Beyond Apple Watch: Banks Explore Apps for Other 'Things'
The San Antonio financial services provider says 101,000 members have already logged into mobile banking with a spoken phrase or a selfie. It may be a sign that after 50 years, biometric authentication is finally hitting the mainstream.
U.S. Bank, Westpac New Zealand and Australia's Bendigo and Adelaide Bank share their experiences with Google Glass, smart watch and augmented reality banking apps. One lesson: voice commands disappoint in trials.
When Apple releases its smartwatch next week, there will be apps available from at least five banks and four of them are community banks. Bankers see the apps as a way to get in early on a new platform, make banking more convenient and drive digital engagement.
The development of an app for Apple Watch is a byproduct of Citi's broader transformation plan to get tech experiences quicker out of the gate. It also speaks to how mobile, and now wearables, is giving PFM an opportunity to have a comeback.
After the early exuberance surrounding Apple Watch, banks and vendors are ramping up testing of bank apps on other wearable devices and everyday objects, preparing for a day in which most everything is connected to the Internet.
Take cars, for instance. FIS, the largest vendor of technology to banks, has been testing car banking at its innovation "garage" in San Francisco. "The team is exploring ways for people [to] do simple tasks such as checking their bank balances all the way to looking at ways we can literally turn the car into a wallet," said a spokesman. "For example, pulling up to gas station, the car is recognized and the pump is turned on and authorized or going through a fast food drive-thru and via a beacon/Bluetooth/other technology the transaction is completed from the car immediately after ordering." Further off, the consulting firm Accenture envisions a day when your bank will send you an alert that your car needs repairs, provides quotes from mechanics, help set up an appointment and walk you through financing the work.
Most other experimentation in the industry with the so-called Internet of Things involves wearable devices (unless you count the startup called 21 Inc., which is reportedly working to bring bitcoin mining chips to a variety of devices like toasters). Wells Fargo has been studying the virtual reality headset Oculus Rift and TV banking. The Royal Bank of Canada and MasterCard are working with Bionym, maker of a wristband that authenticates consumers via biometrics. Citigroup hosted a challenge soliciting ideas for IoT devices including wearables.
Financial institutions are testing apps for these mostly mundane devices because they could shake up the way consumers interact with their brands and further bridge the physical with the digital realms. With the experiments, banks are hoping to play a deeper role in consumers' lives.
The industry "will see brand new experiences through the internet of things," said Hillary Law, director of enterprise production innovation at USAA, who sees IoT devices influencing the ways in which consumers interact with physical things.
USAA recently updated its mobile app with an augmented reality feature that uses the phone's location to look up the going rate to buy or rent a home in an area and overlays that information on the screen. The feature is designed to simplify the home buying process for USAA members, who are likely to more frequently move than the average person, said Law.
"We are really excited about AR," she said, adding that there could come a day when the capability is transported onto an IoT device.
Stessa Cohen, a research director at Gartner, has long urged banks to become digital advisors to consumers, whether they are looking to buy a home or to buy a coffee.
"Where you have shopping, you have payments," said Cohen.
So she advocates that features like account balance checks and potentially payments should be sprinkled on devices like watches that have potential to make such to-dos easier.
"It's a story of convenience," said Cohen.
Apple Watch, and to a smaller extent Android Wear, have captured bankers' dollars in developing apps for the newer smart watches. Most of the apps have launched with the tried-and-true basics like alerts and account balances but without the need to log in. The watch apps are tethered to their ancestor smartphones.
In the medium term, perhaps a few months from now, smart watches are seen as a more obvious way to inform consumers about their spending habits by, say, flashing a budgeting alert when someone enters a retail shop. The watches, after all, are meant to be worn instead of shoved into a purse or a pocket.
It remains to be seen what consumers will want to buy and wear. A recent study from Carlisle & Gallagher Consulting Group found 82% of consumers would not purchase a wearable device. And it seems more than a little ironic to have to pay for something to stay savvier on personal finances.
Still, USAA, Citi, the neobank Moven and a cadre of community banks already have watch apps available to their customers.
"We have been watching wearables for a long time," said Pat Kelly, USAA's executive director of emerging channels. The San Antonio financial services company sees the timing as right for watch banking, especially for its member base: mobile military members who have already expressed interest in wearable banking.
"We believe the watch is about helping you now or in the immediate future," said USAA's Kelly.
USAA's watch banking apps, like rivals', includes the basics like account balances and alerts. But it's easy to imagine a day when more personal finance features come to these devices. In fact, Citi has launched an Apple Watch app that offers color-coded visuals of how close users are to their credit limits.
Digital Insight, a unit of the ATM maker NCR, is piloting an Android Wear app for Wright-Patt Credit Union members, to reach tech-savvy customers, including young audiences. Digital Insight is kicking around watch banking ideas like flashing common banking activities for a set time or day.
"We're at the beginning of the journey," said Marshall Yuan, senior product manager at DI Labs, the vendor's innovation unit.
Some firms are viewing wearable devices as a tool to influence the price of insurance. In exchange for collecting data on gym habits, an insurance company is already giving discounts on policy plans, for example.
Still, there are questions about the degree to which people are willing to share their data, how secure these devices will be, how long the battery life lasts and whether the new business models will favor some customers to others' disadvantage. All of which was part of a heated discussion on the potential of IoT at the recent Milken Institute Global Conference.
"We can't even protect the stuff we have online today," said Marc Goodman, author of "Future Crimes" and chair for policy, law and ethics at Singularity University, during a panel at the April confab.