We are in cusp of a digital revolution, and one of the transformation factor is “The Internet of Things” (IoT). The influence and the innovation that it can power machine-to-machine collaboration would alter the way we live, do business and the impact it will have in our society.
A smart interconnected world is emerging through intuitive devices, which can make our lives healthier, less stress free, dedicate more time to a better lifestyle, safer drives, contactless payments and predictable aspects of life.
Is there Value to Banks to embrace IOT?
Banks have already started their journey of digital revolution, with technology driving the way Banking is done today. The entire business value chain is increasingly getting stitched today with corporations, retail houses, distribution channels, startups collaborating to achieve results.
Bar code scanners, biometric devices, cameras, sensors help banks to track, send triggers to various relevant systems based on positional and location of action. These could be tracking of location wherein the product is being created, goods being shipped, sales at a dealer site, promotion offer provided by dealer in partnership with a bank, offer provided to a customer based on his reward score, risk score of customer and his target set as part of investment Goals. The whole predictability to increase the sales for all business participants in the value chain further increases. Manufacturing company can increase the product output, banks can further provide credit to dealers and hence prospects are better for high quality products and services.
The business scenarios on usage of IoT is immense, these devices can be involved in Warehouses handling order and storage management and Banks’ lending to these warehousing companies as part of business expansion.
Customer centricity through IOT by Banks:
Vast collection of data and exchange of information in a streamlined and seamless fashion through collaboration of machines brings in great value to Banks and Financial institutions. The new level of understanding of customer behaviors’ and patterns will help Banks to enhance personalized experience, excellent offers and targeted products and services. It will also promote innovation in banks, create efficient operations, enhance security features and increase cross-sell opportunities for Banks.
Scenario of IOT in action: at an Airport check-in desk, a frequent flyer customer is excited by the offer of an upgrade to a higher class seat. The bar code scanner at the desk has identified the customer as a frequent flyer, connected to systems on the network to check his Air Miles availability. It also connects to customer’s bank account to check for existing Reward points in the customer relationship account (Savings Account, Credit card, Insurance plans etc.,) to convert them to additional Air Miles and generate this offer. The effective use of these rewards could be achieved through IOT at the center of action. Customer’s home bank and the Airline also benefits as an industry with delighted customers and a stable customer base. This is the usage of IOT for best financial decision taken.
Based on the social media data, spending patterns and customer’s goal planning objectives, Banks based on customer preference & acceptance can provide great financial advices. It could vary from offering Customers best price deal and loan offer on residential or commercial properties with credit assessment already done by bank before this offer is published. Providing advice to customers to save money through Mutual funds through SIP, or on debt based instruments in case, the Credit risk of Customer is high.
In all these cases, data tracked by IoT machines are managed over the network and storage. The data will then move seamlessly faster across systems and channels to play a key role in IOT collaboration and productivity.
Necessity is the mother of Innovation:
Banks to increase their asset growth would be keen to expand their Loan book, hunting for agriculture based farms, micro industries and enterprises. Banks are wary of Non-Performing assets (NPA) which is prevalent in today’s industry. To tide with this problem and still move ahead, IOT can be a platform of collaboration. A view on this aspect is illustrated as an example.
In an Agriculture based farming scenario, sensors and devices can be utilized to scan and assimilate data on various parameters. The data parameters could be availability of resources such as quality seeds, water, fertilizers and data on weather forecasts, which has a direct bearing on quality of crops and crop yields.
So there is a new avenue for business to emerge for startups and technology firms to create smart apps and solutions to build utilizing this data from the IOT platform and create patterns, use cases and specific action for each task. Banks can further fund these startups and create a business model out of these. The agriculture products sold by the farm to their dealers and distributors can utilize the Banking platform for payments and for expansion growth. With this we see an ecosystem emerge of Banks, enterprises, startups and finally consumers.
The Technology side to IOT:
Internet Protocol version (IPv6) is one of the backbone component that provides identification and location for devices on network and handles internet traffic. The hardware component of IoT, is built on Wireless systems on a chip. This utilizes protocols such as TCP, UDP and IP. IoT also uses operating system which is based on a microkernel. The IoT landscape combines data brokers, cloud computing services, network of data gathering sensors to have a high scalable runtime environment.
This also throws up security challenges to securely manage sensitive data, which could be a target while it is stored or while it moves over network. To ensure the mobile phones, connected cars, RFID devices in a connected collaborative environment are safe; encryption and authorization would play a big role. Biometrics information such as fingerprints, voice-recognition, facial recognition, Iris scanners and new password combinations would spearhead to identify and authenticate the users securely. This is important to gain trust of customers and security is a key building block in IoT landscape.
This is a huge fundament shift IoT is driving the innovation across businesses and is becoming an integral part of IT infrastructure. As we see, the World’s first hybrid ‘aeroboat’ capable of travelling on land, water, snow and sand designed by Indo-Russian Joint venture has been launched. The company has equipped the aeroboats with IoT technology, to remotely monitor, control and diagnose the equipment. These vehicles are used in disaster management activities.
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