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The Bank of Things (BoT) Has Arrived: But What Does It Mean for Banks?

By Amanda Greenwood, Tax Cloud and Myriad Associates   

Imagine being interviewed by a bank manager before you could open a bank account. Or imagine having to make a special trip into the bank just to withdraw money or having to write out a cheque every time you wanted to pay for something. 

That’s how it used to be. 

It wasn’t until the 1960s with the introduction of the ATM that technology started to change the banking sector. 

Since then, we’ve seen the introduction of SWIFT payments which allowed banks to send and receive secure financial transactions from around the world. We’ve seen electronic payments overtaking cash payments, and now we’re starting to see the emergence of the Internet of Things (IoT) in banking: A concept coined as the BoT (Bank of Things).   

From smart homes and cities to connected healthcare and cars, the IoT is present in all our lives. But how is the IoT used in the banking sector and how is the BoT benefiting banks up and down the country?

What is the Bank of Things (BoT)? 

As we’ve established, the IoT is everywhere. In fact, by 2025, it’s estimated that there’ll be around 64 billion IoT devices worldwide. 

From smart home security systems to wearable health and fitness trackers, as consumers we’re getting more and more opportunities to connect our devices, applications and networks together, to make our lives easier. 

The Internet of Things is a flourishing field for innovations, and it’s primarily designed to make our life easier.” – FinExtra 

And because of this, we’ve come to expect the same level of connected ease in all areas of our lives, including banking. 

But luckily for banks, integrating IoT into their banking services and products, not only makes lives easier for their customers, but it also helps them as businesses become smarter, more efficient, more cost-effective and more accurate.

But how exactly does IoT work in banking

How does the BoT work?  

The concept of the “Bank of Things” — automatic payments that various devices can make without human intervention.”FinExtra

With 4 in 5 Brits now using online banking, it’s expected that, with the rise of the BoT, by the end of 2021 over 38% will have a digital-only bank. And about three billion people will come into the financial services space between the years 2010 and 2030 and 95% of those will never visit a bank branch.

But how does it work? 

IoT in banking uses the internet and machine-to-machine connectivity to collect and share data from customer devices such as smartphones, tablets, laptops and wearables. 

Because the banking industry relies heavily on gathering and analysing data, the BoT opens up multiple opportunities and a variety of Omni channels for financial institutions to utilise.

It enables them to collect and share data with customers in real-time. It allows them to gather and analyse real-time information so they can predict fluctuations in demand, meet customer needs and solve problems proactively. And, it gives them the opportunity to provide their customers with new payment methods such as contactless payments, smart cards, wearable payments and biometrical tokens.

For example, 60% of financial organizations are planning to make wearables a commonplace way of making financial transactions. In fact, Barclays has already launched a wearable payment system that allows customers to send and receive payments, check their balance and review their credit history using smartwatches. 

How are banks developing these innovative IoT systems? 

The BoT is an exciting opportunity for banks to revolutionise how they work, how they serve their customers and how they perform. 

But, developing and testing ways to use connectivity to create novel payment methods and gather, analyse and utilise data about their customers preferences, behaviour and needs comes with a hefty price tag. 

Research and development (R&D) is notoriously high in risk and can serve as a huge drain on costs, resources and time. So, UK based banks and financial organisations are utilising government-funded R&D schemes such as the R&D tax credit incentive to support the baking sector in their move towards the BoT. 

The R&D tax credit scheme allows banks and other financial organisations to claim up to 33% of the costs associated with the research and development of their innovative banking solutions. This gives them the financial freedom and flexibility to research, develop and test new payment methods and ways of collecting, analysing and utilising data without the strain of escalating costs and the weight of potential failure on their shoulders. 

4 Biggest Benefits of the Bank of Things 

As we’ve seen, the industry-wide adoption of the BoT offers a tremendous amount of value to banks. The collection and analysis of data enables banks to function more effectively, meet customer demands better and achieve more as a business. 

Let’s take a closer look…

The Bank of Things benefit #1: Increased productivity
When it comes to financial services, the Internet of Things will improve the accuracy and speed of data collection and expand the range of insights at hand.” – FinExtra

Customer data that’s collected through the BoT enables banks to make better, more informed decisions about service delivery, product strategy and investment, which drives productivity and performance. 

Through AI, machine learning and connectivity, the bank’s dependence on a human workforce diminishes so data is collected and analysed faster and more efficiently, decision making becomes more transparent, mistakes are reduced, and day-to-day operations become streamlined and simplified. As a result, time savings, enhanced productivity and balanced workflows are achieved.

The Bank of Things benefit #2: Better customer service
96% of consumers would choose a company based on how good its customer service is. The BoT allows banks to collect real-time customer data and enables them to understand their customer’s needs, preferences and problems on a different level. They can use these in-depth insights to reach target markets in new ways, create customised customer experiences, send individualised messages and offer personalised products and services. 

The more you know your clients the better services you can offer them. By providing clients with timely insights and personalized products, you raise the quality of their banking experience.”FinExtra

For example, Citibank has introduced a Bluetooth-empowered system extended with IoT beacons to provide their customers with 24/7 access to ATMs.

The Bank of Things benefit #3: Real-time insights
IoT systems collect and process data 24/7, giving banks real-time information at their fingertips. This up-to-date data gives banks the opportunity to be proactive with their client’s assets, make better, more informed decisions, monitor market trends, improve processes and develop better business strategies.

Data analysis can deliver a real-time status of the situation which is important in exploring new markets and improving underwriting processes.” – FinExtra

The Bank of Things benefit #4: Enhanced security
49% of banks will encounter some form of fraudulent activities at some stage. A scary statistic but one that the implementation of the BoT will reduce. IoT devices can be paired with AI to allow banks to gather data on financial transactions, recognize customers across multiple channels and devices and monitor their accounts for fake information or suspicious behaviour.  They can track the location of a financial crime, identify the type of device involved and even get to the root of it quickly.  

For example, if a cybercriminal gains access to a customer’s financial information and buys something, through the BoT the bank will detect that the device that the customer normally uses for purchases is located somewhere different. So, they can then move quickly and block that purchase. 

The Internet of Things further improves the security of customer accounts due to the active use of encryption and authentication tools.” – FinExtra


The Bank of Things will (and is) changing many areas of banking. Connected devices, systems, networks and apps mean better performance, better customer service, better security and better insights. Banks that aren’t up to speed with this new, fast-developing technology need to urgently reassess their strategy and start integrating the Internet of Things with their banking procedures, products and services. If they don’t, they’ll be left to gather dust.

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