Jul 10, 2017
What must the financial services industry do to benefit from the opportunities offered by IoT?The Internet of Things (IoT) is an evergrowing network of devices that can collect and exchange data. With the number of connected devices expected to outnumber humans on the planet by four to one by 20251, it is inevitable that new forms of interaction will become part of daily life Yet, the IoT is much more than connected cars and smart appliances. It offers an opportunity for financial institutions to serve their customers in new ways and deliver seamless 24/7 banking experiences – from payments, to financial management, to customer service.
The financial services industry can benefit from the increased opportunities for customer engagement offered by the IoT. But first, they need to evaluate which connected devices are right for the delivery of financial information and capabilities, and ensure the security of interactions from these devices.
Providing the right customer experienceAs with any new service offering, it is crucial to understand what capabilities are practical and how they can be delivered most effectively. As new connected devices emerge, financial organisations need to evaluate how customers interact with them, and if they are suitable for conducting financial tasks. For example, when driving in their connected cars, customers may want to check their balances and initiate bill payments. At home, they may want Amazon Alexa to provide reminders to help them stay within a budget or remind them to save for a major purchase.
The end-user must be at the heart of any new service experience that financial institutions develop for IoT. With today’s information overload, irrelevant information will at best be ignored and at worst prompt customers to look elsewhere.
For financial institutions looking to add value to their services by extending existing capabilities to various devices in the IoT, the approach is the same as when evaluating which functionality to offer on a smartphone or a desktop. Start with these questions: What types of capabilities are practical for this device, and how will consumers want to access services from it?
Multiple-layered security, shared standards
Security must also evolve in line with the IoT. The balancing act between customer convenience and security will continue to shift as consumers demand new ways to interact with their money. However, a multilayered approach to security will continue to be vital.
Nowhere is this more crucial than in payments. For example, if a customer wants to check his bank balance and pay a bill from his connected car, he could do so by accessing his online banking account, which already has multiple layers of security in place, via the car.
But what about payments that are initiated from a connected device outside of an existing payment application such as online banking? If your refrigerator recognises that you are out of milk and automatically orders more, that payment also must be secured. In cases such as these, the security of the payment cannot reside exclusively with the device itself – there must be additional security layers residing elsewhere, such as in the cloud.
Initiatives like the PSD2 in Europe and the Open Banking initiative in the UK, will likely accelerate banks’ ability to deliver banking services to the IoT. That, plus the projected explosion of connected devices should propel players across the IoT ecosystem to come together to create robust security standards. And they can take a leaf from the books of the automotive sector, which has been an early-mover in implementing standards-based security for embedded devices. A multi-channel, multi-device approach and thinking in terms of layered security are important considerations for financial services in this new world.
The IoT is one more way to integrate financial services into everyday life By testing technology and gauging consumer demand through research and focus groups, financial institutions and their technology providers can provide customers with relevant content through the right device, whilst ensuring customers are able to access information securely to provide an all-round positive consumer experience.
It is essential they keep the experience secure, contextual and as relevant to the consumer as possible. Understanding what each customer needs, how they want information delivered, and how to do so securely are the first steps in providing customers with the best possible experience, one that fits seamlessly into their everyday life. By Scott Hess, Vice President of User Experience, Consulting and Innovation, Fiserv
Fiserv, Inc. (NASDAQ: FISV) enables clients to achieve best-in-class results by driving quality and innovation in payments, processing services, risk and compliance, customer and channel management, and business insights and optimisation. For more than 30 years, Fiserv has been a global leader in financial services technology. This year, Fiserv was honoured to be named a FORTUNE® magazine's World's Most Admired Company for the third consecutive year; in 2015 the company was recognised among Forbes magazine's America's Best Employers. Fiserv drives innovation that transforms experiences for more than 13,000 clients worldwide including banks, credit unions and thrifts, billers, mortgage lenders and leasing companies, brokerage and investment firms and other business clients.
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