What if your fridge could sense the absence of a milk container and automatically reorder the milk for delivery? What if your car could sense the deflation of a tire, alert the driver and order roadside assistance service? IoT, or the internet of things, is a sensor-based technology that connects objects with sensors embedded in them for data transmission and monitoring over the internet.
IoT is making a lot of this possible. Bank boards should get ready for a future where many more devices are connected through the internet, which will increase exponentially the amount of transactions going through banks. Many of the security questions raised by the IoT-connected world have not been answered yet.
These sensors send and receive signals and carry interactions to and from other IoT devices or systems enabled with IoT technology. So, important implications of this technology are very large and continuous volumes of data flowing from IoT devices and impacting banking systems.
Some examples of impacts to banking systems include:
- Banks will be improving features and capabilities to support more sophisticated consumer-based transaction processing, including IoT-based transactions.
- With new banking technology integration and infrastructure investment, consumers will have increased access to detailed information regarding our most important IoT-based transactions and more options to manage finances surrounding these transactions.
- Consumers will see new transaction reporting for IoT in our banking consoles.
Also, since IoT is an integrated form of data and information transmission, many new types of devices beyond common types such as cell phones, tablets and other kinds of mobile devices have the potential to tap into banking infrastructure.
Newer devices like refrigerator consoles or onboard computer systems in vehicles have the capability to transmit transactions for purchases that impact today’s banking architecture.
By one estimate, the market for IoT platforms, software, applications and services will grow from $170.57 billion in 2017 to $561.04 billion by 2022, a compound annual growth rate of 26.9 percent.
So, because of this, customers will need additional services on the banking side of IoT transaction processing to understand what types of transactions (and from which devices) are included in their bank accounts. Many of today’s customers are used to real-time bank account information and portal login for easy viewing of transactions. So, it is very likely that this new IoT capability for banking would be expected to come in at the same level for all forms of consumer banking.
Understanding how banking computer systems and infrastructure will be adjusted and upgraded to accommodate the influx of IoT-enabled transactions will play a crucial role in supporting customers and clients globally. Consumers will be most impacted by changes in retail and consumer markets. However, business use of IoT for financial transaction flows is also a growing factor. So, the combined business and consumer IoT sensor-driven transaction flows is an exciting area of banking and computing convergence that holds great potential for new and emerging global markets.