Page 41 - Banking Finance September 2022

ARTICLE

Future Banking using Internet of Things bank can then issue the loan immediately, and monitor
the collateral status in real-time without the need to
(IoT):
take physical custody of the asset.
Account Management on Things
As more devices acquire digital interfaces, the digital Risk Mitigation in Trade Finance
banking will acquire new meaning and customers will Internet of Things (IoT) will accelerate the tracking of
be able to access their bank accounts from practically the asset in trade finance, for instance, monitoring
any "thing" that has a digital interface.Biometrics, voice temperature of the container for shipments involving
or touchcan simplify account access in these new temperature sensitive goods such as pharmaceuticals
"anywhere" digital channels. This will eliminate barriers and medicinal molecules. Alerts could be triggered if
associated with in-person, paper-based transactions and there is a chance of spoilage during the shipment
enable clients to conduct business even when they process. These implementations can result in risk
cannot be physically present. mitigation and more informed decision making at banks
for scenarios involving trade finance.
Leasing Finance Automation
Real-time monitoring of wear and tear of assets could Wallet of Things
provide important data points for pricing of leased Each and every home appliance or consumer equipment
assets. Terms of leasing could be simplified and could eventually host an embedded, pre-funded wallet
automated as the bank wields greater control over the that is capable of managing its running expenses on its
leased asset. For instance, in case of contract own. For example, an autonomous car could potentially
termination or default, the leased asset could be locked pay for parking, gas, rental or even maintenance
or disabled remotely by the bank. service using its embedded wallet.

Smart Collaterals Smooth Customer On boarding and KYC
Internet of Things (IoT) technology can enable banks to People use their Facebook / Gmail id to login to different
have better control over a customer's mortgaged assets, Internet sites, this might be extended in the future to
such as machinery, and also monitor their health. In such have a block chain-based unique digital signature which
a scenario, a retail or SME customer could possibly raise is used for most transactions. This universal block chain-
short-term small finance by offering manufacturing based digital identity may also help with KYC processes
machinery as collateral. The request for financing as in the future. Additionally, knowing about the financial
well as the transfer of ownership could be automatic inclinations of the customer through the digital
and completely digital. Enabled by digital identity for signature, banks can offer relevant products at the time
people as well as things, the transfer of ownership of of on boarding - for e.g. credit card designed with
an asset can be achieved in a matter of seconds. The rewards from a particular petrol station or particular
apparel brand that the customer uses frequently.

Customized Auto Insurance
Here digitization will throw up newer metrics that can
be used to provide tailor-made insurance to customers
based on driving habits, engine health and general wear
and tear of the vehicle. Insurance Companies will offer
devices that plug into the on-board diagnostic port of
cars and send driving behaviour data back to them.
Based on driver habits, the owner is eligible for
discounts. Apart from this, by overlaying GPS data on
the actual speed of the vehicle in speed sensitive zones
e.g. schools or residential areas, insurance companies

BANKING FINANCE | SEPTEMBER | 2022 | 41