IoT: market impacts and financial sector outlook
9 minutes reading
The IoT, or the “Internet of Things,” is the technology that brings everyday things that are offline and connects them to the online world. There are countless ways to use the IoT in business, and the banking and payments sector has even more reasons to watch developments in this area closely.
Companies that offer financial solutions are already using the IoT in various ways. In fact, the Internet of Things can help businesses face their biggest challenges in the financial segment. Among these is the need for continuous innovation, survival in a very competitive environment, and constant improvement of fraud management .
Want more details? In this article we have gathered everything you need to know about the IoT and its impacts on the market, particularly in the banking and means of paymentsector. Check it out!
What is the IoT?
IoT is the abbreviation used to describe a huge network of interconnected objectsthat can exchange all types of information because they are all connected to the Internet.
The variety of objects that comprise the IoT increases constantly, extending beyond computers, smartphones, and tablets to clocks, wristwatches, domestic appliances, and industrial tools, and even smart cars.
The information exchanged between these devices is captured from the environment through sensors, software, and systems. The data that is shared can refer to external conditions, conditions of the object itself, and also a user’s habits and preferences.
Read also | Web3: Understand what it is and the changes it can bring the financial industry
How does the IoT work?
By connecting everyday objects to the Internet, the IoT makes it possible to automate numerous activities, allowing people to be able to live and work more comfortably and peacefully.
The IoT consists of an ecosystem that is comprised of basically the following:
- Devices and sensors that capture information from the environment, such as photographs, location, movement, temperature, and lighting;
- Connectivity and interoperability between the objects connected to the Internet;
- Data processing to analyze all information received, and fast delivery of results.
Every object connected to the IoT has an interface that is suitable for its use, collecting information and commands that will feed the entire Internet.
While all market segments will enjoy the benefits of the IoT, the banking and fintech sectors have special motives to monitor this technology carefully..
Automation and the benefits of the IoT for the financial sector
The principal benefits generated by the advent of the IoT are connected to the automation of tasks. By bringing greater agility to the day-to-day of people and companies, there is more time for strategic activities.
The large volume of information exchanged allows the IoT to also provide:
- Greater security against fraud: there are more ways to verify a user’s identity, such as habits and preferences, images, voice, etc.
- More personalized services: with needs and preferences mapped, companies can offer customized products and services.
- Less human error: automation allows more efficient checking mechanisms, reducing errors during transactions.
- Easier decision-making : customization of products and services improves understanding, enhances the purchasing journey, and makes decision-making easier.
Companies that provide services directly to their consumers are particularly benefited by the IoT. The appearance of chatbots, for example, has revolutionized how banks and companies that offer financial services interact with their clients.
IoT applications in finance
In the financial sector, using virtual assistants has made it possible to serve clients every day, at any time, without having to wait in line.
Besides the significant time savings of users and the resources of companies that were previously spent on customer service, the IoT has also been used for numerous other purposes. Below are some examples of IoT applications in finance:
- Creation of personalized products and services, such as points and loyalty programs;
- Making digital payments without using physical money or cards, through virtual cards on watches and cell phones, for example;
- Improvements in prevention mechanisms fraudes by crossing data on consumer habits and preferences;
- Increased security in virtual transactions by using devices that can authenticate using one’s image;
- Automation of transfers and payments through smart contracts;
- More monitoring of physical agencies and use of ATMs using cameras, sensors, and cross-referencing data collected from users ;
- Improvement of ATM systems, making them more intelligent and connected to mobile devices;
- Faster processing of client, provider, and market data to help in the decision-making process in purchasing or contracting services and financial products.
How can the IoT help solve challenges in the financial and means of payment segments?
The Internet of Things can also help businesses face their biggest challenges in the financial segment and the means of payment segment. Below are some of the most salient points.
Highly competitive
In a sector that is in constant change, and in which the competition is fierce, the IoT makes it possible to create even more knowledge about the consumer market, its needs, and preferences.
Client loyalty
In addition to obtaining more information to attract new clients, gaining loyalty tends to be easier when the product and service being offered are more personalized. The IoT enhances the capture and processing of consumer data.
Continuous innovation
Through the captured data, the IoT provides continuous insights on desirable changes in the business model, and allows companies to direct investments towards strategic projects.
Fraud prevention
Cross-referencing information that has been captured from different devices for authentication via the IoT allows companies to streamline their anti-fraud solutions , and increasingly avoid fraudulent transactions.
Read also | Chat GPT and means of payment: Learn how AI is impacting the financial industry
Is your business prepared for the future with the IoT?
With the advent of 5G technology and the growing interoperability between various devices, the IoT will revolutionize the way means of payment and banking function. At Dock, we are anxious to see this transformation take shape!
IoT: what you saw in this article
- IoT is the abbreviation used to describe a huge network of interconnected objects that is capable of exchanging all types of information through their connection to the Internet. Examples: watches, domestic appliances, smart cars.
- By connecting everyday objects to the Internet, the IoT makes it possible to automate various activities, providing comfort and agility.
- Among the benefits of the IoT are the automation of tasks, greater security against fraud, greater personalization of services, reduced human error, and greater ease in decision-making.
- The IoT is already being applied in many ways in the banking and fintechs sector, in the form of virtual assistants, creation of personalized products and services, digital payments, automation of transfers and payments, cross-referencing data to reduce fraud, etc.
- The Internet of Things has a series of benefits for businesses in the financial sector: it makes it easier to attract and gain client loyalty, it generates insights to meet the continuous need to innovate in order to adapt to market needs, and it is particularly good at helping in fraud prevention mechanisms, among other things.
- The IoT will revolutionize the way means of payment and banking function.
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