Eight examples of how IoT is improving retail banking

The financial services sector has been slow to embrace the IoT – but look hard enough and you’ll find some retail banking bright lights leading the way, as Doug Drinkwater reports.

It is fair say that most banks haven’t really got into the swing of the IoT trend. While other industries, such as retail and manufacturing, have led the way, banks have largely focused on other digital technologies that may help them fend off competition from so-called ‘challenger’ banks and fintech start-ups.

For organizations in retail banking, faster payments, improved operability (to support the move to open banking) and more responsive mobile services are the main points of focus for innovation. Despite some interest in technologies such as AI and robotic process automation to deliver what financial services industry commentator Chris Skinner refers to “more personal, more contextual and ultimately unique banking experiences”, many have been laissez-faire with their IoT efforts to date.

Yet the IoT offers retail banks an opportunity to gather more information on customers, offer more personalized experiences and improve efficiencies. Here, we look at some novel examples of IoT in retail banking.

Wearables, payments, cars and contracts

1. Banking on wearables

Wearable devices have arguably been the easiest ‘win’ for banks so far, thanks to a growing ecosystem of devices and the relative low cost associated with getting started. Many banks now provide applications for popular wearables like Apple Watch and FitPay, which is already working with the Bank of America. Some banks have even launched their own devices, with Barclays unveiling bPay wearable contactless payment solutions and other wearable bands coming from Caixa Bank, Hellenic Bank and Australia’s WestPac (with PayWear).

2. Pumping up payments

On the face of it, an IoT-powered beer pump sounds like nothing more than a PR stunt, but there is some logic here. In a trial in a London bar late last year, Barclays’ Pay @ Pump self-serve beer pump allowed users to order, pay for and pour their drink in just 60 seconds and avoid long waits at the busiest time of the year.

3. Branching out to connected cars

For car manufacturers, the opportunity to offer services in and around connected cars not only has the potential to improve customer relationships, but also boost revenues. But smarter vehicles represent an opportunity for banks, too: for example, Idea Bank runs a fleet of cars, each customized with an integrated security deposit box and an ATM, which can visit the customer, rather than vice versa. The bank’s data suggests that the average deposit at one of its mobile, car-based ATMs is three times higher than at the branch. Meanwhile, in Canada, credit union Blueshore is exploring the possibility of wealth management apps, displayed on car windscreens, for passengers to review their portfolios while being driven to their destination.

4. Blockchain-based smart contracts

Blockchain’s potential to keep a secure record of authenticated transactions has been much discussed, in financial services and beyond. Some banks are already trialling the technology: Commonwealth Bank of Australia, Wells Fargo and trading firm Brighann Cotton claim to have completed the first global trade transaction between two banks using blockchain, smart contracts and the IoT. The transaction involved a shipment of cotton from Texas to Qingdao in China.

Branches, beacons and banking at home

5. Smarter branches

The retail bank branch may be under threat, but there is a view that smarter branches might offer customers a better experience. In a recent experiment, Clydesdale and Yorkshire Banking Group’s (CYBG) customer innovation lab opened a test bed in London where it tested a number of smart devices to improve the customer experience. For example, facial detection technology was used to judge how users interacted with the space, while web access was offered through interactive touchscreens.

6. Beacons shine a light on personalization

Bluetooth beacons also represent an opportunity for retail banks to reinvigorate underused high street branches. US Bank, WestPac in New Zealand and Citi are all using beacon technology, while it was recently revealed that Chase is testing beacon technologies to “pre-announce” customers that opt into the service before they approach a human bank teller or ATM. At Barclays, beacons have been used to help disabled passengers navigate branches.

7. Banking at home

Capital One in the US now makes it possible for customers to pay their bills via Amazon’s Alexa (the virtual assistant on its Echo smart speaker), but it is certainly not the only retail banking organisation to do this, nor will it be the last. Take UK challenger bank Starling, for example, which has been experimenting with Google Home, integrating its API with the smart speaker to enable users to carry out balance queries and payments through voice commands.

8. Chatbots offer better customer experience

Chatbots have seen some adoption in retail banking, and no surprise – this is an easy and relatively affordable way of automating customer service enquiries. Some start-ups have hopped on this opportunity too, such as Cleo which connects to your bank and utilises Facebook’s chatbot platform. There are other good examples, from Royal Bank of Scotland’s RBS Assist chatbot for banking FAQs to DBS using Kasisto’s Kai AI platform to allow customers to conduct transactions like transfers and pay bills. Swedbank, meanwhile, launched Nuance’s ‘NINA’ on its website and mobile application to help answer customer inquiries more quickly by sourcing the relevant information.