How is the Internet of Things (IoT) impacting financial services?
Whilst many of you will have heard of the Internet of Things (IoT), not everyone fully understands this concept or its impact on the commercial world. In simple terms, the IoT refers to the interconnection of corporeal devices through the Internet, allowing for remote communication and the management of physical sensors from different locations.
Whilst the most obvious application of the IoT exists in the form of smart technology, the Internet of Things is also revolutionising the workplace and a number of industries across the globe.
In this post, we’ll ask how this technology is impacting on the commercial world, whilst considering the effect that it has had on the lucrative financial services sector in the UK.
How has the IoT Impacted on Business?
If you appraise the core benefits of IoT, it stands to reason that it should have a number of applications in the business world.
After all, IoT offers almost unprecedented opportunity for gathering data from devices and automating processes, and these goals have remained high priorities for entrepreneurs throughout the digital age.
To understand this further, let’s consider the development of connected sensors and their role in the workplace. These can be used throughout a company’s warehouse space or production line, in order to collate data pertaining to speed, efficiency and any manufacturing bottlenecks.
At the same time, similar sensors can be used to manage remote locations and deliver crucial operational data to a central hub in real-time, reducing staffing costs and boosting operational efficiency in the first place.
How has the IoT Impacted on the Financial Services Sector?
Arguably, the single greatest and most lucrative application of the IoT exists in the form of the financial services industry, and there are several reasons for this.
Firstly, the financial services sector often deal with the intangible, from counterparty risk and the settlement of online bills to the transfer of funds between different accounts. During the digital age, the financial markets have evolved to create an even wider range of intangibles, from stock certificates to currency itself.
Managing these tangibles effectively can be genuinely challenging, but the IoT provides a comprehensive suite of tools that make this a more attainable goal than ever before.
In terms of specific applications, we can see that banks can utilise sensors and the IoT to collate real-time data from their machines and devices, including everything from cash points to each individual users smartphone (if they use mobile banking).
These data sets can be vast, diverse and incredibly beneficial to banks, as they enable them to tailor personalised services and products that offer genuine value.
As this technology develops (the number of IoT devices is set to increase from seven billion to a staggering 22.5 billion by 2021), we can expect to see the volumes of data collated and the behavioural insights delivered become increasingly sophisticated over time.
The Last Word
Aside from the challenges posed by a technology that continues to evolve at an incredible pace, IoT also continues to raise legal issues for financial services operators.
After all, the collation of personal and financial data remains a huge concern for operators, not least because this must be kept secured and handled sensitively if firms to avoid potentially expensive lawsuits.
In this respect, it’s important for financial service brands to seek out guidance from experts such as Withers, who can help them to adapt to changing technologies and remain compliant with the demands of IoT and similar innovations.
This issue will become even more pronounced over the course of the next few years, particularly when the UK leaves the EU. After all, whilst the single bloc’s GDPR data protection regulation will initially be copied and pasted into the UK’s legislature, this will most likely be replaced with new laws in the long-term.