Innovative services for consumers
Many financial institutions, especially banks, have been working to create better experiences for their customers. There are many things that have changed over the years, but mobile has been one of the biggest. Consumers have come to expect mobile services like mobile banking, bill pay, and other related services. In their quest to give customers innovative services and to have an advantage over the competition, they have started to move past mobile devices like phones and tablets to wearables.
Current use of wearables in Finance
As mobile technology has evolved, devices have gotten smaller and better at communicating and integrating with other systems. For this reason, the global wearables market was valued at around $9 billion in 2014 and some experts feel that it will grow to about $30 billion by 2018.
This investment in wearables has encouraged banks to start rolling out wearable apps. In fact, according to a recent survey, about 15% of banks now have apps or will so soon. 72% say they want to do more with wearables in the next three years. Bank see potential in this technology and will continue to invest in it in the future. Currently, there are two main aspects of banking with the most potential.
The most advances uses
The two most advanced uses of wearables are in payments and the extension of current mobile banking functions. Payments in particular are highly developed. There are many different payment options: jewelry (NFC Ring), wristbands (Jawbone, UP4, bPay Band, Nymi Band), watches (Watch2Pay, Apple Watch, Alibaba Pay Watch, Sony Wena, and Samsung Gear S2), clothing (Motorola Skip, Lyle & Scott bPay jacket). All of these devices connect with mobile phones or bank accounts to allow consumers to make payments for good and services at stores. Wearables are also being used to improve functions like checking balances, tracking cash flow, location services, receiving alerts and notifications, and making payments.
Many of these wearables use near field communication (NFC) technology, apps, and biometrics to connect wearables, smartphones, and other devices.
The future of wearables
Since there are so many devices being used and so many banks creating apps to use on these devices, it would seem that the future of wearables is bright. The problem is that not everything is as it seems. While the future looks bright in some ways, there are other concerns that need to be addressed before the technology can make the impact that many people hope for.
The needs of consumers and banks
For wearables to continue to grow, they need to address the needs of consumers and banks. In order for consumers to adopt the technology, wearable devices will have to improve in terms of simplicity, intuitiveness, reliability, and transparency. They also have to find ways to work around the small screen size they require. The goal of banks should be to add value to the consumer’s experience and create the wearable and app so that they become a seamless aspect of the entire system. Lastly, they have to address security concerns that many consumers may have. Many consumers may be nervous about what happens if they lose the device or how safe it is to wirelessly pay for something using a wearable device.
Many companies like Apple, Samsung, and Google are continuing to upgrade and improve their wearable devices, while banks and other financial institutions are creating and improving apps that work with wearable devices.
The challenges of wearables
The interesting thing about wearables and something that impacts its growth is the fact that of banks that have no strategy for wearables, 78% are in the US and EU. This means that a large part of the market has little or no interest in wearables.
This seems to be backed up by other research as well. Surveys by the Financial Times show that the wearables market in the US will continue to shrink over the next few years.
The result of this is that tech companies who invested in wearables are now struggling. Fitbit and Jawbone have been downsizing, laying off staff, and struggling financially. Motorola and Pebble were once interested in the technology but have now abandoned those plans.
Leaders in wearables
Many leaders in wearables, Apple being number one, feel that there is still a lot of potential in the technology. But so far, other than a few semi-successful fitness trackers and finance apps, that potential as not yet been realized.
Ben Wood, analyst at CCS Insight stated that wearables have not lived up to the hype and that they are a solution still looking for a problem. That is one of the main challenges of wearables in finance and other industries: how can they make the lives of consumers so much better that consumers view them as a necessity. Right now, that is still a major hurdle. In a recent survey of almost 10,000 consumers of wearables in the US, UK, and Australia, researchers at Gartner found that 29% abandoned the devices. That is not a good sign for a technology that has not caught on yet with a majority of consumers.
The market for wearables
Despite their fall from grace and the challenges they face, many in the field still feel that wearables have a market. If companies can figure out how to create them in a way that makes the lives of consumers easier, soon we might all be paying for goods and services with a bracelet, buying and selling stocks on a watch, or receiving alerts and notifications in a jacket.