An experiment in wearable payment tokens has become such a successful drawcard for new customers that Bankwest technologists have found themselves on a crash course in the dynamics of the fashion accessory market.
Launched in January after three months of production and pilot testing, the bank’s onyx-black Halo payment ring was chosen after experiments with wrist straps, clip-ons and other payment tokens proved to be too ponderous and difficult to manage.
The ring – which lets customers pay from conventional accounts by making a fist and ‘punching’ the payment terminal – “had a different impact on customers to some of the other form factors that we trialled,” Bankwest chief technology officer Sean Langton told attendees at the recent FST Media Future of Financial Services conference.
Customers loved the rings so much that, despite the absence of formal advertising campaigns, they have proved to be adept at attracting new customers – who have snapped up half of all rings sold to date (the bank charges $39 per ring on a cost-recovery basis).
Rings have been given as gifts, purchased for spouses – and, yes, there has even been a marriage ceremony in which the rings were exchanged, Langton laughed.
Breaking the cash habit
Emotional attachment is only part of the endgame for Bankwest, which like every second-tier bank must continually reinvent itself and its offerings at the periphery of what the Big Four offer.
The longer-term game is to change the behaviour of the 45% of customers who, despite years of advancement, remain wedded to withdrawing cash from their accounts using ATMs.
Early analysis suggests the rings have been a potent force in breaking those addictions.
“We’re seeing the number of ATM transactions these people are making going down,” Langton explained, “and we’re seeing your typical low-value use cases – such as coffees and parking purchases – going up.
“This is changing their behaviours by giving them a real alternative to cash.
“It has been a huge hit with customers – and the biggest challenge has been keeping up with the supply chain, and having enough stock.”
Wearing the risk – and the benefits
Banks have tried all manner of devices to help customers into the world of electronic payments, where upstarts like Samsung and Apple are working to leverage their smartphone dominance to turn those devices into payment devices.
The ANZ Bank’s early adoption of Apple Pay gave it a head start in that space, but other banks’ fight against Apple damaged the payment service’s Australian prospects.
Yet Apple isn’t the only one suffering from e-payment fatigue: just-released figures from payment-fraud services firm Kount highlight a broad decline in use of smartphones for payments.
The percentage of merchants accepting Apple Pay dropped from 48% last year to 35% this year, according to Kount, while Samsung Pay declined from 38% of merchants to 25%.
This, despite a third of the nearly 600 surveyed merchants agreeing that mobile payments will represent at least half of their total revenue by 2020.
Much of that revenue will come from third-party payment services such as PayPal (which increase from 48% to 64% of respondents) and AliPay (10%) showing the potential for alternative channels.
Wearable devices – in particular, smart watches and fitness trackers – will comprise a growing proportion of this market.
IDC, for one, recently pegged last year’s growth at 10.3% amid strong adoption that saw devices from Apple, Xiaomi, Fitbit, Garmin, and Fossil collect 51.8% of the market.
While this represented a drop from the 27.3% growth the year before, IDC wearables team research director Ramon Llamas warned that the figures represented a quantum shift rather than a decline.
“User tastes have become more sophisticated over the past several quarters,” he said.
“Apple pounced on the demand for cellular connectivity and streaming multimedia.... Going forward, the next generation of wearables will make the ones we saw as recently as 2016 look quaint.”
And while some vendors imbue wearables with phone-like capabilities, the market holds big opportunities for devices like Bankwest’s Halo ring – whose success, Langton admits as a practicing and necessarily risk-averse enterprise technologist, has been conceptually disconcerting.
“I spend a lot of my working days educating customers not to get magpie-like and attracted to shiny new tech toys,” he said, “so it’s ironic that we literally have invested so much in a piece of shiny technology.”
“Some of the conversations our engineering team have are now focused around things like ring sizes, and which finger most people wear Halo on. We’re not exactly sure where it will go, but it is very much driven by customers and their needs.