Banking On the Internet of Things

By Scott Hess

Today’s consumers are constantly on the move and expect their technology to keep up with the pace of their lives. Smartphones, smartwatches, smart homes, connected cars, and even Internet-enabled appliances empower a user to be a voice command or a click away from communicating with family and friends, getting directions, scheduling services—and now, conducting everyday banking activities. With the myriad of connected devices available, the Internet of things (also known as the IoT) has the potential to bring banking to every corner of people’s lives.

At its best, the Internet of things offers an opportunity to deliver relevant, timely information that helps people keep pace with the speed of life today. On the other hand, there is the risk that people could be overwhelmed with so much content that it simply amounts to noise. The challenge for financial institutions is to determine how consumers might want to consume financial services through these devices and what content is relevant for each device.

The key is making the information relevant and timely, no matter the device or channel.

As with any new banking offering, consumer choice and preference should be at the center of design. Financial institutions interested in expanding services delivered to the Internet of things should use the same lens they do when evaluating which capabilities they would deliver on a smartphone versus a desktop: what types of capabilities are practical for this device, and how will consumers want to access them?

Some devices lend themselves better to financial services than others.

The physical attributes of the device can determine how the consumer will use it. For example, a smartphone or smartwatch is ideal for receiving proactive alerts regarding account activity, while a screen on the refrigerator door might be better used for connecting with the financial institution to check account balances or pay a bill.

Offering consumers a choice to customize their interactions is another way to ensure that interactions are appealing rather than annoying. Some customers may want to receive an alert on every transaction that impacts their account, whereas others may want to only be notified only when an account is overdrawn or a bill is due.

Smart devices in the home offer a unique opportunity for interaction with customers.

A recent Alexa challenge featured financial services companies testing out how consumers could utilize the digital personal assistant Alexa via an Amazon Echo to conduct banking activities. The challenge demonstrated that consumers can utilize Alexa to check their account balances, pay outstanding bills, transfer funds or even ask for the recent mortgage rates as they are making dinner at home or getting ready for work. In the future, with the addition of biometric authentication by voice or other security features, users may be able to leverage Alexa to complete additional banking tasks, such as adding contacts to their person-to-person payment list.

Financial institutions that embrace the positive impact that the Internet of things can have on financial services will find themselves at a competitive advantage and well positioned to maintain and expand their customer base.

Millennials in particular are a desirable target for financial institutions—they are also increasingly mobile-only consumers who have come to expect these anywhere, anytime capabilities. Enabling people to handle their banking activity via the devices they already use daily will demonstrate the financial institution’s ability to deliver valuable, timely insight and assistance to a broad spectrum of customers.

Some devices may have no applicability to financial services—say, the connected coffee maker or the smart home lock—but others do lend themselves well to delivering financial information that consumers want and need, whether at home or on the go. By giving customers additional touchpoints to connect with their financial institution, the Internet of things has the potential to change how they live, work and bank.

Scott Hess is vice president of user experience, consulting and innovation at Fiserv. Email: scott.hess@fiserv.com.

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