Barclays’ Rolfe: “I can create a ubiquitous ‘bankless’ banking experience – and that’s where the true value of IoT and connected devices lies”

• The way the industry is starting to see real value in IoT is centred on big data, artificial intelligence and the intelligence behind it
• Rolfe believes that the biggest use case for us internally relates to the connected devices that provide information around security
• IoT will increase the competitive dynamic as it will force banks into more transparency into how they make their money

For some, the Internet of Things (IoT) is yet another technology that has the potential to optimise operations, increase productivity and generate new business models - the standard impact model for transformative technologies. Others call it the “fourth industrial revolution” with consequences as far reaching as changing the nature of humanities role.

“If you think back to the dim and distant past of the Third Industrial Revolution - which was centred on information technology and digitisation - applications were about people or IT processes communicating. But now it's machines and devices that are communicating, continuously and in ever greater numbers. The promise of real-time enterprise - organizations that can respond to need and demand instantaneously - is finally becoming a reality,” wrote Jean-Marc Frangos, chief innovation officer, BT, United Kingdom in a June 2017 World Economic forum article.

In reality, however, much of what is currently covered around IoT is related to manufacturing and, within the financial institutions (FIs) space, wealth, investment and insurance. Those are the biggest adopters as those industries have tangible use cases because there is real value generation within the organisation. The commercial banking sector is in the early stages of implementation around proof of concept or pilot stages, and at best have achieved modest benefits from IoT programmes.

"The traditional view of IoT is that it is limited to devices that produce telemetry-type data, for example, in the manufacturing space, where you’ll find a plethora of devices designed to measure specific metrics. While it is easy to conceive of how this data could be analysed and used, the applications for IoT in banking do not necessarily feel as ‘real’. Our data relates to human behaviour, so it takes a great deal more – and more sophisticated – analysis to extract the right value from it. Hence, it is important to clarify what IoT means and what constitutes the world of IoT. If you think only about devices, you are missing the big picture. As financial institutions, we need to think about it differently in order to truly understand its significance and how to translate those measurements into more meaningful customer experiences,” said Kevin Rolfe, head of technology for the chief technology office at Barclays Africa Group.

The reason why banks are not yet able to build a more connected experience in conjunction with other financial players and service providers is because they don’t know yet what to do with the data available to them.

"I look at it simplistically, and say that there is a business case for using IoT to save time for our customers. In other words, how do we use the volumes of data being produced by all the devices we plug into every single day, to give us an indication of which type of person we are dealing with and where they are spending their time? How do we use it to make banking ubiquitous and customised to each person’s unique needs at any given time or place? How do we use IoT to strip out all the time customers have to spend interacting with apps, websites and other banking solutions, and give that time back to them?”

Banks already have billions of lines of data about customers and often struggle how to translate these into meaningful metrics. The way the industry is starting to see this is centred on big data, artificial intelligence and the intelligence behind what it can do.

“IoT gives banks the opportunity to integrate environmental data, behavioural data and financial data to the point that customers don’t need to apply for a product or service – they simply click a button to utilise what the bank’s already made available. For example, financing a new car could be as simple as clicking yes in response to a note from your bank, which knows you’re at a car dealership, knows which car you’re test driving, and whether or not you can afford it.”

“The reality for all financial institutions today is that we do not ‘own’ customers. We merely own a share of the customer wallet, and the only unique value that we can provide is to give customers back the time they currently spending engaging with the bank, by creating a much more connected experience for them. Once I understand who my customer truly is, I can create a ubiquitous ‘bankless’ banking experience for that person – and that’s where the true value of IoT and connected devices lies.”

Biggest use cases for banks

The upcoming boom in IoT technology hold the promise of a far more interconnected and efficient world but it equally increased the threat of fraud, identity theft and customer verification. At the same time, banks use IoT already to combat fraud, a field which will grow hugely in the next years.

"The biggest use case for us internally relates to the connected devices that provide information around security. As a bank, we are focusing on how we manage and secure employee devices to better protect our staff and customers. Cyber crime is escalating at a rate not seen before, and IoT and the patterns revealed in the data mean that we can now detect crime in real time. IoT allows the intelligence sitting at the back-end of a system to start working through scenarios that allow us to be one step ahead," Rolfe said.

Banks have been monitoring banking infrastructure with IoT devices already for years such as in buildings or data centres where real time information becomes critical in terms of maintaining the uptime of the organisation which ultimately impacts customer experience the moment those systems are not performing optimally. This IoT technology as simple telematics has been around for years but the potential is bigger spilling over into a wide field of financial transactions.

"IoT becomes particularly exciting when we start bringing in the financial transaction component. To illustrate that, IoT enables us to undertake succinct smart payments – or micro payments - against a fraction of utilisation, for example, when paying for electricity or water consumption or any other service, such connectivity, airtime or even office space. This is a game changer for start-up businesses, for example, who don’t have the capital to invest in this infrastructure or service provision, and now pay for precisely what they need at any given time, but only when and where they need it. This could do for business what the pay-as-you-go model did for mobile adoption in Africa. I think that what banking and payments brings to the table will enable the IoT revolution.”

Rolfe believes that institutions need to start sharing data with each other and run this against centralised databases or shared environments with other FIs to quantify in real time patterns of spending and behaviour and to understand what the credit space can be.

IoT forces banks to increase transparency

IoT will increase the competitive dynamic as it will force banks into more transparency into how they make their money. "When it comes to financial power, banks don't have the monopoly anymore. Customers have enough information at the fingertips to know exactly what they are paying for. The value is no longer in the product, it’s in the experience. The power of information and decision making is back in the hands of our customers."