Key takeaways
- IoT in fintech is a hot topic right now. Many businesses — from Stripe to Mastercard and CashApp — implement IoT features to elevate the services they provide.
- Key IoT components in fintech apps include sensors/devices, cloud connectivity technologies (Wi-Fi, Bluetooth, or cellular), data processing platforms, and user interfaces.
- IoT in fintech apps advances security, customer experience, and process automation, as well as facilitates smart payments and cash flow management.
- Emerging IoT development trends include 5G, blockchain, digital twin technology, AI & machine learning, and edge computing.
What is IoT in app development?
The Internet of Things, or IoT, refers to the interconnected network of physical devices and sensors — “things” — that collect and exchange data with each other. Think about smart homes where you can control locks, lights, curtains, or AC through an app on a phone. All these devices are connected to the Internet, creating an ecosystem of appliances that can be managed from one place.
In the fintech industry, the Internet of Things works in a similar way. The prime example of it is smart branches — bank locations, where connected sensors and systems can monitor occupancy levels and predict wait time, so the managers can coordinate staff better and find ways to improve customer experiences.
IoT technology helps with real-time data collection, analytics, and automated decision-making. This has completely transformed how financial apps provide services and operate.
Key IoT components in fintech apps
IoT systems include 4 main components that make them work:
How IoT is impacting the fintech industry
The Internet of Things is one of the hottest technologies in the fintech industry. The global IoT in the banking and financial services market is growing steadily. Its size was estimated at USD 57.55 billion in 2023 and is expected to reach USD 68.15 billion by the end of 2024. Many businesses — from Stripe to Mastercard, IBM, and Microsoft — implement IoT features to elevate the level of services they provide.
Here is how IoT technologies transformed fintech services.
Smart payments
Smart payments are financial transactions that are processed without human intervention, with the help of IoT devices — for example, when you buy a coffee and pay by holding your smartwatch to a terminal or when paying at a grocery store by tapping your phone. IoT technology collects your payment data and communicates it between devices without having to swipe a physical card.
Contactless payments are widely popular in many countries, including the United States and Europe, where over half of consumers prefer it over traditional card swipes.
Advanced security
When you use IoT in a financial platform, enhanced security is required to safeguard data that is being transferred between devices. The more devices get connected via IoT technology, the more app owners need to elevate their security measures to protect financial information. These include biometric authentication like FaceIDs and fingerprints, or physical measures like access control to prevent unauthorized access.
Better customer experience
IoT devices generate a lot of data about customer behavior, patterns, preferences, and needs. These analytics are used in fintech products to improve customer experience and come up with better ways of delivering services. For instance, through IoT, banks can collect insights about customer spending habits and provide tailored promotional offers.
Precise cash flow management
Cash flow refers to all money coming in and out of a business. This includes cash from customers, investments, payroll expenses, loans, etc. Effective cash flow management means you always track and control where business assets are.
As an example of how IoT technology helps with this, think of ATMs. Banks know exactly how much cash is in each ATM at the moment, what banknotes are prevalent, and what machines need to be serviced soon.
Process automation
IoT-connected devices create an ecosystem that helps with automating the processes in a fintech organization. For example, this removes the chance of human errors when transferring data — instead of a manual input, devices automatically communicate with each other and exchange information.
4 fintech apps that implemented IoT features
Let’s shift from theory to practice and take a look at fintech apps that have implemented IoT features in their products.
Stripe
Stripe logo
Stripe is a SaaS (software as a service) product that helps businesses of all sizes accept online and in-person payments through a cloud-based infrastructure.
Stripe uses IoT to enable a wider array of devices to initiate and process payments. For example, Stripe introduced Stripe Terminal, an IoT-powered card reader for contactless payments. They offer end-to-end encryption, cloud-based ordering, and consolidated payment management in one platform.
Cash App
Cash App logo
Cash App is a well-known platform for peer-to-peer payments that is available in the United States and the United Kingdom.
The app uses IoT devices to speed up financial transactions. For instance, the Cash App issues cards using NFC (Near-Field Communication) technology to give users access to contactless payments anywhere.
Mastercard
Mastercard logo
Mastercard is one of the pioneering companies in the financial industry, and, regardless of its long-lasting legacy, it manages to stay on top of recent trends and developments.
Mastercard actively uses IoT data to optimize the payment experience, and it even published a report How IoT Will Shape the Future of Payments, addressing major benefits and challenges of the technology. On top of that, the company uses data collected by IoT devices to create new customer offers. For example, pay from your driver’s seat service which allows users to pay from an electric vehicle charging without leaving it.
Kontakt.io
Kontakt.io logo
Kontakt.io is a service that tracks how customers move throughout the business location.
To measure foot traffic, Kontakt.io manufactures low-energy Bluetooth beacons that enable mobile payments and replace traditional point-of-sale technologies. These IoT devices provide benefits such as streamlined checkout experiences, optimized shopping journeys, and increased data collection for businesses.
With the help of IoT, as well as AI and RTLS, Kontakt.io helps businesses uncover wasteful resources, streamline staff capacity, and improve workflows.
The future of IoT in financial services
IoT in fintech is set to snowball. By 2029, the global IoT market is projected to grow by 10.49% and reach $1.56 trillion in market volume. At the same time, the number of IoT-connected objects is expected to hit 17 billion devices worldwide by 2030.
The future of IoT is promising, with advancements in 5G connectivity, blockchain, digital twin technology, AI and machine learning, and edge computing. Let’s dive into details about these key IoT development trends.
5G integration
Remember the times when 3G was cool? Now, the next generation of mobile internet, 5G, is becoming increasingly widespread. Even though it’s not available everywhere yet, mass coverage is only a matter of time.
5G is around 10 times faster than current LTE networks. This increase in speed will allow IoT sensors and devices to share more data, and quicker than ever. For businesses that accept payments, for example, it means that it will only take a couple of seconds for a transaction to be executed and approved. And faster service leads to happier clients.
Blockchain
Blockchain is on the rise in many industries, and fintech is no exception. This technology provides a digitally distributed database that is used to record transactions in many businesses.
To IoT ecosystems, Blockchain can offer decentralized data storage, which helps protect connected devices from breaches and enhance overall security and transparency in networks.
Digital twin
Digital twin technology creates virtual replicas of a physical object using real-time data from IoT sensors on the model. Use cases for digital twins in fintech include simulating different user scenarios and financial models, facilitating data analytics or testing, and replicating risk management frameworks.
AI and machine learning
AI and machine learning can radically push the capabilities of IoT hardware, especially when it comes to data analytics. For example, AI technology allows connected IoT devices to learn from experience and external data sources. This can improve fraud detection accuracy and enable hyper-personalized financial services.
Edge computing
Edge computing is a type of IT architecture in which client data is processed at the network’s periphery, closer to the source. It reduces internet connection latency and boosts data privacy and security — all while enabling real-time decision-making in financial transactions.
Purrweb’s experience in fintech and IoT development
At Purrweb, we’ve helped numerous startups integrate IoT features. Our expertise in fintech app development, combined with our deep understanding of the IoT technology, enables us to create cutting-edge apps on time, while still staying within the budget. Here are some examples.
Vendify
Vendify is an IoT application for smart vending machines that sell fresh food. Unlike a traditional vending machine, with Vendify the purchase happens on a smartphone: the user just scans a QR code on the fridge, opens the door, grabs a meal, and leaves.
It works because every product has an RFID tag, which allows the backend to not only know what products were taken out, but also how many meals are left and what needs to be restocked. When the fridge detects what was taken, it sends this info to the app that charges the user’s credit card.
EnerGO
EnerGO is a startup for renting power banks at subway stations, cafés, and coffee shops. The main challenge was to develop a React Native app and integrate it with IoT stations that the client sent us from China, we spent a lot of time studying the hardware to learn how to communicate with the station.
Although we initially planned on making one app, there were 2 more apps that came along:
- The app for advertising — for stations that play video playlists and show advertising banners.
- The app for maintenance — for service workers to help them set up and maintain the stations more efficiently.
Crypto Wallet
Crypto Wallet is an alternative to Metamask which are platforms for crypto coin storage and exchange. When users sign up for Crypto Wallet, they can either import an existing wallet or create a new one right in the app. For the visuals, we took inspiration from Metamask but went a step further and refreshed outdated design elements like a burger menu.
Final thoughts
IoT, or the Internet of Things, connects multiple devices into an ecosystem and establishes communication between them and the cloud. These devices exchange data to help companies gain insights into customer behavior, operational performance, or market trends.
IoT in fintech is on the rise, and it’s not just a trans that will come and go — the technology has been around for years. If you want to get ahead of the curve, it is crucial not only to use IoT features but also to combine them with the recent trending technologies: 5G, AI & machine learning, blockchain, and others.
At Purrweb, we develop apps that connect various IoT devices into an automated ecosystem with a focus on modern and robust UI/UX design and cost-efficient software development approaches. We always consider trending technologies as something we can implement, but only as long as they are needed in the product and fit within our client’s budget.
