The wearable bank

Watch-calendarWe can expect wearables to play a major part in the digital payments arena. Which is all the more reason for bankers to lose no time in getting behind it.

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APRIL 24 will mark the three-year anniversary of first day you could purchase an Apple Watch. That the first month of Q2 2015 had all but passed didn’t stop Apple from selling over four million units before July 1, making it the quarter’s top selling wearable technology. 

It was an impressive debut, even though at the time competing wearables hadn’t exactly flooded the market. Since then, the wearable tech category has been swelling. If that’s an indicator, we can expect wearables to play a major part in the digital payments arena. Which is all the more reason for bankers to lose no time in getting behind it.

The coming boom in wearable tech

Research and advisory company Gartner predicts a boom in wearable tech sales:

… worldwide shipments of wearable devices will reach 225 million in 2019, an increase of 25.8 percent from 2018. End-user spending on wearable devices is forecast to reach $42 billion in 2019. Of that, $16.2 billion will be on smartwatches.

Likewise, PYMNTS.com reports this optimistic prediction from International Data Corporation’s Quarterly Wearable Device Tracker:

In fact, global shipments of wearable devices will reach 125.3 million units in 2018, an 8.5 percent increase from the previous year … the five-year compound annual growth rate (CAGR) is expected to hit 11 percent, with shipments reaching 189.9 million units in 2022.

Despite sales to date, it’s possible that Apple Watch’s $399 to $1,500 price range exerted a dampening effect. If so, that’s about to change, for two reasons. First is the influx of competing, lower-end wearables driving prices down. Walmart will set you up with a Tagital watch for $15.99. Second is the fact that no law confines wearable technology to wrists. You’ll find it adorning heads and feetneckshands, and even fingers.

The banker’s wearables challenge

Let’s be honest: What isn’t driving wearables sales is consumers who can’t wait to execute payments from their wrist. 

Much of the credit for the wearables category growth goes to fitness-related applications. Popular wearables measure heart rate, monitor blood sugar, track miles walked or run, remind wearers to get up and move, and measure exposure to ultraviolet light. Conveniences like being able to subtly check alerts, emails, and text messages without pulling out a phone certainly play a role. And, if you can imagine, some people even using smart watches to check the time.

Not to be overlooked is the upward spiral of fashion. As increasing numbers of non-geeks adopt wearable technology, herd mentality inclines us to follow suit. I can hardly think of a better harbinger of wearables-as-fashion than the fact that Louis Vuitton has gotten in on the act with its Tambour Horizon watch. The most basic model will set you back a mere $2,450.

Wary of offering a one-trick pony, many wearable tech marketers are building payments capabilities into their products. But since few people are likely to purchase wearable technology expressly for banking purposes, the banker’s challenge is to become an immediate, attractive afterthought the likes of, “Since I have this device, I might as well use it for digital banking.”

It follows that banks had better give their clients effortless setup and functionally complete apps. Given the growing range of devices and applications, this will be no small challenge. PaymentsSource observed a roadblock in the form of …

… the lack of infrastructure; wearable devices need the buy-in of major technology players, and many have different strategies for this market. 

On the other hand, marketers of wearable tech want their payments apps to work just as much as bankers do. Device sales depend on it. So bankers may find a willing partner in wearable tech marketers.

Financial institutions would do well to make a priority of moving into the wearable tech space. As wearables become increasingly commonplace, demand will inevitably grow. Even if consumers adopt it as a “might as well.”

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