Financial services companies are encouraged to introduce and adopt technology-led services by the gen Y, as quickly as possible. Internet of things (IoT) is one of the responsible factors to enable this change. Using mobile applications for banking is an example. In the coming years, changes will be more significant. We look at the financial services sector as anticipated by Frost and Sullivan in the next few years.
- Auto Insurance:
Telematics could be recurring in auto insurance as more companies adopt it sooner to issue customer-centric insurance premiums. It will be based on the number of miles driven and the driving behaviour. The drivers might feel this might put them at a disadvantage as all their data will be open to analysis and study in case of incidents. For example, brokers in Canada reported that their patrons didn’t want insurance companies knowing their driving patterns and other details. If insurance companies can make the clients get past this, then this model might reduce the overall price for the patrons.
Of course, this means that the insurance companies automatically increase their access to crucial data about their customers. This enables them to come up with services that will resonate with the customers more. As of now, getting a telematics auto insurance for your vehicle might even be lucrative as it is just starting and companies are eager to get more patrons.
- Health Insurance:
Wearable health trackers have already gained a level of trust among the public which the health insurance companies could leverage from. In the coming years, this might translate to the insurance companies encouraging their clients to issue the trackers. This could be adjusted with the premiums in their health insurance, but this is another push to the clients to have a healthy lifestyle. While it will, to some extent, determine the pricing of the insurance services, it will also involve these companies to monitor and give recommendations accordingly.
- Digital banks:
Banks relying more on data for profit and understanding customer behaviour points a future where they might have to accommodate or review resources befitting the situation. So the next few years we might get to see banks slowly start to cut down the number of physical branches and increase the number of digital branches. In such, banking sector’s reliance on sensor deployment might increase, pushing the market to reach 6.1 billion by 2022. Use of sensors in banking might grow at a CAGR of 38.4% in the next five years.
These branches have an important part to play so that they are not just service givers but problem solvers, too. With the changes happening in the banking with IoT ecosystem and technologies such as wearables, they are also responsible to educate and prepare the customers for the changes.
A few things to keep in mind
IoT’s influence might enable banks to improve customer intimacy and sales and marketing effectiveness. Its effect might be so that the established financial companies might have to rush to adopt such systems as the young population are open to use products and services offered by startups if incumbents fail to meet their demands and needs. Such a situation might prove beneficial for the clients as these companies – old and new – compete for them.
However, one thing that these institutions might still need to deal with is data security management. With so much in the equation, a slight threat in the ecosystem might prove disastrous if these companies don’t take an initiative to secure their clients’ data. This means heavy and expensive investment in the resources, but it will also be a smart investment.
Overall, it is safe to say that financial services’ inclination towards adoption of latest systems is almost evident.
Sachi Mulmi is a researcher with Frost & Sullivan. She can be reached at firstname.lastname@example.org
Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at email@example.com | +603 6204 5830