Saturday, 20 July 2019

Wearables: A New Opportunity In Banking – Forbes

Benita Uncategorized 0

The market for wearable digital technology is taking off. Market revenue was expected to reach $8.3 billion in 2018 and grew at an estimated compound annual growth rate (CAGR) of more than 17% from 2013 to 2018.  It shows no signs of slowing down, with 31.4% growth in quarter four of 2018 and 27.5% more devices shipped than in 2017. At my company, we regularly consult with clients on ways to implement wearables and related technologies; I believe wearables represent an enormous opportunity in banking and are likely to revolutionize the industry over the next decade.

Wearables And The IoT Revolution

The common term “wearables” refers to devices with embedded digital technology that are designed to be worn rather than carried. From a technology perspective, wearables are a subset of the rapidly growing internet of things (IoT) category. As of 2017, 127 new IoT devices were connecting to the internet every second, and Business Insider estimated that there will be more than 64 billion IoT devices worldwide by 2025. I believe the size and economic potential of IoT promises that there will be a rich and deep ecosystem to support banking use cases, of which there are many.

A Wealth Of Opportunities

While wearables currently offer ease-of-use functionalities like payments, there are more functionalities to come in the near future. With wearables, consumers could soon utilize:

• Payments: Near field communication (NFC) technology enables consumers to pay for coffee, retail items or services by simply putting their smartwatch near an NFC-equipped point-of-purchase terminal. By one estimate, wearable transactions will comprise roughly 20% of all mobile transactions by 2020, with total transaction volumes of over $500 billion.

• Notifications and alerts: Wearables, particularly watches, could give banks the most reliable instant access to customers yet devised. They can receive all sorts of routine notifications, such as the availability of a monthly statement or the possibility of an overdraft. Even more importantly, wearables could allow banks to fine-tune anti-fraud processes. Instead of automatically blocking suspicious transactions, some of which may be legitimate, they can contact the customer in real time to determine the right course of action.

• Inquiries and transactions: Wearables could let customers make inquiries, transfer funds and perform other transactions on an anytime, anywhere basis.

• Geolocation features: Wearables have the potential to be geo-tracked, which would enable banks to use convenience features such as helping customers find the nearest ATM. I envision new, less conventional business models as well, such as retail partnerships where a bank opens its wearable communication channel to marketing messages from its retail customers.

Capabilities And Challenges

In order to succeed, wearables for banking may have to prove themselves better than smartphones. This means offering most of the capabilities of a smartphone with significantly greater convenience. Here are some questions banks need to ask themselves as they move forward:

• What is the feature set? You’ll need to consider this carefully to balance consumer expectations and competitive pressures on the one hand with cost and time to value on the other.

• How will the interface work? Voice user interfaces (VUIs) are at the top of the convenience list. They eliminate the need to tap information into a smartphone, a process that can feel clumsy for many users. Will it be possible to adapt existing telephone trees — at least in the short term — or should banks go directly to natural language chatbots?

• What about security? People will use wearables, by their very nature, commonly in public spaces — where network safety is not guaranteed. For this reason, banks should make sure all data, including PIN and account details, is encrypted. Furthermore, customers should be able to perform a remote wipe of all data if their wearable device is lost.

From Competitive Advantage To Table Stakes

At present, wearable banking is in its early stages, and banks that can offer it will likely obtain a competitive advantage — provided that their offering works well, is easy to use and is safe. In the relatively near future, however, wearable banking could become table stakes for the industry. In the end, developing a successful product will present significant challenges, but I believe the results will be well worth the investment.

Source: https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2019/07/11/wearables-a-new-opportunity-in-banking/

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