Contactless payment, tap & pay, and cashless payment- everyone today is familiar with these terms. This is a prime example of a revolution in the finance industry. Also, this major shift in banking and financial services is hugely supported and backed up by the Internet of Things.
If you have landed on this page to know about the significance of IoT in fintech industry, then you are on the right page. Scroll a little and learn everything about the role of IoT in fintech in an easy-to-understand language.
Let’s start by understanding what IoT is and how it’s bolting to revolutionize the fintech industry.
What Do You Mean by IoT Technology and Fintech?
IoT, as in “Internet of Things,” is a group of interconnected devices that exchange data without any human intervention.
Fintech includes financial services like mobile payment apps and blockchain solutions. Basically, where finance meets technology is “Fintech”
How IoT is Used in the Banking and Finance Sector?
The integration of IoT in banking sector is becoming increasingly crucial. The finance industry is always under pressure to match the rapidly evolving digital world. Today, if the bank server even goes down for 5 minutes or a transaction fails, we take no time to switch to another bank.
Thus, banks and fintech institutions are working towards offering convenient and personalized services. For this, they have started shaking hands with the Internet of Things (IoT).
Why, only IoT, tho?
Well, because IoT is capable of improving the fintech and banking sectors in various ways.
For instance- fintech companies can use IoT to track user’s behavior and preferences and offer more personalized services.
I went to a bank recently to see what kind of investments I could make. In the end, the bank employee asked me to write down my name and phone number in a diary so she could remember to sign me up for their savings plan.
The officer manually calls to ask for and offer custom plans. Now think about how good it will be if this manual, time-consuming process can be done by an IoT device.
Other than this, IoT can be employed in fintech companies to improve security, either by using a device that can track suspicious activity or through biometrics.
This is just the beginning; shortly, IoT will have a much bigger role in the fintech sector. IoT in fintech can gather even more information. However, there will also be new opportunities for scammers, so companies and banks will need to be more alert about security. This is where an IoT-based security system is very helpful.
Read More: Also Know about the use of IoT in Inventory Management.
Some Examples of IoT-Fintech Fusion
Here are some specific examples of IoT in Fintech that are currently being used:
1. Smart Payment and Wearable Devices
Wearable devices like smartwatches and fitness trackers are now made to store payment information and allow users to make payments with just a single tap.
Wearable payment devices are now very popular and offer a very convenient payment method.
(This tap-and-pay is so cool, but these hassle-free payments have made me penniless. Anyway, it’s the technology that we are talking about.)
2. Smart Contracts and Decentralized Finance (DeFi)
Smart contracts are a new financial system that uses blockchain technology. The decentralized finance system lets users borrow and invest money without the involvement of any middleman. Although DeFi is still in its early stages and not very popular among users, it is an innovative way to revolutionize the way we manage our finances.
3. Real-time Data Collection
IoT technology stands out best when it comes to real-time data gathering and visualization. Fintech companies use it to offer additional services and updates to their customers. This way, companies help their customers make critical financial decisions quickly.
Also, smart devices installed across bank branches and companies can monitor the crowd and queue, thus allowing customers to schedule their visits. Inside the company, this data can be utilized to notify customers about their wait time and available counters.
4. Smart Asset Monitoring
Fintech companies use IoT-enabled devices to monitor their equipment. This way, the assets in the company are optimally used to boost productivity and reduce operational expenses.
The data gathered by IoT devices can also be used for capacity management. Also, through the collected data on the maximum footfalls, one can identify a favorable site for their company location.
5. Apple Pay
It is a mobile payment service that uses NFC technology to let users make payments through their smartphones. Presently, Apple Pay is the most popular fintech solution, as millions of people are using it.
To conclude, this fusion of IoT technology and fintech revolutionizes financial services and empowers customers by offering personalized services. Financial inclusion expands and helps everyone to build wealth.
Fintech is like a black canvas where IoT is painting possibilities beyond imagination to make the world smarter and more connected.
I hope you enjoyed reading the article.
