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Banking and FinTech (Financial Technology) Embraced with IoT Device

Chapter · January 2020

DOI: 10.1007/978-981-32-9949-8_15

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Banking and FinTech
(Financial Technology) Embraced
with IoT Device

G. Suseendran, E. Chandrasekaran, D. Akila and A. Sasi Kumar

Abstract In recent years the traditional financial industries have motivated for a
new technology of financial technology (FinTech) clinch embraced with internet of
things (IoT). The requirements of FinTech and IoT need to be integrated into new
business environment. Several companies are affected because of the financial-level
investments. So, there is a need to improve the next level of the business. FinTech
can introduce a new service of tools and products for the emergent businesses
through the internet of services which provide ideas linked in internet. Nowadays,
increasing number of companies uses the IoT and creates new added values. The
administrators of existing money-related organization in the direct society are
dreadful by means of budgetary innovation. The social innovation is accomplished
by new innovation. To make a powerful business plan and action, the FinTech and
IoT are combined in order to create new innovative ideas based on the
requirements.

Keywords FinTech
IoT
Innovation
Business model
Cyber security

Banking

G. Suseendran (&)
D. Akila
A. Sasi Kumar

Department of Information Technology, School of Computing Sciences,
Vels Institute of Science Technology & Advanced Studies (VISTAS), Chennai, India
e-mail: suseendar_1234@yahoo.co.in
D. Akila
e-mail: akiindia@yahoo.com
A. Sasi Kumar
e-mail: askmca@yahoo.com
E. Chandrasekaran
Department of Mathematics, Veltech Dr. RR & Dr. SR University, Chennai, India
e-mail: e_chandrasekaran@yahoo.com

© Springer Nature Singapore Pte Ltd. 2020 197

N. Sharma et al. (eds.), Data Management, Analytics
and Innovation, Advances in Intelligent Systems and Computing
1042, https://doi.org/10.1007/978-981-32-9949-8_15
198 G. Suseendran et al.

1 Introduction

The current generation is surrounded by smart phones, which connect devices

working from home, public places and office, colleges, schools and everywhere.
The consumers use this opportunity to work smarter with the help of internet of
things (IoT). Banking, finance and insurance companies are easily embraced with
IoT devices. The banking and financial sectors create a new way of collecting the
valuable information about the customer through IoT sensor devices using smart
phones. FinTech is similar to electric vehicle innovation which works with capital
valuation, trading, investment and asset valuation, and provides new improving
accounting systems when compared to existing financial technology. Financial
engineers handle hundreds of millions of datasets. It is not easy for them to
maintain all the data. So FinTech is adapting to a larger field of the IoT and will
transform all the customer information to cloud using IoT devices. Most of the
banking and financial sectors can rapidly improve in e-commerce by connecting
cloud business through the profitable offerings of business tactics, where the cloud
is stored with a lot of customers’ data. In recent years, all the banks are commu-
nicating with the customer through smart phones, social networks and any new
sensors, in financial technology to create some new industries [1].

1.1 IoT-Aided Banking Services

The internet of things is a big approach in financial services. The IoT connected to
the concerned bank through the internet will send and receive data that are stored in
cloud. Figure 1 explains the details of the customer, bank and IoT transactions [2].
Around the world, billions of devices are connected with each other. These
devices share the information on the cloud with the permission of the bank and allow
the entire customers to view the account details and provide access power while using
smart devices. It is the easiest way of communicating with the customer and also
conveying the personal information through messages and alerts awaiting works.

1.2 Benefits of IoT in Banking Services

The most important benefit of IoT in banking services is providing the credit and
debit cards for easy access of the services of the banks. Also, the bank can analyze
the usage of ATMs in the specific area to increase and decrease the installations of
ATMs. While using IoT device, all the customer information are stored in the
devices. So, the bank uses this opportunity to help in identifying the customer’s
business needs, like supplier, retailer and distributors [3]. Figure 2 shows the details
of the bank providing valuable services to a customer.
Banking and FinTech (Financial Technology) Embraced with IoT … 199

Fig. 1 How to connect customer, bank and IoT devices

Fig. 2 Bank providing

valuable services
200 G. Suseendran et al.

2 Cyber Security in the Banking and FinTech on IoT

The banking and financial industry is the main target of cyber attacks. In this
network world, personal data are easily accessed by the attacker. So, cybercrime is
feared all around the world today. We will protect the cyber security in the banking
and FinTech services industries. In Fig 3 IoT connects device through the internet
and then connects to the FinTech, cloud, machine learning and industrial
productivity.
Cyber Attack
Cyber attack is a careful mistreatment of a computer system, technology and net-
works. The hacker uses malicious code or software to alter the system and secrete
code that can compromise the data to cybercrimes, such as health care documents,
banking accounts details and hacking lock of the system.
As we are increasing the use of IoT connecting devices in the banking sector, the
risk of cyber attacks also increases. The IoT connecting device communicates,
analyzes and presents some new ways for technology. It is not only the data but
other kinds of sensitive information are also shared through the IoT. Hence the risks
are exponentially high [4].

Fig. 3 Internet of things

Banking and FinTech (Financial Technology) Embraced with IoT … 201

Unencrypted Data
The data breach happens due to improper encryption, and the stolen data have
immediate access.
Unprotected Third-Party Services
The internet services are an extremely worldwide connector; therefore, the cyber
attacker can easily access the data of the targeted user, because third-party services
are unprotected.
Unsecured Mobile Banking
In recent years, mobile banking users have increased. Using this opportunity, the
mobile hacker accesses the data due to small computation time. For securing the
data in mobile banking, a cryptography method of encryption and decryption is
used.
A Constantly Changing Treat Landscape
In the past few years, cyber threat landscape has changed the financial services.
Cybercriminals must change the low-value payment into high-value payment. So, a
number of breaches affect the financial sector.
False-Positives
Anti-money laundering (AML) monitoring system is false-positive. The issue will
point out the fake activity accessing time and calculated with the help of an analyst.
The Big Breach
The huge volume of financial data is increasing the risk on customers’ security from
hackers and cybercrime as it occurs at the night time. So beware of the breach in
banking sectors.
These are major cyber security threats in banking and FinTech [5].

3 Challenges of Banking and Financial Institutions

Mainly four challenges are faced by banks and financial industries which respond
consumer expectations, heavy competition on financial companies, regulatory
pressure and not making enough money [6, 7].
i. Not making enough money
Many of the banks run on unprofitability because the financial industry is still
not making enough return on investment.
ii. Consumer expectation
Many bank employees are feeling at most pressure because the expectations of
the consumer are high. To maintain the standard they need to work hard which
leads to the pressure.
202 G. Suseendran et al.

iii. Increased competition from financial technology companies

FinTech companies is using the start up business to provide financial services
to technologies. FinTech is a big challenge because of using a traditional
banking system. They can change the modification and technical operation
quickly, and another backup process is handled.
iv. Regulatory pressure
The bank requirements are continuously changing and because of that banks
invest a lot of amount in some other business. So, the system processes to keep
up with the higher goal requirements.

4 New Tools and Product for FinTech Sector

Traditional financial sectors are lacking because of some redundant files and were
forced to move with the new tools and new products. With the advantages from
new technologies, which are requirements, design and modeling, investments and
delivery models are merged with IoT through the internet facilities. Table 1 lists out
the new tools and products that are developed and developing in the financial
sector. In 2018, 15 top Indian financial markets had radical transformation by
technology and innovation in India. The FinTech sector in India with USD 1.2
billion in the year 2016 is expected to touch USD 2.4 billion in the year 2020.
MobiKwik—Indian digital wallet company, Capital Float—digital financial
company serving businesses, Bank Bazaar—online marketplace for bank loans,
credit cards and insurance policies, Incred—web-based financial services,
PolicyBazaar—online insurance aggregator, Fino Payments Bank—providing a

Table 1 New tools and product of FinTech company [9]

S. No. FinTech sector New tool New products
1 Banking Improved loan risk Record keeping with sensors
Monitoring Emp Debt Profit Factoring and leasing
Analysis of SMS lending Trade finance and energy finance
Financing failing Security for accounts
applications Goolglization of accounts
2 Wealth Real-time IoT data for stocks Telematics as a metric for start ups
management IoT as main source for ideas Link health monitor to wealth
IoT replaces bond management
derivatives Data to profit customer
3 Insurance Insuring in high-risk areas Pricing assets in risk-prone areas
Sensors data for smart Accurate pricing product liability
payload Weather detection reduces claims
Unbiased vehicle data
4 Capital market Leveraging IoT for crowd New commodity data streams
investing New banks for public access to
Block chain IPOs capital
Banking and FinTech (Financial Technology) Embraced with IoT … 203

technology solutions for institutions like banks, governments and insurance com-
panies, CCAvenue—popular payment gateway, Razorpay—a product suite that
manages the entire payments lifecycle for all business are the topmost FinTech
companies in India [8].

5 Use Cases of IoT—Digital Future

In banking, IoT is interconnected with connecting devices; the system that provides
services does machine-to-machine (M2M) communications and is connected to lot
of protocols, domains and applications. The IoT has impacted the traditional
financial process such as trade financial, payments, personal financial management
(PFM) and insurance [10]. There are many use cases that can be implemented in
banking in the period ranging from small to long term (Fig. 4).

5.1 Account Management on Things

Biometrics (voice/touch) can make the accounts’ access anywhere simpler through
the digital channel. Using the new technology called Wet Ink, the customer can sign
in remotely through any touch screen gadget and can be marked promptly onto
physical paper with Wet Ink.

Fig. 4 IoT enabling banking of things in digital future

204 G. Suseendran et al.

5.2 Leasing Finance Automation

New daily leasing models have enabled the digital assets worldwide and are
effectively turning the traditional products and its services. For delineations, the
rented resources could be bolted or debilitated remotely by the bank.

5.3 Smart Collaterals

An IoT device can empower the money-related banks to all the more likely com-
mand over client hypothecated resources, for example, observing their wellbeing,
autos and home. Financial offerings such as manufacturing machinery, cars,
building home loans as collaterals are provided in short term and can be done in a
digital way automatically. For representations, in the event of EMIs are not paid, the
motor can be impaired and the nature of security can be observed continuously.

5.4 Automated Payment Through Internet of Things

The traditional banking of payment transaction is automated and integrated of

services. IoT can raise some conditions on security concerns and digital security in
payments. So, the customer can do the payment transaction automatically like one
bank to other bank or one bank to other companies.

5.5 Risk Mitigation in Trade Finance

High estimation of products are utilize the RFID monetary space. With the help of
IoT the shipments including the delicate merchandise are monitored for example,
restorative atoms. These executions of the hazard are relief and more educated
choices at banks for including exchange back.

5.6 Wallet of Things

Wallet is associated with each device, where more devices have become digital and
smart and that all banks have automated payments through IoT. For example,
upkeep administrations utilizing wallet automatically can be stopping the payment
transactions.
Banking and FinTech (Financial Technology) Embraced with IoT … 205

6 International Global Fintech Benchmark Report 2017

An international global FinTech benchmark report led an online review on FinTech

chiefs from monetary establishments around the globe. An in-depth interview was
conducted among senior executives from leading FinTech companies (Fig. 5).
FinTech technologies will come to emerging with Amazon, Google and
business-based platforms by the next three years. From overview reacting inves-
tigation and huge information be arranged anticipated that would a large portion of
consideration. 76% of back up plans, 65% of banks and 58% of advantage
administration organizations are positioned the information examination as one of
the best most FinTech advancements. Moreover, application programming interface
advancements and mechanical autonomy and robo-guides are positioned in the high
range of the world wide. Figure 6 shows the rising of FinTech with more enthu-
siasm in the upcoming next three years [7].
Insurance companies are more intent towards IoT because all valuable infor-
mation and pricing are provided to the customer. The IoT connecting with the
insurer person and his information from risk partners. On the off chance that any

Fig. 5 Segments and elements of FinTech

206 G. Suseendran et al.

Fig. 6 Emerging FinTech in next three years in the field

mishaps to giving security after the occasion as a case. 36% resource administration
organizations additionally positioned man-made consciousness as a best of
advancements of intrigue. Safety net providers have more grounded enthusiasm for
advances identified with IoT at that point banks or resource administration
organizations.
In the course of recent months, the square chain has essential measurement of
consideration. It was anticipating the high positioned organizations in the benefit
administration. But, it was just 35% positioned zone intrigue.

7 Analysis and Discussion

For this part of work all information and data are collected from various research
articles and magazines, and these data were discussed and investigated in this
section. We divided the analyses into two categories: the first part is the status of
Banking and FinTech (Financial Technology) Embraced with IoT … 207

FinTech block chain and crypto currencies. EU, USA and India have how alter-
native payment methods and investment are to be demonstrated. Banking is pro-
viding positive characteristic as well as negative characteristic using FinTech global
financial service sector elements [11].

7.1 FinTech Current Status and Positive Characteristics

FinTech is an imperative piece of open monetary administration segment. It gives

information on monetary and keeping money of conventional individuals. The
prospect getting diverse sorts of money related administrations. The fiasco and the
wretchedness in all the three locales, for instance, the EU, USA and India, did
negative effects and impacts on the advancement and interruption in the monetary
administration sector [12].
The new FinTech companies are using block chain innovation that has given the
opportunity and benefits for more money transaction related administrations. The
term digital revolution was reported by Accenture in 2015.
According to Table 2, the Luxembourg is in the top position in digitalization
index of 1.00 and USA has 0.92 in digitalization index, which means this is closing
to reach the full potential value, and EU also has the average range digitalization
value of 0.62, which means the EU member countries are positioned with different
values. But India is lagging in digitalization world as it has the value 0.29 and
positioned 83rd in the digitalization index.
The FinTech companies bid these services at a lower level price compared to
traditional financial service sectors because fully automated technology accessing
the operation and process work completely or partially. The motivation or main
concept of FinTech service is to reduce the human errors and increase banking
business transaction and accessing. In this system automatically applicable by India.
India will reached the highest digitalization index ranking position when compared
to EU and USA ranking level.

7.2 Fintech Current Status and Negative Characteristics

They are many positive characteristics identified by the people, which are block
chain and crypto currencies, an alternative payment system and FinTech technology
and banking solutions. Nevertheless, the treats related to the FinTech essentials are
really negative effects in the FinTech financial service sectors. The negative ele-
ments are due to affecting the FinTech operations and that related process failed
incompletely. That’s why India is not able to develop it, while the EU and USA
quickly increased the work regularly.
208 G. Suseendran et al.

Table 2 BBVA digitalization index 2015 [13]

S. No. Country Index S. No. Country Index
1 Luxembourg 1.00 44 Kazakhstan 0.47
2 United Kingdom 0.97 45 South Africa 0.47
3 Hong Kong SAR 0.95 46 Slovakia 0.46
4 United States 0.92 47 Mauritius 0.46
5 Netherlands 0.90 48 Colombia 0.45
6 Japan 0.88 49 Russian Federation 0.45
7 Singapore 0.87 50 Italy 0.44
8 Norway 0.86 51 Azerbaijan 0.44
9 Finland 0.85 52 Poland 0.43
10 Sweden 0.84 53 Romania 0.43
11 Switzerland 0.82 54 Croatia 0.43
12 Iceland 0.82 55 Montenegro 0.42
13 Canada 0.81 56 Kuwait 0.41
14 New Zeeland 0.80 57 Mexico 0.41
15 Australia 0.79 58 Greece 0.40
16 Germany 0.78 59 Armenia 0.40
17 Denmark 0.77 60 Georgia 0.40
18 Korea, Rep. 0.76 61 Panama 0.40
19 Estonia 0.76 62 Macedonia FYR 0.39
20 France 0.76 63 China 0.38
21 Austria 0.73 64 Thailand 0.38
22 United Arab Emirates 0.71 65 Morocco 0.37
23 Belgium 0.69 66 Philippines 0.35
24 Ireland 0.68 67 Sri Lanka 0.34
25 Island 0.68 68 Egypt 0.33
26 Bahrain 0.65 69 Indonesia 0.33
27 Lithuania 0.65 70 Bulgaria 0.33
28 Maita 0.64 71 Moldova 0.33
29 Malaysia 0.63 72 Tunisia 0.33
30 Spain 0.62 73 Argentina 0.32
31 Qatar 0.61 74 Kenya 0.32
32 Saudi Arabia 0.59 75 Peru 0.32
33 Portugal 0.59 76 EI Salvador 0.31
34 Chile 0.58 77 Serbia 0.31
35 Latvia 0.55 78 Dominican Rep 0.31
36 Czech Republic 0.52 79 Vietnam 0.31
37 Oman 0.51 80 Honduras 0.30
38 Turkey 0.50 81 India 0.29
39 Costa Rica 0.49 82 Albania 0.28
40 Jordan 0.48 83 Albania 0.24
(continued)
Banking and FinTech (Financial Technology) Embraced with IoT … 209

Table 2 (continued)
S. No. Country Index S. No. Country Index
41 Cyprus 0.48 84 Senegal 0.24
42 Hungary 0.48 85 Guatemala 0.22
43 Uruguay 0.47 86 Ukraine 0.21

Fig. 7 Digitalization transaction of India in 2013–2015

According to the data, Fig. 7 displays the digitalization transaction in India’s

growth; however, the Billon Eco System (BCG) research in India that surveyed the
ATM mobile transaction and withdrawal transaction at ATM, NEFT-based trans-
action in mobile, mobile internet and traditional transaction of cash and cheque and
all our day-to-day our life usage showed 12% increase in the year 2013–2014 and
also in 2014–2015; so, year by year as we increase FinTech operations, banking
financial services also increased [14].
This is very a good example of block chain and crypto currencies method. The
customer will need to safety for payment transaction because the hackers follow to
your regular work. This cyber security and data privacy also comes from the USA
and EU. The regularly EU, USA and India using the FinTech methods and block
chain Methods for money transaction [15].
210 G. Suseendran et al.

8 Conclusions

In this study the overall functions of financial advanced technologies, challenges of

banking and financial industries, cyber security of banking while connecting IoT
through the internet to store the all information’s on cloud and benefits of the
FinTech while connecting IoT device have been described. In addition, the use
cases of FinTech on IoT in digital society in futures are mentioned in detailed. All
banks, financial industry, insurance companies are moved to automated technology
that reduces the workloads and easy to mingle the customer activities. From
authors’ point of view, the FinTech embraced with IoT in future will boom the
society into the next generation.

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