Banking on the Apple watch - could the Apple Watch disrupt retail banking?

08 April, 2015
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On the 24 April Apple will release the Apple Watch. Just like the ATM, computer, mobile phone, and tablet did for previous generations of technologies, the Apple Watch is expected to take wearable technology into the mainstream. Jupiter research estimates 100 million wearable devices will be sold by 2017.1 However whether or not it will disrupt retail banking, at least in the short term, is doubtful.

Limitations of 1st generation devices

As a first generation device there are limitations to app functionality as the watch must be paired to an iPhone in order to function. The first generation of watch apps will essentially be interactive extensions and notifications that will only work with existing apps. There is presently no way to create a native watch app that will run independently of the iPhone. However, there have been hints that this will change in the future. As the technology evolves the second or third generation device will have advanced enough to run apps independently.

Apple Watch adoption rates

There is also the issue of adoption rates and changing the mind-set of consumers. Am I the only person who can see that the only major benefit of owning an Apple Watch is not having to get my iPhone out every couple of minutes? Instead I could choose to ‘discreetly’ interact with the Apple Watch on my wrist. Sure, it will work well when interacting with real world devices such as scanners to open hotel or car doors or payment terminals in shops but can consumers be convinced to bank this way?

Changing the mind-set of consumers

Many people, make a point of not accessing their banking app in public, for fear of someone looking over their shoulder, or unsecured connections. So the watch might not offer any major advantage here. Many may also prefer to do their banking on a bigger screen, in the comfort of their own home, where they can see the numbers, double check that any payments are correct and where there is a stable(ish) and secure internet connection. On a small screen this might also be a problem, especially for those with reduced vision.

The first banking Apple Watch app

These limitations have not deterred banks from developing apps in time for the launch. Citibank’s Apple Watch app is the first banking app to be announced and will enable its debit and credit card customers to view account balances, recent transactions and to receive real-time notifications of credit card transactions.2 It is fairly basic functionality, but it gives an idea of what might be possible in the future.

Users adapting to new technology

We should remember the sceptics when the original iPhone was released in 2007.3 What it came down to in the end was convenience. As technology advanced users began to feel more comfortable carrying out most of their day to banking needs from the palm of their hand. Time will tell if consumers will be just as comfortable using their wrists. No pun intended.

Smart Wearable Device Shipments, including Watches and Glasses, to exceed 100 million by 2017, finds Juniper Research http://www.juniperresearch.com/press/press-releases/smart-wearable-device-shipments-including-watches

2 Citi to Launch Banking App for Apple Watch http://www.citigroup.com/citi/news/2015/150310c.htm

3 How Apple Will Make the Wearable Market http://stratechery.com/2015/apple-make-wearable-market/

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