When IoT meets Banking: the “Fin”-ternet of Things

Here is a fun fact: the automated teller machine (ATM) is an early example of a smart device – and it was way before its time. We’re talking 1970s! These machines were considered ‘smart’ – which is how we define the Internet of Things (IoT) today – because they were connected to a data network and in real-time provided actionable insight. Banking, once a pioneer of innovative technologies, cannot claim that role any longer. When it comes to the adoption and deployment of state-of-the-art technologies, such as IoT, it has fallen behind industries that have innovated at a much faster speed.

One reason is that banks had seen technologies as a way to optimize activities and processes and less as a way to differentiate. Today, generational change and different customer expectations, disruptive competitors from within and outside the industry, and an all-time low trust in the incumbent players, are changing the rules of the game. Banks understand that the number and quality of customer engagements will define winners. IoT represent a unique opportunity for banks to enter in the lives of their customers and understand them better.

Enhancing the status quo

Applying IoT to reduce costs and improve efficiency, such as using light sensors and thermostats to adjust lights and temperature when no one is around are a few basic examples. Better examples are coming from banks implementing geolocation, geo-fencing and beacon technologies as a way to improve sales and marketing effectiveness by improving engagement and encouraging greater usage of banking products.

Sensors, for instance, can recognize when a customer enters a shopping mall or retail store so a promotional message can be sent to a verified smartphone, enticing the customer to spend more using his or her credit card. Or imagine sending a message to a customer walking by a branch, inviting him or her in to discuss a new loan or promotional offer that he or she had just been looking at on a smartphone or home banking a few minutes before. For banks that are able to track a user’s online behavior and connect it to in-store profiles, the sales offer could be tailored to discuss a new investment product that the user has been researching.

The connected nature of the technology allows efforts and results to be tracked, enabling the retail bank to place an ROI number on the tactics that improve sales.

Going the extra mile

IoT can be realizalized better when the customer experience is improved without the direct action of the customer. For example manufacturers building new payment capabilities into everyday items, such as appliances and consumables, can have “things” initiate orders and payments without a customer’s involvement. The Amazon Dash Button and Visa’s recent announcement shows that this use-case is not so far out in the future.

Retail banking is not the only area that can benefit from IoT. In the corporate world, connecting “things” that move through the supply chain could transform highly manual and time-consuming processes, such as supply chain finance, creating value to both banks and corporations needing these services.

The time is now for banks large and small, in retail and corporate segments, to leverage IoT to its full potential. For that, IoT must become an integrated part of a business strategy and core processes, not just a one off experiment in a me-too fashion. Experimentation is still required to identify the use cases that will drive the biggest benefits, but when such use cases are identified,the “Fin”ternet of things will certainly reward the early adopters.


Filippo De Montis, former Director of Banking and Insurance for Software AG and current CTO of Tinaba, has more than 10 years of experience driving growth and profitability in major corporations through technologies. Holding an MBA, Filippo is passionate for innovation and its impact on companies’ ability to differentiate in the market.

Written by Filippo De Montis