by Angela Guess
Christopher O. Hernaes, a TechCrunch contributor, recently wrote, “It is widely acknowledged that the Internet of Things (IoT) will have a huge impact on nearly every industry, and financial services is no exception. Gartner estimates that connected devices will reach an installed base of 25 billion units by 2020, with an annual compound growth rate of 35.2 percent from 2013-2020. Insurers are already exploring how the IoT will transform the insurance industry through improved customer dialogue, more precise price models and faster settlements… Although the impact of the IoT on insurance is inevitable and more obvious, an analysis by Deloitte predicts that the IoT has potential in both retail banking and capital markets, as well. While use cases may seem somewhat less obvious, banks ultimately rely on access to data for risk management and credit analysis. Deployment of sensors and M2M communication represent a new array of data sources that may be utilized in a banking context.”
He goes on, “In addition to adding new data sources to credit scores, sensor technology could revolutionize loan collateral tracking and balance sheet reporting for both SMEs and corporate clients. Imagine the possibilities for real-time monitoring of inventory or livestock for manufacturing and agriculture segments. This would potentially enable banks to perform automated and near real-time balance sheet reporting. Paired with the promise of smart contracts, banks could be able to deliver credit and loans at a much lower cost, as well as give existing loan officers efficient tools when reviewing credit portfolios. Access to real-time client data also enables new business models like dynamic installments based on real-time analysis of available working capital and cash flow. Much like iZettle and Square, which offer pre-approved loans based on payment data with installments as a fraction of future sales through their terminals.”
photo credit: Flickr
