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The Future of Banking Lies in Wearables

By Tim Sloane
December 21, 2015
in Analysts Coverage
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In its “2016 Outlook: Emerging Technologies,” Mercator predicts that wearables will have a real impact on payments as early as 2016 and on bank information delivery to consumers a few years after that. But we are hard pressed to imagine that the very future of banking will rely on wearables; even in the 30 year window as identified by Rajiv Anand in this Economic Times article:

“With the advance of smartwatches, banking is slated to shift from your pockets to your wrists. Wearable banking will help banks roll out contextual notifications to clients. This means actionable promotional content delivered at the right time. Imagine getting a limited-time promotional offer that is just right for you as you walk by a local store or a summary of the balance in your accounts as you pass by your bank branch.

Technology will extend beyond smart watches to include smart eyewear, gesture-controlled devices and other connected products in the larger IoT (Internet of Things). We envisage a world of predictive banking to emerge. All the data you generate in your daily life might be captured (with your due permission), connected and analysed—from sensors embedded in everything from your wearables to your cooking utensils to your car.

As we explore, a billion possibilities could emerge. You can expect your bank to create products that will connect with you on a deeper level, but in a non-intrusive manner. For instance, by linking with your fitness band, we would like to encourage your fitness goals by rewarding you on your achievements. We can track your health data (pulse rate, sleeping habits, daily exercise, calorie intake, and so on) and create customised insurance plans for you at the lowest possible annual premiums by partnering with various health providers.

We can not only make suggestions for your doctor appointments, medical tests, gym memberships but can also make these transactions seamless on the payment front using biometric authentication —letting your Smartwatch app’s heart rate authentication replace your card pin. Wearables will become a key device for multi-factor authentication.”

The Mercator Outlook also identifies how wearables will improve authentication and is likely to be the key enabler of persistent identity, probably after 2020. It is at least good to know that the branch won’t disappear due to wearables:

“However, we should not undermine the importance of bank branches. They are here to stay. They might not be top priority, but will continue to play an important role. It will all boil down to how banks seamlessly blend the physical and virtual touch points required to create a consistent omni-channel experience. Future branches will be high on design and technology. They will move up the value chain where less and less transactional activities will be performed by personal bankers in favour of high value sales and financial advice. The above trends are just a few primary possibilities and don’t add up to a revolution yet. What’s needed is a complete mindset change of bankers, if Indian banks are to harness the power of this new wave in technology.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

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