IoT and open banking are two of the most talked about trends in the finance world today. But what happens when you combine them? Let’s explore how IoT can be used to make open banking even more secure, efficient, and transformative.
IoT in open banking
Open banking is an arrangement which allows third parties to access the bank data of a customer, as long as that customer has granted permission to do so.
IoT will revolutionize the way we bank. Using sensors, actuators and other devices that are connected to the internet, you can take a peek at your account balance with a glance at your wrist instead of going on a web browser or using an app.
One example is payments: customers can simply place their hands on scanners in stores and receive items without having to pay cash. This saves time and helps speed up payment processes for both users and merchants alike by making the process more efficient in every way.
Streamline operations with IoT sensors
IoT sensors stream line operations in open banking through the following ways:
- Enhance customer experience with automated interactions and proactively manage service tickets to enhance the overall customer experience.
- Improve predictive maintenance with IoT sensors that can detect changes in temperature or motion and trigger alerts, enabling preemptive maintenance to be performed on equipment at the right time.
- Reduce costs by increasing operational efficiency and reducing human errors. With IoT sensors monitoring all operations, routine maintenance and upgrades can be scheduled when required, resulting in savings on labor costs.
- Detect fraud with real-time data monitoring of transactions against defined thresholds or parameters to detect unusual behavior that might point to fraudulent activities
By utilizing the power of IoT devices we can see a future where open banking creates a more personalized experience through predictive analytics, allowing banks to:
- Proactively offer products and services that are relevant.
- Offer enhanced customer experience that leads to higher levels of loyalty and reduce attrition rates.
- enable new business models
As the world moves toward a cashless economy, and more and more industries rely on the Internet of Things to deliver exceptional customer experiences, open banking and IoT seem to be a perfect pair. But right now, there are some challenges facing their collaboration that we’re going to need to overcome.
In an open banking system, users can grant third-party providers access to their financial data so that these providers can offer users tailored services that make it easier for them to manage their money. The problem is that this comes with two risks:
- First, there’s the risk that many people might not be ready for it. Users will need to be provided with sufficient education about how this system works in order for them to feel comfortable with giving up control over their financial data.
- Second, there’s the risk of a cyber-attack or other type of data breach by a third party provider. This risk will have to be mitigated through high levels of security and regulation.
These risks can stand in the way of the promise of open banking—a world in which users have better control over their finances, as well as better tools for managing them.
IoT and open banking are both critical to the next generation of financial services. IoT is a rapidly growing market because it is a way for companies to collect data from their customers. This data can then be used to create more personalized products and services, and this trend is particularly important in the financial industry.
Open banking allows for the sharing of customers’ financial data with third parties, which enables innovation as well as competition between traditional banks and fintech startups. The combination of these two technologies will lead to a smarter, more connected world of finance.