Wearable technology – ideal for the financial services industry’s ‘push’ content such as security notifications or banking alerts for low balances – is poised to usher in a new era of digital banking.
In a report last fall, PwC reported that 21% of American adults already own a wearable device, about on par with where tablets were two years after their introduction. It’s too early to say whether wearables will keep pace, but for a point of comparison, by 2014 more than 40% of Americans owned a tablet. For now, it appears that smartwatches will dominate the emerging wearables category as consumer early-adopters flock to the Apple Watch and wearable tech from competitors including Google, Samsung and others.
The data we have been gathering on smartwatch early adopters through our own customer testing is already extremely promising. We’ve found that smartwatch users, whether Apple or Android, have more overall financial products with financial institutions than non-users. This is correlation, rather than cause and effect, but it is still telling financial institutions an important message: the customers who engage with you the most have already adopted smartwatches so you have both an opportunity and a responsibility to provide them with a new way to experience banking.
“The customers who engage with you the most have already adopted smartwatches so you have both an opportunity and a responsibility to provide them with a new way to experience banking.”
Our data also shows that not only do smartwatch users log in more frequently to your digital channels in general, those activities increase with the launch of a banking app on the watch.. The data makes a compelling case that even at the early stages of what smartwatch banking apps can do, the use case is being proven.
So what does this mean for financial institutions right now? It means your most engaged customers are expecting you to serve them better in this new channel – today. It’s important for financial institutions to start testing these new solutions now because, as with any new technology, it will take time to figure out how to best serve the customer. Finding the right notifications, insights and best way to capture their attention will take testing and innovating.
Those sitting on the sidelines waiting for the ‘killer app’ are missing out on serving their customers who are the most loyal, profitable and engaged. It’s a matter of being ahead of the competition and leading the field – technology is not going to slow down – neither should your organization. Let’s look at this new world of banking.
Making Wearables Work Now
As with the first apps available for smartphones, software developers embarking on this new era are finding that there is a lot to learn about the user experience on this new, even more intimate form factor. The calendar app on your smartphone may be something you can’t live without, but how do you translate that experience to this new screen on your wrist in a way that is useful and distinct?
In fact, it may not be about translating what you know, but discovering new experiences uniquely suited for the smartwatch. Just as mobile banking built upon desktop online banking and opened new possibilities – such as remote check deposits using the phone’s camera – we have to reimagine the experience for wearables.
‘Push’ content including banking alerts, security warnings, low balance notices and the like can provide a quick report of valuable information with a glance at the wrist, for instance. Financial institutions can start solving these basic customer needs even with the first wave of ‘wearable banking’ applications being developed and tested.
As development matures, the next wave could include actionable notifications, from transferring funds and making daily payments to purchasing a stock the instant it hits the price you pre-set. Contextual notifications will mean that actionable promotional content can be delivered at just the right time – enabling user experiences that provide opportunities to rethink how banks can engage with customers.
“Contextual notifications will mean that actionable promotional content can be delivered at just the right time.”
For example, you might get a limited-time promotion that is just right for you as you walk by a local branch or a summary of the balances in your accounts when passing by an ATM. You can also use this capability to integrate merchant-funded rewards, location and balance availability – the ultimate in personalized, contextual engagement. As much as wearables will be an important delivery mechanism, gathering data and analyzing it to create great experiences or make relevant recommendations will be critical.
Similarly, biometric authentication — already gaining traction on mobile devices today with Touch ID – might be employed in new ways, authenticating you at the local ATM or letting a watch app’s heart rate authentication replace your debit card.
Moving Beyond Notifications
From this early vantage point, it appears that the first wave of wearable banking has the potential to change the consumer perception of what banking can offer. As device adoption and app development mature, there’s an even bigger opportunity for wearable banking to be truly transformative.
As the wearables category extends beyond smartwatches to include smart-eyewear, gesture-controlled devices and other connected products in the larger Internet of Things, we envision a world of ‘predictive banking.’ All the data you generate across your daily life might be captured, connected, and analyzed – from sensors embedded in everything from your coffee pot to your car – to be turned into actionable insights.
The pain points of banking now are not much different than they have been over the last 30 years. Access to up-to-date information on transactions and balances remains a core customer demand, whether delivered via physical statements to mobile banking. And as mobile devices compelled banks to simplify the information they deliver to their customers, wearable devices will let banks rewrite the entire experience. As our expectations around immediacy and ease of use grow, wearable devices will give us more predictive insights – in bite-size interactions – into our money management that we’ll be able to act on in real-time.
Financial services institutions must innovate in advance of the customer journey to be ready when they arrive: focus on creating wearable device experiences that you cannot currently provide and wow your customers with ease and value. Remember, wearable banking is not just about creating an experience for the sake of creating it, it’s about changing the game and connecting with your customers in a way that you never have before.
Use these new technologies to change your mindset and rethink how you approach banking – it’s that state of mind that will set apart the winning financial institutions from the ones who will get left behind.