Wearables Users More Likely to Use Digital Banking And Mobile Wallets, Research Says

Apple Inc. and American Express Co. may be catching a wave. Users of wearable technology like fitness bands and smart watches—the kind of gadgets AmEx and Apple are mixing with payments and financial services—are not only younger and wealthier than owners of smart phones and tablets, they’re also more likely to use the devices for digital banking and payments.

That’s according to a new study on wearables released Thursday by Javelin Strategy & Research, Pleasanton, Calif.

The latest research comes as major companies are gearing up to leverage wearable devices for payments. Apple is expected to begin shipping its highly anticipated Smart Watch next week, a gadget that will work with the iPhone 6 to make Apple Pay transactions. Javelin forecasts Apple will ship 15 million watches in the next 12 months.

Citigroup Inc.’s Citi Mobile Lite app is the first major banking app to work with the Apple Watch, according to Javelin. The app gives balances and lists recent transactions without a login, and also shows notification of recent credit card transactions.

Separately, AmEx has said it will work with fitness-band maker Jawbone to let AmEx cardholders make payments with Jawbone’s new UP4 wristband, expected to become available this summer.

“Now is the time to target wearables owners,” urges the Javelin report, entitled “What Apple Watch Means for Banking And Payments.”

One big reason has to do with the demographic profile of wearables users. While 6% of all consumers own a smart watch and 12% use a fitness band, those percentages balloon to 10% and 24% among persons earning $150,000 or more, according to Javelin’s research.

But the demographics of wearables users compare favorably to those of mobile users generally, as well. “Wearables’ early adopters are younger, wealthier, and more active in digital banking and payments compared to owners of smart phones and tablets,” says the report. Eighty percent of wearables owners use mobile banking and 85% are online bankers.

As for wallets, some 46% of wearables owners used a mobile wallet in the previous 30 days. Among smart-phone users, just 17% did. Going back 90 days, 61% of wearables users had tapped a mobile wallet, compared with 22% of all consumers.

While Apple has included Apple Pay support with Apple Watch, Google Inc. has not done likewise with Google Wallet and the company’s Android Wear technology, a potential liability for Google, Javelin warns. “Google, Samsung, and other mobile wallet providers should move quickly to capitalize on wearables owners’ increased mobile-wallet usage,” advises the report.

Javelin’s advice to all payments providers looking at supporting smart watches and other wearables is to keep things fast and simple. “Forcing users to enter login credentials is out of the question,” says the report. Similarly, providers must also support pre-login balance viewing and target owners with in-store, location-based offers. With respect to security, wearables should authenticate users with biometrics such as a fingerprint Javelin advises.

Javelin’s final piece of advice to banks and wallet providers is to keep in mind the primary purpose of a wearable gadget—which isn’t to make payments. “It is important to note that what attracts wearables owners most to their devices is the ability to track their steps, sleep, and heart rate,” says the report. “Mobile payments and banking capabilities will be a secondary function for wearables owners in the near term.”