The Future of Wearable Technology and Payments

Jim Marous (00:12):

Hello, and welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous, Owner and CEO of the Digital Banking Report and co-publisher of The Financial Brand.

Jim Marous (00:22):

The global wearable device market is expected to reach 62.82 billion by 2025. Wearable technology holds the potential to revolutionize the way people interact with their financial institution, healthcare provider, and corner retailing, leveraging wearable devices from smartwatches to fitness trackers, to apparel.

Jim Marous (00:44):

More than ever, wearable devices can create seamless payment experiences, while also providing unequaled authentication around digital identity. It also allows an opportunity for an organization to brand the payments process.

Jim Marous (00:59):

My guest in the Banking Transformed Podcast is David Birch, international speaker, author, and advisor of the financial services industry. We discuss how wearable technology can be a major differentiator for both payments and digital identity in the future.

Jim Marous (01:15):

With enhanced customer experience, improved security, contactless payments, personalized financial management, biometric integration, and new use cases and devices, wearables have the potentials to transform the way individuals interact with their financial institution, healthcare provider, and retailer, making all these more convenient, efficient, and personalized.

Jim Marous (01:37):

I have known today's guest for more than a decade, meeting David at several banking events across the globe, and keeping in touch through the years as he is the foremost authority on digital identity and the future of money. Before we start, David, can you share a little bit about your background, and what you've seen change the most in the last five years around digital identity, digital payments, and even the potential for wearables?

David Birch (02:02):

Sure, I'd be happy to, Jim. So when I first got involved in pay ... I won't even say how long ago it was, it'll embarrass both of us, but we go back a while.

David Birch (02:12):

And I always remember when I very first got involved, and I wish I could remember who this was — I honestly can't remember who ... But somebody said to me, "Look, we are basically all dealing with the same problem. Payments are too slow, too expensive, and too opaque. And everything we do is dealing with those issues," which turned out to be true actually.

David Birch (02:37):

And I think what's happened in the last five years, we've seen real advances in all of those. I mean payments, some people would argue still too expensive, but they're a lot less expensive than they used to be, they're certainly a lot faster than they used to be. They're still a little opaque, but there's work being done in digital identity, data sharing, zero knowledge proofs, this kind of thing, which is about to change that as well.

David Birch (03:05):

So, if you say what's happened in the last five years? Well, we have some new technologies at our disposal now that we didn't have before. And so, there's not just the improvements that we've seen, but optimism for improvements in the future.

David Birch (03:20):

When it comes kind of more specifically to wearables, I think the first time I — and I can't even remember how long ago this was, but it was a very long time ago. Because I rememberconsulting Hyperion, the consulting company I helped to found, worked on the very first contactless pilot, which was Tampa, Florida, and that must have been 2004, 2005, something like that, and that was with ...

David Birch (03:49):

And I remember not long after that, and I can't remember what context this was -we were messing around putting some EMV chips in stickers on the backs of phones. And I remember just being blown away by that, I thought it was fantastic. Because everybody had a mobile phone at that point.

David Birch (04:09):

And then it started to become watches, and then it started to become badges, and then it started to be like access control and all these other kind of things. And it was interesting. It wasn't the core of what was going on but it was interesting.

David Birch (04:26):

And then what happened, was a couple of years ago, some friends of mine who had been part of the team at MasterCard, which built all the Apple Pay infrastructure, they decided to specialize on the wearable side of things and build a company in that space, which is Digiseq.

David Birch (04:49):

And they wanted to grow that company, and so they went to the market to raise some more money. And the market told them, "Well, if you're going to raise money, you have to have a proper board and governance and all this kind of thing." And so, they figured, well, who do we know that's old that can do this sort of stuff, and so they gave me a call and I became the non-executive chairman.

David Birch (05:10):

And they raised the money and have started to build and develop the company. And at that point, I became very interested in the potential for wearables, not only in the payments market, and I'll come back to that in a second because I want to make a point about how that's changed for me very recently. But also, because I think the future is about money and identity.

David Birch (05:34):

I also became very interested in the use of wearables for these identity related things. And the reason for that, Jim, is because there's a thing that really bothers me about biometric identification. The idea that you walk into a store and the store knows it's you or you go and look at something and pay and things — I don't like the idea of being identified. Maybe it's a cultural thing, I don't know. But the idea that they identify you bothers me.

David Birch (06:00):

But strong biometric authentication, I think that's a different matter, that's why I love Face ID on my iPhone. It's not identifying me, it's authenticating me. And why is it authenticating me? It's authenticating me because it wants to use secure cryptographic keys that are held in tamper resistant hardware.

David Birch (06:19):

So, the idea that you have a bracelet, the bracelet has a chip inside it, the chip is very secure, the chip has keys inside it, and you authenticate yourself to that chip with your face or voice or whatever.

David Birch (06:32):

There's a difference between walking into the Amazon store and a camera just scanning you and you walking in and you wave your phone or you put a ring on something or you wave a bracelet, and then identifies you. So, I became very interested in the use of wearables for that kind of thing. In fact, I'm giving a keynote about that later in the year, in October because I wrote a piece about this.

David Birch (06:56):

Look, if people start to use biometric authentication for things, that is going to ruin the James Bond movies, I thought that was really funny because — and then I read in the Financial Times, there was an article from MI5 and an actual real spy in the Financial Times said it was so much easier before biometrics. Because now, if you're identified everywhere, "Hey, you are not David Birch, you're James Bond," that's the kind of end of that. So, I'm interested in the use of wearables in both spaces.

David Birch (07:30):

Now, when it comes to payments these things have been around for a long time and there's a lot of different form factors. I happen to prefer the ring, my wife has a key fob which she much prefers. But they're bracelets, and actually I've got a few here behind me I can actually show you.

David Birch (07:52):

But it's nice for people to have a choice in these kind of things. So, why is it now it's suddenly getting more attention? I think there are three factors there. One of them is deeply technical and much too boring to go into for your listeners, but I will anyway because I'm that sort of person.

David Birch (08:09):

So, one of them is in the old — let's say you are an Amex customer and you want one of those fancy Amex leather bracelets, they're Prada, aren't they? I think, or some other designer kind of. So, you want one of these fancy bracelets with your contactless Amex card inside it.

David Birch (08:25):

Amex have got to get your card details, they've got to get them tokenized. They've got to get the right token into the right chip, the right inlay into the right bracelet, the right bracelet to the right person, it's quite a complicated value chain.

David Birch (08:39):

But because of some developments in the technology that Digiseq has, you can now personalize the chips using Android or iPhone. So, in other words, I can just mail you the bracelet or the key fob or whatever. And when it arrives, you can use your phone to load whatever token you want into it.

David Birch (08:56):

So, for example, I happen to have a Curve card, you can map Curve to any cards you want. So, what I do isI load a Curve card into my — actually my wife has one in her key ring right now, and it's a Mastercard. We have Mastercard bulk enablement, so basically any bank that signs up can do this.

David Birch (09:19):

So, we load Curve Mastercards into things, and then you can map the Mastercard to whatever you want, mine happens to be mapped to a John Lewis rewards card. So, now all of a sudden, your bracelet, your hat, whatever it is, is your John Lewis rewards card, so that's the first thing that's changed.

David Birch (09:35):

The second thing that's changed is the wearables themselves have gone from being I suppose if you like, sort of more technical things to becoming — they're more to do with fashion now than they were. So, people want a nice bracelet or charms on bracelets or — actually I'm thinking of getting one of these. They have those nice corded leather bracelets for men that have the chip inside the clasp. So, these things, they're kind of more fashion now, so that's changing the way people think about them.

David Birch (10:13):

And thirdly, the use cases have exploded because the idea of the branding of payments. I'll give you an example. We sold a lot of key rings to one of the soccer teams in the Spanish La Liga. And so, the thing is, it's this kind of thing, and it's like you are a big, I don't know, think of an American sports team — you're a big San Francisco Giants fan.

David Birch (10:38):

So, you go into the store and you pay with your iPhone, who cares. If you walk into the store and you pay with your Giants key fob or your giant's wristband or whatever that says something different. It has a different context in terms of brand. Or the idea that, actually when you're at the ballgame you want to pay with your branded merchandise, and then it's a pretty small step because of the way those chips work to load the access control. So, now, all of a sudden, you've got your Giants bracelet or whatever it is, and that gets you into the stadium — well, now you could do that with your phone.

Jim Marous (11:22):

What's the difference between these wearables and what I can do with my phone today?

David Birch (11:28):

Well, one is the branding of course. So, if you go to the gym, you might not want to carry your phone around with you in the gym, whereas a wristband or something would be better. Or maybe, if you go out, you might want to leave your — like maybe you've got your AirPods in, you actually want to leave the phone zipped up inside your bag or zipped up inside a pocket, you don't wanna take it out. Which I didn't think that much about actually until last week when I got my phone stolen.

Jim Marous (11:55):

Oh, wow.

David Birch (11:56):

So, I was sitting in a coffee shop chatting to a friend of mine, bought a coffee, sat down, we're having a conversation. I mean, a woman was pretending to be a beggar or something, and she was waving this piece of paper around, we shooed her away. And when she'd gone, I realized my phone had gone too, and I ran out and it was too late.

David Birch (12:19):

And I started to think — and I did all the right things, I changed my iCloud password instantly. I blocked it with the — so in the great scheme of things, my bank account was safe and I have enough money I can go buy another phone.

Jim Marous (12:35):

But you have the inconvenience of a phone having to be replaced.

David Birch (12:37):

It was inconvenient, it wasn't the end of the world. I mean, I read stories in the papers every day about people who their phone is stolen. Someone was looking over their shoulder in the bar when they were paying with their phone to get the pin, and then they grab the phone when people are leaving the bar and their bank account gets cleaned out.

David Birch (12:56):

And I started thinking, I looked up the statistics, there's 250 phones a day stolen in London, a third of them are stolen from Westminster, which is the area where I was. And I thought I don't even know why I had the phone now, I wasn't using it, I was talking to somebody.

David Birch (13:11):

I said, from now on, when I'm in the center of London in the coffee shop, my phone is staying zipped up unless I'm using it. And if I want to buy a cup of coffee, I'm going to use my ring, there's no chance I'm going to take out my phone.

Jim Marous (13:24):

So, when you look at that kind of wearable versus let's say, a watch, because I use my watch as much for tracking of fitness than anything else. Where do the wearables, such as a ring, a bracelet?

David Birch (13:38):

Actually, turning fitness bands into payment instruments is rather a popular direction at the moment. I personally, I'm not really a watch person, I mean, I never used to wear a watch. I bought an Apple watch because I'm that sort of person basically, and I just never use it, it's just not my thing.

David Birch (13:57):

But I mean, other people love watches, but the specific thing about taking fitness bands and adding EMV to them, adding chipcontactless payments to them so that if you're out running, you could just use your fitness band to buy a coffee or something — yeah, I mean that's definitely an interesting area.

Jim Marous (14:18):

Well, especially as you think down the road and talk about the integration possibly of healthcare and payments and fitness, things of this nature where I'm looking for the day that there's a reward system with my insurance company for me working out every day. And my doctor doesn't have to do a, "I'll get your blood test so I can find out how you're doing today." Where it'd be better off looking at me all 365 days.

David Birch (14:47):

There was a famous soccer player in the UK who was under instructions to get fitter (this is a true story by the way). And his club gave him a schedule to get fitter, and these were in the early days of fitness tracking. And so, they gave him this fitness tracker to wear and he put it on his dog and just let his dog go running around.

Jim Marous (15:13):

I've used that as a joke a couple times. Well, honestly, my first Fitbit got left in my blue jeans once, went in the washing machine. When it got out, I had like 400,000 steps and realized, "Oh, this wouldn't be a bad process." Now, the Fit band was not much better after the wash, but it did give me the steps.

David Birch (15:33):

I think the insurance companies have got some work to do there. But yeah, there's all those things coming together, Jim, which makes it interesting in this space.

Jim Marous (15:42):

When you talk about the whole authentication thing and we talked about biometrics and all that, do you see that the regulations have kept pace with what's going on in the wearable and the authentication area?

David Birch (15:57):

Actually, that's a very acute question, Jim, and the answer is yes. If you go to our website, we've actually just published a white paper, which we commissioned from Consult Hyperion to look at the specific issue of the PSD2 strong customer authentication SCA regulations in Europe.

David Birch (16:12):

And you can see why it's a point, because if you're just going to go around paying for things just by tapping all the time, how are you going to comply with the rules that keep everybody safe? And I mean, the short answer is actually, it's good and it's good for wearables, they do comply.

David Birch (16:28):

The slightly longer answer is essentially, there are two kind of ways of doing this. You either go to online pins. So, in the UK, once every 10 times you do it — actually now I can't remember; it's 10 or 5. When you've spent like 300 pounds or something like that, you might occasionally get asked to put a pin in at the-

Jim Marous (16:51):

Yeah, a dual authentication.

David Birch (16:54):

Yeah, so you'll tap it and then it'll ask you for the pin. And most issuers have this implemented now but a few don't. So, the other case, it'll be the app on the phone that resets it. So, you might get asked to reauthenticate yourself on the phone. And actually, I can honestly say it's actually never happened to me, so it's pretty infrequent. But yes, the answer is yes, it does comply with all the relevant regulations.

Jim Marous (17:22):

So, we have had great advance in biometrics, we've had great advances in identity and in authentication, but yet people still use plastics, banks and financial institutions still push the plastics. What are the biggest roadblocks to the development and acceptance, both from financial institutions as well as the consumer to wearable technology then?

David Birch (17:44):

It's funny I was just talking to somebody else on another call before I came on air because I spent the most of the week in Dubai, I was at Seamless, which is the big ... I went out on Sunday, so I've just spent like five days in Dubai, I had a lovely time, great event, really enjoyed it.

David Birch (18:04):

I couldn't even tell you what the money looks like in Dubai, I never saw any. And gone are the days when you would come back and say, "Well, actually I never used any money, so I don't know what the money is, I don't know what it looks like." Not only did I not use any money, I never used a card. Not once. I used my phone in the hotel.

David Birch (18:26):

And I was there with Terry Smith from Digiseq, and her favorite payment ... She has a charm bracelet that has a little heart on it that has the — and I have a lovely picture of her paying the taxi with her bracelet. The guy was suitably shocked at this point.

David Birch (18:43):

But yeah, I mean, so not only did I not use cash, I didn't use cards either. So, if you look at the figures for Apple Pay usage, you can see that many people are just content to take their cards around. And even though they have Apple Pay and by the way, I know more than one person like this — even though they have Apple Pay, they just can't be bothered to use it. They can't be bothered to load their cards into it, they can't be bothered to use their phone.

David Birch (19:08):

I know you're not supposed to use family as anecdote, but my wife, she'd rather run into the grocery store. She's got her keys in her hand anyway. So, she'll go in to grab some milk, she'll just pay in ... In fact, she's more than once got hold of my key fob and tried to pay with it, mine's not actually a payment key fob. So, different people act differently.

David Birch (19:27):

So, deciding that everybody's happy with cards, I'm not sure that's true. I think it's just that Apple Pay wasn't the right alternative to a lot of people. And in places where this branding becomes important, like travel resorts, cruise ships, sports stadiums, pop events, that kind of thing — then actually, the ability to brand the wearables and integrate that into a broader brand strategy becomes very important.

David Birch (19:58):

That will also become more important when you get used to the security components being added for the brand protection purposes. So, the idea that you go to the game, you buy a team shirt, the team shirt's got a chip in it. We already have a product called Promo Ready.

David Birch (20:18):

So, you can have a washable tag that's got the chip inside it, and you tap it with your phone and your phone tells you, "Yes, this is real, whatever, New York Yankees merchandise," and it'll show you a video or something. And the brand can log in a thousand times a day if they want to and change what that video ... So each time the fan taps their shirt or whatever it is, not only do they get told this is authentic merchandise, but by the way, here's a clip of your favorite player, or here's a clip of last night's home run or whatever.

David Birch (20:54):

So, linking the security part of it with the kind of brand and promotional part of it, I think is really rather interesting, and I think in the future you'll expect more, I mean, let's just generalize and say objects. I mean, in the future you'll expect more objects to be smart. And just in the same way that Elon Musk is very exercised about whether you can tell whether it's a real person on the internet or not, especially with the tidal wave of misinformation-

Jim Marous (21:27):

It just seems, because I tell people I leave my wallet in my car or in my house and I take my phone and I won't even go to a place that doesn't accept Apple Pay or some other means of paying other than cards. Because cards are the worst example of security overall, but it's just not known by many people.

Jim Marous (21:47):

The other thing is, where do you see the amazing advance in AI and the ability to fake virtually everything — how does that play into the authentication and identity game?

David Birch (22:01):

Well, this is why I have a suspicion, Jim, that this issue about authenticity suddenly becomes vastly more important. And this is why I'm curious about the overlap with the kind of Internet of Things stuff, because there are ways that you can tell whether I'm authentic or not.

David Birch (22:20):

I mean, we don't use any of these at the moment. We do stupid things like make people hold up pictures of their passport, whatever, we don't actually do any of that.

David Birch (22:27):

Actually, when my phone got stolen, the thing that really frightened me about that before I got to my iCloud and was able to tell the phone to wipe — the thing I was most worried about was not the cards in my Apple Pay, it was because I knew there were some pictures in my photos because over the last couple of weeks, I had to more than once send a photo of my driver's license.

Jim Marous (22:51):

You started saying this, I'm going, "Oh my gosh, I have photos of ..." — you know, this is going to be great putting on the air, which I'll get rid of right now. "I Have photos of my debit cards."

David Birch (23:00):

And what's more, because of Google, the Google for Christ's sake, because of some Google business thing, there's actually a picture of me holding up my passport.

Jim Marous (23:09):

Oh my God.

David Birch (23:09):

Because Google wanted to see a picture of me holding up my passport. So, yeah, this issue about authenticity is — and like I've long said, Jim, if Twitter wants to know that I'm a real person, who is it that knows that I'm a real person? It's my bank, my bank knows that I'm a real person. If Twitter wants to know whether I'm a person or not, why don't you ask the bank instead of trying these crazy things with tick and passports.

David Birch (23:35):

So, the authenticity of people ... But you've also got this issue about the authenticity of things. And for us, this is a very interesting new business because the authenticity of things has a slightly different thing which is, suppose we put one of our chips inside your shirt ...

David Birch (23:56):

And so, I meet you at a conference and I'm like, "Man, that's a nice shirt," but I'm like, really jazzed, and I'm a guy, I don't want to ask you where you got the shirt from, so I'm just going to scan it with my phone when you're not looking, I'll just put my phone around your back.

David Birch (24:09):

I just want to see, is that a real shirt or is that a knockoff. Well, if I can read that chip and it tells me this is real, all that tells me is that the chip is real, it doesn't tell me anything about your shirt. That chip could have been knocked off in China, it could have been taken out of a real shirt and put into a fake. All the chip tells me is that the chip's real.

David Birch (24:37):

So, if I want to know if the shirt's real, I need to know which factory did it come from, which wholesaler, which distributor, which retailer? When was it sold? I need the provenance of it. And the truth is, the provenance of your shirt is none of my damn business. So, therefore, it has to have appropriate access management around it. And that's complicated, and therefore, it's a business.

David Birch (25:02):

So, in a way, that's why the complexities around the identity of things, not just the wearables themselves — but clothing and ... If I want to know are these real whatever, Nike sneakers, is this a real Rolex or just being able to read the chip is not enough. I need the providence, and so I think that's quite an exciting new area.

Jim Marous (25:28):

So, let's take a short break here and recognize this sponsor, this podcast.

[Music Playing]

Jim Marous (25:31):

Welcome back to Banking Transformed. So, I am joined again today by David Birch, we have been discussing significant opportunities provided by wearable technology in banking and beyond.

Jim Marous (25:49):

So, David, this interesting question is we talk about the power of wearables and even authentication. Could wearables be the physical center point of the future of, as you call the super wallet with all credentials stored on a ring or a piece of fashion?

David Birch (26:08):

I mean, the way I see it at the moment is — because you see this happening like the Bitcoin people all the time. They have these like USB sticks and things which the dog eats or they accidentally drop in the landfill or whatever, and lose their life savings. So, do I want all of my entire life on a bracelet that I could drop in the ocean? Well, no, I don't.

David Birch (26:33):

But what I do want on the bracelet is the secure cryptographic keys that get access to those things. And then if I do drop the bracelet in the ocean, I can get a new bracelet and then the bank can reload the keys for me into it. So, if you like, I think of the wearable as holding the keys to the data.

David Birch (26:52):

And if you look at the variety of data that ... You talk about that Internet of Things example. There's a lovely story that I read, actually I referred to it a couple of weeks ago in Forbes. I read a story about a guy who had a Ferrari, it's like this million-dollar car.

David Birch (27:09):

And he's in an underground garage and they're fiddling about with the seats and they do something with the seats that trips the Ferrari, has some kind of mechanism whereby if somebody is messing around with the car, it bricks the car, so now his car doesn't work.

David Birch (27:27):

And so, in order to get the car rebooted, you have to call Ferrari and then they send a signal, but it's in an underground car park, so it can't get a signal. So, they have to send a tow truck to go and tow this guy's million-dollar car ...

Jim Marous (27:42):

Upstairs, out of the garage.

David Birch (27:43):

Yeah, I mean, that's not a life I want. So basically, what I want in my wearables are keys and certificates that can be used offline. I mean, I'll give you an example, which is, suppose I could do it using my retinas, I don't want to do that. I can have a chip implanted in my arm, not sure I want to do that, although I might be prepared to give it a try. I'd much rather have a key ring.

David Birch (28:14):

I walk up to my office door and the office door opens because it's my key ring and it's been authenticated and in I go. Now, I don't want the door to have to go online to do that because you and I live in the real world where online doesn't work all the time.

David Birch (28:30):

So, therefore, the door has to be able to get a certificate from my key fob, which says, "Dave's allowed through this door for the day." And you can easily imagine, I wake up in the morning, my phone goes online and gets all the certificates, Bluetooth them into the relevant wearables, you can imagine ways how this will work, but it works because really you are storing the keys in the wearables not all of the data.

Jim Marous (28:59):

So, really, I mean, it gets back to your article that wrote about a super app versus a super wallet. A super wallet is really much more convenient to what we want to have in our future as opposed to a super app, correct?

David Birch (29:12):

Yeah, I mean, I'm really on the super — I mean, I can see there are pluses and minuses and I understand why people like the super app approach, there is a lot of convenience to that. And what I mean by this is, when I say super app, I mean something that shares your identity across multiple service providers.

David Birch (29:32):

When I talk about a smart wallet, I talk about something that shares strong authentication across multiple providers. Like you might have a lot of different identities in your smart wallet, but you don't have a lot of different authentication. It's like you pick up your phone, you do your face, and then depending on which shop you are in or which service provider you're talking to, you may present a very different identity.

David Birch (29:56):

So, the super app shared identity versus the smart wallet shared authentication is a really interesting two different ways of doing things. There's a lot of cultural and business reasons why I think a smart wallet is a better approach.

Jim Marous (30:13):

Yeah, I mean authentication overall, after all the talk we've done around identity, the authentication really becomes more important, especially with what's going on with AI.

David Birch (30:23):

Well, exactly, and that's going to put an even bigger premium on authenticity. Like knowing whether someone's real is going to be ... I mean not just for me walking down the street, but we have to get into a situation where my web browser just will not display a picture unless that picture has some kind of digital signature authentication. Otherwise, we are on the verge of not knowing anything is real.

David Birch (30:56):

Literally, you'll open up your Facebook feed and there'll be a picture of Winston Churchill playing table tennis with Harry Styles and everybody will go, "Oh, that's cool, I hope they had a fun time," you know what I mean? If that picture shows up in my browser, I want a red border around it.

David Birch (31:16):

Oh yeah.

David Birch (31:16):

Which says, "You know what, this doesn't have a verifiable digital signature attached to it, somebody just made this up."

Jim Marous (31:21):

We're going to need it in our elections pretty quickly, but we'll get into that at some other time. So, what part of the ecosystem do you believe will drive the future growth of wearables? Will it be the financial institution the payments provider, maybe a tech firm or some combination thereof?

David Birch (31:37):

I think for us, historically, it was the issuers because the issuers wanted to give people something cool. So, the idea is you come to me, yeah, I'll give you a debit card, but I'll also give you a key ring or I'll give you a bracelet or whatever, so it tended to be the issuers.

David Birch (31:50):

But actually the way things are going now, it's got a lot more to do with brand. It's got a lot more to do with ... When you are in my theme park, I want you to wear my theme park wristband and pay for everything with your wristband, because I'm tracking you and ...

Jim Marous (32:07):

Which is what Disney does.

David Birch (32:09):

Yeah, but extending that experience across companies and sports and all sorts of other things as well. So, at the moment, I think — but also, like I said at the beginning, one of the things which — because I don't understand a lot about it, but there's also this issue about fashion. This idea that wearables are becoming fashion as opposed to just purely functional payment devices. And I just brought a couple to show you from just one of the collections that we work with, I don't know if you're interested in these kind of things.

Jim Marous (32:42):

Oh, I'm actually going to ask you to bring them to Amsterdam with you because I'm going to be a purchaser of some kind of wearable in the next two weeks.

David Birch (32:52):

So, this is the kind of bracelet that a lot of people like. It's leather, pretty bracelet, it's got the chip inside the clasp there, here's a key chain that has the ...

Jim Marous (33:13):

Oh my gosh, yeah.

David Birch (33:14):

Chip inside it, it's pretty. A lot of people like the charm bracelet things. I mean, some are bigger than others, but let me give you an example of one of these kind of — oh, here's just for people like you, Jim, just like a functional plain black key fob.

Jim Marous (33:31):

I get concerned about losing the key fob. I like the ring because if it's connected to me, I can go swimming, I can work out.

David Birch (33:39):

The key fob, I mean, as I say, some people, because they have their keys in their hand when they go to the store, they just find that more convenient. And of course, if you do lose it, you can just go to the app and turn it off, so it doesn't matter. Here's some of the higher fashion bracelets that people ...

Jim Marous (33:54):

Oh, my gosh, is that manufactured by companies for Digiseq or ...

David Birch (33:59):

Yeah, this is from a UK designer called Tovi Sorga. He's a jewelry designer, they do things with ...

Jim Marous (34:08):

Those work globally. I mean, you could buy them and I could use them in the U.S. Just as easy as I could use them in the UK, correct?

David Birch (34:15):

The ones I've got in my hands here have to be activated to a UK account, but yes, they work in the U.S. But yeah, we do have U.S. Partners to deliver. Here's another, this is the butterfly key chain that quite a lot of people like.

Jim Marous (34:32):

Oh, my gosh.

David Birch (34:33):

That's cool, and like I say, there's charm bracelets and necklaces and rings and those kind of stuff. So, there's that fashion aspect as well, Jim.

Jim Marous (34:44):

Do you think that the expansion of the wearable market will be a regional or global phenomenon in the near term? I mean, is it going to be something that plays out more in the UK or in the United Emirates than it does in the U.S., or is this really going to become pretty quickly global?

David Birch (35:01):

I saw some figures (I don't have them in front of me) from, I think it was Discover that were like looking at growth in the global market for this kind of thing. So, I'm not sure if it's different in — because a lot of countries, because they've already gone to QR codes and phones and so on, there's lots of good reasons why people like me think wearables are much more secure than QR codes, but it's going to be a hard sell. So, there, you are looking at more to do with access control, brand protection, providence, sports, that kind of thing.

Jim Marous (35:39):

So, finally, what recommendations do you give to the financial services community as they have to get prepared for maybe a deeper integration within the wearable marketplace?

David Birch (35:50):

Well, I would say we talk about brand in financial service, and we talk about brand in payments and I read amazing stuff on your website about this, Jim. I'm not an expert on it, which is why I come to you for this kind of material.

David Birch (36:04):

But the opportunity to really have something branded for payment is a little different. You'll still have your Amex card, but it'll be home in the drawer. And sometimes you'll use your phone, but when you're running to the store to get a cup of coffee, you'll use your ring or your bracelet or something like that. And when I pay with my Manchester City bracelet, I'll feel good.

Jim Marous (36:33):

It's interesting because I'm thinking about sports teams or even my Banking Transformed bracelet, not that anybody would know what that is, but ...

David Birch (36:43):

I'll give you an example, so Mastercard was sponsors of the Roland-Garros, The French Open.

Jim Marous (36:48):

The French Open, yep.

[Music Playing]

David Birch (36:49):

And so, they gave payment key fobs which were our key fobs there. And I love these things, they looked like leather, but they were actually made from recycled apple peel, they were completely sustainable. Recycled apple key fobs with the — so the imagination, like what you can do with wearable — people like me know how to implement it, but of course, you need brand and marketing people to have the imagination of what to do with it.

Jim Marous (37:22):

Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoyed today's interview, please take some time to give our show a five-star rating. Also, be sure to catch my recent articles on The Financial Brand and check out the research we're doing for the Digital Banking Report.

Jim Marous (37:38):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage; audio engineer, Sean Rule-Hoffman, and video producer Will Pritts. I'm your host, Jim Marous.

Jim Marous (37:49):

Until next time, remember, banking in the future can be done with a variety of new wearable technologies that move far beyond the branch of the mobile phone.