Author: Muhammad Arslan Hayat
Publication date: 15.11.2023
The Internet of Things (IoT) has altered the way we interact with technology and the world around us. This interconnected web of sensors, devices and the data has not only changed our daily lives but has also shaped various industries. In fact, it has a positive impact on the financial industry.
What is Internet of things (IoT)?
The Internet of things (IoT) is the network of interconnected devices to the internet. They can collect and transfer data over a network without human intervention. IoT devices are typically embedded with technology such as software and sensors. For example, they can include mechanical, digital machines and consumer objects.
Why is IoT Important?
Companies can automate processes, reduce labor costs, cut down on waste and improve service delivery. So, it helps to make it less expensive to manufacture goods and offers transparency into customer transactions.
Impact on Financial Services
As IoT integrates with our daily life. The issue of privacy is of utmost importance. Financial services require policies and procedures to proactively address the risks while preparing the readiness protocol to deal with any exceptions. The goal is to protect the consumer's privacy.
Whereas IoT offers numerous benefits for financial services, it also raises concerns about data security. This is because more sensitive data is transmitted and stored in interconnected devices. Therefore, the risk of data breaches and cyber-attack increases. So, financial institutions should invest in robust cybersecurity measures to protect customer data and maintain their trust.
IoT data can be harnessed for predictive analytics in the financial sector. By doing so, institutions can make more accurate forecasts about market trends. This empowers them to make strategic decisions and adjust their offerings accordingly.
Asset and portfolio Management
IoT has revolutionized asset and portfolio management for both individuals and institutional investors. Connected sensors and devices provide real-time data on asset performance, market trends, and economic indicators. As a result, this data can be used to make informed investment decisions, manage portfolios more effectively, and optimize asset allocation.
Smart Banking and Payments
IoT devices have paved the way for the concept of smart banking and payments. With the rise of wearable technology and IoT-enabled payment devices, customers can make secure and convenient transactions. For example, contactless payments and mobile banking apps have become an integral part of modern banking. This way, it allows customers to manage their finances with ease.
IoT can lead to significant cost reductions for financial institutions. Automated processes and data-driven decision-making can streamline operations and reduce the need for manual intervention. This can result in lower operational costs and increased efficiency, ultimately leading to cost savings that can be passed on to customers.
Insurance industry transformation
IoT is transforming the insurance industry as well. Insurance companies can now offer usage-based policies, using data from IoT devices to assess risk more accurately. For instance, telematics devices in cars provide data on driving habits, allowing insurers to offer lower premiums to safe drivers. This transformation has the potential to make insurance more affordable and accessible to a broader range of customers.