Will wearables lead to a new era of digital disruption in banking?
2 September 2015
It took five years for online banking to become mainstream and less than two years for customers to adopt mobile banking. But what’s next? Does wearable technology have the potential and the power to redefine today’s banking business?
Intelligent wearables are the hottest products on the technology market in 2015. The most hyped device is definitely the smartwatch, with 6.8 million units sold in the last year. With a market share of 17.7%, Samsung has claimed the spot as a market leader, with Apple entering the wearable tech field and launching the new Apple Watch in April this year.
On April 3, 2010 Apple launched the iPad and succeeded in positioning a completely new category of device on the market. And industry experts have no doubt that other mold-breaking devices will have a similar impact on consumer technology in the future.
How have (or could) financial services be disrupted with wearables?
So far, we’ve seen banks conducting early trials of wearables, to integrate new smartwatch platforms into their existing channel concepts. The range of functionalities is broad: from balance check, to payments, to communication. But so far, nothing that would cause real disruption.
For instance, India’s second largest private sector bank, HDFC Bank, introduced a smartwatch application to the market which enables customers to check account movements, to top up their pre-paid mobile phones or to conduct utility payments with the help of their Apple Watches. Another notable application comes from the Commonwealth Bank of Australia – as well as balance enquiries, customers can also locate the next ATM or withdraw cash at any ATM of the bank only with the use of their smartwatch.
Differentiating the smartwatch banking app from mobile banking
The fact that smartwatch applications are based on data drawn from the mobile banking account of the user poses the challenge for banks to build a contextual experience with relevant information. In a nutshell: it is not enough to replicate the mobile solution in a shrunken format on the wristwatch.
With wearable technology, banks have the possibility to leverage entirely new capabilities such as bio-sensors, gestures or geolocation.
The shift from online to mobile banking has already shown that the smaller the screen, the less complex the interaction should be. A clear strategy that takes into account what matters to the user the most, in which way they want to be notified and what they can do with the presented data is crucial.
Wearable technology has not hit the mainstream yet
Although customer adoption of wearables is still in an early phase, the new technology has the potential to radically reshape the way we bank and consumers communicate with banks. The expectations of wearables are high – CCS Insightspredicts that by 2018 almost 350 million wearable devices will be in use worldwide.
Smartwatches open up great opportunities for banks to push information right onto the wrists of consumers 24/7 and to build relevance with individual notifications that can be viewed at a glance. But until the ‘killer app’ – that creates a tipping point in smartwatch usage – is created, banking apps could remain a fad, a novelty.
Join the Misys & Samsung webinar on ‘Wearable Banking – a new era of digital disruption?’ where we will explore what that killer app could look like, we look at existing use cases – and we’ll look beyond the smartwatch to the future of wearables in banking.