Wearables and Finance–Challenges & Opportunities

Now that smart phones have revolutionised the way we bank, experts are predicting that wearables will be the next game changer for banking. And it’s not just banks that are paying attention to the wearables market. With worldwide wearable device sales expected to double by 2022, many of the brands that you would recognise as household names are betting on wearables. For instance Levi’s and Google have already developed smart clothes, Adidas has partnered with Fitbit in developing its own version of the popular fitness tracker and Nike has done the same with the Apple Watch.

For banks however, the focus is likely to be on using wearables to extend the ease and convenience introduced by internet enabled services like mobile and online banking. In fact, wearables are already being used to perform common functions like account monitoring, alerts, notifications and bill payments.

Wearable payment options are also expected to grow along with the market. Near field communication (NFC) – which allows devices placed close to one another to exchange data – also makes it possible for wearables to be used to pay for purchases simply by tapping the device onto any NFC-equipped payment terminal. Wearbles therefore, have the potential to reduce the effort needed to pause, remember, and enter authentication pins, to a mere flick of a wrist. The more these devices are incorporated into the payments experience, the faster and more seamless that experience will be.

But the opportunities for wearables don’t end there! Businesses are already dreaming up ways of using wearables to improve their customers’ experience in-store or in the case of banks, in-branch. Imagine the ability to recognise and personally greet your customer from the moment they step into a branch. Or the ability to chat with them face to face about their mortgage or savings plan without having to ask them to come in to see you or without disrupting their day. Or even the ability to show them animated 3D images of their interest accumulating over time.

Wearables, can give customers this experience at home or on the go. Plus, unlike smart phones and tablets, devices like headsets and eyeglasses are entirely hands free. When combined with artificial intelligence and virtual or augmented reality, these wearables have the potential to transform the way banks and customers build relationships together.

Of course, no new technology is without its challenges and wearables come with their own risks that need to be managed. Chief among them is security. Most wearbles connect to other devices using Bluetooth, NFC or Wi-Fi and there are valid concerns over whether these connections are sufficiently secure for the sensitive data increasingly being stored and transmitted by wearable devices.

Data gathering and the responsible use of data will also be an ongoing concern for wearables in the future especially given the fact that many wearables are specifically designed to track health and activity data. These factors make safety and transparency in the collection and use of wearable device data that much more critical.

Despite these challenges, wearables are already changing the way we shop, bank and live and it’s expected that their prevalence will only increase in the future. There may be challenges to overcome, but financial institutions are already working to make wearables a secure and seamless element of the customer experience.