Posted by Bethany Frank on 19 Oct 2016
Once an abstract concept, the Internet of Things (IoT) is now a tangible and profitable phenomenon all around the world. Apple’s Siri, smart appliances, and wearable technology are only a few examples of IoT concepts that have successfully primed consumers and markets for the roll-out of similar products and services in the near future. The IoT is quickly becoming a discussion about commerce, creating ample opportunity for banks and others in the payments space to capitalize on emerging trends.
The capabilities available to consumers lead them to form new expectations that go on to apply to any goods or services they use—including payments. A concept like IoT, which essentially enables machines to preemptively fulfill needs based on data, suggests to consumers that their payment experience should be just as efficient.
Consumers now expect their payment experiences to integrate seamlessly into their everyday routines. The IoT will only further increase transaction volumes and demands around payments, making a robust payments infrastructure a fundamental component to sustained success.
Consumer electronics like Amazon’s Echo, for instance, will eventually initiate payment transactions on behalf of consumers. As adoption of these new technologies increases, businesses will have to think outside the box to anticipate their customers’ needs. Success will ultimately come down to whether or not the payments infrastructure in place can meet increased demand.
Banks and other payment service providers can help businesses prepare for monetization opportunities by offering comprehensive payment processing services that can integrate into a fast purchasing environment. Speed, efficiency, and security are keys to customer satisfaction as IoT-enabled devices become more commonplace.
According to Cognizant, the IoT “will create more digital touchpoints that will send back large amounts of data that can be analyzed for greater insights into consumer behavior.” This data can also be leveraged by financial institutions to provide additional value to clients, or by a business’s internal consultants to drive strategy.
While all this innovation is generally great for a number of industries, the IoT may also give rise to new kinds of payments fraud and risk. Banks and other stakeholders will have to keep the possibility of increased fraud in mind and perhaps develop additional security measures to verify and protect consumer identities.
As consumers demand increased connectivity and convenience, market leadership in the digital space can help financial institutions and payments service providers gain a decisive competitive advantage. The IoT will provide new ways for businesses to offer value-added products and services to customers. Those who are best able to balance innovation with properly-scaled security will be most successful in encouraging adoption of IoT services, providing consumers the payment experience they want, and ultimately leveraging the technology to drive a profit.