The IoT / Banking of Things (BoT) is Coming of Age: Are You Ready?
The Banking of Things is simply the notion that the Internet of Things can be applied to the banking vertical.
In today’s world of connected devices, mobile, wearables and cloud computing, new opportunities for actionable data in financial services are omnipresent. The notion of the ‘Banking of Things’ brings together data and relationships to offer more personalized service at key customer milestones. The ability to capture and leverage customer data to effect actionable insights is critical to delivering better banking customer experiences.
Event-driven use cases include key life stage financial events such as:
- Qualifying for a mortgage,
- Having a child,
- Moving or buying a home, and
- Experiencing a lump sum windfall such as receipt of inheritance or other liquidity event.
We are all familiar with banks that provide value-driven offers based on consistent savings account balances when we the customer swipe our account card at the teller. This creates the gateway to more effective cross sell opportunities and offers. This same data can be directed through other connected customer communications as expansion with connected experiences occurs.
For example, if you are not a regular visitor to a branch, but you have your geo-location preferences set to on when you do visit a branch, the bank manager likely knows there is a problem to be resolved or an opportunity to discuss a life event like a mortgage. The opportunity for moving between the digital and in-person interactions fuels the value in the banking relationship.
- The economic value added by the Internet of Things (IoT) by the middle of the next decade is estimated to be between $4-11 trillion (Measuring the Economic Potential of the Internet of Things, The Wall Street Journal)
- There will be 6.1 billion smartphones users by 2020. (TechCrunch)
- Unlocking the value inherent in the asset of data is a key challenge for many banks. Banks currently have silos of data that are growing in size and are not integrated. Analysis of customer data sets is disjointed given the inconsistent approaches, tools and technologies being utilized. Data left in this fashion, or analyzed and synthesized in isolation, remains an untapped opportunity.
- Social media is also disrupting the game and transforming the way consumers pay for things online (as has been done on Snapchat and Facebook). Integration of payment features into services to attract customers, businesses and investment is starting to occur. Banks ability to be relevant to this shift is imperative.
The forces that drive mobile adoption, digital maturity and banking are certain to accelerate mobile and connected experiences (phone, watch, car, home, etc.). Line of business banking stakeholders will need to collaborate and share information effectively with their technology partners in IT to keep pace with customer demands and meet or exceed customer experience expectations.
Properly bringing existing research methods together with the reams of data that is available through connected devices is key to developing a viable plan of action for the BoT. In doing so, banks will be able to fully understand their customers' needs in the right context, including time, channel and message.
“One of the primary drivers of this trend is the robust growth in mobile commerce which is outpacing desktop usage in some countries, including China. As the world of mobile payments integrates with social media, the line between social networking and payments is starting to blur.” Innovation in Retail Banking
- BoT needs to be grounded in an innovation strategy. The threat of disruption is real and the need for financial services leadership and capabilities will not happen in a vacuum. Time, resources and innovation investment are required to stay relevant and continue to deliver on the brand promise for your customers.
- Do not go it alone. Collaboration with your customers, peers and partners to effect the right insights and plan is important. Continue to build a diverse ecosystem of thinking and capabilities to increase quality. This may include data facilities, design and development, investors, corporate affiliates and/or service design expertise, among others.
- The BoT has the potential to revolutionize banking. Functions including the mobile wallet, peer-to-peer lending via social networks and hands-free voice control for money transfers are among possible use cases. Grounding the revolution in customer-centricity is the central principle of success.
- Mind-the-gap from becoming too intrusive and advisory versus helpful. Personal data must be an earned as trust is key with your customers. One data security breach is all it takes to incent customers to switch financial institutions.