Wide application for wearables in financial services industry

Santhosh Kumar Madathil is general manager, chief technology office at Wipro

There has been hype around wearable technology for some time now but only now is it reaching market maturity with the introduction and subsequent adoption by consumers of smart watches and wristbands. Just as we saw with smart phones and tablets, consumer technology, in this case wearables, has the potential to have a huge impact on the business world. The implications for the financial services industry are significant, writes Santhosh Kumar Madathil

Smartwatches are one of the most obvious uses for wearable tech in the consumer financial services space. As the financial services industry become increasingly digitised, high street banks can use devices like smartwatches to wristbands and augmented reality enabled  eyewear devices with intuitive user experience to deliver  a range of basic  services like checking account balances or receiving alerts.  This could be also extended to more complex services, in the future. However, the rate of adoption comes down to consumer behaviour, the price of the wearable, and also depends on how user friendly the service is to the consumer. If it’s easier to pick up the phone to pay a bill or log on to a computer, the consumer will do that.

Consumer applications are just one piece of wearables puzzle in the financial services industry. There are much broader opportunities on offer. As always, security is one of the main concerns when it comes to a new technology in the financial services sector where data and privacy, especially on mobile devices, are the most at risk.

However, there is a market opportunity to use wearable technology to address these concerns. Wearables can enable user authentication, which can involve biometric, speech and video modes of authentication. All these can collectively lead to a more secure multipoint authentication system. The benefit of continuous authentication is quite evident. The device can be worn by traders, bank employees as well as high net worth customers for transactions. Eventually continuous authentication can be combined with voice authentication via wearables to enable a seamless and secure banking transaction environment. This technology has the potential to revolutionize the way banking transactions are carried out. It can help do away the plastic card based transactions at an ATM or merchant terminal wherein the banks can authenticate a person by his biometry rather than the card the person holds, signature or password he/she keys in to authorize a transaction.

Imagine a smartwatch which incorporates continuous authentication technology so that only authorized users can access privileged information, authenticate a transaction, enter a bank’s vault or access restricted computer files.

We’re also seeing apps being developed to allow share-trading clients to track indices or markets. The possibilities really are endless.

Although mindset might seem like a barrier to entry, consumer confidence in wearable technology and interconnected devices is growing. Undoubtedly there are concerns about data privacy and security, but this is no different to the resistance faced by technologies such as ATMs, Internet or mobile banking and  plastic card related technology, before they became common-place.

Major tech companies are quickly filling this space and have already revolutionised payments.

While wearable technology is still seen by some as a fad, and there have been notable bumps in the road, the technology is here to stay. It is already making significant waves in the financial services industry, and although we are at an early stage, the technology has the potential to transform the sector significantly along the lines of internet or mobile device based transactions.