Increased dependence on the Internet of Things (IoT) is one of the largest trends in enterprise technology, and a big part of that trend is the financial services industry. And because of the nature of the financial business, both IoT’s promises and Risks with IoT in Finance.To demystify the IoT a little, an IoT device is something that can’t be used as a computing device with processing power. That includes naming a few, point-of-sale (POS) devices, security motion detectors, and even internet-connected coffee machines. Gartner estimated that approximately 21 billion IoT devices would be visible to the world by next year.
Many IoT devices utilized in the financial services industry are tailored to customers. For example, banks can use IoT tech to build a higher-resolution image of credit risk or identify customers as they come through the door to provide a smoother, more personalized customer service. Businesses can use IoT devices to gather more data on customer preferences and behaviors, and financial institutions can collect data from wearables in real-time to enable customized product advertising.
Customers can use wearable and car-based IoT apps to carry out transactions, and new customers can sign up for financial services using mobile devices at special events, trade shows, or malls. Home devices such as smart speakers enable consumers to open accounts through voice commands, which can trigger workflows in back offices. In short, IoT devices offer enhanced customer service and more significant business efficiency, but the benefits of IoT in financial services can’t be realized simply by buying IoT devices — that’s just the start.
How The Internet of Things Can Become Broken Things Internet
When a new technology that is not yet wholly understood comes along, buyers often adopt the technology because it is the “Next Big Thing,” and not because they have a strong view of how it can help their affairs or add value to existing systems and processes. IoT Techs are no exception. It is all too popular to consider the costs of purchasing IoT devices without considering the following expenses. Let’s begin with the most mundane questions they can carry.
Unlike almost all enterprise technology devices that are either plugged in the wall or powered by rechargeable batteries, numerous IoT products are powered by batteries that can be replaced. This can begin great but turn sour as the batteries gradually fail and eventually die. Dealing with batteries is part of a broader debate that needs to take place about the multiple factors that can impact the overall cost of owning IoT devices. We need to take into account the inevitability of equipment failures and the downtime costs, as well as the tools and processes required to perform preventive maintenance.
IoT devices can also generate large amounts of data, creating additional costs associated with the storage and securing of all those data. Organizations often don’t have the processes necessary to check IoT data for errors and omissions, so data quality isn’t always reliable. That is a project that needs to be planned separately. Once a company purchases an IoT system, it must also allocate funds for installation, protection, maintenance, and other post-purchase issues.
Privacy and Security Concerns
Gartner expects the spending on IoT security will hit $3.1 billion by 2021. This estimate is likely to be conservative, as expenditure will likely increase once organizations fully understand the IoT-related security and privacy risks. Moreover, IoT decision-making often does not include security budgeting, but a greater awareness of the susceptibility of these devices to hacks will probably change that.
Many IoT devices in financial services are ripe targets for cybercriminals because they tend to convey customer personal information and facilitate money transfers. And because that IoT data doesn’t always come from financial organizations, it’s often left exposed or poorly protected. To account for this, customer-related IoT data organizations must communicate what data are being collected from customers and what the company aims to do with that information.
It is helpful to consider IoT devices as sources of vast quantities of potentially sensitive data, in addition to the already growing stores of organizational data that must be managed securely and privately.
Small Devices Can Create Big Data
Where is all the data that financial institutions generate are going? And how can organizations take advantage of that? Institutions need to extract the most actionable insights to maximize the potential gains from data collection, and that is where AI can help. A survey conducted by Deloitte, SAS, and Intel found that after integrating AI with IoT systems, 92 percent of respondents reported business improvements. Shockingly, only 12% of organizations found the IoT to be beneficial on its own, but with AI added, the statistics rose to 31%.
IoT data must be explainde to be useful, and AI is a crucial asset for transforming data into actionable insights.
The Secure Implementation of IoT Devices
Here are some guidelines for incorporating IoT technologies for improved security and business performance in a financial organization:
- Understand where and which devices are part of your IoT infrastructure. Hold an eye on these devices, what they do, and who has access to those devices.
- For actionable business insights, think about how to pair IoT data with AI.
- Consider the operations of authentication. If specific people are selectively given access to your devices or data, how are those people going to be authenticated?
- Ensure you have an upgrade and repair plan that includes how you can ensure that your current update management systems are compliant with new IoT devices.
- Stay on top of IoT-related recent emerging threats.
- Plan how you treat any strange or malicious behavior that originates from your IoT devices.
- Verify that your IoT purchases endorse Identity and Access Management (IAM), as many items do not.
- Integrate IoT into the software for vulnerability management.
Don’t think of the IoT, above all, as a tech bandwagon that you need to hop on. Think of it instead as a source of vast quantities of data that need to be made intelligible, usable, and safe. It’s not just about purchasing the products; it’s about what’s coming after the purchase.
