Page 50 - Banking Finance September 2021

ARTICLE

IOT s also allow bank customers to change their financial Y IOT devices are devoid of inherent protection and
habits and tackle the problem of overspending by sending wireless net works also vulnerable to many risks.
alerts to the connected device when the set limit in credit Y Bugs and viruses can cause wide range of damages to
and debit cards are reached. Along with payment control,
the entire system
banks can act as personal advisors, information providers also.
Y Rectification will take much time and effort
IOT s clubbed with AI [Artificial Intelligence] can be
developed to detect KYC details, to do due diligence of There can be more roles to a bank than from custodian of
customers, detect fake notes, early identification of frauds public money to financial advisor, helping in budgeting,
by studying the transactions, reports etc of the account. portfolio management, insurance manager including health
etc. Data collected through IoT can also help the bank make
In preventing frauds, for example, the misuse of debit or better risk management decisions. Biometric data collected
credit cards can be prevented by having IoT enabled by sensors assist in the authentication process in all digital
security systems with more personal/biometric banking transactions with a secure access. Eg. Facial/eye
authorization methods. Also alerts can be sent to the recognition to operate ATM or digital banking apps.
customer regarding the unauthorized usage of the cards,
for eg, at ATMs.
Banks need to make use of latest technology and initiatives
to secure the data available with them.
Thus IOT in banking helps for better customer service,
designing products based on customer interests, ease in There can be issues in Interaction of multiple devices/
survey and operations and also to reduce costs.
interfaces, Power consumptions challenge as many IOTs run
on batteries, Data overload issues [control of data to be sent
Customers also prefers to use IoT in banking services as it
saves time and effort and easy to use as well. Awareness, to cloud or internet should be there] etc. Data security is
privacy and safety also contributes to the adoption of IOT also one of the major concern in every digital transformation
in banking. initiatives of banks.

Data is the new oil in the digi-world. BOT devices will be So, we need to switch from 'Banking' to 'Banking of Things'
useful for collecting data from customers and store in devices safely.
or cloud. Banks can use this data [data mining] at any point
of time, and this will be having a far reaching effect in Future of Banking of Things
product designing, personalized and customized customer
service, credit decisions, and getting early warning signals The Bill Gate's quote, "Banking is necessary, banks are not"
is becoming more meaningful with the introduction of new
about loans slipping to NPA category, thus enabling banks
to take remedial actions. technologies like IOT, Artificial Intelligence etc in the banking
system.
The data collected also will be helpful for data integration
across the banks, like that of CIBIL/Experian reports. This As Banking is continuously evolving with the IOT s and other
can detect/ prevent many fraudulent activities in loans, technologies, those institutions which do not stay ahead in
frauds in digital banking, and help to take better decisions these latest technologies, will be left behind.
in credit and other matters.
BoT has the potential of revolutionizing banking in many
Risks involved in 'Banking of Things' ways. But as the most important concern with technological

Various risks are involved in 'Banking of Things', most advancement is security issues, banks has to develop
important one is the Security Risks which include, adequate measures to prevent security breach.
Y Hackers stealing the data of customers
References :
Y Too much dependency in technology may lead to higher
risks. Various sources

50 | 2021 | SEPTEMBER | BANKING FINANCE