The Internet of Things offers a number of real benefits for fintech. Some of these are – enhanced security, reduced cost, and improved customer experiences
IoT can help financial sector companies and fintech to enhance services across the financial sector through various use cases. As the Fintech landscape evolves, IoT will become increasingly vital in making it more accessible and secure.
This article will explore IoT’s advantages and practical applications in Fintech sector.
What is IoT ?
Oracle defines IoT as:
“The Internet of Things (IoT) describes the network of physical objects—“things”—that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet. …With more than 7 billion connected IoT devices today, experts expect this number to grow to 10 billion by 2020 and 22 billion by 2025. ..”
Simply put, IoT is a system comprising physical devices, vehicles, appliances, and other objects. They use sensors, software, and networks to stay connected, allowing for easy data collection and exchange.
These ‘ smart devices’ include RFID technology and complex industrial machinery and transportation systems.
Benefits of IoT in Fintech
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Enhanced Security
IoT devices can boost security in the financial sector. They can detect unauthorized access and send alerts instantly. For instance, a bank can use IoT-connected cameras and sensors to monitor its premises 24/7, ensuring safety.
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Efficient Asset Management
In Fintech, managing assets efficiently is essential. IoT in fintech simplifies this task by tracking assets in real-time. Banks and investment firms can keep tabs on valuable assets, such as cash shipments, ensuring they reach their destinations without issues.
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Cost Reduction
IoT can help financial companies save money. IoT devices can automate repetitive tasks, like data entry, minimizing the necessity for costly human skills.
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Improved Customer Experience
Banks can use IoT-enabled kiosks to provide self-service options, reducing wait times and improving customer satisfaction.
Using IoT-enabled devices, banks can offer customized and seamless services to their clients. For instance, it enables customers to access their account details and conduct transactions conveniently. They can even receive instant notifications using mobile banking apps or smart devices.
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Data Analytics
The Fintech sector thrives on data, and IoT devices generate huge amounts of data. This data is useful for predictive analytics. The insights help financial companies make informed decisions to craft personalized customer solutions and services.
Applications of IoT in Fintech
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Smart ATMs
IoT-equipped ATMs can monitor their operational health, report real-time issues, and even predict when they need maintenance. This ensures that ATMs are always available, minimizing downtime and customer inconvenience.
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Payment Processing
IoT devices can simplify payment processing. For example, contactless payment terminals connect with wearable personal devices like smartwatches. This enables secure and convenient transactions, reducing the need for cash or physical cards.
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Fraud Detection
IoT in fintech can be a powerful assistant in fraud detection. Banks can use IoT devices to analyze transaction data and detect unusual patterns. They can then predict security risks and frauds. With this knowledge, the companies are in a good position to protect customers from financial harm.
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Supply Chain Finance
Fintech extends its reach beyond traditional banking. IoT in fintech can track goods in transit, monitor their condition, and automate payments based on predefined criteria. This simplifies supply chain financing and reduces administrative overhead.
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Insurance Telematics
In the insurance sector, IoT plays a pivotal role through telematics. IoT devices installed in vehicles can collect data on driving behavior. For an insurance claim, insurers can use this data to calculate premiums based on actual risk, promoting safer driving habits.
Also Read: Leveraging the Internet of Things (IoT) in FinTech Stack
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Wealth Management
IoT in fintech can assist in wealth management by tracking investment portfolios in real-time. This enables financial advisors to make timely decisions and provide better client guidance.
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Customer Authentication
Enhanced security is a priority in Fintech. IoT in fintech can offer multi-factor authentication solutions, such as biometrics and smart devices. These will ensure that only authorized individuals access sensitive financial information.
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Asset Tracking
For asset-backed lending, IoT’s asset-tracking capabilities are invaluable. Financial institutions can monitor the location and condition of assets used as collateral, reducing the risk of default.
Summing Up
In the finance sector, IoT is making a huge impact. IoT is simplifying our financial interactions through intelligent ATMs, seamless payment processing, or enhanced fraud detection.
These devices transform financial institutions’ operations, from monitoring ATMs to tracking assets and ensuring supply chain efficiency.
IoT is here to stay as it delivers so many advantages to fintechs and financial companies. It simplifies processes, reducing risks and improving financial services.
