Protecting your wearables
Due to the fact that wearables are an easier solution with less friction, questions are raised on the security of it all.
Contactless fraud, according to Which?, is ‘too easy’ and consumers could be exploited. Vinnai concluded that it ‘is an issue’.
CaixaBank said: “One limitation for any financial device is the need to ensure airtight security. It is vital that the same security levels are upheld regardless of whether payments are made by cards or bracelets. This extends beyond providing the actual technical security; we must also ensure that clients perceive transactions via bracelets to be fully secure.
“CaixaBank wristbands have all the same security features as normal contactless cards. Thanks to EMV technology, purchases made with the band are fully encrypted. Besides, clients have full control of operations made with their bracelets, and receive a push notification for each transaction.”
Hargreaves believed that the security issue is top priority and the solution might have already been found: biometrics.
She said: “Some of the wearables designers are already experimenting with biometrics and we’re seeing a huge amount of biometric innovation, not just in wearables, but in other forms. Being alert to fraudster attacks in wearables is at the forefront of our minds, we have a tonne of experience in that as a financial institution.
“One of the benefits of having bPay as a sub-brand of our core is that we can bring all that expertise and leverage that knowledge. We have a kill switch in the app (which can also just disable the wearable). You can transfer money back to your account. It’s about staying alert and constantly monitoring the data we see and making sure that we are able to select and introduce new triggers and control when we need to.
“It’s going to be an interesting evolution as we move forward in the next couple of years around how wearables interact with other identifies, such as your heartbeat, there will be advancements in that going forward.”
Entering a global scale
While bPay has been success in the UK, where contactless is booming, the rest of the world is a less sure prospect.
Hargreaves commented: “There are some examples of payment wearables in other markets in existing financial organisation. I think more and more, as the market grows, particularly through this year, we’ll get into not payment-only devices, but when you start to think of what the generation looks like, integrating the payments technology into other devices that function.
“Whether you integrate it into a fitness device or something else, it brings many functions together for the consumer. We do have the concept of competing for space on the arm, in terms of multiple bands doing multiple things. More would move towards multiple functionality in one or two devices that could be connected with each other. Globally, we definitely think there’s an interest. We are very interested.
Research from Misys stated that of banks that have no wearables strategy in place, 78% are in the EU and the US and that there is a stronger appetite for innovation from Latin American and Asian regions.
However, the demand tells a different story. A study from NPD found that 15.6 million smartwatches and activity trackers are forecast to be sold in North America and 12.5 million in Western Europe in 2015.
Vinnai said: “The banks have tried to implement [wearables] in their roadmap. However, this is very region-orientated. The more developed part of the world, such as the US and the EU, they are less interested in wearable technology while Asia Pacific and Latin America are very enthusiastic about it. This can be another leap for the countries on the bench.
“I think that most of the banks are just waiting to see how these things go forward, particularly how many devices each provider sells. This is getting very close to the inflexion level and banks will change their minds.”
Another study conducted by Misys, in collaboration with Efma, claimed that banks are tipping the next three years as the era in which digital customer-driven sales will usher in wearables. The forecast leap from 13% today to 75% of sales conducted via digital channels by 2018 is staggering. With 82% of banks predicting that smartwatches will facilitate financial transactions in the future, it is a ‘not a trend to be ignored’.
Vinnai concluded: “I believe in the watches. The Samsung Gear 2 and the Apple Watch are east to use, particularly with proximity payments. It’s a good, easy way to make a payment. For normal daily life usage, this is an important point.
“We never know, and I never know, what will come up in the future. There are interesting new experiments, such as contact lenses, which can change the whole dynamic of wearables, but at the moment, I believe the watches are the solution.”