Large banks are investing heavily in IoT technologies and reaping big financial rewards.
Financial institutions have reported an average IoT budget of $117.4 million which is 0.4% of the revenue. Our study reveals that they are planning to spend $153.5 million by 2018. A large amount of their IoT budget (32% in 2015 and 29% by 2020) will account for monitoring financial products and services. Also, this year they plan to allocate 30% of their IoT budget to monitor customers. This allocation is expected to increase to 34% by 2020.
It was observed that for banks, IoT technologies are most popularly used to monitor customers. To understand and engage with customers, 65% of the banking respondents use mobile apps and 16% track wearables. The next common IoT application is monitoring the supply chain with 38% of the respondents using it to keep tabs on a complex web comprising branches, ATMs, partners and so on.
The IoT focus for financial institutions has been on products. The most important business process improvement is tailoring their products and services. From recognizing customers who step into a branch, to customers who favor drive-through banking to pay for products at places like restaurants and gas stations while in their car, have all been possible with IoT technologies. The emphasis is expected to shift to improved selling and providing better insights for sales staff by 2020.
Banks and financial institutions have identified that deciphering what data to capture and how to gather, process and analyze it is the key to success with the IoT. They are also looking to increase the skill of their business analysts, who will help them identify data that will have the greatest impact.