Wearable banking: trends that will revolutionize legacy financial institutions

As modern consumers become more open to embracing opportunities for frictionless transactions faster, the demand for wearable technology keeps increasing. Considering the increasing popularity of such devices, seamless user experience has become a priority for main industry players. Consumers no longer expect their wearable devices to help them achieve their fitness goals; increasingly more want these devices to manage their finances and enable them to live better, more organized, and effortless financial lives.  

Some financial institutions are starting to adopt wearables mainly to facilitate transactions and drive faster payments, paving the way to the materialization of a new type of customer experience.

An overview of the state of wearable technology  

By the end of 2021, a whopping 500 million wearables will be sold, including fitness devices, Bluetooth headsets, smartwatches, and others. In terms of sales, it looks like a third will most likely be triggered by smartwatches. Due to their popularity among modern consumers, banks have started to optimize their investment pools, spending more on wearable tech, better targeting customers interested in smartwatch-ready apps that can help them manage their finances more seamlessly. 

Financial institutions can also use wearable technology to their advantage. As opposed to other devices like computers and laptops, wearables feature biometric security and additional signature models that are nearly impossible to reproduce. That being said, authentication becomes even more secure, thus reducing the risk of infringement and financial fraud.

Wearable banking – frictionless user experience & access to value-added services 

Wearables pave the way to creating value-added services in banking because the security levels they provide appeal to daily consumers constantly seeking frictionless user experiences when managing their finances. Needless to say, banks must remain strategic and keep investing and innovating in tech stacks and R&D programs to remain competitive.

For payments, wearable technology offers tangible benefits to consumers. Elegant designs paired with integrated capabilities and the easiness of tapping to pay with a wristband provides the unified integration people have been expected from banks and other financial institutions. 

The need to stay connected goes hand in hand with the need to access baking services fast, securely, and transparently. Trust in delegating tasks to wearable payment solutions is what people need and expect from wearables today.

Endless opportunities that will revolutionize banking

Although wearables have proven to offer user-friendly functionalities such as streamlined payments, additional opportunities are to come in the foreseeable future. Via wearables, consumers are expected to embrace even more uses cases: 

  • Payments via NFC technology where consumers will be able to pay for retail items or coffee by placing a smartwatch close to an NFC-enabled POS terminal. In 2020, transactions made via wearables amassed 20% of mobile payments, with a volume of $500 billion in total transactions made. 
  • Alerts & notifications via wearables could potentially help banks provide their customers with instant access to value-added services. Furthermore, the technology could also enable institutions to fine-tune their anti-fraud measures and contact customers in real-time to settle on a plan of action. 
  • Geo-location features via wearables could be of great assistance, too. By tracking user devices, banks could help customers find ATMs in their proximity on the go. 
  • Real-time transactions and transfers via devices that support at any time, from anywhere. 
  • VUI (voice user interface) capabilities to improve user experience and prevent customers from tapping to perform an action. 

In conclusion, banks and financial institutions that will keep pace with technologies such as AI, IoT, and big data analytics, will most likely succeed at making wearables an integral part of their banking services. Even though the traditional consumer will be reticent in embracing them, the key to success is to make the user experience as streamlined as possible; at the same time adding continuous value and giving pertinent reasons for ongoing use. 

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