IoT in Banking and Financial Services Market

Market Overview

IoT in Banking and Financial Services Market Anticipated to Touch a CAGR of 28.9 %During the Forecast Period (2022-2027).

The IoT-embedded devices are expected to usher in automation across several legacy processes in the financial and banking sector. While many industries may have already grasped and embraced the benefits of IoT, the financial services industry is yet in the primary phase, where it is exploring the incorporation and advantages of IoT. In 2017, over 1000 bank branches ceased operations across the U.K. amid a lack of in-store innovation and tepid demand for customers. Therefore, the banking industry is in search of innovative service delivery avenues.

The increasing need for data gathering and data analysis is one of the most important factors driving the growth of IoT in banking and financial services. Today, almost every bank has a mobile app for banking, and these apps provide data at a large scale – helping the banking and financial industry analyze customer behavior and aiding the decision-making process. Digital sensors are another source of collecting customer information through ATMs and other automated devices placed in physical units to analyze customer behavior, which in turn helps banks come up with innovative ideas to serve customers.

Customer relationship management, personalized marketing, and cybersecurity are among the other factors fuelling the growth of the IoT in banking and financial services market. Tata Consultancy Services stated that “To understand and engage with customers, 65% of banking respondents use mobile apps and 16% track wearables”. IoT can help banks understand their present economic condition and offer services as per customer requirements from time to time, facilitating a healthy relationship with customers and better customer experience. IoT allows for increased security through encryption and authentication that only allows access to authorized individuals, including recognized customers and employees.

Segmental Analysis

The IoT in banking and financial services market can be segmented by solution, service, and end user. On the basis of solution, the market can be segmented into security, customer experience management, monitoring, data management, and others. On the other hand, by services, the IoT in banking and financial services market can be segmented into professional services and managed services. Lastly, based on end user, the market can be segmented into banking, insurance, and others.

Regional Analysis

On the basis of geography, the global IoT in banking and financial services market has been segmented into North America, Europe, Asia Pacific, and Latin America and the Middle East and Africa (LAMEA).

North America is expected to witness a higher adoption rate, owing to the presence of several key players in the region. Additionally, North America has some of the largest banks, including JP Morgan, Wells Fargo, Goldman Sachs, and Royal Bank of Scotland, which will act as a key enabler for the IoT in banking and financial services market. For instance, Bank of America has been collaborating with Apple to increase the usage of IoT in the industry. Against a backdrop of such collaborations in the banking industry, the market in North America is expected to witness robust growth during the forecast period.

European banks and financial institutions are well ahead globally in terms of innovation and efficiency. Insurance companies are already public about the impact of IoT on their business, as it pertains to insurance pricing and follow up.  With more and more mobility and the move to connected and cashless payment systems, Europe is well placed to maintain its leadership position in the IoT in banking and financial services market.

APAC is one of the largest contributors in the IoT in banking and financial services market. Prominent APAC countries such as Singapore, Japan, and India are working to adopt IoT technology. The Infocomm Development Authority of Singapore (IDA) and the Information Technology Standards Committee (ITSC) have taken an initiative called SPRING Singapore, which encourages industry participants to make new developments and investments in the IoT sector. As per a TCS report, 55% of APAC organizations, including financial institutions, have adopted the IoT-enabled agile business model. Moreover, the report states that APAC companies are more likely to use IoT technology solutions to automatically resupply their end-customers with connected solutions, for which 26% of organizations have already made changes to their business model.

The Middle East banking and financial industry is undergoing a phenomenal transformation, overcoming traditional processes and legacy systems. Banks and financial institutes are adopting all kinds of emerging technologies such as Internet of Things (IoT), Big Data, and Artificial Intelligence in order to deliver a better omnichannel experience for both customers and their own employees.

IoT in Banking and Financial Services Market Segmentation

By Solution

• Security
• Customer Experience Management
• Monitoring
• Data Management
• Others

By Services

• Professional
• Managed

By End-User

• Banking
• Insurance
• Others