The watch on your wrist is getting smarter and so are the banks that have come a long way since making you wait endlessly in queues to withdraw your money.
Today, banks not only encourage customers to use other channels like the ATM, Internet banking and mobile banking to reduce transaction costs, but are also wooing customers to perform real-time banking and money transfers on social networking sites like Facebook and Twitter.
Now you can even do banking transactions on your smartwatch—be it an Apple Watch (not yet being sold in India), Android Wear or Samsung Gear.
It’s not only global financial institutions and banks like Scotiabank, Barclays, Nationwide, Deutsche Bank, Stanchart and Citigroup that have developed apps for smartwatches that run on all major mobile operating systems such as Apple Inc.’s iOS and Google Inc.’s Android OS, but private banks in India are also keeping pace with the trend.
“We believe that the watch will always be on your wrist. And you will be using the watch for more than banking, such as health, checking for hotels and restaurants. Hence, it will be a category by itself,” said Nitin Chugh, senior executive vice-president and head of digital banking at HDFC Bank Ltd, which introduced its smartwatch app for iPhone users in July.
HDFC Bank has about 175 features on Net banking and about 80 features on the mobile app, and plans to add 30-35 extra features. Users typically use 15-20 features, according to Chugh. The remaining features, he said, are used once in six months or a year.
WatchBanking, the name that HDFC Bank has given its smartwatch app, has about 14 features—“the ones for which you may not want to pull out your phone from your pocket”.
The app allows its customers to perform various tasks such as view information of all their accounts, recharge their mobile and DTH (direct-to-home) connection (users have to register for this service on their mobiles), request for an account statement or cheque book, locate an HDFC Bank ATM or branch, or even call the bank.
ICICI Bank Ltd’s smartwatch app iWear offers similar features. “We are seeing transactions on all smartwatches—the iWatch, Android Wear and Samsung Gear. The idea is to provide customers with additional convenience across all channels,” said Abonty Banerjee, general manager and head of digital channels at ICICI Bank. It was the first private domestic bank to launch the smartwatch app on 22 April.
Axis Bank Ltd has a similar product, but has not given the app any name. According to Rajiv Anand, group executive and head of retail banking at Axis Bank, the “Axis Watch application reinforces our commitment to making banking simple and hassle free for our customers”.
Banks typically adopt a similar process to enable transactions on smartwatches. Customers first have to download the latest app from the app store—be it the Google Play Store for Android Wear, App Store for Apple Watch or Samsung Gear Manager for Samsung Gear. The next step involves pairing (connecting using Bluetooth) the watch with your phone. Customers, then, have to set up a four-digit PIN or personal identification number.
To begin banking on smartwatches, customers simply have to tap on the app icon, enter their PIN and complete their banking tasks. In the case of Axis Bank, iPhone customers (those with iPhone 5 and above, running iOS 8.2 and above) can also sync their Axis Mobile App with their Apple watch. The customer does not have to set up a new PIN for the watch as the watch is synced with the Axis Mobile App, said Anand.
The Apple Watch, say banks, has been the primary growth driver of smartwatch banking.
“When Apple announced the app, it created a lot of anticipation. We also made up our mind around that time. In November 2014, Apple released the SDK (software development kit) and we began developing the applications. We had to make up our mind what all to offer—anything that can be used on the smaller interface of a watch,” said Chugh, adding that most smartwatch banking is done on the Apple Watch.
Transactions on the iWatch “are in the few thousands, while those on Android Wear and Samsung Gear are in the hundreds”, said Banerjee. So is the case with Axis Bank users.
Analysts say the growth potential is immense and smartwatch banking can emerge as a category in itself. By 2016, smartwatches will comprise about 40% of consumer wrist-worn devices, according to a 17 September 2014, report by research firm Gartner Inc. released after the Apple Watch was unveiled.
A 22 June report by research firm Forrester Inc. cited its analyst James McQuivey’s end of 2014 forecast of an estimated 2.5 million Apple Watches being sold by the end of May 2015, and Apple being on track to touch the 10-million mark by end-December 2015.
Banks in India agree with this assessment. “We do have a very sizeable number of Apple iPhone users and that gave us confidence to introduce this category,” said Chugh of HDFC Bank.
Banerjee of ICICI Bank said, “Apple Watch was used more by what we call the wealth segment (high networth individuals), while Android Wear and Samsung Gear are used more by younger people.” The profile segmentation of Axis Bank is similar.
Security and privacy, nevertheless, remain a concern for wearables. According to a study by Hewlett-Packard Corp. released on 23 July, 100% of the tested smartwatches contain significant vulnerabilities.
The most common and easily addressable security issues, according to the study, include insufficient user authentication and authorization, lack of transport encryption that is critical when personal information is being moved to multiple locations in the cloud, insecure interfaces, insecure software, and privacy concerns.
The banks that Mint spoke with acknowledged the concerns, but pointed out that they have strict security protocols and have addressed privacy concerns.
“In the case of WatchBanking, the watch merely acts as a projection device for the HDFC Bank MobileBanking App. The app has multiple layers of security starting with password protection, two-factor authentication, multi-step dynamic security and more. WatchBanking adds another layer of a secure four-digit PIN, which the user can enter on the smartwatch to access the bank details,” Chugh said. The session ends automatically after 5 minutes of inactivity and five incorrect attempts to enter the WatchBanking PIN, he added.
ICICI Bank had a similar refrain. “We do not store anything on the watch. Besides, this is an encrypted channel, so security is amply taken care of,” said Banerjee.
Besides, all banks point out that when the watch is not in range of the phone, the pairing gets disconnected and the transaction gets terminated. Banks typically use the Immediate Payment Service to allow customers to access their bank accounts, and transfer funds instantly and securely.
The system will only evolve, said Chugh. “In times to come, the smartwatch may become a biometric authenticated device to do more transactions since even our pulse is emerging as a new biometric feature. We may also use it to make a payment, or even access other devices (with it),” he added.
It’s time for smartwatch banking - Livemint
