a) Main Features of Internet of Things (IoT) Technology (10 Marks): IoT refers to interconnected devices that collect and exchange data over the Internet without human intervention. In the Ghanaian banking context, where digital transformation is key post-2017 cleanup, IoT aligns with BoG’s fintech regulations under Act 987. Key features include:

• Connectivity: Devices connect via wireless networks (e.g., Wi-Fi, Bluetooth, 5G), enabling seamless data transfer. For example, ATMs in GCB Bank use IoT for real-time status updates.
• Sensors and Data Collection: Embedded sensors gather environmental or user data, such as location or biometrics, supporting compliance with BoG’s Cyber Security Directive 2020.
• Automation and Intelligence: IoT devices process data using edge computing or AI for autonomous actions, like fraud alerts in Stanbic Bank’s systems.
• Scalability: Systems can expand to handle numerous devices, aiding banks in managing large-scale operations amid recapitalization efforts.
• Interoperability: Devices from different vendors communicate via standards like MQTT, ensuring integration in hybrid environments, as seen in Ecobank Ghana’s multi-vendor setups.
• Security Protocols: Built-in encryption and authentication, though often challenged, to protect data flows.
• Low Power Consumption: Many devices are designed for energy efficiency, suitable for remote banking in Ghana’s rural areas.
• Real-Time Analytics: Enables immediate insights, enhancing decision-making under Basel principles.
• Cloud Integration: Data storage and processing in clouds for accessibility, complying with BoG’s outsourcing guidelines.
• Unique Identification: Each device has an IP address for tracking, vital for audit trails in governance.

b) Two Use Cases of IoT in Modern Banking and Major Challenges (10 Marks):

Use Case 1: Smart ATMs and Branch Management (3 Marks): IoT sensors in ATMs monitor cash levels, downtime, and user interactions, enabling predictive maintenance. In Ghana, Access Bank uses IoT-enabled ATMs to reduce outages, improving customer service and liquidity management per BoG guidelines.

Use Case 2: Wearable Devices for Customer Authentication and Payments (3 Marks): IoT in smartwatches or cards allows contactless payments and biometric verification. Ecobank Ghana integrates IoT wearables for secure transactions, enhancing financial inclusion post-DDEP.

Major Challenges (4 Marks):

• Security Risks: Vulnerabilities to hacking, as seen in global incidents, could lead to data breaches; BoG’s Directive 2020 mandates robust controls, but implementation costs are high.
• Data Privacy Concerns: Handling vast personal data risks non-compliance with data protection laws, similar to issues in the 2017 bank collapses.
• Integration and Compatibility: Legacy systems in Ghanaian banks like GCB may not mesh with IoT, requiring costly upgrades.
• High Initial Costs and Infrastructure: Rural connectivity issues hinder adoption, exacerbating digital divides.
• Regulatory and Skill Gaps: Ensuring BoG approval for IoT deployments demands skilled staff, scarce in the sector.