The Fintech industry has seen tremendous evolution over the past few years. For instance, several startups have successfully made their mark in the market by surpassing the traditional methods of lending with faster, convenient, cheaper, and flexible personal loans.
The entire Fintech industry depends heavily on data. With the help of IoT, the FinTech companies leverage big data analytics to assess the creditworthiness of their potential customers. They fast-track the approval process in a secure and dependable lending environment. Let’s take a look at how the IoT is boosting the Fintech Industry to new heights.
Benefits of IoT:
The major fronts on which the Fintech industry will experience maximum benefits from IoT are internal operations, security, payments, and above all, customer experience. Let’s understand these in detail:
- More relevant data can be gathered by the banking service providers with the help of IoT technology. This can help them gain valuable insights into their customers’ interests and requirements with which they can provide a better and personalized experience.
- There are several IoT-based security solutions available today, which have made financial operations more safe and transparent. Several wearable smart devices offer biometric authentication for wireless payments and money transfers, making these transactions convenient, fast, and secure.
- The more and better the data, the better is the decision-making ability of the lending companies. This means enhanced credit risk assessment. Be it any field – agriculture, transport, retail, etc., asset management companies can gather critical and relevant data with device-to-device communication protocols and sensor implementation.
Personal financing is one such an integral part of the financial industry, which has seen a significant transformation with the help of IoT. Let’s understand how.
IoT and Personal Financing
The IoT interconnectedness has also revolutionized the personal financing scenario. The numerous benefits of IoT have made personal loan transactions smooth for both – the lenders and the borrowers. For instance, the countless personal loan apps available today can offer their customers safer, smarter, and more customized experiences thanks to IoT. Let’s see the benefits of IoT:
- Financial organizations can get real-time data on their own clients’ assets, which can help them enhance their risk management.
- Thanks to IoT, financial companies can adopt a totally new approach to a personal loan or any other form of financing in terms of collateral tracking, risk-free investment decisions, and smart contracts. This will help these organizations reduce the cost of personal and business loans significantly, which in turn will help give the global economy a much-needed boost.
- Banks and other lenders can now better anticipate the financial needs of their customers. This means they can offer better personal loan experience. IoT applications can provide new avenues for credit underwriting, particularly for those customer segments which lack a credit history. The customer data available via IoT will help the financial organizations provide more customized financial solutions proactively. This data can also be used to understand and determine the potential risk of new forms of redlining based on ‘pattern of life’ or POL analyses.
- Studies have shown that consumer service expectations have grown tremendously from even just a year ago. With the help of data gathered from IoT applications, personalized attention, friendly greetings, and product or service offers based on previous purchases or activities of the customers can be provided.
The adoption of IoT in the financial market has seen an impressive growth so far and is slated to increase by leaps and bounds. Those fintech companies who haven’t adopted IoT or are using them on a small scale might soon find them critical for retaining their new-age customers who prefer faster, convenient, cheaper, and secure financial services.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at firstname.lastname@example.org.