Smart homes don’t deserve dumb banking

Today a “smart home” uses technology to provide homeowners (or renters) greater comfort, convenience, and security as well as energy efficiency — even when no one is at home. Smart Homes include any number of “smart” appliances, lighting, HVAC, TVs, computers, entertainment solutions as well as security, and camera systems.

The Internet of Things (IoT) and the advent of the smart home will have a profound impact on bank technology and more importantly, how financial institutions (FIs) will deliver services while leveraging data to provide a more holistic approach to household financial management.

The opportunities for savvy, tech-forward FIs are exciting. Having AI-driven banking piped into smart homes allows FIs to tap into huge amounts of data that can be enriched to provide granular information on customers that has been inconceivable up to now.

The numbers are staggering. The global smart home market is forecast to reach a value of more than $53 billion by 2022. IoT devices in use now outnumber the world’s population. Already, Amazon is investing in homebuilder, Plant PreFab, which follows the Amazon 2018 launch of more than a dozen new smart home devices that will be powered by Alexa. And IoT and smart homes will proliferate, even more so as 5G becomes the new norm.

The 2018 Digital Banking Report published by The Financial Brand and Jim Marous included this nugget from fintech expert Theodora Lau; “The combination of advanced analytics, Internet of Things (IoT), and big data will allow banking to be more seamlessly integrated into our daily routine, transforming voice into the new UI.”

She is right on the money; AI, automation and smarter homes, impact daily routines and have the ability to reduce friction, including how consumers engage their financial institution and resolve financial needs. We already know that financial services needs to improve digital experiences, differentiate brands and find ways to de-commoditize our very essence, while staying relevant in an ever changing marketplace.

Based on research reported in the Digital Banking Report, the top 5 trends identified by banking executives worldwide at the beginning of 2018 were:
  • Remove friction from the customer experience
  • Use of data, AI, and advanced analytics
  • Improving integrated multichannel delivery
  • The expansion of open banking and open APIs
  • Banking + fintech partnerships

In an interview with Jim Marous, he stated, “These trends will only come to fruition when organizations start to move from building great reports, to creating great experiences with data and consumer insights.” Bingo.

Yet how far have we advanced in 2018? I’d say not far enough. The stats paint the picture that there’s a real value for using connected smart products. And consumers are more than willing to trade privacy for convenience. For example, already, over 60% of Millennials, 50% of Gen Xers and 30% of Baby Boomers have smart home devices with voice control. At the same time, financial institutions and fintech firms have not yet begun to scratch the surface in how they can join a smart home ecosystem.

The opportunity is clear. When banking is done at home it can become a more natural extension of everyday life. The fast evolution of digital and mobile consumption and the ever increasing adoption of mobile banking, just goes to show that in the future, consumers may not ever need to leave their homes to “do their banking.”

Consumers want convenience and the financial institutions that offer the most innovative ways to make life easier and more convenient will be the ones that stand out. Smart homes and “smart banking” go hand-in-hand.

“Alexa, give me a list of smart banking providers.”
Bryan Clagett

Bryan Clagett

Bryan is on the executive team and singularly focused on driving revenue growth through a variety of new initiatives that help financial services and fintech become ever more relevant to ... Web: Details