The Internet of Things (IoT) is a rapidly expanding network of linked devices that use embedded sensors to collect and exchange data in real-time. In recent times, IoT has provided the fintech industry with a significant boost, particularly in terms of security and payment processing.
Devices embedded with sensors and other IoT technology mechanisms are used as mobile point-of-sale systems (e.g. contactless cards). IoT also helps finance teams collect and share data easily and use it for making better decisions on investments, insurance amounts, customer risks, etc. IoT supports and elevates customer experiences. The data collected by IoT devices also helps detect fraud and cyber threats.
IoT helps finance companies save time and money by gathering and transferring data efficiently. It helps automate core processes through efficient collection and processing of information. IoT also helps financial institutions improve their customer experience to a large extent.
IoT helps collect data from multiple sources to help improve decision-making. It also supports machine-to-machine communication, thereby automating a variety of tasks.
Let’s look into the benefits of IoT in finance in detail.
Many business decisions including investment decisions are based on in-depth data analytics, business pattern analysis, and market research. Businesses can use IoT devices to collect and analyze clients’ data to gain valuable insights into their needs. Therefore, along with technologies like AI, ML, and RPA, IoT helps the finance department make informed business decisions.
Finance and accounting (F&A) processes involve the collaboration of different departments for the efficient collection of information. Instead of manually collaborating, companies can automate the whole process. The information can be collected and updated to the cloud in real-time using IoT devices. This helps save time and effort that would otherwise have been spent in collating data from multiple teams.
IoT helps to track employee and business performance in real-time. IoT devices like wearables help to track productive hours as well as alert you if anything is amiss. It also provides data to check whether your devices such as ATMs, customer kiosks, etc. are working efficiently.
In this section, we discuss areas in finance processes that can be streamlined or automated with IoT devices and technology.
IoT payments refer to payments made by a device, without human intervention, based on a set of rules.
IoT payments platforms allow customers to pay their invoices through a variety of devices not limited to contactless cards, smartphones, and smartwatches. Enabling IoT payments in your accounts receivable process can help elevate customer experiences and make the payment process smoother.
IoT devices help provide prompt customer assistance to customers. For example, smartphones (an IoT device) can notify account managers or customer relationship managers when a customer walks into your office. This helps you address customers’ concerns quickly and gain their trust and loyalty.
IoT devices can also help customers navigate your office premises by providing them the directions to the right executive. (e.g. Citibank allows customers to open doors at ATMs with their mobile phones). IoT technology also supports identity management (e.g. Nymi smart wristband utilizes an individual’s heart rate for biometric authentication) and electronic ticketing for query resolution.
Overview of IoT-chatbot system (Source)
Gather real-time data of clients’ assets using IoT to improve your credit-risk management. It also helps send alerts and notifications to your salespersons and finance teams when they deal with high-risk customers. This will help keep bad debt at a minimum and improve ROI.
Banks and financial institutions are prime targets of hackers. IoT devices coupled with machine learning (ML) applications help detect anomalies by collecting data from various machines and web applications including payment portals, servers, teller machines, etc. This helps quickly identify instances of fraud and money laundering and take necessary corrective actions.
Auditing is crucial to identify any irregularities in the finance processes or to uncover fraud. Traditional auditing methods involve a ton of paperwork.
With the help of IoT, all the transactions can be tracked in real-time and sent to the accounting department. Using IoT, the accountants can easily track the audit trails of all the employees or business units, whether they make a purchase or receive money in real-time. This streamlines the accounting process and lowers the efforts that are otherwise needed for the auditing process. This also ensures that the accounting procedure is efficient and error-free.
In this section, we’ll look at some tips that can help you implement IoT successfully in various finance functions.
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