As banking continues to come to grips with digital disruption, a new information-based revolution known as the Internet of Things (IoT) is hot on its heels.
The term, Internet of Things, was originated by researchers at the Massachusetts Institute of Technology and refers to different digital devices being able to communicate with each other automatically or by command. This includes household appliances, cars and most other vehicles, industrial machinery and more.
According to Cisco, there were 13 billion internet connected devices in 2013 and there will be 50 billion in 2020 including ‘chips, sensors, implants and devices of which we have not yet conceived.’
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At the heart of the IoT revolution is the consumer. Already the internet and technology is part of their daily life. They share and voice opinions through social media, they want to be engaged in the channels they use, they expect prompt service and a prompt response to queries and complaints, and they turn to the crowd for recommendations. Add in all the data that will be available from internet connected domestic and industrial devices, it’s not hard to see consumer expectations of the businesses they choose to deal with lifting significantly.
Banks already have an enviable amount of data on customers and when you layer on top the additional information the IoT will deliver, the smart bank will be able to analyse and use that to anticipate its customers’ needs and, unprompted, deliver relevant solutions, services, advice and insights.
Mark Dangerfield oversees the implementation of a lot of Westpac New Zealand’s digital innovations and he sees possibilities for both consumers and businesses and the way they connect with their bank.
“With the pace of change the types of things I envisage might only be a few years away,” he said.
“One factor to bear in mind is that technology knows no boundaries so a development in one sector can often be picked up and adapted in another quiet quickly and that is one of the reasons we are seeing such quick and widespread change.”
Innovation is as much about iterative thinking as it is about that single light bulb moment, he added. With more businesses investing in digital innovation and more minds committed to interpreting data and how it can be used to benefit customers, the imagination is the only limitation on what can be delivered.
Dangerfield envisages information from different sources, both financial and nonfinancial, could be used to make peoples’ lives easier and more efficient. It could be something as simple as a prioritised shopping list that is triggered by your fridge which is automatically re-ordered online with the number of items restricted to your available balance.
“Through IoT, we’re no longer constrained to just the tasks of banking, we can now consider all aspects of our customer’s lives and develop solutions that can help them,” he said.
In an illuminating paper, management specialist Accenture foresees this example as the new reality in less than five years:
“Yumi Sato needed to take her car to the mechanic. Her car flashed an alert on its dashboard while she was on her way home from work. She wondered how she’d pay for the expensive motor repairs.
“Arriving home, Yumi pulled out her phone and opened her bank app. At a glance, she could see the budget would be tight. Her bank continuously pulled data from her smart fridge, electric meter, water tank and other appliances, her smartphone’s digital wallet — and even her car — to
provide a real-time snapshot of her spending, saving and budget activity.
“As she looked over the figures, an alert from her bank popped up on-screen. The bank knew her car needed repairs — and here it was with two mechanics’ quotes and available appointment times. As though reading her mind, the bank also provided Yumi with suggestions on how to finance the repair: she could find the funds by reducing her vacation savings for six months, or raise her credit card limit by the amount of the repair. The bank had factored in the latest reduction in her auto insurance, based on the car’s recent data about her driving habits.
“Yumi decided she could stay a bit closer to home for this year’s vacation, checked her calendar and booked the repair. Instantly, the screen updated her vacation fund goal.”
Recent findings in the United States by the reputable Pew Research Centre also show that many believe the IoT will transform our lives within a decade aided by wearable technology monitoring our activity and health.
For banks in particular, wearable technology is seen as providing an immediate opportunity. Wearables could allow new forms of security and authentication (fingerprints, heart beats, DNA) while it also has potential for messaging. Alerting someone of an account being compromised or seeking confirmation of a large withdrawal is bound to get picked up a lot quicker by a customer through a vibration on a wrist device then waiting for someone to respond to a text or email.
Others see IoT and wearable technology providing real benefits in the public sector to manage and oversee public health, transport and other smart programs.
In a survey by global infrastructure provider Rackspace, 19% of Brits and 22% of Americans said that they would be willing to use a wearable device that monitors location for central government activity, and one in three respondents said they would be willing to use a wearable health and fitness monitor that shares personal data with the National Health Service or health care provider.
Wellington based Michael Dutton is a Senior Experience Designer with Optimal Experience and believes IoT gives banks the opportunity to offer amazing customer experiences, “because they know more about me than I know myself.”
“They know where, how much, and how often I spend. They know how much I earn and they know what I put on a credit card versus what I pay directly out of my account. They can even know where I go and how often I’m there, because I carry my bank in my pocket. They have all this data, and yet they are still asking me, “Would you like a mortgage today?” Dutton says.
“If I’m shopping for a new home, they should be able to deduce this from my banking and movement activities and offer me specialised solutions, like calculating my financial risk before sending me a push notification offering me a personalised mortgage.
“Instead of me having to sit down with a financial planner, the bank-in-my-pocket should tell me how I can best save money. Instead of me making an appointment with the bank, how about I grant you read access to my calendar and request that you call me when I’m free?”
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