Move Over Phone, Make Way for Smart-Watch Banking
Ready or not, wearable banking think transferring funds by tapping a wristwatch or checking balances with a couple blinks of the eye is close to becoming a reality.
Google introduced its Android Wear operating system for smart watches last week, and some banks, including U.S. Bank, Wells Fargo and ING Direct Canada, are already looking into developing apps for it. These apps would allow bank customers to check their balances, receive fraud alerts and perform other banking tasks simply by tapping the face on their watches.
Charaka Kithulegoda, chief information officer at ING Direct Canada, says that wearable technology "will be one of the hottest trends for 2014."
ING and others are already working on apps for existing wearable technology, such as Google Glass and smart watches from Samsung and Sony. Westpac New Zealand, for instance, was one of the first to create an app that lets consumers check their bank balances on a Sony SmartWatch.>
The main challenge to wearable banking is the lack of consumer adoption of such devices to date. If and when wearable devices do become more popular, other hurdles are sure to arise. For instance, as banks work to support a growing list of devices, including smart phones, tablets and phablets, carving out the time and resources to create wearable apps is bound to be tough. And smart watches and glasses are sure to prove fertile new ground for hackers, whose exploits will have to be followed closely.
Still, Kithulegoda says the debut of Android Wear is a significant development because it has the backing of not just Google, but also the likes of LG, Motorola, Samsung and Intel. Such a lineup of tech heavyweights behind one operating system could help it leapfrog Apple, which has yet to debut its smart watch operating system.
"Momentum is on their side," he says. "Wearable technology has the ability to transform computing."
ING is "actively looking" to develop banking apps for smart watches and other wearable devices, he says. The bank already has an app that works on the Sony SmartWatch. Kithulegoda sees a lot of potential for Android Wear, especially for its voice control and notification features.
Voice commands could be very helpful for someone who wants to quickly access bank account information but is driving a car or walking down the street. The notification feature, meanwhile, could be used for fraud alerts, balance alerts and other timely messages.
ING's smart watch development efforts are driven by a need to be where customers want the bank to be, he says. "It is a smartphone today, it may be a watch tomorrow and it may be something else the day after," he says, adding that ING hopes to pilot an app in the next few months.
U.S. Bank is working on a prototype app for the Android Wear-based Moto 360, as well as for Google Glass and a Samsung watch. The bank is testing integration ideas, user experience, scale, and use cases, and expects to roll out an app to the public in 2015.
Niti Badarinath, U.S. Bank's senior vice president of mobile banking and payments, envisions delivering a variety of alerts including messages about potential fraud, location-relevant offers, payment due notices, financial health updates, and possible violations of spending limits via these devices. "While not yet ready for prime-time, we think this is as an excellent way, as the technology and customer adoption matures, to tell our customers what they need to know, when they need to know it, without being too intrusive," he says.
Miranda Hill, a vice president and manager for Digital Innovation Capabilities at Wells Fargo Labs, notes that in the past, wearable computers were only used by a small group of early adopters, but she says that is changing.
"A huge influx of wearables ranging from smart bands and watches to Google Glass are being introduced into the marketplace," she says. "Moreover, consumers are finally adopting them" so much so that the market is expected to reach $1.5 billion in 2014, according to Juniper, up from about $800 million last year.
At Wells Fargo Labs, Hill and her team are exploring use cases for smart watches. "Just like any new technology, our focus is on test and learn, and understanding whether the new technology will help our customers succeed financially," she says. "We are asking the questions why make this experience wearable? What am I doing with my hands that necessitates this wearable form factor? What tradeoffs do customers get in exchange for the smaller screen real estate?"
To generate interest in Android Wear, Google gave developers advance copies of the device so they could start to write applications right away. (Usually a device prototype comes out first, and the actual development environment comes out later, leaving app developers at a loss in the meantime.)
The new operating system can also support certain functions written for existing Android apps. For instance, if a bank has already created an option for customers to receive alerts, say, when a transaction on their account exceeds $200, they should be able to port that code over to an Android Wear app easily.
ING's Kithulegoda and U.S. Bank's Badarinath say they could see themselves wearing smart watches. Both happen to already wear health tracking bands, so the new gear would not be too much of a stretch for them. Wells Fargo's Hill is less sure she would, noting that she doesn't wear a watch at all. Still, she adds that she knows many people who are trying different smart watches and bands to track their physical health or to check their texts and email.
One obstacle that has held back Google Glass is its perceived geeky look and potential for creepiness (due to the wearer's ability to take photos and videos of people without their knowing). Google may have found an answer to the style problem on Monday, when it announced an agreement with Italian eyewear designer Luxottica to design future models of Google Glass. Luxottica makes, among other brands, Ray-Ban and Oakley sunglasses, both considered chic among a certain set.
"I think most of these devices, including Glass, are for the hardcore techie today," Badarinath says. "They're not ready for widespread adoption yet."
Hill agrees, observing that in smart watch design, form follows function. "Many people who buy watches do so for aesthetic reasons," she says. "Though some consumers would welcome the look of relatively large form factors on their wrist, I think there are many others who are waiting for the technology to mature so that the focus is more on form and style."
Android Wear is less nerdy than Glass, Kithulegoda believes. "I've seen pictures of the Moto 360 and the LG G Watch, and to be honest they don't look geeky at all," he says. "In fact, they look pretty stylish and cool."