CONSULTING

IoT Opportunities in BFSI

Mentor: - Team Members: -
Mr. Vishal Khanna 16 - Jashin Arora
35 - Yaseen Rangrez
49 - Shubhangi Srivastava
What is IoT?
● The internet of things, or IoT, is a
system of interrelated computing
devices, mechanical and digital
machines, objects, animals or
people that are provided with
unique identifiers (UID) and the
ability to transfer data over a
network without requiring human-
to-human or human-to-computer
interaction.
IoT Value Chain
 Pros & Cons of IoT

• Ability to access information from anywhere at any time on any

device.
Advantages • Improved communication between connected electronic devices.
• Transferring data packets over a connected network saves time
and money.

• As the number of connected devices increases and more

information is shared between devices, the potential that a
Disadvantages hacker could steal confidential information also increases.
• If there’s a bug in the system, it’s likely that every connected
device will become corrupted.
 BFSI Overview
● Banking, financial services and
insurance (BFSI) is an industry term for
companies that provide a range of such
financial products or services.

● BFSI comprises commercial banks, insurance

companies, non-banking financial companies,
cooperatives, pensions funds, mutual
funds and other smaller financial entities.

● The Banking part of BFSI may include core

banking, retail, private, corporate, investment
and cards. Financial services may include
stock-broking, payment gateways, mutual
funds. Insurance covers both life
insurance and general insurance.
 Challenges in BFSI
Banks Insurance Mutual Funds

• Increasing the • Need for accuracy in • Low level of customer

penetration of pricing of risks. awareness.
banking in rural areas. • Rural market still • Inadequate reach of
• Tackling demand- under-penetrated. funds / distributors to
supply mismatch. • Pension market retail investors.
• Credit disbursement remains untapped. • Limited innovation in
to the priority sector. product offering
• Improving risk • Multiple regulatory
management frameworks.
mechanism.
• Technology adoption.
 ● It was observed that for banks, IoT
technologies are most popularly used to
monitor customers.

● It is observed that 65% of the banking

Presence of IoT in respondents use mobile apps and 16%
track wearable.
Banking and Financial
Services Industry (BFSI) ● It was observed that 38% of the
respondents use these IoT apps to keep
tabs on a complex web comprising
branches, ATMs, partners, etc.
IoT
Landscape in
BFSI
How Does the Flow of IoT-Generated Information
Create Value for the Banks and their Customers?

 With the use of IoT, banks may achieve improved customer experience, generate
new markets and cross sell opportunities but banks has to develop new ways for
cost reduction, risk management and improved operational efficiency.

 Real time data may pose risk to banks when providing financial services. The ability
to manage risk in addition to collecting data from media and other credit behaviour
data, allow banks in making better financial and commercial decisions.
General Framework of IoT in BFSI
IoT
Framework
For BFSI

Smart Collaterals
•The request for financing as
well as the transfer of
ownership could be
automatic and completely
digital. Enabled by digital
identity for people as well as
things, the transfer of
ownership of an asset can
be achieved in a matter of
seconds.
Use Cases for IoT in BFSI
Automated Payment
through Things
•When machines are able to
perform transactions with
machines in real-time on a
marginal cost basis, the
traditional concept of
payments will become
obsolete in many use cases
as transactions become
automated and integrated
into other services –
virtually any “thing” could
include an automated
payment experience.
Though the IoT raises
certain security concerns,
personal biometrics and
digital identities could
potentially increase security
in payments.
Wallet of Things
•As an extension of
automated payment
through things, when more
devices become digital and
“smart”, it will be possible
to have wallets associated
with each device. For
instance, an autonomous
car could potentially pay for
parking, gas, rental or even
maintenance service using
its embedded wallet. Each
and every home appliance
or consumer equipment
could eventually host an
embedded, pre-funded
wallet that is capable of
managing its running
expenses on its own.
Tailor-Made Auto
Insurance
•Insurance Companies are
already offering devices that
plug into the on-board
diagnostic port of cars and
send driving behavior data
back to them.
P2P Finance on
Tangible Assets
•Peer-to-peer models have
proved to be a disruptive
trend for banks in areas
such as lending. A futuristic
application of IoT might
extend the P2P model to
several new areas and
impact traditional financial
services products such as
leasing.
Global Segmentation of IoT in BFSI can be given as as

Regional Type Application Manufacturers Solution Services End-user

•North Infosys
Banks •Security
America
Hardware Vodafone
•Customer Professional Banking
Insurance SAP
•Europe Experience
Companies Management
IBM
Mortgage
•Asia Pacific Software Microsoft •Monitoring
Companies
Oracle
•Latin Brokerage •Data
America Firms Capgemini Management
Managed Insurance
Service Accenture
•Middle East
Others •Others
and Africa Cisco Systems
 Uses of IoT in BFSI
1. Product Planning & Management.

By using the data collected from sources like mobile apps, banks can launch better and more targeted service offerings.
‘What services and products to launch? Who will be the key targets? When is the right time to launch the products?’ - All
these questions can be answered using data about the past service offerings and the reaction of customers for the same.

2. Tailored Marketing.

In order to tailor a banking solution to a client, information is needed about his present economic condition, buying
behavior & individual needs. IoT has made it possible for banks to keep a track of all consumer activities and present a
solution specific to the needs and desires of the client.

3. Proactive Service.

Service faults and upcoming products changes can be handled much easily using IoT in banking and financial industries. If
there is an underlying concern about a product then it will come to notice quite easily and steps can be taken to handle the
issue before it becomes too serious.
 Visa Mobile
Location
Confirmation

Banking IoT
Alfa Bank
on Implementation sense
Wearable in BFSI

Groceries
by master
card
 Advantages of IoT in BFSI
Increased
security due to Time saving.
encryption and
authentication.

Better
understanding of
customers and
clients.
Improved efficiency & risk
management, decreased
expense.

Virtual
banking:
Convenience
for customers.
 Disadvantages of IoT in BFSI

Hacking of system.

Too much dependency on

technology.

Rise in unemployment.

Complex network.
But the sector finds itself deep in

Loss of credibility.

Frauds.

NPA’s.
Thus, SWOT Analysis can be depicted as
•Increased security. •Complexity.
•Customer friendly. •Unawareness.
•End-to-end service. •Absence of common
•Time saving. standards.
•Cost of implementation.

STRENGTH WEAKNESS

OPPORTUNITIE
THREATS S

•Hackers. •Privacy & security.

•Frauds. •Big Data.
•Crumbling economy. •Setting of common
standards.
•KYC.
•Upgradation of software and
hardware.
IoT Opportunities in BFSI can be further explained as
 Privacy & security.
1. ATM’s.
2. Online Banking/Net banking.
3. Biometrics Authentication.

 Big Data.
1. Management of Real time data by bank round the clock.
2. Authentication and transfer of required data via any bank or financial institution easily.

 Setting of common standards.

1. Companies setting a general or standard IoT framework.
2. Common standards set by RBI for IoT implementation in BFSI.

 KYC.
1. A common Aadhaar number and a linked biometric information saved and linked so that during any transaction the
bank scans the biometrics – ATM (fingerprint) and Net banking (retina scan) to authenticate user data and enable
transaction.

 Upgradation of software and hardware.

Failure Mode Effects Analysis (FMEA) for threats related to
opportunities
Potential Problem Likely to Severity Difficulty Risk Priority Preventive Action Contingency Action
occur (A) (B) of Number
Detection (A*B*C)
(C)
Robber steals 8 10 3 240 High security inside Nearest police
money while and around ATM station informed by
withdrawing money premise user/bank while
from ATM help reaches to user
Unable to Manage 7 6 5 210 Cloud server used to ERP system
data for all save information implementation
customers
Old systems and 7 7 4 196 All available Update systems
software information to be
saved on drive
Biometric 5 9 5 235 Shoot on sight rule User account to be
dependency may to be implemented blocked
lead to danger to for immediately if any
user tampering/harming harm or force
Using Innovation to address the opportunity with highest RPN = 240 ->
Robber steals money while withdrawing money from ATM
Design Thinking Application
Empathize

Define
The user wants to
withdraw money Ideate
from ATM safely The user should
be able to Prototype
withdraw money Use of technology
without getting and sensors. Test
blackmailed by ATM entry to be
Implementation
robber. individual based
of AI & ML to
The testing can
understand user’s on fingerprint
scan. start with one
withdrawal habits
branch and 5
and also behavior. Sensors inside
sample, that is,
ATM to predict if
developers of this
the user is tensed
model.
or scared.
In Conclusion,

 Need for awareness and education in IoT.

 Outsourcing can be one of the ways in which implementation can be started step-by-
step.

 Each Opportunity can be implemented using high-end technology and design

thinking.

 Before implementation, FMEA (Failure Mode Effects Analysis) should be done.

 References
● https://internetofthingsagenda.techtarget.com/definition/Internet-of-Things-IoT
● https://www.newgenapps.com/blog/uses-of-iot-in-banking-finance-bfsi
● International Journal of Advance Research in Science and Engineering
● https://www.edgeverve.com/finacle/finacleconnect/trulydigital-2017/perspective/iot-banking-enabling-banks-
digital-future/
● https://en.wikipedia.org/wiki/BFSI
● https://www.stoodnt.com/blog/scopes-of-internet-of-things-iot-in-the-banking-and-financial-services-iot-impact-on-
fintech/
● https://www.iotcentral.io/blog/iot-in-banking-and-financial-industry
● https://themarketsegment.com/global-iot-in-banking-financial-service-market-2019-demand-size-type-applications-
share-growth-opportunities-potential-trends-industry-forecast-to-2024/
● http://courses.welingkaronline.org/Fulltimeplacement/Files/10_9_2018_2_09_54_PMBanking%20Industry.pdf
● http://courses.welingkaronline.org/Fulltimeplacement/Files/10_9_2018_2_07_49_PMFinancial%20Services%20Indu
stry.pdf
● https://straitsresearch.com/report/IoT-in-Banking-and-Financial-Services-Market
● https://blogs.cisco.com/energy/iot-design-thinking-case-studies