If the rapid adoption of the Internet is any indication to go by, the Internet of Things (IoT) will indeed be the next big thing for customers and businesses alike. The interconnectedness between everything is a concept that captured the imagination of millions, and opened up possibilities like never before. Today as most industries flirt with the idea of IoT, and some actually apply it quite successfully, the opportunity is ripe for the banking industry as well to play in the IoT space. Customers are looking for always-on convenience and this is no surprise. IoT, applied right can actually transform customer experiences and make them more personalized, contextual and relevant. But how does a bank begin to construct its IoT strategy? How can it actually craft IoT-based products that benefit customers? Interestingly, there is a formula for it! Finacle’s segmentation model is a strategic approach for banks to identify use cases that will deliver customer value, all the while keeping in mind the bank’s unique context.

Introducing the Use Case Segmentation Model

To identify use cases that will benefit customers, each bank should take into consideration two factors. Figure 1 recommends a careful evaluation of these two critical dimensions – the information value of IoT, and the openness of underlying architecture – to zero-in on best-fit use cases in the context of customer requirements and the banks’ own infrastructure constraints.

Segmentation Model

Axis 1 – IoT Information Value Chain

The applicability of IoT extends beyond measurement of product performance and operating conditions through placement of sensors. IoT can potentially turn any object into a source of information and also facilitate interaction. This has the potential to create a new information value chain in banking by enabling use of sensor data to offer frictionless experience, contextualized services, and automated operations. The entire IoT information value chain can be simplified into 3 stages: access, insights, and action.

Axis 2 – The Openness of the IoT Ecosystem

Adoption of IoT is still in its nascent stages. Yet, to realize the expected impact and potential market for IoT, it is imperative that the provider ecosystem of infrastructure, hardware, and software work together to develop solutions. Adherence to integration and interoperability standards and use of open API architecture are crucial for meaningful integration with the ecosystem. The openness of the IoT ecosystem can be viewed through the below 3 lenses:

The Segmentation Model and Use Cases Mapping

Using the above dimensions of information value and ecosystem openness, we can construct a segmentation model that would help banks identify best-fit use cases. The seven segments listed below can help banks align their IoT strategies and deployments more closely with customer needs in the context of existing capability.

As explained above, IoT use cases can be classified across different segments based on business objectives and capabilities. Figure 2 is a mapping of IoT use cases to the segmentation model we introduced. It is not designed to be a comprehensive list of IoT use cases, rather a sample reference to possible use case segments. No one-size-fits-all use case exists and the mapping provides a baseline model that can help banks explore IoT use cases that are relevant in their specific context.

Segmentation Model


Given IoT’s potential to impact, transform, and even disrupt multiple lines of business in banking, banks need to approach innovations in this space in a well thought out and structured manner.

Banks are recommended to:

IoT is a key pillar for tomorrow’s digital bank and must be part of every bank’s digital strategy.

As it goes with most nascent technologies, IoT in banking can be a game changer for the early adopters and fast followers. In an era where consumer loyalties are fickle, and new players, armed with this knowledge, are vying for customers’ attention with promises of convenience, it is essential for banks to transform their digital strategy to stay ahead of the curve. IoT is that differentiator, and a cohesive execution approach that is driven by an end-state vision in mind can lead to breakthrough innovations and define future technology leaders. The Finacle segmentation model is a roadmap, and even a guide for banks to begin exploring their threshold for IoT based innovations. While there may be concerns still on security and the risks involved, but the greater risk perhaps would be to do nothing at all.

Would you like to discuss your bank’s strategy for IoT with the experts at Finacle?

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Ethan Wang, Product Manager, Infosys Finacle

Pramod Krishna Kamath, Lead Product Manager, Infosys Finacle