For many industries, the internet of things presents unique and exciting business opportunities. Unfortunately, financial services executives aren’t entirely convinced that’s the case. Only 15% of this sector’s decision-makers view IoT as their organization’s most exciting future project.
However, even today’s most traditional-minded finance firms won’t be able to ignore IoT for much longer. By 2025, this technology is predicted to generate more than $11 trillion in economic value — a sum too large for financial services to simply ignore.
Despite the large-scale deployment concerns and hesitation, most of this industry’s CEOs already understand the value of this technology. Most — 52% — believe IoT endpoints will deliver their business major (if not transformational) process efficiencies and improvements.
While financial services firms figure out how to deploy IoT devices, here are two main reasons why this industry will see adoption efforts accelerate going forward:
1. The consumerization of IT continues
Mobile technology has become ubiquitous. Since the very first smartphone, enterprise mobility has empowered employees to become a primary driver of business technology decisions. And it appears that IoT endpoints are well on their way to becoming the next consumer technology craze to find its way into workplaces all over the world.
This year, more than 23 billion IoT devices will be sold — a projected increase of almost 14% over last year’s total. With that many sensors and miscellaneous technologies inside millions of homes, it’s only a matter of time before employees start asking for IoT-inclusive environments — assuming they’re not already doing so, of course.
As financial services organizations grow more familiar with these data-driven technologies (and digital service offerings in general), global leaders will find it increasingly difficult to ignore the benefits of IoT implementation. Moving forward, that challenge — combined with growing consumer demand — will put enormous pressure on enterprises to either innovate and adopt IoT or fall behind the competition.
2. Enterprise alignment and affordability
For all its advantages, security and interoperability issues continue to be a sore spot for IoT. However, device manufacturers are taking bold steps to make improvements. Today’s managed enterprise environments are finding it easier than ever to develop and implement connectivity standards, protect data and fix vulnerabilities that have plagued privacy and security standards for years.
The most advanced mobile technology initiatives are even investing in new infrastructure to accommodate IoT — making its financial services industry insights that much more actionable and valuable. And, since the cost of IoT products have dropped dramatically in recent years, low-cost sensors and prototyping tools are transforming these systems from an expensive luxury item to an affordable, everyday business tool.
Beyond these drivers, financial services companies have much to gain by integrating IoT endpoints into existing systems and workflows. Strategic deployments and successful management creates a variety of business benefits like these:
Reduced risk management
The biggest IoT benefit for financial services is real-time data feedback. By gaining insight into both internal and client assets, many of these companies can integrate other innovations like artificial intelligence and machine learning algorithms. This means an enhanced enterprise understanding of never-before-seen customer behavior, global industry and product/service change effect trends.
In addition to deeper customer knowledge and more agile mobile technology, IoT can also be used to save businesses money. For example, using these endpoints can reduce the expense of a building management system by as much as 30%. Considering one of these systems can cost an office hundreds of thousands of dollars to install, IoT creates a tremendous opportunity to cut costs and its investment pay for itself.
Real-time data also does something else for financial services firms — it gives this industry the ability to anticipate future customer needs and concerns. And, by responding immediately to (if not before) these forward-thinking requests, customer experiences are upgraded, loyalty is improved and eventually the number of new business opportunities increases.
IoT even provides a technical framework that’s capable of creating personalized customer offers and rewards. If a user population is heavily engaged with a specific product or service, or if sensors detect someone’s been stuck for an extended period of time in line at a physical branch, new offerings can be made more accessible and existing services can be tailored to the individual to add even more value and relevance.
Stronger and safer
Advanced mobile technologies also strengthen the safety and security of the financial services industry. First and foremost, IoT creates the potential to prevent fraud in debit and credit card transactions by simultaneously tracking customer locations and charges. Anytime someone swipes their card to make a purchase, these endpoints can immediately verify or deny charges based on whether the transaction and customer’s mobile device locations match.
Automated sensors can also continuously monitor workplace environments to ensure conditions are safe and any potentially dangerous equipment is functioning and performing as expected. Organizations can also use IoT to ensure financial health and integrity by tracking expenses and paying off loans as inventory is sold — reducing overhead costs and eliminating the possibility for fraudulent borrower activity.
By the end of this year, the average financial services organization will spend more than $153 million on IoT. With that much money on the line, it’s critical for enterprises to prepare for security and strategy risks ahead of time. A managed mobility software partner is the best way a financial services firm can pilot and integrate IoT in a manner that maximizes its enterprise impact and ROI.
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