The term Internet of Things (IoT) has been used for some time now, referring to the connected nature of our society thanks to smart devices. It’s the communication between machines, sharing information to supposedly make lives easier.  Analysts predict that IoT will add economic value of between $4tr and $11tr by the middle of the next decade. A figure which when put into the context of over 6.1 billion smartphones users by 2020, doesn’t seem to be too outlandish.

These devices, like the smartphone and an internet-connected thermostat, share information with each other. In this instance, the smartphone informs the thermostat that a particular individual is a certain distance from home, informing the thermostat to switch on before the person gets home. This is a simplistic way to describe the connected nature of the Internet of Things but it has many components and features which is set to improve an individual’s quality of life.

Many industries are looking at ways to make best use of innate connectivity between smart devices, and some interesting concepts are in the pipeline. One area, however, which is yet to have a concrete plan of action for the Internet of Things is financial services.

Deloitte suggests that the time is now for banks to get ready for the avalanche of data that will befall them in the near future, thanks to the Internet of Things. This is particularly true when one considers the potential revenue in this market.

It’s all well and good having the data, the hard part is actually making something useful out of it. Gaining actionable insight from the data is imperative to truly affect the customer experience. By analysing this data, industries can determine exactly where and who to target with sales campaigns and which customers to give certain offers to.

The opportunities that lie in wait for banks are tangible and extremely useful for the consumer, be it corporate investment or the high street retail bank.

Consider a bargain hunter, going out to the high street to look for the best deals during an end of year sales campaign. With the help of a location-based tracker in the mobile banking app, the bank can send customers alerts based on the best deals available at a nearby store. 

This opens the door to banks partnering with retailers and restaurants to offer the best deals. Obviously these developments require incentives to engage with customers, this is where banks could be creative in their product bundling and offer notifications.

Another use case, which could take off is the advancements in the offering of goods insurance, particularly when financing cars. A bank could incentivise cheaper insurance rates with the installation of tracking devices within the vehicle, making it less risky for the bank to offer a loan, and easier for the individual to secure the loan at a cheaper rate.

Using data collected via connected devices, which is colossal in size and value, will give banks endless opportunities to cross sell to the customer and provide irresistible offers. Getting to and making best use of that data is usually the hardest part but through the implementation of analytics and the pooling of customer data from all disparate silos will ensure banks take full advantage of one of their strongest commodities; customer data.

The convergence of banking, digital and telecommunications, which is already taking place in postmodern societies, will boost the adoption and subsequent use of connected devices. It’s the task of those in charge of the technological developments within the bank to ensure that they stay ahead of the curve and don’t play catch-up to those who have already started the “things” journey.