoT and FinTech can become a successful alliance. Using software with AI and IoT devices is likely to monitor all financial deals and find out all possible deviations that do not face the expected behavior of that or another client.
Offers real-time data collection – One of the best benefits of using IoT is that these devices regularly collect user data and process it to keep users up to date with their data.
Automated payments – Sensors and clever software will prompt you to make payments automatically without using smart wearables or banking cards with RFID sensors. But this solution still requires government approval under all financial regulations.
Customer's intelligent interaction – The advantages of IoT in the financial sector are not completely revealed. It newly entered the fintech industry. As per the specialists, there's a demand for developing such tools where clients can attach their bank accounts with their devices.
Though the choice of IoT in the fintech industry has many benefits for banks and financial technology companies, they may also face some significant hurdles. Some of them are mentioned below:
Security – It is one of the most prominent challenges when customers utilize IoT in their businesses. Since a network of devices enhances the risk of hacking. When data is conveyed through IoT networks, there is a possibility that the data can be hacked. Hence, securing your system should be your priority and should be taken care of it.
Lack of standards – Each appliance has its maintenance plan. Many suppliers manufacture the hardware used in IoT devices as there are no universal standards to sustain. Unfortunately, the lack of common standards can be the reason for the collapse of Internet of things devices. This can be solved if there is only one manufacturer of all devices, but this may not be possible.
Data management – Collecting user data from various devices complicates the process of data management for financial service providers. Once you have chosen to utilize IoT in your fintech industry, you must know that the information gathered by devices is immense.
Smart EMV chip technology – EMV chips help in reducing losses due to ATM card accidents. EMV technology in shift towards the OTP for each transaction as it enhances security. If someone steals the ATM, you won't do anything because the code is only valid for one transaction. Financial institutions and bankers try to reduce theft attacks by providing a high level of security to their customers.
An increase in biometric sensors – IoT has led to many innovations in the financial and banking industry, and biometrics is one of the changes. Biometrics sensors and IRIS scanners are now being seen in ATMs, which decrease the desire to carry plastic cards or recognize identification PINs. ATMs utilize biometric sensors, palm scanners, and iris scanners to know the account holders to conduct a secure transaction.
Transparency – Several banks face difficulties in tracking their credit allocation range to their customers. But with IoT, it is simple. It assists banks in allocating loans to customers based on the information of their past loans.
Enhance bank's decision making – With IoT devices, banks gain valuable data to know more about their customers also enhance their decision-making power for better strategic planning and customer service.
Chatbots – There are several ways to improve the customer experience. Remember, higher customer interaction means they can pay for more hours. According to research by BI Intelligence, chatbot integration could lock in savings of up to $23 billion. As an industry, sometimes you require to provide quick answers to customer queries. But by propelling chatbots of IoT, customers get their questions answered in seconds. So, this is the best benefit of IoT, which is also helpful for competitive analysis.
You will have a better perception of how IoT with its services revolutionizes the financial sector. At present, the financial industry is becoming more conspicuous than ever. And next time, it will revolutionize retail banking, core banking, and other banking software. IoT will proceed to convert other industries also. It's time to start developing your IoT-fintech software. If you don't know how? Then you can contact Valere labs to know everything about IoT revolutionizing.