Wearable computing is very much a nascent market, but by using flexible programming methods PNC hopes to be ready to deploy payments apps when the technology takes off.
PNC has not deployed a specific banking app for wearable computing, but is prepping for the technology's growth by developing uses for wearables through application programming interfaces (APIs), said Tom Trebilcock, vice president of digital for PNC Financial Services Group.
APIs are sets of programming tools that allow the design, function and interfaces of banking and payment apps to be easily configured to fit different computing devices.
By using APIs, PNC can build digital wallets, money transfer services or account alerts for a computing watch, Google Glass or other mobile devices quickly as the technology becomes popular with consumers.
Trebilcock sees a particular opportunity to use wearable payment apps to execute contactless payments for small purchases, where taking out a wallet or mobile phone from a purse, bag or pocket would be more inconvenient for consumers than for larger purchases that would typically require more time.
"It's the sort of payment where you would carry paper money or coins to make, a few dollars at a coffee shop or something like that, generally purchases under $30," he said.
Micropayments may not sound like a big deal, but enrolling consumers to make small payments is how PayPal made major inroads against banks more than a decade ago. And wearable payments can also be used to feed other banking functions, such as security and account management.
"There's plenty for financial institutions to be doing today" with wearables, said Mark Schwanhausser, director of Omnichannel Financial Services for Javelin Strategy & Research. "For first movers, it's about buffing their image for innovation. But as a whole, this is a time for the financial services industry to develop the technology that banks will deploy in the future in multiple ways, one of which will be wearables."
Some banks are already building wearable payments apps, as device manufacturers such as Pebble, Galaxy Gear and Intel introduce wearable devices. Apple is also expected to release Apple Watch early in 2015, which will likely include access to Apple Pay.
U.S. Bank is experimenting with different wearable devices and use cases in anticipation of demand for wearable payments and financial services apps. In Canada, RBC is testing a wristband that uses a consumer's heart rhythms for authentication. In Europe, CaixaBank and Barclays are testing bracelets that can execute contactless payments at merchants.
Trebilcock has been impressed by Disney's MagicBands, a wristband that can be used to make payments, reserve rides and enter affiliated hotel rooms at the theme park. MagicBands are now used by half of Disney's guests, and more than 90% of the users report a positive experience.
"The Disney watch is an example of what other companies are doing with wearables to solve problems in the payments ecosystem," Trebilcock said. "At Disney, they have to deal with people not wanting to take out their wallets or carry cash while they're at the park. I'm not suggesting financial institutions would do the same thing, but there is a way to make transactions more convenient."