How wearable technology is revolutionising transactions

As demand for wearables continues to grow influenced by modern lifestyle, culture and technology, consumers now embrace such opportunities for faster, more frictionless transactions.

Joining the trend, retail banks are exploring potential uses for wearables in banking - whether that’s facilitating transactions and payments or creating entirely new classes of customer experiences.

While recent years have witnessed the emergence of various innovative payment methods, from smartphone-based digital wallets offered by giants like Apple, Google, and Samsung, an array of wearable payment devices ranging from smartwatches and Fitbits to jewellery and even embedded chips beneath your skin are now trendy.

“They want their wearables to house the tools they need to manage not only their fitness efforts and their fashion choices but also their financial lives,” says Joseph Njogu, Head of Digital Innovation and Payments at Premier Bank.

Njogu says as technology evolves, so must the financial industry, where such technology aims to personalise and secure assets and payment methods.

Locally, Premier Bank has successfully rolled out the technology in Kenya through its premier tap wearable payment solution. “We saw a gap in lifestyle banking, where security meets convenience, as today’s customer needs speed, style and simplicity,” said Njogu.

The Tap to Pay wearables leverage Near Field Communication (NFC) technology, seamlessly integrated into everyday accessories such as eyeglasses, rings, wristbands, smartwatch straps, and phone cases.

These stylish wearables enable customers to make swift, secure payments by simply tapping their wearable device near any compatible Point of Sale (POS) terminal, ATM, or other NFC-enabled payment points. “Just tap and pay, no card, no cash, no complications.”

The Premier Bank wearables not only enhance the consumer experience but also offer significant benefits to merchants. The ease and speed of these payments can help drive business revenue, attract tech-savvy customers, and integrate seamlessly with existing POS systems for more efficient, fast and secure transaction processing.

Besides the security, wearables provide Premier Bank an opportunity to create more digital touchpoints with customers to make their experience frictionless and increase their use of digital banking. Wearables can also offer real-time transaction updates, and provide balance notifications through SMS alerts and the Premier Wear App.

“Customers simply self-link their bank card to their preferred wearable, and from there, it’s as easy as a tap at any contactless-enabled payment terminal,” explains Njogu.

Predictions suggest that the wearable market will grow considerably, and will be part of an even larger revolution than Internet banking; the Internet of Things. However, this growth is not without security concerns. For wearables to become as prominent in banking as Internet banking has been, security risks must be effectively addressed.

Njogu explained how information exchange is encrypted between the device and bank platforms, noting it observes the highest card transaction standards like PCI DSS.

Security standards

He said the technology embeds a chip into the wearable device that makes sure every transaction is encrypted and tokenised using MasterCard’s global security standards, and no sensitive information is stored on the device, making it safer than physical cards.

“In case of a lost wearable, you can instantly deactivate it via our mobile app or by simply contacting the bank’s 24/7 customer care Centre.”

The Sharia-compliant bank hopes the innovation will cement it as a first mover and digital banking leader in ethical finance. Its partnership with MasterCard also gives it better payment infrastructure, global acceptance, and a product that speaks to its customer’s daily life.

The global market for wearable payment technology is set to soar to a staggering $137 billion (Sh17.81 trillion) by 2030.

This explosive growth signifies a significant shift in consumer preferences towards convenient and secure payment options.

Among all wearables, smartwatches hold significant promise from a consumer perspective. The global smartwatch market is projected to grow exponentially, reaching $130 billion (16.9 trillion) by 2030.