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Will IoT impact also on banks?

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Discussions around the Internet of Things (IoT) are widespread in the technology industry right now, with many analysts suggesting that we are entering the second digital revolution, writes Christelle Toureille, vice-president: marketing for Middle East and Africa at Gemalto.
Gartner is even predicting that there will be 25-billion smartphones, smartwatches, wearables, connected cars and other devices by 2020. So it is more than likely that IoT will make a greater impact on society than earlier digital revolutions.
There is a dizzying world of possibilities in a future where we are surrounded by intuitive connected devices, helping us to save time, work smarter, drive safer, keep healthy and live a more active lifestyle. In particular, there are a myriad of opportunities for businesses to benefit from the IoT, Gartner further forecasting $2-trillion of economic benefit globally.
However, while many industries like insurance, commercial real estate, may have already grasped and embraced its benefits, the financial services industry is just beginning to see how IoT can push the industry to the next level.
Modern consumers expect convenience and demand an always-on personalised service – as evidenced by the mass adoption of online banking, mobile banking apps and contactless payment. By enabling the collection and exchange of information from objects, the IoT has the potential to open up numerous opportunities for banks to provide their customers a truly personalized experience with targeted advice, offers and insight.
How does the flow of IoT-generated information create value for the banks and their customers?
An increasing number of digital devices like wearables, cars, appliances, computing devices, will be communicating 24×7 with each other as well as with external entities. The availability of this unprecedented level of data and data-driven customer insight and the ability to correlate information and act on it, in a way not possible before, can bring new benefits to institution as well as consumers in the area of personal banking, business banking and industrial banking.
Potential scenarios include using IoT to improve their customer experience, create customer rewards, generate customer cross sell opportunities and generate engaging digital experiences but also devise new ways to improve risk management, reduce cost and improve operational efficiency. Real time data can make a difference to the risk a bank is taking when they provide a financial product. The ability to monitor residential and commercial premises, in addition to collecting social media, spending, and other credit behaviour data, allow banks to make better commercial decisions.
For example, by accessing the data captured by different smart devices, banks can provide customers with a holistic view of their personal finances, updated in real time, and anticipate their needs so to offer products and solutions enabling customers to make the right financial decisions. Same process can be applied to assist business customers better commercial results thanks to the bank ability to access data from across their business customers’ value chain, from suppliers to distributors to retailers.
Conversely, physical performance, and behavioural data generated from biometric and positional sensors for individuals, and shipping and manufacturing control sensors for businesses could help banks improve underwriting processes and reach new markets.
Banks might benefit from various sensors that monitor the activity and condition of retail industrial and agricultural businesses, such as connected field devices in manufacturing or agricultural sensors that monitor livestock.
Realtime data feeds will allow farmers and their banks to continuously and accurately assess the health of the farm’s crops and livestock; and more accurately gauge expected yields, property and overall business value.
Finally, branch-based examples of IoT applications could include video tellers and kiosks in bank branches equipped with sensing technology that can recognise customers the moment they walk in and take actions accordingly.

Securing IoT for banking
While today’s demanding customers are the driving force behind the latest developments in always-on access and new payment technologies, IoT with its big amount of data will raise issues around privacy, identity verification and authentication and security, particularly around data management and data security.
Many users are already using technologies such as Apple Pay via an Apple Watch and new entrants to the market such as Google and Samsung are embedding payment functionalities in connected cards and fitness wearables. So far adoption has been patchy, but the foundations have already been put in place for this to grow. Tokenisation is proving as increasing popular way to bring additional security to digital payment process.
Additionally, banks and retailers are already developing new ways of using real time geo-location technologies to identify where and when they might be able to offer incentives to their customers. Each development now requires specific new types of security and user authentication to ensure customers are happy to adopt and use them.
New types of biometric data Рlike fingerprints, iris scans, voice-recognition software, facial recognition to name but a few Рhave started getting used  to help with authentication. Trust is essential for IoT to reach its full potential and this will only happen when users understand that they can fully trust all of the connected devices tied to their bank account. Making the entire connected banking experience safe and secure is paramount to dispel any potential user anxiety about their personal privacy and private banking data being breached.
The bottom line is that any personal information – such as your location history or your financial data – being moved around a network is potentially open to attack from cybercriminals. Whether that data is ‘resting’ on a device or moving around nodes in an IoT ecosystem (such as, for example, between your bank and your connected car) it needs to be fully secured.
Encrypting all sensitive data in transit around these new IoT networks, together with securely managing encryption keys and having a strong authentication process in place becomes absolutely vital.

A secure future for banking in the IoT
So how might banks deal with their IoT security in the future? In order to grow and retain trust amongst their customer base, it is essential that any IoT-driven banking ecosystem is secured at all levels, from the device and its connections in the network through to any financial data held by banks in the cloud.
There is absolutely no doubt that the forthcoming connected world of the IoT creates multiple new business opportunities for banks with the potential to be the key differentiating factor in the run between innovators and laggards, providing they are able to step up to the security challenge and implement the best practices to understand and protect their customers from the many new data security risks ahead as well as implementing improvements in overall network infrastructure, big data, analytics, cloud infrastructure and accessibility.