Internet of Things (IoT) a huge opportunity for Financial Services - Viewpoint - careers advice blog Viewpoint careers advice blog

Internet of Things (IoT) a huge opportunity for Financial Services - Viewpoint - careers advice blog Analysts at Gartner predict there will be 25 billion smartphones, smartwatches, wearables, connected cars and other connected devices by 2020. From household appliances to ATMs, all these devices will constantly gather user data, and communicate that data in what is known as the “Internet of Things” â€" or IoT. IoT will change the world of financial services beyond recognition. Candidates with the right set of skills to exploit this opportunity have a bright future ahead. IoT: a more customer-centric approach Machine-to-machine (M2M) connectivity represents a revolutionary opportunity for the financial services sector to understand their customer much better and offer them the most appropriate products, based on their actual behavior, minute by minute. “This is good news for everyone,” claims Romain Doutriaux, Chief Marketing Officer at Dataiku, a startup that creates software to help data scientists process information and make sense of big data, and whose customers include Axa Group and LCL (Le Credit Lyonnais). “These days, most consumers and definitely the customers if financial services firms expect services to be centered around them and their needs. IoT will fine-tune products, for instance by offering specific pricing for a loan or an insurance contract, but will also help in fraud prevention, churn defection (customers turning to other companies), as well as contributing to a more accurate segmentation of customers,” he says. Indeed in the banking sector, IoT technologies are currently used mainly to monitor customers according to Tata Consultancy Services. “To understand and engage with customers, 65% of the banking respondents use mobile apps and 16% track wearables. The next common IoT application is monitoring the supply chain with 38% of the respondents using it to keep tabs on a complex web comprising branches, ATMs, partners and so on” the company notes. Banks investing massively in IoT Tata says that banks and financial institutions have identified that deciphering what data to capture and how to gather, process and analyze it is the key to success with IoT. They are now investing massively in solutions to deal with the huge rise in connected objects. Tata Consultancy Services reports that financial institutions have reported an average IoT budget of US$117.4 million which is 0.4% of total revenue. Its study reveals that they are planning to spend US$153.5 million by 2018. “A large amount of their IoT budget (32% in 2015 and 29% by 2020) will account for monitoring financial products and services. Also, this year they plan to allocate 30% of their IoT budget to monitor customers. This allocation is expected to increase to 34%  by 2020”. Wanted: data experts “With connected devices everywhere, by 2020 data monitoring, analytics and control will be used widely in marketing,” says Romain Doutriaux. The latter believes that in the financial services sector, data science will also be used in auto insurance customisation for instance. “There will be a black box in your car monitoring your driving, your speed, etc. The data generated will be able to offer very targeted pricing,” he says. Doutriaux thinks the use of connected devices in lending is an “ongoing” development. “If you have a wearable device like an iWatch, your bank could use some of the information it generates to offer you more interesting contracts. Banking apps will monitor your expenses, what you spend on, at what moment, where etc. It will help determine which banking solution is right for you”. However, Doutriaux also notes that currently financial services companies are having difficulties recruiting candidates with the right skills to take IoT further. “Yet, in 2017, IoT will be the most important source of innovation for banking and financial services,” says Romain Doutriaux. “Most of our customers find it very difficult to recruit data scientists, whose skills are a mix of good knowledge of business and mathematics. IoT will also increase the need for statisticians, actuaries, data analysts etc.,” he says. A skills gap So why is it so difficult for banks to recruit the right workforce to harness the power of IoT? “Financial services companies like banks and insurers have existed for centuries. Suddenly this long-standing industry and the people who have worked in it for decades and are supposed to be experts are being challenged by the GAFAs (Google, Apple, Facebook, and Amazon) and the Fintech world. There are seeing young folks who know lots about IT and not much about banking challenging them,” Doutriaux remarks. He thinks that what banks need to fight back is more agility, being more customer-centric and developing digital skills in-house. However, he is noticing a shift, with financial services companies creating more chief innovation officer roles. “To master IoT you need more than tools. You need people who can learn quickly, adapt, be involved with project they would not have been involved with in the past” he concludes. I hope you found this content useful. 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