They’re applying for financial sector licences, unbundling financial products, and meeting the needs of digital-native consumers. The resultant pressure has forced a number of financial services institutions to pivot their business models and develop new, non-banking revenue streams.
The shifting banking landscape
Most of the big banking institutional, commercial and corporate clients are looking for more than just traditional financial services offerings. They’re demanding more value-added services and innovation from their banks that can have a significant impact on bottom- and top-line financials. Environmental, social and governance (ESG) and sustainable development goals (SDGs) are also becoming topical subjects, not just for employees and consumers, but more so for investors, forcing companies to move away from shallow greenwashing initiatives to a complete alignment between purpose and ESG/SDGs.
The role of IoT in enabling new banking business models
Internet of Things (IoT), one of the oldest emerging technologies – the term was coined as far back as 1999 – has the potential to deliver this and more. In fact, the financial services industry is no stranger to IoT. Some insurance companies have deployed usage-based insurance for motor vehicles to link insurance premiums to driver behaviour. In addition, behavioural-based health insurance policies today use data from wearable devices to reward healthy lifestyles with lower premiums and drive loyalty. ATMs have also been using machine-to-machine (M2M) communication technologies to monitor cash levels and trigger cash-replenishing events. Nowadays, some ATMs even leverage AI and video analytics to track footfall traffic to optimise positioning and send automatic alerts in case of fraud or theft attempts.
However, IoT use cases that really transform and scale banking business models lie in the B2B2X space. As Accenture put it in The Future of Banking report about rethinking banking business models, finding the best-of-breed partners to help create new propositions through non-linear, adaptive business models are critical for success.
The 3 IoT use cases for scaling B2B2X propositions
- Smart utilities – leveraging IoT to reduce non-revenue water and improve overall revenue collection for utility service providers through the long-term saving of water, a critical resource. (Smart Utilities | IoT.nxt (iotnxt.com))
- Smart mining – providing value-added IoT solutions via non-banking marketplaces to ensure workplace safety and increase productivity for mining clients. (Mining | IoT.nxt (iotnxt.com))
- Smart real estate (residential, commercial or industrial) – offering building management systems as part of a project-financing package to promote green buildings and a stickier relationship over and above loan repayments and insurance premiums. (Smart Spaces | IoT.nxt (iotnxt.com))
Vodacom & IoT.nxt: Your preferred partners
As a purpose-led organisation, recognised among peers by Sustainalytics as a global leader in ESG, and by Gartner as a leader in Managed IoT Connectivity Services, Vodacom is perfectly positioned to partner with financial institutions of any size to unlock even more value for you and your clients through IoT solutions.
Through our subsidiary, IoT.nxt, we can plug into virtually any technology, equipment, and process. By providing communication at the edge and in the cloud, we will give you one single view of your entire business, making your business agile and efficient. It's still your business, only smarter.
By co-creating bespoke solutions with us, you can embrace the potential of IoT to enable new B2B2X business models beyond traditional banking, unlocking new and sustainable opportunities for you and your clients.
- Kevin Odudoh, Executive HoD: Financial Services Sector, Vodacom Business
