1.     
Introduction

Internet
of things is first spelled by Anchestor University which connects objects in
the real world by using the Internet so that they exchange the data for taking
actions based on events. IoT exists anywhere in the environment at anytime
within any context and anybody can access across any business.

The
devices connected with IoT will be more than 200 billion devices according to
Intel and 212 billion devices by Dell by 2020.The device connected can be any
tangible devices such as car ,computer, printer, tablet, phone, fridge embedded
with sensors technology and intangible devices such as software, database,
webpage, text document etc. having unique identification.

Banks
are mostly relied on depositing and withdrawal of money to provide security and
to give interest on deposit for the money deposited for the customers .The
connected objects are increasing in more sectors such as smart city, smart
home, industry, agriculture, retail sector, medical sector but it needs to be
connected in the banking sector to perform banking operations in order to
explore new services  to satisfy customer
needs.

The
banking in IoT industry is now in the young stage, started using IoT functionalities
for improving banking operations.  Banks
are increasing under pressure to connect customers with other services  such as retailers, insurance providers,
health practitioners, airlines, and hotels to deliver tailored offering that
meet customer needs and life styles. .A survey 
was conducted to find how much IoT technology is used in Banks. The
survey shows that 64.5% is used by banking executives globally through
smartphones tablets and other digital devices. Additionally 3.6% is used to
monitor retail bank branches , 21.1% is used to gather product performance data
by using digital sensors and 15.8% is used to track customer product usage by
IoT sensors in wearablesshould banking build on IoT stages

This
paper reveals about how banks use IoT in offering new services to satisfy
customer needs .Section 1 describes how 
IoT can be used  in Banking,
section 2 describes about the devices used in IoT banking, section3 describe
about the challenges that has be faced when IoT is used in Banking.

2.Working
of IoT 2

The internet of things is a system of
interconnected devices or objects  or
people having unique identifier  and has
the ability to exchange information over network without requiring human interaction.
The whole IoT system consist of four modules: sensors/things, Communication,
data processing, and user Interface

1.     
Sensor/Things

Sensors is a device which detect changes in the environments
and collects information  from the environment.
The IoT sensors
can be smart sensors, actuators or wearable sensing devices.

For example smart phone is a device having multiple
sensors such as camera, accelerometer, GPS.  So data to be collected from the environment
is deployed with sensors. For example, in order to finder the number of
customers entering into the bank can be detected by installing motion sensors
in the bank

2. Communication

Once the data collected from the environment are sent
to cloud. The sensors or devices are connected to cloud by different
communication technologies such as Wi-Fi, Bluetooth, LPWAN or by directly
connecting to the Internet.

3.Data Processing

Once the data gets to the
cloud, software performs some kind of processing on it. The
collected data is analyzed to take specific actions based on required services.
The data
processing may be very simple or complex. For example, paying a toll bill ,or
identification a customer entering into a bank

4.User Interface

Next, the information is made
useful to the end-user in some way. This could be via an alert to the user
(email, text, notification, etc). For example, a text alert when the customer
exceeds bank balance when spending money. Also, a user might have an
interface that allows them to proactively check in on the system. For example,
a user might want to check the video feeds in their house via a phone app or a
web browser. Depending on the IoT application, the user may also be able to
perform an action and affect the system. For example, the user might remotely
adjust the temperature in the cold storage via an app on their phone. And some
actions are performed automatically. Rather than waiting for you to adjust the
temperature, the system could do it automatically via predefined rules. And
rather than just call you to alert you of an intruder, the IoT system could
also automatically notify relevant authorities.

 

3.Applications of IoT in banking

IoT can create new device to device connections that have the
potential to interrupt banking in a few areas. Listed below are some of the
uses that may be adopted in banking in a time span ranging from near-term to
long-term.

3.1
To provide reward for debit and credit card customers

The
number of people entering and leaving in an ATM can be found by identifying the
foot traffic in the ATM by placing sensors using IoT technology in a certain
zone to find out more ATMs are needed for that area or to remove the ATM at
that Zone.

3.2
ATM monitoring

IoT
provides security to the ATM machine by placing sensors around ATM and monitor
it. The parameters such as movement around ATM machine, change in temperature,
any additional noise or sound , power fluctuation  can be monitored. If there is any change in
the above parameter above the predefined level ATM can programmed to lock down
the ATM door or to provide an alarm to the nearby police station.

3.3.Customer
identification

Bank
customers are identified by their signature during banking operations , But
using IoT customer can be recognized biometrically by using biometric scanners
such as retina and finger print scanner when an customer enters the bank and
provide OTP (preference)number  for
performing banking operations.

3.4 To create personal budgets

Banks
can monitor the customer spending habits from customer smart device such
as   smart car, smart meter, wearables and also
from gathering customer bank transactions and create personal budgets. Thus
customer spending pattern such as saving, deposits can be analyzed to estimate
month end balance to optimize their profits while making customer free feel
more comfortable.

3.5 Improved customer service

Sometime
customers will spent more time on specific bank operations. So sensors can be
installed for each banking operations queue which is connected to IoT
technology to identify more time spent for specific operations . So by
identifying time spent on each operations, Banks can provide better service to
the customer by providing additional staff to such services.

3.6 Financial Planner

Sometime
customer may need huge money for unexpected expenditure for that the customer
spending patterns can be analyzed by using artificial intelligence to identify
in which form the money can be saved for unexpected and future expenditures for
each month. Thus Iot banks will be able to analyze and deliver relevant
solutions to make financial sound decisions.

Similarly
when a customer spends more  money or
exceeding customer balance a message can be sent to the customer smart device
or an alarm/vibration can be raised to the customer wearable indicating
financial risk of customer. Thus IoT banks can pay more attention to the
customer for safe usage of money and free from financial risk.

3.7
To identify offers

When
an customer swipes his debit/credit card in an supermarket , the offers that
are provided by the nearby trader  can be
pushed to the customer  smart phone by
collecting the geographical data of the customer

3.8
IoT powered shop

When
a customer purchases an item , the item can be automatically paid to the
retailer when the customer leaves the system. For example, in a supermarket,
when the customer have  purchased all
items, before leaving the shop, IoT enabled smart device can be connected to
the bank of supermarket and payment can be made to the purchased product.

3.9
Shipping and International Trade

Iot
can be used for shipping and International trade , with sensors collecting real
time geographical  data about the
shipping products  .This makes business
more efficient and perhaps allow payments to be made faster , when the shipment
reaches the destination..

3.10
To purchase Asset: Deliver Loan proposal

When
a customer wants to purchase higher value items such as car or furniture, loan
proposal can be delivered  to the
customer smart device, when the customer enters the showroom by using IoT
technology by linking the customer with his bank. The customer has to enter OK
for his loan approval if he wants to purchase the products with bank loan.

3.11
Smart parking

When
the car is parked using Iot technology , the payment for parking can be made
when the car leaves the parking area without the intervention of driver with
the help of sensors, smart devices of customers connected with bank.

3.12
Smart Enabled Apartments

When
apartments are built with embedded IoT technology connected with banks, when a
new owner takes up the residence, payments can be made for the housing loan,
utility bills, automatically re-ordering milk etc..

3.13
Monitoring Agriculture

When
IoT is employed in farms and connected to banks, allowing farmers and banks to
continuously arise and value the farm crops , calculate the yields, so that
banks can provide financial decisions where the crops can be sold for better
profit.

3.14
Toll Payment

The
payment can be made easily for toll, when the car arrives before the toll gate
by automatically running an app without the intervention of driver.

4.Smart Devices involved in IoT Banks

Today
everything is connected either wireless or wired up. Some of the IoT devices
such as Embedded sensors, gadgets, wearable’s ,Core Banking Apps on smartphones,
Personal Banking Pods, Security Keys and Card readers, Digital Assistance ,
Finance Tracking Apps, Contactless Payment Desks, IP locations all these are
combined with Internet will allow to access the things in the world and  help the banking and finance industry  to get more benefits.

4.1
Wearables

Wearbles
or wearable devices  are electronic devices
that can be embedded into items or accessories 
worn on body .They can do tasks like computer  or mobile. 
Wearable devices have been the easiest method for payment in banks.   Wearables can be  smart watches, wrist bands through which
banks can be connected to the customer and payments can be made through
wearables. Banks can provide an application for wearable devices to allow
contactless wearable payment solutions1.Wearables  can also be used for quick balance enquiry ,
promotion notification on new features,to provide transaction alerts ,real time
receipts, mini statements,  purchase of
stocks etc. Wearable device are becoming better than smart phone because they
are pervasive . Banking Apps can developed for wearable’s to provide more value
added service to the customers  2,5. For
e.g. major banks in India like SBI and YES Bank have
rolled out smart watch apps which can help users with information like tracking
transactions, account balances, mini statements, ATM locations, etc. on the go5.

  Authentication is important for banking
transactions. The customer can be authenticated by using  ECG of a customer via wearble to  withdraw money providing more security 3 to
the customer . Banking experts argue
that wearable’s may even replace mobiles and become more common for carrying
out banking transactions4

4.2
Smart phones

Mobile devices such as smart
phones and tablets are mostly recognized applications of Iot in banking
industry. This allows simple communication between the customers and the banks
2. Mobile apps can be installed in mobile phones and tablets which help to improve
secure payments1.

 

A survey conducted by BI Intelligence Digital Banking  shows that 64.5 % of banking officials monitored
their clients through portable applications on smartphones3.Banks can also
identify customers  by incorporating
sensors at the entrance of the banks which recognise the customer based on the
electronic devices installed in the mobile phones4.

 

 Citibank last year tested the use of Bluetooth-enabled beacon technology to give their
customers the ability to access branch ATMs 24 hours a day via their
smartphones and receive location-based personalized offers.

 

4.3
Connected Car

Cars
can be linked to customer’s bank accounts, so that when there is need for
payments like food ordering, paying for car parking, payments for fuel, payment
for toll gates , payments for garage, payments for service can be done using
Iot Technology with the help of apps1,2.

4.4
Smart sensors

Digital
sensors can be placed in physical units like in bank branches and ATMs to analyze
consumer behavior. The digital sensors can be used to find unexpected customer
problems related to finance , service issue, comfort in using ATM and other
automated machine.1

The
digital sensors  built with artificial
intelligence having unique identification connected through Internet and with
banks forming IoT technology can be used to order any products or items when
there is out of stock in house hold items and at the same time payment can take
place flawlessly in the background and the product can be delivered  on time. In retail stores sensors can be
placed near the checkout counters , so that when the customer leaving after
purchase , payment can be initiated 2

Sensors
can be used to track the goods shipped to check the goods reached the  destination on time so that payments can be
made faster .So sensors can be used to track real time data in shipping and
international trade3

With  the
help of sensors , it is also used to monitor the state  and conditions in agricultural  businesses, which helps the farmers to
provide more loan options by the banks4.

 

5.Challenges

IoT in banking is a revolution , but
when it is implemented in real time there exists numerous barrier that must be
overcome . Numerous serious concerns must be taken into account when IoT
devices are connected to Banks .

5.1 Security

The introduction of IoT  solution in Banks , faces serious security
challenges and risks. With more number of devices connected to the banks, banks
become the easy targets for the hackers. Data generated  by the customer during transactions goes
through the network must be protected by smart solutions  such as encryption, authentication tools,
biometric verification . Banks must also provide increased level of
authentication and authorization to maintain the customer trust

 

5.2 Current Barrier

Limited cellphone and internet coverage
in rural area , low rate of return from investment, skilled person required to
install and maintain the computer and ATMs in diverse locations. Other problems
associated are sending cash from urban to rural areas includes  cost, theft and loss , protected from money
laundering and time delays.

 

5.3 Big data

More number of devices are connected to
the banks which is expected to create Bank of Things . Thus Banks can collect
data from any device or machine including personal data from device and M2M
data from any device to offer different services to customers. This leads to generate
more amount of data which must be transfer to the cloud for processing. The
data generated must be moved to the cloud needs more bandwidth and more
storage. This is an serious problem which dumps more data in cloud, which need
preprocessing techniques and data analytics   to store only the relevant data needed for
further processing.  For example the data
collected from ATMS can be analyzed to understand which area need more ATM
installations or location changes.So
handling Big data must be identified to reduce operating costs of IoY
technology in Banks and increase the revenue for the banks and thereby improve customer
experience.

 

5.4 Privacy

Banks collect information from customers
to provide services and they face privacy issue. But while data collected
through IoT technology the privacy problems increases, since the data is not
only collected from bank accounts, but the data is also collected from smart
home devices, cars , smart phones etc and these data are not only used for
proper financial transactions, but they are also used to provide better
services , gain saving and they are shared with third parties. So  the customers are more concerned about the
privacy and confidentiality. So banks have to provide proper measures to
protect the data and asset of their customers.

 

5.5 Interoperability

interoperability is fundamentally
valuable from the perspective of both the individual consumer and Bankers user
of these devices.Customers use  a variety of IoT devices for banking
operations, which leads to interoperability between devices for sharing
information . This occurs because of  the
use of different manufactures of IoT devices , different operating system used
by the IoT devices, different version of IoT devices, and different or
inconsistent communication protocols used 80. Thus there is a strong need for
standardization for the exchange of information between IoT devices and also
for interoperability of devices from multiple vendors.

 

Thus there is a
strong need for standardization, that enables the semantics being conveyed and
understood, and also for interoperability of devices from multiple dealers.

 

Conclusion

Many
number of IoT devices will be  connected
to banks which provides customer easiness in using Banks. So Banks must
identify customer interest and then the technology required to meet the
customer requirements must be implemented. Modern Banking architecture must be
built to manage the complexity and level of uncertainty to support real time
access to banks and flexibility in using IoT banks.

The
use of  IoT in Banking technology for payments
will reduce problems that generally occur when using cash , such as fraud,
forgery, money laundering and theft. Thus IoT is a great way for banks to
transform data into insight to better understand the customers and eventually
deliver a better customer experience.