JOIN USWould you trust your car with your credit card? The question would have sounded cryptic or misplaced back in the Henry Ford days. Fast forward a hundred years, thanks to all the action in the space, it gets consumers thinking about the prospect of connected possibilities and may well be fitting enough for a dip stick smart car consumer survey.
The integration of software in cars by Tesla was a major leap in collapsing the distance towards the connected car dream. In the words of Craig Venter, an early Model S owner, "Tesla put a computer on wheels." And just like a Tesla allows its users to perform actions such as switching on air conditioning or heating through a smartphone app, a smart home lets its residents control access, lights, air conditioning and more without having to be at home.
This is the connected world of the Internet of Things (IoT), a world not confined to devices or gadgets but one that encompasses transformation of entire cities. Dublin, one of the early adopters, has a city-wide network of sensors that provide a real picture of what's happening across the city at any given time.
And then there is the Industrial Internet of Things (IIOT) where applications such as automated inventory tracking in trade finance are bringing about phenomenal efficiencies. Engineering giant GE estimates industry productivity to generate $10 trillion to $15 trillion in GDP worldwide over the next 15 years. IIoT is making businesses rethink their models, products, the way they offer products and their pricing.
A common thread across all applications of IoT is the handshake between the consumer side and the supplier side, putting banking and payments at the centre of every IoT ecosystem. In the future, as self-driving cars pay for tolls and fuels, payments will have to evolve to talk to these smart cars. There is also talk of an Uber-like model in which these cars will collect payments, too.
In a smart home, smart meters would not only help users prevent wasteful use but also manage energy expenditure better. In a smart city, banks will be central to facilitating the exchange of not just finances but also customer information among various players in an ecosystem, for building services best suited for citizens.
A successful IoT strategy for banks must span the three stages of the information value-chain:
Access: Instead of customers coming to the bank, the bank of the future will go to the customers. In the age of IoT, this means banking on various form factors and channels. Banks must ensure they are available for their customers at all times on the channel of their choice. These channels could be a smart car, a smart refrigerator, a chatbot, a voice assistant or any connected device.
To offer seamless, frictionless experiences, banks will need a robust omni-channel strategy. In addition to being accessible to customers, banks will need to ensure access to the data streams from these connected devices.
Insights: Banks must have a strong analytics engine to convert the massive amount of data generated into insights. This would include data as varied as a customer's activity level through a fitness tracker to purchase habits through her bank account to location details on her cell phone.
Action: And finally, in the last mile of the service or process, the IoT device will be configured to initiate action based on insights. For example, in trade finance, the device would send an automated alert in the event that a perishable shipment is at the risk of getting damaged.
Gartner forecasts 20.4 billion connected things by 2020, and estimates IoT to be a part of 95% of electronics for new product designs. But the firm also estimates a looming concern that about 25% of identified enterprise attacks would involve IoT.
Clearly, with devices, data, and integration end points multiplying, the impact of vulnerabilities in a system will also multiply. Banks must pull out all stops to combat these threats with solutions that bring together the power of AI, machine learning, biometrics and more.
Businesses across industries are reinventing themselves to create new possibilities with IoT. IoT is making it possible for them to offer services from outside their own industries. These industrial players inching their way into financial services may put banks at the risk of being reduced to back-end processing entities if they do not move fast.
Banks have customer trust on their side as institutions that customers have entrusted their fortunes with for eons. They must capitalise on this and build a holistic IoT strategy creating context-aware offers and experiences with security embedded in every aspect of banking.
(The writer is vice president - Product Development, Infosys Finacle)