Wearable devices and the future of authentication

Wearable devices and the future of authentication
There is a lot of hype around wearables (smartwatches, fitness bands, etc.) and they may have all kinds of interesting potential. This potential, particularly for banking is still to be determined. However, I believe that there is a great opportunity for certain wearable devices to provide strong authentication and enhance the user experience (see this blog entry). Examples are starting to trickle out:
  • RBC recently announced that it has partnered up with a firm called Bionym. Bionym offers a wearable device, the Nymi Band, that can be used for authenticating you to all kinds of products, devices and services (see this video for potential use cases). The device will take the user’s electrocardiogram and use it for authentication purposes. RBC and Bionym are going to test ECG authenticated payments at the point of sale. Sounds pretty cool to me! The Nymi band is a $79 product that can be ordered on Kickstarter.
  • Last week, at the AFP Conference, Online Banking Solutions (OBS) showed me a demo of how they are using a smartwatch to authenticate corporate online banking transactions. When the user performs a certain function, an alert is sent to the smartwatch (the demo was shown to me on a Moto360). The user then has to interact with the watch in order to confirm or reject the transaction.
Much of this is obviously still experimental. It is however highly innovative, and a step in the right direction to killing the password.

Why I’m not Buying an Apple Watch

Why I’m not Buying an Apple Watch

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First reason –I’m an Android user and enthusiast : ) Like it or not, Android and iOS don’t play nicely with each other, and the Apple Watch is a companion device for the iPhone. It’s definitely an intriguing device though, and I enjoyed learning more about how Apple plans to tackle the wearables space. The Apple Pay announcement was also extremely fascinating – my colleague Zil has prepared an excellent and informative review of Apple Pay. Back to the topic at hand. Why would I stay away from this device? A few reasons come to mind, some are banking related, and others are not:
  • The battery life is expected to be pitiful. The rumour is that this device will POSSIBLY last through the day and will need to be charged every night. I have to regularly remember to charge my laptop, mobile phone, Fitbit, tablet, Kindle, kid’s iPad, and a bunch of rechargeable batteries that are used in various toys and gadgets around our household. I don’t want anything else that I need to charge regularly, and I certainly don’t want to travel with another charging cable or dock. My goal is to downsize our chargers and we need better battery life and a set of charging standards to be able to do this. Note that this comment isn’t specific to the Apple Watch – it’s an issue for the Android Wear watches as well, and the primary reason I’m hesitant to dive in. I’m also a believer that the success of mobile payments will be contingent upon battery life (among other things). Who wants to end up at the POS with a dead device or worry that this could happen?
  • It only comes out in early 2015.  The slew of Android smartwatches has clearly put pressure on Apple to ANNOUNCE a device but they obviously aren’t ready to release it. Otherwise, it would have ended up on the shelves as rapidly as the new iPhone 6 and 6+.
  • It’s a first generation offering. This builds on the previous point regarding battery life and release date. Like most new products, this first gen device will require some improvements. It will certainly be fun to tinker with, but will be frustrating at the same time. If you are an iPhone user and you want a smartwatch you are limited to this first generation offering. Note that competing Android offerings from Samsung have already gone through multiple product iterations and will be even further along by the time the Apple Watch is released. Motorola and LG also have first generation products out there that will be rapidly refreshed.
  • I don’t think it’s very fashionable. I like watches and there is much to appreciate about a beautiful timepiece. A watch is my primary if not only “accessory.” To me this watch looks a bit childish and cheap. Not to mention that if you want a nicer band or colour it will cost more money. My wife disagrees with me, she thinks it’s awesome and she is an iPhone user. Most of the Android watches aren’t that fashionable either, with the exception of the Moto 360 (save for the black bar at the bottom of the screen) and the LG G Watch R. The watches will get nicer over time and it will take a generation or two for these to become more elegant timepieces. Note that not everyone shares my opinion about the Apple watch as a fashionable timepiece – Hodinkee, a watch review site (not a tech site), finds the watch to be well made and fashionable. Hat tip to Jimmy Dinh for pointing me to this particularly informative review.
  • Health reasons. Radios communicating everywhere – in my pocket, my house, at the office, etc. Do I need another, particularly one that is stuck to my body? I have no scientific data to back this up at this point, but I do think about harmful exposure.
Now that I’ve vented, here are a few reasons why I would consider the watch. I’m not sure they are enough though to justify the price tag:
  • I’m a gadget enthusiast. I’d buy a smartwatch for pure tinkering purposes. You’ve probably gathered by now that I like this stuff. Even if it’s not practical, I enjoy a hands on approach to understanding how these devices work and what they can be used for.
  • As a fitness device and companion. I currently wear a Fitbit, and while I really like it, I’d like to get rid of it. It’s just something extra to remember, carry and charge. This class of devices will likely disappear as heart monitors, step counters, etc. get built into smartwatches and mobile phones. The Apple Watch, or any other smartwatch could make a great bike computer or running computer.
  • To experiment with Apple Pay (in the morning of course, when the battery still works!).
  • As a conversation starter with bankers. I enjoy demoing cool technology to our banking clients that unfortunately don’t have the time to think about new technology or devices. Their day jobs are demanding and they turn to us for opinions on how emerging technology with impact the banking landscape.
Enough about me. More importantly, what does all of this mean for financial institutions? I recently blogged on wearables for banking and you can read more about that here. Even if the masses aren’t flocking to smartwatch banking, I believe that every bank should buy this watch and a couple of Android watches. It’s critical for banks to understand the impact of new technology and the best way to learn about it is hands on experimentation and experience. Buy a couple, give them to your senior digital banking product folks and tech staff so that they can form educated opinions. This will require some budget of course – a budget that every bank should have for research and development and the creation of new products. What I’m suggesting certainly isn’t typical or commonplace, but well needed if banks want to be the digital powerhouses that they are aspiring to. Will you buy the Apple Watch? Why or why not? How does Apple Pay factor into your purchasing decision? Please weigh in with your thoughts or comments.

Wearables – banking hype or opportunity?

Wearables – banking hype or opportunity?
Lately there has been much fanfare around wearables. From Google Glass to smartwatches, there has been no shortage of press releases, articles and hype surrounding these devices. I must say that I personally find all of this stuff amazingly cool, and love trying out new things. I am also super excited about the Moto 360 smartwatch and will likely pick one up when it launches. My interest in these devices however has absolutely nothing to do with banking. Don’t get me wrong, I think it’s critical for banks to try out new technology in order to understand how devices are evolving and how consumers will use them. In other words, banks should proactively throw stuff against the wall in order to see what sticks! Will wearables be the next big “channel” or consumer touchpoint? I have a hard time believing that consumers are going to want to “bank” using these devices – there is a lot of hype here that needs to be filtered. Wearables, specifically smartwatches, will act as more of a companion to a smartphone. There are however a couple of specific areas where wearables can have an impact on banking:
  • Alerts and notfications. The alerts that pop up on a watch should in theory be the same ones that appear on your smartphone. Most day to day banking alerts may not be that critical, however there are some that the user may want to have access to at a glance. Security at the point of sale is also a possible use case. If a credit card is swiped an alert can be sent – it’s simpler and faster to have this appear on your wrist then in your pocket.
  • Authentication. These devices, particularly the smartwatch, represent an interesting authentication alternative. The Android platform can be configured to allow for a “trusted device” to unlock the phone or an app. In other words, the phone or app can be unlocked if the device detects the presence of a smartwatch. If the device is lost or not in the hands of the user, the smartwatch won’t be detected and the user will be prompted for a password. The Moto X smartphone currently has this software feature incorporated into its build of Android, and it can be used to unlock the device. Celent believes that devices like the smartwatch can act as a solid form of authentication and enhance the user experience. Additionally, banks have been challenged to come up with new methods of providing authentication for mobile banking, particularly since classic multifactor authentication involves something you know and something you have.
The mobile world is rapidly evolving and there is much to look forward to. Please weigh in with your thoughts and comments.