The bank of 2020: wearable, digital and a little more

Glimpse a vision of the future, when banking is very personal, with Chris Skinner

We saw a huge surge of technology being released at the Consumer Electronics Show (CES) in Las Vegas earlier this month, with much of the buzz being about wearable technologies and the Internet of Things. What these technologies mean is that you will soon be wearing clothes, jewellery, wigs and more that communicates your whereabouts, wants and needs everywhere. You might even have the technology inside you, with nanochips monitoring your heartbeat, brain activity and general health.

It may sound scary, but this world of technology was buzzing a decade ago. For example, the Baja Beach Club in Barcelona became famous for offering to insert smart chips inside their customers’ arms. Why would anyone want such a thing? Well, in the case of the Baja Beach Club, it enabled you to party in your swimwear without having to carry a wallet. You would just hold your arm over the contactless payments terminal and your Mai Tai or Pina Colada was paid on your account.

This is where banking, money, payments and commerce is headed. Banks are digitising every aspect of their operations in order to service customers better remotely. They are starting to mine all their data about customers’ transaction records, and leverage that information to proactively market and manage customer accounts. A little like Amazon’s recent announcement that they can predict your next orders, banks are trying to achieve the same by predicting your financial needs. With wearable technologies communicating non-stop through the mobile internet, they will very soon achieve this.

As you walk past a car showroom, your Google Glass or Samsung Smart Watch will vibrate or buzz to tell you that there’s a great loan available if you want to buy that BMW. As you drive home, your car will alert you to the houses that are available in the price bracket you are searching for, as you look for your next home. Or, as you leave the casino, the bank might bump up your credit limit to allow you to walk back in one last time and lose or win a fortune.

Banks are working on predictive, proactive, proximity-based services as we speak

This may all sound like a frightening or fantastic vision of the near future, dependent upon your view, but it is a very realistic one. Banks are working on predictive, proactive, proximity-based services as we speak, and they are already partnering with retailers, manufacturers and government agencies to share and leverage information about you at the point of relevance.

The block to this Orwellian vision is, of course, you. None of your data can be leveraged or shared if you don’t want it to be. Banks and their partners will only offer such services if you give them permission. In other words, they have to create value for you to feel this is relevant or appropriate, and that value will be based around gifts and discounts. You can get that BMW for 5 per cent less than everyone else; you can buy that house with a mortgage 0.25 per cent cheaper than any other; or you can make that bet knowing that the casino will chase the bank, not you, if you lose.

These are the developments of commerce and money that have been bubbling for a decade and the digital, wearable reality of CES, Google Glass and Samsung’s Galaxy Gear mean that the capabilities for wearable, digital banking are right here and right now.

So, soon that chip inside you might be used for seamlessly dealing with anyone and anything – and if you don’t like it, don’t have one.

Chris Skinner is chairman of the Financial Services Club and author of the new book Digital Bank, a vision of the next generation of banking.