The financial sector is transforming at an astounding speed, thanks to the growth of the fintech industry. In 2016, global funding in fintech reached a staggering $78.6 Billion from a mere $5.5 Billion in 2005. It is no surprise that Fintech has reshaped, reinvented and redefined the global landscape of financial services.
As we head towards a mobile-only world, customers are increasingly adopting fintech solutions. According to Capgemini’s World Fintech Report of 2017, 50.2% of customers say that they have already opted for at least one non-traditional financial firm. It is clear that for financial firms to cater to the digital natives – millenials and Gen-Z, fintech offerings are a must.
Wearables: The Next Wave Of Revolution In Fintech
Wearable technology is not a standalone phenomenon and is a part of the larger wave of the ‘Internet of Things’. Though by 2018, the global Wearable devices market is projected to reach $20.6 Billion, the financial sector has still not leveraged this opportunity enough. A survey done by Misys reveals that only 15% of the banks worldwide already have or are currently rolling out a wearable app.
The reason for this slow acceptance of Wearables is owing to the inherent challenges of the devices like smaller screen size, lower battery life, smartphone dependency, limited scope of innovation, etc. Hopefully, technology advances will soon enough surpass these challenges.
Nonetheless, the financial services sector acknowledges and is optimistic about this emerging trend.
Statistics Which Reinstate The Positive Outlook Of Fintech Towards Wearables
- 96% of banking professionals agree that wearable technology will impact their industry.
- 72% say wearables are on their three-year roadmap.
- 82% believe that smart watches will facilitate financial transactions in the future.
If done right, Wearables present a great opportunity for the players to stand-out from the crowd. However, it is imperative for organisations to take into account the evolutionary limitations of the technology and devise solutions to provide innovative and customised offerings for their customers.
Wearable Devices Have Limited Space – How Fintech Can Make The Most Out Of It
While creating wearable solutions, developers face a three-fold challenge of optimising the functionalities in the limited screen space, creating value for customers through the features and also offering a differentiated product.
The first step and the most critical step towards overcoming this challenge is to understand the end user well.
For e.g., Motilal Oswal Securities Ltd one of the leading investment firms in India introduced the first ever trading smartwatch app for the Indian markets. The app is populated with select features, which are of prime importance to the trader and investor community like live market updates, portfolio updates, market position updates, etc. As the first mover, this wearable solution offers a differentiated product to its customers, and also adds value by bringing critical market updates on their wrists in real time.
Security Is The Key, Make It Robust
While building wearable solutions for the financial services industry, security of sensitive financial data remains a major concern for most of the developers.
Fortunately, innovations are being made to deal with the security threats. For instance, GPS technology and biometric identifiers (fingerprints, voice, heart rate, etc.) are being coupled together to make unauthorised payments or access nearly impossible. Even the methods of data encryption are also changing to strengthen the security measures. For e.g. Cryptosecurity organisations such as the FIDO Alliance are continuously developing new authentication methods for password-less security options like voice and fingerprint verification. They also revise these protocols regularly to stay ahead of phishers and hackers.
Innovate To Stand Out
Most users deem innovation as an important aspect when it comes to engaging with Wearables. However, most wearable solutions that are getting introduced in the market are me-too. According to a survey, when it comes to Wearables half of the millennials feel that there is little difference in the products and services their bank offered and the offerings of other banks.
However, some forward-thinking financial firms are working towards building differentiation through innovation. For e.g. London-based brokerage and spread betting provider, IG Group; with their Apple Watch app allows for trading in CFDs (Contract For Differences) and stocks.
Another such example is YES Bank, one of the leading banks in India which introduced some innovative industry first features like one touch bill payment, speech-to-text capabilities to enable hands-free complaints registration, and on-the-go bill payments from Wearables, etc. in their mobile banking solution Yes Mobile 2.0.
Solve Real Problems And Not Be A Vanity Technology
Today’s customers are connected throughout the day across multiple screens, sometimes at the same time. However, they want each of their devices to perform distinct functions. For e.g. while most users research for a particular product on mobile, they might still prefer making the final purchase through a desktop. Similarly, they might see Wearables as a means to remind or track their activities and not a medium to perform complex transactions.
Therefore, it is important for organisations to understand what do users seek from their wearable solution and address that need, rather than just adding another vanity technology in their portfolio.
Seamless Integration Across Platforms
As mentioned earlier, today’s consumers are using multiple screens at a time. Therefore it is important to understand their engagement with each of these screens and develop seamless user experiences across devices. Understanding customer behaviour or user journey across platform is imperative and should be the first step while creating wearable solutions.
While the future of wearables in fintech is still unfolding, it is certainly not a trend to be ignored. With all the hype around wearables, it will be interesting to see how the financial sector adapts to this newbie. However, for the financial sector, this is the right time to get into Wearable Tech when the risk is low, and opportunities are ample.