Mobile Beaters? Wearables in Digital Banking
16 February 2015
I have two watches at home which I rarely wear. When I do wear them, it is mainly for fashion. I do not feel a need to wear a watch since I have a mobile phone in my pocket. This is a simple illustration that if wearable tech does not provide value which mobile cannot, then people will not use it in their daily life.
So, for wearables to be adopted, they should deliver a value proposition which mobiles cannot. There are many ways in which this can be done:
1. Payment: wearables can make payments faster and easier. A customer could make a fast payment at POS with either a mobile or a smartwatch by simply waving them in front of the POS terminal. However, it would be simpler to do this action with a smartwatch. Using a mobile takes an extra step – you need to take it out of your pocket. This is a small but significant friction point. Furthermore, biometrics in the smartwatch could authenticate the user, providing a higher degree of security for the payment.
Possible Wearables: smartwatches, glasses, wrist bands, gadgets embedded in clothing (e.g. Power Suit by Heritage Bank)
2. Health tracking and monetary rewards: Wearables can be used to track health metric accurately and provide that information to insurance providers. Based on that information – how much a customer is walking or running for example - the price of the insurance policies could be discounted. This is the wearable equivalent to the dashboard cameras that many motor insurers have recommended.
Possible Wearables: health tracking gadgets/ wrist bands / smartwatches / glasses
3. Convenience: The users can quickly get basic information about their accounts (e.g. see account balances), receive notification and alerts, and specials deals or offers. According to a report by PwC entitled “The Wearable Future”, 51% of respondents aged 18-34 say that they would like to get information about retail deals through wearable devices. With this convenience, wearables could be used as a supplement to mobile.
Possible Wearables: smartwatches
4. Security: Biometrics and voice recognition features in wearables offer enhanced security. Biometric authentication (e.g. via fingerprints or voice recognition) gives a user confidence to use the gadgets more frequently for transactions.
Wearables: smartwatches, glasses, wrist bands
Banks and credit unions should invest in the development of wearable device solutions. They could be a key differentiator in the future. However, to win the customer engagement, solutions should deliver a real value proposition.