Google's Android platform ushered in the era of the smartwatch last year and the impending release of the Apple Watch has focused even greater attention on wearable technology. For people outside the tech press, these devices might seem like expensive oddities, but there's a chance they will become a critical part of the way we live and communicate in the future.
Credit unions and other banking institutions recently saw their businesses undergo substantial change during the transition to smartphones, which allowed mobile banking to become a huge force in the financing services market. While smartwatches have not achieved the same level of ubiquity that smartphones now enjoy, credit union executives may want to get out in front of the possible smartwatch revolution. To understand whether that's a good idea, it's important to take a look at what smartwatches offer and how they can be integrated into traditional banking tasks.
What can smartwatches do?
At this point, it's difficult to sum up what smartwatches can be used for because the market is so new. Right now, there are a few unifying features that make certain products smartwatches. Generally, these devices work in tandem with smartphones to display notifications from the phone on a screen. These gadgets can be used to take calls, send text messages and run apps. That last detail could have the biggest impact on banks and credit unions, as mobile banking on smartphones is extremely popular.
"Should credit unions create smartphone apps right away?"
Different devices offer varied capabilities, so what works on one device may not function on another. There are already apps that allow smartwatches running Google's Android Wear software to make payments wirelessly, and the new Apple Watch features ApplePay, an NFC payment system previously unique to Apple's latest phones. Apple and Google are the major players in this field at the moment, and both their devices allow third parties to create apps that extend the watches' functionality. The question is whether credit union executives should dive in and create apps right away.
Waiting might be the best policy
While it's clear that smartwatches offer plenty of promise, it may not be time for credit unions and other financial institutions to enter the market for smartwatch apps. Smartwatch adoption hasn't taken off quite yet, and the size of the eventual smartwatch market remains unclear.
In a survey conducted by Global Web Index that surveyed 170,000 people across the globe, a mere 9 percent currently owned smartwatches. Given that 80 percent of the people in the survey owned a smartphone, the current smartwatch adoption seems paltry, but that could be due to smartwatches' relative newness. While smartphones have been on the market for many years, smartwatches are a recent phenomenon. It may be wise to wait on implementing a mobile strategy that involves smartwatches until the technology gains wider adoption and maturity.
The newness of these devices could also lead to an increased prevalence of security holes that hackers might exploit. Last year saw the rise of malware that attacked mobile banking platforms specifically, according to American Banker. It seems likely that new smartwatch platforms could offer criminals another route to compromise people's financial data security.
A state of flux
In the end, the impact of smartwatches on every day life remains a mystery, and it's unclear whether these new pieces of technology will ingratiate themselves into the world of money management as smartphones have. Credit union executives will need to keep a watchful eye on the smartwatch market in coming months to properly assess when, if ever, they need to expand their digital offerings to the world of smartwatches.