How wearables will change everything
Adoption of new digital devices has driven enormous change in retail financial services.
Phone and then internet banking liberated customers from branches and ATMs for transactions and account information. Mobile banking extended that independence by unshackling customers from a physical location.
At every step in the process, banks have had to adjust to the realities of the new device. Early internet banking systems looked like branch teller positions. The first mobile banking applications attempted to reformat online banking for a smaller screen. Over time, banks have become savvier at understanding the different customer requirements and experiences by device.
All this knowledge will be critical as banks begin to mull over the next wave of technological transformation which will be driven by the rise of wearable technology.
What do we mean by wearables?
Wearable technology encompasses a wide range of devices, linked by a common simple feature – it can be worn on the human body. This covers all conceivable applications – from smart watches and glasses, right the way to underwear, shoes – and even tattoos. These devices matter because they can offer the most detailed view yet into customer behaviour. Between them, they could give a 24-hour picture of every action a customer takes.
What kinds of devices are there today?
The most common devices on the market today are smart watches, such as the Apple Watch or Samsung Gear, and fitness trackers such as Fitbits. However, there are many other device classes, which can be categorised as either providing a voice/visual interface or not:
Voice and visual interface
- Smart watch (e.g. Apple Watch, Samsung Gear)
- Smart hearing devices (e.g. Google Pixel Buds, ReSound)
- Smart glasses (e.g. Google Glass, Vuzix)
No user interface
- Smart jewellery (e.g. Ringly)
- Smart clothing (e.g. Nadi X yoga pants, Polar Team Pro Shirt)
- Smart shoes (e.g. Digitsole)
- Smart tattoos (such as those under development by Harvard and MIT)
- Basic fitness tracker (e.g. Fitbit)
There are three ways in which wearable technology will revolutionise the retail banking experience:
- Customer identity: Wearables have the potential to render passwords irrelevant. Wearable tech, through its proximity to your body, can utilize biometrics to seamlessly authenticate you at any point in time. This matters for many reasons.
Forgetting a password is a key cause for customer queries – and also for customers ceasing to be active on a product. Eliminating this need will significantly improve customer satisfaction and reduce attrition and servicing costs.
Biometric authentication is also significantly more secure than signatures or memorized codes, as biometrics cannot be stolen easily.
Devices, like the Apple Watch, can identify that their owners have not taken them off. These devices utilize plethysmography to identify if a body part (in this case, the wrist veins) has increased or decreased in size to identify the user. Other forms of biometrics include heart beat monitoring, iris scanning, voice analysis, and even brain wave pattern monitoring.
Finger print scanning is not included in this list, as it requires an action by the user. It is crucial to the differentiation of wearable devices that the customer does not need to do anything to remain authenticated.
To illustrate the power of this identification capability, imagine a customer buying a coffee. The customer can walk into their local coffee shop and order their favorite drink. The barista rings up the price and relays it to the customer. The customer takes the drink and says thank you. The wearable device validates the user’s acceptance of the quoted price. It approves the payment based on the customer’s ongoing authenticated state. The customer leaves the coffee shop, after quickly and easily making the purchase without fumbling through pockets for a wallet or phone.
- Customer understanding: Wearable technology offers banks with wholly new ways to interact with and inform customers – and help them understand their financial needs, before they even realize they have them.
As financial services products become ever more complex – and as regulations seek to make them easier to understand, banks need to find new ways to represent information simply. Wearable devices offer a way for banks to bring this information to life. For example, a bank could use augmented reality rendered through smart glasses to provide animated 3D renderings of interest earnings growing over time – and the impacts of charges and fees. Customers could look at paper-based brochures or even at their own credit card, and banks can show related product or account information. In stores, a customer could be presented with a product and deal information through smart glasses, when looking at potential purchases. Banks could even share cashback offer details – or better deals available in partner stores.
In addition, customers could have seamless access to customer support through their wearable devices. They could talk directly to agents or conversational UI (voice chat bots) through their smart ear buds or smart glasses. Alternatively, consumers could read chat through smart glasses or smart watches – powered by artificial intelligence.
In our café example, as customers goes to buy their coffee, they are wearing smart glasses. Their integrated banking application knows transaction’s context, and displays customers’ current coffee shop loyalty point total, as well as how this transaction will impact their savings goals in personal financial management.
- Customer data: Wearable technology is the next big piece of the puzzle to fall into place for the creation of the Internet of things. By surrounding a customer with devices, banks will be able to access more data than ever before. There is much that could be done with those insight. The origin of wearable tech was in fitness tracking, with some of the earliest devices including Fitbits and Jawbones. With the proliferation of devices, the range of data collected has also expanded in the following areas:
- Location – Wearable devices could be worn up to 24 hours a day, giving an unparalleled view of customer context in any situation, as well as customer preferences.
- Activity level – provides insight into customer health and fitness, which is invaluable for credit scoring and insurance.
- Mood – can assess a customer’s tone of voice, and body temperature can help determine reactions to bank interactions.
In our café scenario, the customer has been walking around a lot all morning, and his or her steps have been tracked by smart shoes. When approaching the coffee shop, the customer’s banking app sends a notification via smart glasses to with a special offer on muffins, which provides a helpful recharge after a busy morning.
Of course, access to this data comes with some serious caveats. First of all, there is a significant risk of data security. Customers will respond badly if such personal data is stolen and misused. Second, customer tolerance thresholds for this level of invasive data gathering is likely to be low. It will be highly dependent on the value they get in return. We know that customers will accept dashcams in return for lower car premiums, so financial institutions should not assume that customers will be unilaterally hostile to this kind of data gathering.
There are a huge range of scenarios in which banks could deploy wearables meaningfully to deliver a better experience for customers. Banks must learn from the early waves of devices, and not seek to try to replicate the user experience (UX) for one channel onto another. Banks need to focus on four key actions to deliver effective applications that drive business impact:
- Customer value proposition – Banks must deliver something that matter to customers with these new technologies. People will discard gimmicks quickly.
- Customer experience design – Investment in creating UX that is optimised for the new wearable devices is critical. Seamless integration with other devices and channels also is crucial. Customers want an experience that does not feel discombobulated.
- Effective analytics – Banks need to get under the skin of all the new data they can obtain. What links and patterns they discern? Given data’s scale and complexity, this is a perfect opportunity for artificial intelligence to help financial institutions drive actionable insights that will deliver for customers.
- Data security – Bluetooth theft, signal interceptor issues, and virus attacks are all issues which banks will need to protect customers against, through a combination of architectural design and fraud prevention analytics.
By focusing on these key activities, banks can make the most of the next wave of device innovations, without repeating the errors of past technology implementations.
Alex Bray, assistant vice-president, consumer banking, Genpact