How Apple Watch Could Change Banking

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Depending on whom you ask, the recently announced Apple Watch will either catapult wearable computers into the mainstream or meet the same indifference as other interactive objects.

If the former comes true, the Apple Watch could also present a new way for consumers to interact with their finances, and banks will be tasked to reimagine the way they provide service features to their customers.

"Imagine being able to check your balance right from your wrist, without reaching for your phone," said Matt Krogstad, vice president of mobile banking and payments at Bank of The West. "I think it's an awesome use case."

His San Francisco bank, a unit of BNP Paribas, is interested in making its quick balance feature, which lets people check their balances without signing in, available on Apple Watch. The user could glance at a watch and touch the crown dial to see an account balance and other "snack-size" data.

The $69 billion-asset Bank of the West said it knows demand will be there, as customers already do an average of 21 quick balance views per month. By comparison, customers log in to their mobile apps seven times a month to get the balance.

A killer banking use case has yet to be uncovered for wearable devices. However, curiosity is there among banks that want to be prepared for when one resonates with the everyday consumer.

Wells Fargo & Co., U.S. Bank and Tangerine Bank (formerly ING direct) have been working on apps for the Samsung smart watch and Adroid Wear, for example. Bendigo and Adelaide Bank in Australia has created a payment app for the Samsung Gear 2 watch that is already live in production. And another bank in Australia created a suit prototype so wearers could pay with a wave of the sleeve.

The Apple Watch will come with a reimagined user interface that includes a digital crown to let consumers scroll, zoom, navigate, access the Siri app, and share their heartbeats with one another. The device will also include a built-in speaker and a so-called Taptic Engine that will alert a wearer via a vibration meant to feel like a gentle tap on the wrist. This could conceivably become a way to let users know they have messages from their bank. And the watch will have Apple's mobile payment capabilities.

Charaka Kithulegoda, chief information officer of Tangerine, said he hopes Apple "will push the industry to the next frontier of the user interface in wearable."

At first blush, Kithulegoda envisions the device serving as a window through which wearers could request basic banking information by voice and receive timely alerts that would only require a glance — instead of pulling out a tablet or phone. Such a capability is particularly valuable, say, when someone is wearing gloves and struggling to use the phone.

The Apple Watch, which costs $349, must pair with an iPhone. However, Kithulegoda said, "the phone is almost going to take a backseat to how you interact with the technology."

"The potential in wearables is really big," said. "Today, there is a fairly restricted definition of what mobile is. But when you think about it, wearable will change the definition of what we mean by mobile."

Mark Schwanhausser, director of omnichannel of financial services at Javelin Strategy & Research, agreed with that prediction.

"There is a day — somewhat of a distant day — when we will look at smartphone in the same way we look at the pager," he said.

Acceptance, of course, remains to be seen for the smart watch that Apple announced this month but won't be available until early 2015.

"Will everyone wear Apple Watch? Maybe or maybe not," said Stessa Cohen, a research director at Gartner. "I want a Pebble Watch. …I like the colors."

Indeed, one of the factors that will dictate the popularity of this technology is the look, which probably explains why Apple is offering its watch in three styles and allowing consumers to customize the timepiece's face.

"The trick with wearables is it has to be something someone wants to wear," said Ben Jackson, director of prepaid advisory service at Mercator Advisory Services. "Function has to meet fashion."

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