Internet of Things will bring about the dis-intermediation of bankers.

 Internet of Things: The dis-intermediation of bankers.

In banking, the intervention of  technology has reached a critical threshold. The Internet of Things (IoT) revolution will accelerate the age of disruption ushered in by the  digitalization of  banking. IoT will reduce dependence on bankers but add to the customer accessibility of banking.

The components that would capture the attention of IoT in banking include (a) development of sensor platforms, (b) development of communication and connectivity systems,(c) cloud computing (d) big data  (e) analytics, and (f) cyber security.[1]

Moore’s Law states that there is a doubling of computer processing capacity every 18 months or so   The “internet of things” uses multiple sensors (like the brain’s neurons) connected through the web (like the brain’s synapses) to create, in effect, a machine-brain.[2] It is estimated that by 2020 there would be 30 billion wireless devices connected to the Internet of things.[3]  

These requires that IoT reduces if not nullifies subjectivity. All processes would be driven by integrated networking of technology and less by people. As banking moves towards total technology driven banking, and as people operate from a host of hardware interfaces through rapidly evolving software,  there will be fewer bankers and more of machines.

These mathematics driven processes will cover the following functional areas through  predictive models (using advanced analytics like data modelling, data mining, statistical analysis, text mining and visualization can be used by banks to ensure compliance to regulatory requirements by identifying patterns and predictive trends.

a) Capital adequacy management;

b) Risk management - Evaluation of risk exposure for internal and external  - Risk Mitigation.

c) Real time  assessment of factors like the external market conditions, balance sheet changes.

d) Balance Sheet Management

e) Project performance management.

f) Fraud detection.

g) Credit risk

h) Customer profiling

i) Compliance

j) Payment / Settlement systems

k) Trading of financial instruments  (forex, bonds, other market instruments )

 Without any risk or responsibility.

Copyright of this article and its contents vests with the author of this blog: Jayaram Nayar. 

He can be contacted at email: jaynayar@gmail.com  

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[1] http://theinstitute.ieee.org/ieee-roundup/opinions/ieee-roundup/your-questions-answered-the-internet-of-things

[2] Haldane, A. G. 'Growing Fast and Slow' Bank of England Speech at the East Anglia University, 17 February, 2015

[3] Padmanabhan, G 'Emerging Issues In Cyber Security in The Financial Sector' Reserve Bank of India, at   the State Bank of Travancore, , 28 February 2015.