IoT impact on Financial Technology Sector – Will customer experience win over “brand value”?

Projections

Gartner, Inc. forecasts that 6.4 billion connected things will be in use worldwide in 2016, up 30 percent from 2015, and will reach 20.8 billion by 2020. In 2016, 5.5 million new things will get connected every day.

Gartner estimates that the Internet of Things (IoT) will support total services spending of $235 billion in 2016, up 22 percent from 2015. Services are dominated by the professional category (in which businesses contract with external providers in order to design, install and operate IoT systems), however connectivity services (through communications service providers) and consumer services will grow at a faster pace.

Implications

IoT services will become the real drivers and value add. Service providers and vendors which will provide integration to third party applications will become the critical part in the value chain. Those service providers that provide the best value in terms of customer experience will win market share.

Customer experience vs brand value?

The financial sector is heavily dependent on exchange of “data” on a large scale for normal operations. IoT by it’s nature itself will increase it many times more. It is therefore imperative that like manufacturing, retail, energy, transportation, etc, financial sector will be disrupted in a major way by this new “technology revolution”.

Retail banking experience is the obvious choice. How can retail banks make the ATM experience more engaging? Can the smartwatch and smart- wallets be connected to provide an enhanced experience? Walking into an ATM or bank can be a different customized experience for each customer based on his needs (Like many retail stores). One need not slot in the debit card in the ATM, proximity sensors or authenticated messages from my smart watch or wallet can authenticate and dispense the required services.

Data mined from various IoT sources can provide customized experience to the end user. Walking into a car dealership, the connected banks can send provide customized interest rate and contextual offerings on models that I searched online.   

The Mortgage industry can adopt the same customer experience. Real estate agents and builders are already providing VR (Virtual Reality) experiences on the property. Mortgage industry can exploit these date to provide customized loans. With e-documents and e-signatures also being adopted, the experience becomes smoother. The connectivity could move across the whole lifecycle from real estate agents, mortgage providers, movers and interior designers to local authorities and utilities. A mortgage provider providing such a connected experience will hands down against an established brand.

The same connected experience (“Smart Homes”) can be extended to home insurance. Homes with updated fire systems and burglar alarms connected to emergency systems are already being provided with customized home and fire insurances.

Connected cars (cars with telemetry) are already allowing car insurance providers to reward or punish drivers based on their driving habits.

IoT by it’s nature and underlying value makes static objects more engaging by interaction of data. Therefore it is imperative that “customer experience” will overtake brand values and pricing in customer decisions.