Three-step framework to evaluate wearable banking concepts
After the phenomenal rise of Wearables in health and fitness, Gaurav Johri and Ajay Yadav explore their eminence in the banking sector
After the phenomenal rise of wearables in health and fitness, they are gaining popularity in banking. Analysts estimate the wearable economy to touch $30 billion by 2018. Wearables are flooding the market in various avatars – smartwatch (Apple watch, Samsung galaxy gear, pebble, Sony), Bluetooth ring (MBTA Sesame ring), smart glasses (Goggle glasses), and smart bands (Fitbit, Nike fuel). Their unique features like hands-free provision, bio-metric capability and augmented reality advantage is making them more desirable than traditional digital channels.
Wearables expectations are helping banks and financial institutions effectively engage customers. They satiate customer’s at one end and generate enormous publicity at the other. Examples include: Moven smartwatch app to track balances & get timely alerts and notifications. Westpac, US bank & Wells Fargo have also launched similar apps. Barclays launched contactless payment bands. Banco Sabadell has designed a Goggle glass app to locate nearby ATM/Branches. Bango plc also designed a Smart Belt which would be used to control spend limits!
While talking to a few of our clients, we found that evaluating enterprise wearable concepts for return on investment (ROI)/value proposition is a key challenge. We give below the Mindtree evaluation framework to help CTO’s and Business Owners effectively assess identified banking concepts.
Mindtree’s Three-step framework to evaluate wearable banking concepts
The framework considers two parameters – implementation complexity and business attractiveness for scoring for evaluation. A three step process is followed to evaluate the concepts.
- Assess implementation complexity
- Assess business attractiveness
- Determine the Classification
Step 1: Scoring on implementation complexity
Implementation complexity is defined as the ability of a bank to design, develop and launch a concept in a reasonable time frame. It consists of three parameters:
a) Market position of the wearable technology (High weightage)
b) Ecosystem changes (Medium weightage)
- Business process/practices
- IT systems
c) Internal (bank/FI) changes (Low weightage)
- Business processes
- IT systems
A larger internal change or ecosystem change means higher implementation complexity. However, Market position of wearable technology inversely affects implementation complexity.
Step 2: Scoring on business attractiveness
This again has two parameters:
a) Qualitative business value (High weightage)
- Customer value proposition or wow factor – Personalization, contextual/relevant, real time, user-friendly, modernistic, youthful
- Brand value – Buzz/viral, innovators/first mover, social Impact
b) Quantitative business value (Low weightage)
- Cost effective
- Direct revenue stream
Step 3: Categorization matrix
The step involves the classification of concepts as per the framework. Figure 3 shows a 2 X 2 matrix. The quadrant into which the concept falls will define the future of the concept and the next steps.
Figure 1: Framework to evaluate wearable banking concepts
Concept to Track Equities.
Let’s take the case of a working professional who is interested in equity trading and has a mobile banking app to track equities. On a given day, he wants to track the stocks of two companies for which he anticipates significant movement. Normally, he would have to check stock prices manually by refreshing his app on the smartphone. Now with a smartwatch which is connected to his smartphone stock tracking app, the user can identify 2-3 stocks which he wants to track closely. He can then get timely updates about the market price, and execute trades with just one click. This adds value to the user as it’s handy and easy.
As this concept is high on customer value proposition (simplistic approach and timely access to critical information) it can be classified as “High” on business attractiveness. In terms of implementation complexity, it will be “Low” as this doesn’t require any change to the internal and external ecosystem and the maturity of smart watches is quite high today. This concept will hence be a “Quick win” as per the framework.
Figure 2: Some examples of wearable concepts classified as per Mindtree framework
Success of wearable banking concepts depends on the maturity cycle of the technology and the possibility of wearables becoming an integral part of our lives like smartphones. A simple and customer-centric approach aided by technology and collaboration is the way forward for banks to engage customers.