The Financial Health
In 2014, Russia’s Alfa-Bank introduced a new savings account linked to an activity tracker, which rewarded consumers with a higher interest rate for exercising more. Customers could link their activity savings account with their trackers like RunKeeper, Fitbit or Jawbone Up and enjoy the returns.
Sounds like a fun way to manage your money right? Well, the ‘health’ in the ‘financial health’ is soon going to take a shape of its own as banking gets together with wearable fitness devices. Many banks are already operating out of your wrists, thanks to the advent of Smartwatch banking and soon, many will start offering banking services on wearable fitness devices.
The Age of Quantified Self
If you find yourself asking why we need yet another banking channel, then the understanding of the ‘Quantified Self’ could probably answer your question. We are living in the age of ‘Quantified Self’ which basically means incorporating technology into data congregation on aspects of a person’s daily life in the context of various inputs, states and performance like food consumed, calories burnt, blood oxygen levels, etc. This is done via wearable sensors and computing. Basically, this means acquiring self knowledge through self tracking via technology. As the concept of Quantified Self manifests itself more, so will the consumers’ demands to link financial insights and services along with this data.
Banking and Fitness Devices
The association between wearable devices and banking can be manifold in the future. One of the most basic ways that banks can utilise the wearable computing apps is through alerts, notifications, transaction details, etc. They can also keep a track of your personal financial health. If a person is trying to stay on budget, his or her wristband could warn him by some sort of vibration when he or she goes overboard, for example.
In the future, wearables can also work as a payment method which uses the Near Field Communication technology.
Moreover, the consumer information gathered through these sensors, coupled with time and geography, will give an added edge to the banks who invest in this technology. This can help banks reduce marketing costs and fulfill customers’ expectations to the maximum.
While the advantages are numerous, there are a few challenges down the line too. While banks hold a huge amount of consumer data which can work wonders when combined with the wearable technology, however, there are rigorous compliance factors and customer security and investor data issues that banks need to keep in mind.
Banks also need to thoroughly understand the unique characteristics of wearables as a banking channel vis-à-vis other channels to formulate its plans.
The sales of wearable devices including smartwatches and fitness bands was about 1 lakh units in India in 2014 and is estimated to rise to a bit above half a million in 2015, according to Counterpoint Research. During the first quarter of 2015, there were 0.08 million units with smart watches contributing to 40% of shipments and smart bands contributing to 60%, according to the same report. Wearable tech is also important for being a part of the ‘Internet of Things’, which has a potential economic impact of up to $6.2 trillion annually by 2025, according to McKinsey.
The Big Picture
Consumers are exploring the ‘Quantified Self’ in many ways and discovering its advantages and soon they will expect their banking services to be closely interlinked to give them a big picture of their finances. Banks will be bound to explore this technology and extract whatever advantages it offers and pass them over to the consumers.