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Banking on Things

July 6, 2017 - Pramod Krishna Kamath Lead Product Manager, Infosys Finacle


IoT is the interconnection of uniquely identifiable embedded computing devices within the existing Internet infrastructure. IoT is expected to offer advanced connectivity of devices, systems, and services that goes beyond machine-to-machine (M2M) communications and covers a variety of protocols, domains, and applications. In the financial services space, the interconnection of these embedded devices is expected to usher in automation in several legacy processes.
As IoT led digitization begins to take root, new business models and products are emerging. This is opening up new frontiers of innovation that can potentially reshape customer experiences, and throw up clear winners or losers in the financial services sector.
In my blog published earlier this year – The Beacon Beckons: Banks and the Internet of Things, I had discussed how financial institutions can tap into IoT to automate, integrate and build intelligence into each of their processes to create immense value at every stage. In this blog, I have listed use cases that may be adopted in banking in a time span ranging from near-term to long-term.

  1. Automated Payment through Things
    When moving on to payments, integration of IoT and payment functionality will lead to greater number of payment endpoints.Beyond the clichéd milk ordering refrigerator, we are already starting to see the beginning of the use of connected devices and wearables, for instance, payment through Apple Watch or the fitness band Jawbone. When machines are able to perform transactions with machines in real-time on a marginal cost basis, the traditional concept of payments will become obsolete in many use cases as transactions become automated and integrated into other services – virtually any “thing” could include an automated payment experience. Though the IoT raises certain security concerns, personal biometrics and digital identities could potentially increase security in payments, if done right. Eventually the opportunity extends not only to the end user, for whom automated payments will lead to greater convenience and smarter transactions, but to banks, payments companies, retailers, and technology manufacturers.
  2. Risk Mitigation in Trade Finance
    Tracking of high value goods delivery using RFID is already reality in the trade finance space. IoT will accelerate this to include fine-grained tracking of the asset, for instance, monitoring temperature of the container for shipments involving temperature sensitive goods such as pharmaceuticals and medicinal molecules. Alerts could be triggered if there is a chance of spoilage during the shipment process – say one of the parameters being monitored goes out of bounds. These implementations can result in risk mitigation and more informed decision making at banks for scenarios involving trade finance.
  3. Wallet of Things
    As an extension of automated payment through things, when more devices become digital and “smart”, it will be possible to have wallets associated with each device. For instance, an autonomous car could potentially pay for parking, gas, rental or even maintenance service using its embedded wallet. Each and every home appliance or consumer equipment could eventually host an embedded, pre-funded wallet that is capable of managing its running expenses on its own.From an owner’s perspective, a digital identity based “wallet of things” might provide an integrated view of costs and expenses associated with owned or leased devices.IoT has the potential to reimagine banking as we know it completely. And it is more important than ever for banks to look at providing services and products on the channels that their customers prefer. In 2017 and beyond we will see progressive banks take it a step further and provide “banking on things” – which can be anything from a smart car, to smart walls.

Click here to read my article on ‘IoT in Banking – Enabling Banks’ Digital Future’ for the complete list of 12 use cases that may be adopted in banking in a time span ranging from near-term to long-term.

Pramod Krishna Kamath

Lead Product Manager, Infosys Finacle

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