The internet of things (IoT) has brought the financial sector to the forefront of digital transformation. Even the CEOs of both JP Morgan and Goldman Sachs have described their organizations as tech companies rather than financial institutions. The main innovation of IoT is that it allows for real-time data flow and analysis. The key for financial institutions will be to marry the usage of data from IoT collectors with transaction data they already have in order to develop new models for lending and risk assessment. For example, a financial institution with access to real-time data from a factory machine could better determine a company’s repayment capacity. IoT also offers financial institutions the chance to better interact with customers and provide them with personalized services and offers. For instance, it could turn a simple trip to the ATM into a chance for a financial institution to offer customers loans and savings products based on things they’ve recently expressed interest in.
IoT represents a significant opportunity for financial institutions to figure out how tangible data can be used in service of better decision-making and better customer service. To do this however, they must invest resources in the expertise, platforms and data integration technologies that will allow them to derive full value from all available data. The data is already there; it is time for financial institutions to grasp its full utility.