Fintech has disrupted the traditional financial services industry in many ways. Chief among them, however, is the convenience that fintech startups offer by leveraging new technologies. That’s why there is often a lot of overlap between fintech products and other tech innovations, like virtual reality and augmented reality.
The Internet of Things, or IoT, has also made it possible for financial services companies to better serve consumers. IoT devices are, as the name implies, able to connect to the internet so that users can operate them remotely. An example of an IoT device would be a “smart thermostat” that users can adjust via their phone or tablet, even when they’re miles away.
These types of products have many potential applications in the fintech industry. The following are just a few examples of how banks and similar organizations are taking advantage of this new technology.
In the near future, the average bank customer may be able to withdraw money from an ATM, even if they don’t have their debit card on hand.
Citigroup has already tested an ATM that allows users to schedule withdrawals via their mobile devices. The customer then arrives at the ATM, which scans a confirmation code before dispensing cash.
As this type of ATM becomes more ubiquitous, it might even be possible to make a withdrawal without a confirmation code. Citigroup has also experimented with biometric-scanning ATMs. A simple iris scan can confirm a person’s identity, allowing them to withdraw funds if they forget to bring their phone with them.
This innovation may help customers who’ve lost their debit cards, or simply don’t have them on hand when they need to make a withdrawal. On top of that, because customers don’t have to insert a card and wait for it to be scanned, making withdrawals won’t take as much time as it currently does.
Reducing Insurance Rates
Insurtech is a branch of fintech related to efficient solutions for customers purchasing and managing insurance policies.
Thanks to IoT, insurtech companies may be able to help users save a lot of money. For example, some insurance providers are allowing customers to install devices in their cars that monitor driving habits. If a customer drives safely, obeying speed limits and traffic laws, the device relays this information to the insurance provider. Customers who consistently practice safe driving habits are rewarded with reductions in their insurance costs.
This principle may also be applied to homeowner’s insurance. As more people begin to install IoT devices in their homes, said devices can track how often they lock their doors when they leave, turn off kitchen appliances when they’re no longer in use, etc. Insurance providers will collect the information from these devices and reduce the rates of customers who take steps to keep their homes safe.
Even health insurance companies are looking into ways they can better serve their customer via IoT. If fitness trackers and related devices collect data indicating that a customer makes efforts to stay healthy, providers may offer them reduced rates.
Banks Helping Homeowners Save Money
While the innovations described above already exist in some form, similar innovations are still in the development stage. That said, they’re very likely to offer significant benefits to bank customers in the near future.
For example, thanks to IoT-capable devices, it will soon be possible for homeowners to install smart meters that monitor their energy usage, relaying the data to their banks. The banks, in turn, will alert customers if their energy usage threatens to deplete their account balances substantially. Some experts even predict that banks will be able to offer suggestions to customers to help them use their energy and related utilities more efficiently.
This concept doesn’t merely apply to home energy use. Retailers like Amazon are experimenting with brick-and-mortar stores that allow customers to purchase items without interacting with a cashier. They simply select the products they want and walk out of the store. Sensors detect which products they’ve walked out with, and the funds are automatically removed from their accounts. Banks could link to these sensors and let customers know if the amount of money they’ve spent at these stores exceeds their budget.
Taking Advantage of All Opportunities
Fintech companies that succeed are typically those that leverage the right technology for the right purposes. That’s why startups should investigate how they could potentially use the Internet of Things to improve the quality of their services. IoT devices are becoming more and more ubiquitous. Using them to offer convenient financial services is a smart strategy for any entrepreneur in the fintech industry.