The Internet of Things and the Finance Industry

The Internet of Things (IoT) is one of the buzzwords floating around executive committee meetings for the banking, financial services, and insurance (BFSI) market, with the hopes the technology will be able to radically change our lives. According to studies conducted by industry researcher Fortune Business Insights, the global internet of things (IoT) value for the BFSI market is predicted to reach 116.3 billion USD by 2026, up from 17.8 billion USD in 2018, exhibiting a CAGR of 26.5%. It’s far from its potential, and there are usually two starting questions asked by those who wish to launch an IoT project:

  • What kinds of successful IoT projects can be done?
  • What is 5G’s role in finance’s IoT evolution?

Types of successful projects

Many firms are already using IoT data to improve operational performance, customer experience, and product pricing. The insurance industry has used smartphone apps and in-auto devices to help with personalised auto insurance underwriting. Progressive customers participating in its ‘Snapshot’ program receive a discount just for installing the device or app. It allows Progressive to identify both good drivers as well as the 20% of users who will end up paying higher premiums after the data collection is complete.

Snapshot is a perfect example of IoT, because IoT should be about making products and services more personalised, centered around customers’ needs and preferences, while still allowing companies a more comprehensive understanding of their customers. There are financials gains at both ends: customers save and companies earn more (by offering tailored services and grabbing market share).

The BFSI sector is data-driven and unlike retail, or even other services, it offers many intangible products, such as peace of mind or a more prosperous future. IoT projects are often focused on the indirect, human, benefits. Imagine a future with an implanted health monitor, whose purpose is to monitor and prevent health issues from deteriorating, but this same data could indirectly be used for actuarial purposes–specifically for the user or for segments of customers. IoT devices do not require direct cases to be successful or even useful; however, indirect use cases from IoT devices definitively improve financial products and services. 

Supply chain sensor data is now collected by manufacturers and retailers. Financial institutions can indirectly use this data for credit scoring of young companies without relevant histories, and for more personalised client interest rates. It can also be used in defining contractual conditions. For example, knowing the geolocation data of a shipment can automatically trigger the release of the reciprocal payment, which benefits both sides of a contract. This same geolocation data can be used for the monitoring of mortgaged or leased equipment. Finally, a company’s financial results can be predicted by knowing the levels of moving goods from warehouses to sales outlets in real-time.

Risk reduction protocols, for customer risk (KYC), credit risk, insurance risk, operational risk, and fraud mitigation, can be augmented to provide more accurate results with the data being collected from a customer’s smartphone. This data is used for authentication as well as its geolocation data, allowing the company to confirm a customer’s identity, address, and workplace, or to verify their location when a purchase is happening, whether it is in-person or online. 

Sales and CRM delivery can be improved when a customer contacts a financial institution, either through their app, the phone, or at a self-service kiosk/smart ATM. Their information is immediately provided through biometric authentication (fingerprint, facial recognition, or the current safe and quick protocol) without the need for filling out additional data. When going through their day-to-day, clients can be offered personalised products and services that match their locations, activities, or interactions.  A sales call can be made when the client is not at work, or travel insurance can be offered via the device when a client is at the airport. The opportunities for marketing teams are endless. 

The roll out of 5G and increasing data transfer capabilities

The growing 5G infrastructure is the new launching pad for IoT devices. With the capability to send tremendous amounts of data over wireless networks, IoT devices can interact and create value where there previously was none; allowing the advent of smart cities, smart banking, and more, by the interaction between machinated sensors and people.


For the BFSI market, the data obtained from mobile, and blockchain activity, as well as that from IoT sensors, will allow the industry to use its CRM and Artificial Intelligence functionalities to conduct real time analyses of end client buying and living behaviors. Products and services can be created and tested in real-time, as well as having the capability to feed information between the market’s industries, leading to a global, digital, financial footprint. 

IoT presents the BFSI market with many opportunities. Making the correct steps forward will lead to successful projects and substantial value increases for both clients and companies. 

Disclaimer: The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech and entertainment. Mr. Chalopin is Chairman of Deltec International Group,

The co-author of this text, Robin Trehan, has a bachelor’s degree in economics, a master’s in international business and finance, and an MBA in electronic business. Mr. Trehan is a Senior VP at Deltec International Group,

The views, thoughts, and opinions expressed in this text are solely the views of the authors, and do not necessarily reflect those of Deltec International Group, its subsidiaries, and/or its employees.