The internet of things in the banking market is expected to grow at a CAGR of 18.58% over the forecast period (2021-2026). Today's banking customers are known to be less loyal, more demanding, and increasingly comfortable with the entire digital banking experiences, from self-service to automated wealth advisory. Moreover, the combination of cost, customer expectations, traditional competitors, and FinTechs represents a significant threat to the banks. Thus, the focus has turned to offering new and improved experiences and higher value for customers and employees, competing with rising expectations. One of the technologies being embraced by the banks is IoT. Amid a massive digital disruption, banks are exploring how IoT can help design products that adhere specifically to customer demands. Some of the world's largest banks are re-organizing their front-office, due to an increase in prioritization of customer-centricity.
- One of the essential benefits of IoT in the banking industry is providing easy-to-access services to both credit card and debit card customers. Banks can analyze the usage rate of ATM kiosks in specific areas and alter the installation of ATMs, depending on usage volumes. Along with ATMs, banks can use IoT data to bring on-demand services closer to customers by providing kiosks and increasing the accessibility of service to customers. The customer data available through IoT can help banks identify their customer's business needs, their value chain, and gain customer insights. Such kind of customer information can help banks contribute to providing value-added services, financial assistance, and customized products to ensure a favorable situation for both parties.
- The market has a huge potential when it comes to retail banking. Banking via smart speakers provides customers with the convenience of issuing voice instructions rather than physically looking at a mobile device. For instance, Capital One in the United States has made it possible for customers to pay their bills via Amazon's Alexa. UK challenger bank, Starling, has integrated its API via Google Home, allowing users to carry out balance queries and payments through voice commands. In 2019, NatWest piloted a voice banking feature with Google Assistant. The function was compatible with the Google Home smart speaker and allowed customers to inquire about account balances, latest transactions, and pending transactions.
- Some banks have started using beacons to send customized offers to customers' smartphones as soon as they enter the branch. Some ATMs now have live stream video support that allows customers to speak to tellers if they require additional assistance. Banks use IoT and other banking applications to resolve the conflict seen in traditional branch banking due to mobile banking. For instance, biometric sensors can be utitlize to garner user data when they enter the bank and relay it to the primary system. The BMO Harris Bank tested such a smart branch where no real employees are present. In this case, a uset is geberally guided by a technology-based system or chatbots.
- To contain the spread of COVID-19, the majority of bank employees across the world are being asked to work from home. COVID-19 is also challenging the traditional banking habits of customers. The World Health Organization (WHO) has advised people to use contactless payment and avoid handling banknotes as much as possible. This is because the COVID-19 may continue to live on notes for days, accelerating the spread of this disease. By implementing completely digitized and remote customer transactions, banks can ensure that both everyday and exceptional processes are likely to be carried out with limited disruption. This represents an increasing adoption of IoT in banking in the future.
Key Market Trends
Security Application is Expected to Hold Significant Share
- Nowadays, customer expectations, technological capabilities, regulatory requirements, demographics, and economics create a crucial change. This demands the banking institutions move past these challenges and adopt a proactive approach to cybersecurity. The financial sector faced almost three times the cyber attacks as compared to that of the other industries. Data breaches (both internal through fraud and external through cybercriminals) lead to an exponential rise in costs. Enforcing Multi-Factor Authentication (MFA), usually for physical access control, for the use of virtual private networks, and prevention of counterfeit by chip assembly integrator are the critical trends in the cybersecurity applications market which are expected to enhance the market.
- Ongoing threats related to IoT devices will force banks to tighten security layers, including patchable firmware/software and controlled privilege access. New regulations will follow once massive scale attacks are initiated using IoT. This will be done to amplify the attack using the help of wearable devices. According to Samsung Insights, wearables, such as smartwatches, are poised to become the future of the retail banking experience. For example, banks could use Bluetooth beacons to push personal greetings to customers' smartwatches when entering a banking location.
- In October 2019, Shinhan Card, Korea's most prominent global top-five credit card company, is deploying blockchain, facial recognition-based payment methods, and internet of things (IoT) financial payments, as Korea is trying to become a pioneer of "deviceless" payment systems. In August 2019, Shinhan Face Pay was rolled out in cafeterias, convenience stores, and coffee shops, and in November, it will be tested across universities. Aware of global privacy concerns, the company assures users that the technology doesn't breach privacy.
- In May 2020, Lantronix Inc., a provider of intelligent edge and secure data management solutions for the industrial Internet of Things (IIoT) launched its E210 Series routers which are being used to enable secure real-time transmission of video and sensor data to help ensure security at a global bank's Automated Teller Machines (ATMs). For the bank customer's 1,000 branches, the Lantronix routers quickly and reliably transmit video and data to ensure the ATMs' security.
North America to Account for a Significant Share
- North America has many of the largest banks, which has a significant effect on driving the market for IoT in banking. The convergence of operational and information technology and the increasing use of IoT devices in product, application, and premises monitoring for connected banking are factors driving the IoT in Banking in North America. The U.S. is the largest market for IoT security solutions in banking because of having a large number of banks with a large number of data breaches news.
- Many banks now provide applications for popular wearables like Apple Watch and FitPay, which is already working with Bank of America. Amazon is too planning to let customers zap each other cash with Alexa, and then deposit it in an Amazon-branded checking account. Diebold, a U.S. financial and security services corporation, went even further and designed a smart ATM. If anyone wants to withdraw some cash, a person should schedule a session via a mobile app, walk up to the nearest ATM and choose one of the available verification options.
- There is an increased rate of data breaches in the United States annually. The main segment affected is the banking sector, and the privileged misuse and web attack is the main reason for it, where the hackers use malicious code and software to alter computer code. Recent news quotes that HSBC Bank customers had personal information exposed to a data breach by unauthorized users in the United States. Like Attila's GoSilent, security solutions are designed to detect and prevent cyber-attacks from a broad spectrum of sources. GoSilent locks down access to banking institutions' networks by securing all the endpoints, such as servers, mobile devices, printer/scanners, laptops, and desktops.
- In June 2020, Qualcomm Technologies, Inc. and Infinite Computer Solutions are US-based companies that announced a strategic partnership to promote the widespread adoption of smart cities solutions and deliver the Internet of Things as a Service (IoTaaS) plug and play deployment. The partnership creates an end-to-end, fully managed solution that facilitates digital transformation for smart connected spaces across various end-user verticals, including banking. The IoTaaS offering combines companies in the Qualcomm Smart Cities Accelerator Program using Infinite's intelligent engagement platform Zyter SmartSpacesTM to enable a streamlined, full suite of offerings that address the complexities around developing secure, smart, connected spaces across vertical industries.
The Internet of things in the banking market is moving toward a fragmented market. This is because of the entry of companies and solutions in the market that creates a very fragmented landscape within the IoT ecosystem. The key players are IBM Corporation, Microsoft Corporation, Cisco Systems, Inc., Infosys Limited, etc. Recent developments in the market are -
- January 2020 - Sunwest, US-based Bank offered its business customers new ways of banking coupled with traditional services. Sunwest wanted to provide a more robust method for its cash-intensive customers to make cash deposits after hours. The bank worked with technology partner Mesh Systems to create and implement a sensor-based solution built on Microsoft Azure IoT Central. Now, the solution tracks after-hours cash drops, generating visibility and data that improves customer confidence and bank efficiency
- January 2020 - Infosys signed a multi-year, multi-million contract with ABN AMRO Bank to increase the pace of its cloud and DevOps transformation. As part of this contract, Infosys will enable ABN AMRO Bank to achieve its operational and business goals by aligning its transformation with its cloud platform strategy. Using its expertise in cloud and data management services, the company will help ABN AMRO Bank to use a single public cloud to deliver cost efficiency in business operations.
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1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET INSIGHTS
4.1 Market Overview
4.2 Industry Attractiveness - Porter's Five Force Analysis
4.2.1 Bargaining Power of Suppliers
4.2.2 Bargaining Power of Buyers
4.2.3 Threat of New Entrants
4.2.4 Threat of Substitute Products
4.2.5 Intensity of Competitive Rivalry
4.3 Assessment of Impact of COVID-19 on the Market
5 MARKET DYNAMICS
5.1 Market Drivers
5.1.1 Increasing Accessibility of Services to Customers by Providing On-demand services via Kiosk
5.1.2 Growing Adoption of IoT for Predicting Fraud in Debit/Credit Card Transactions
5.2 Market Challenges
5.2.1 Concerns Regarding Breach of Privacy and Data Security Risks
5.3 Key Use-cases and Case Studies
5.3.1 Tracking Raw Materials and Inventory Stock for Loan
5.3.2 Deciding Flexibility in Financial Terms by Analyzing Farm Crop Output
5.3.3 Improving Effectiveness of Protection System Against Possible Attacks
5.4 Retail Banking Landscape
5.4.1 The utilization of Beacon by Chase to pre-announce customers, opting into the service before approaching ATM
5.4.2 Barclay's Initiative to help disabled passengers navigate branches using Beacon technology
5.4.3 US Bank and Citi using Beacons to revive underused high-street branches
6 MARKET SEGMENTATION
6.1 By Type
6.2 By Application
6.2.3 Data Management
6.2.4 Customer Experience Management
6.2.5 Other Applications
6.3.1 North America
6.3.4 Rest of the World
7 COMPETITIVE LANDSCAPE
7.1 Company Profiles
7.1.1 IBM Corporation
7.1.2 Infosys Limited
7.1.3 Software AG
7.1.4 Temenos AG
7.1.5 Cisco Systems, Inc.
7.1.6 Microsoft Corporation
7.1.7 Oracle Corporation
7.1.8 Accenture PLC
7.1.9 Tibbo Systems
7.1.10 Vodafone Group PLC
8 INVESTMENT ANALYSIS AND FUTURE OF THE IOT MARKET IN BANKING SECTOR
Secondary Research Information is collected from a number of publicly available as well as paid databases. Public sources involve publications by different associations and governments, annual reports and statements of companies, white papers and research publications by recognized industry experts and renowned academia etc. Paid data sources include third party authentic industry databases.
Once data collection is done through secondary research, primary interviews are conducted with different stakeholders across the value chain like manufacturers, distributors, ingredient/input suppliers, end customers and other key opinion leaders of the industry. Primary research is used both to validate the data points obtained from secondary research and to fill in the data gaps after secondary research.
The market engineering phase involves analyzing the data collected, market breakdown and forecasting. Macroeconomic indicators and bottom-up and top-down approaches are used to arrive at a complete set of data points that give way to valuable qualitative and quantitative insights. Each data point is verified by the process of data triangulation to validate the numbers and arrive at close estimates.
The market engineered data is verified and validated by a number of experts, both in-house and external.
REPORT WRITING/ PRESENTATION
After the data is curated by the mentioned highly sophisticated process, the analysts begin to write the report. Garnering insights from data and forecasts, insights are drawn to visualize the entire ecosystem in a single report.