The Internet of Things (IoT) is an integrated platform where millions of devices connect, communicate and share information each other. This connected system can help enterprises solve problems and improve efficiency. Insurance and banking industries are not exception of this. According to global research firm Gartner’s forecast, there will be around 25 billion active IoT devices by 2020, in which insurance and banking organizations could be one of the highest utilizers of this future-generation technology.
IoT has already changed the way of some leading banks by connecting dispersed things in the infrastructure, and that influenced the resource to provide improved service towards customers. Since banking and insurance industries deal with huge data transfer, collection and analysis of a huge set of data, IoT can have a significant impact on them, in terms of enhanced workforce productivity and improved customer service.
IoT benefits for banking industry
Banks need to continually monitor all the transactions to avoid any fraudulent activities. IoT can enable banks to get the information instantly and make it consumable by other systems and networks in the infrastructure.
Another unique benefit of IoT for banks is a convenient facility to offer pre-understood home improvement loans. Banks using IoT technology can bring their customers (borrowers) under the agreement to install a sensor in their new house, which can help bank offer loan when there is any damage and repair required. The sensors in the wall avoid any big possible damage. This system can benefit customers get loan at discounted rate, without much paperwork. Banks can allow customers to come out of the agreement at any point of time.
IoT benefits for insurance industry
IoT can help insurance companies through telematics data for vehicle insurance, health insurance and so on. With this, insurers can easily capture the customer data, and better the existing business practices. This further helps in reducing costs and increasing the revenue opportunity by evaluating client’s risk better.
If we take automobile insurance as an example, insurers can offer their customers UBI (usage based insurance) that tracks the driving habits of the customers. The way of tracking can be made better adding sensor to their car with their permission. Upon data analysis, insurance companies can reward (with discounts or other facilities) them for healthy and safe behaviour. This can help people choose better insurers who create new value for them.