How should Investment Banks capitalise on the new Apple Watch for financial trading?

With the launch of the Apple Watch Caplin wanted to board the wearable tech bandwagon. We wanted to ask the questions why and how should a sell side Investment Bank want to use wearable tech?

Let’s face it, previous smartwatches that have come to market failed to spark massive growth in the wearable tech sector, despite various, notable electronics manufacturers committing to the concept. They had a gimmicky feel and not much practical use, leaving a forgettable impression on consumers. Apple Watch on the other hand looks set to dominate the smartwatch market thanks to its pre-order sales that have already overtaken Android Wear units sold in 2014. It’s already looking healthy for consumer adoption.

In the graph below you can see tablet sales have gone from practically zero to selling at double the rate of desktop PCs, reaching 80 million units per quarter. Will we see this growth pattern repeat for smartwatches?

But consider this – just because you can create a smartwatch app, it doesn’t mean you should. Just because you build it, consumers won’t necessarily come. Should Caplin be looking to build on its FX mobile product and offer financial trading on a smartwatch?

IG and Citi have stolen the march in smartwatch banking in the retail sector with the development of apps for use on Apple Watch via WatchKit. Citi offers a stripped down version of their mobile app with functionality such as viewing bank balances, and real-time notifications for purchases – very much information only. IG goes a step further and offers limited trading functionality for their smartwatch app; such as options to spread bet, trade CFDs, and buy and sell stocks.

I’m not saying wearable tech can’t play its role in the world of financial trading; it’s just are people going to want to trade large amounts of money using a watch?

Caplin conducted an e-trading survey in 2014 assessing the revolution of mobile technology; it looked at the growing adoption of mobile devices and how it could be capitalised on by Investment Banks.

A lot of objections were initially raised about smartphone trading a few years ago – in our white paper we outlined how financial trading for investment banks on mobile devices could be done.

Trading on the move – Caplin explore the growing use of mobile devices in the capital markets and why banks should offer mobile trading in order to be competitive

What are the trading features users will want to use on their wrist?

I sat down with a panel of specialists at Caplin, who were best qualified to give us their insight into what impact wearable tech will have in the financial industry – this included Livia, Caplin’s in-house usability and UX designer; Jonathan a product owner for Caplin’s FX trading solutions and Stephen,  Head of Mobile solutions as well as a development manager here at Caplin Systems.

Question: With the launch of Apple Watch imminent, what role do you see it playing in the financial market?

Jonathan, Caplin Trading Solutions: It provides an opportunity to set up some very nice notification features, but me personally when I look at the whole wearable tech scene I imagine it’s cool to have the whole instantly available notifications thing, where I don’t have to pull my phone out of my pocket. And then when you get the notification you can be like ahhh what shall I do now? Then at that point you would pull out your smartphone or your tablet if its handy and use a more powerful trading application tool to carry out any actions.

Livia, Caplin User Experience: I think certainly from a UX point of view the launch of the Apple Watch is an exciting event, because we are not really sure what people are expecting and so it gives us a lot of freedom to experiment, instead of people saying I want it like this or like that. We will discover a lot of things when observing how people use the Apple Watch, like how they expect to view a notification and as a result designers are going learn a lot.

Stephen, Caplin Mobile Solutions: On the role of the Apple watch in the world of trading – I think it’s difficult to say as smartwatches haven’t really taken off so far, and partly that’s because a lot of them have been really terrible but more recently the android wear devices have been really really nice – I like the Moto 360 personally. Whereas with Apple Watch coming to market, they have already got a strong number of pre-orders [Editors’s note: As of this writing it has surpassed 2.3M units] and this will definitely help drive the segment and give the form factor a chance at succeeding, because very rarely do you see now people walking around with smartwatches.

At Caplin we have already observed a number of companies that are looking into wearable technology and have already got support for smartwatch functionality. Some interesting work has been done although I have observed a few classic mistakes which I feel pretty much everyone is going to make when they first start building their smartwatch apps where typically you are going to try and recreate all the stuff you provide on a mobile app, onto a Smartwatch app.

I feel like no one is ever really going to want the full trading experience on a Smartwatch. You will more than likely pull out your phone or your tablet and view trading orders on a bigger screen because obviously it’s an important transaction.

Having said that don’t feel that notifications is necessarily the extent of trading functionality that Smartwatches can bring to the table, I am sure there will be other features that you can imagine. It could be used to manage open trading positions – those sort of short interactions where you can just press one button to close all positions, or swipe to the right etc.

I think Apple got it right when they said that each interaction on the Apple Watch should be ten seconds long at most

Stephen, Caplin Mobile Solutions

Jonathan, Caplin Mobile Solutions: Continuing on Stephen’s points, yes I can see that happening by setting up triggers that notify the user with ‘Oh the Euro Dollar has just gone from medium to hot.. action needs to be taken quickly, what does the user do now?’ If they’re away from a PC they would just pull out a phone and get trading.

Stephen, Caplin Mobile Solutions: With Apple Watch – interactions need to be short,  that will be the intended purpose. If you are on the train and browsing you are more than likely going to be using your phone.

But I do think people will come up with different ideas – such as browsing market prices, and just generally seeing if prices are going up or down so it will be interesting to see if this kind of thing sticks or not, and whether or not there will be a wide adoption of smartwatches for trading uses.

Question: What challenges do you see for any bank looking to come up with a wearable tech strategy for e-trading solutions? What are the obstacles for launching such a Smartwatch offering?

Jonathan, Caplin Trading Solutions: I mean from Caplin’s point of view, what we expect from banks is that they will want an extension of what is already on offer for mobile, such as an extension of the notifications framework. We know that Apple Watch will be dependant on an iPhone for connectivity, and so the iPhone would just relay or push any trading notifications to your smartwatch, using simple integration via an API of sorts. I mean everyone realises that smartwatches aren’t really designed to be stand alone devices [Editor’s note: although the Samsung gear can make calls by itself] and so they will need to depend on your existing mobile app for functionality.

Stephen, Caplin Mobile Solutions: Yeah, I mean given what Jonathan is saying, this provides advantages where not much code or development needs to be set up as you are just extending on an already existing framework with mobile, where the Smartwatch can just adopt a few simple features from.

The biggest challenges banks may face with a wearable tech strategy for e-trading is that middle managers might want to promote all of the facilities available with their offering using smartwatch support, and that clients out there will be like – What do you mean I can’t call my dealer on this watch?!

Jonathan, Caplin Trading Solutions

Editor’s note: Although there are smartwatches that can actually make calls!

Stephen, Caplin Mobile Solutions: For a bank, having a wearable tech strategy and smartwatch support for their e-trade offering is nice to have as part of their brochure and marketing campaigns.

Question: What do you think would make the experience of wearable tech better than other Mobile devices?

Livia, Caplin User Experience: Put simply you would have the information available on your wrist. You could be walking and you get an instant alert.

Editor’s note – I think it is debatable on whether you are more likely to notice notifications on your wrist (via a vibration) as oppose to a smartphone somewhere on or near you. During the interview, Livia raised an interesting point where she had used a wristband that had a notification system before and while at the start she was instantly notified by any sudden vibrations on her wrist, over the long term she had become use to it before ignoring the vibrations and notifications all together.

Question: In an e-trading survey conducted by Caplin, we found that 77% of buy-side clients would want to monitor existing positions on a mobile device. What would the figure be today for SmartWatches?

Jonathan, Caplin Trading Solutions: I would say much much lower, but let’s find out, and even if it is a low figure I think it’s one of those things where the cost of implementation is so low that even having a small percentage of consumers onboard can turn SmartWatch support into a profitable solution. It’s not like you would be creating a new app, with high development costs, in an agile development it’s just another a sprint or two, not a project.


As it stands now, the wearable tech like Apple Watch won’t be replacing devices such as the Tablet and Smartphone anytime soon; a smartwatch simply lacks the screen space for a pleasant user experience. Instead, it is designed to compliment your mobile device, with notifications that give you quick bits of info and some notifications that can be acted upon instantly.

In development terms, it’s not that expensive to develop a smartwatch app if you already have a mobile app. Overall it’s a viable option… so yeah IG and Citi are certainly taking the right direction – with the advent of wearable tech they are exploiting a new, fresh segment of the e-trading market… but are they taking the right approach? Or missing the unique selling point of wearable tech?

Apple said it themselves: ‘Apple Watch represents a new chapter in the relationship people have with technology’.

There are things that people will always prefer doing on a bigger screen, with broader facilities, and financial trading is one of them. However, it’s much more quicker to glance at your smartwatch and do a simple tap as opposed to getting your phone out of your pocket if you wanted to view a notification and act upon it.

Better still – you are more likely to notice a vibration on your wrist than in your back pocket. Even better still, it is more subtle and appropriate in some instances to look at things on your watch – like in a meeting – then say your mobile phone.

That call order you set up earlier in the day just came in, and you can make some money, and you know this because your wrist whispered it to you and you just took a glance on the sly.

The problem will be middle managers wanting all features possible on a smartwatch. But how often will developers stop to address the usefulness of the device in question and to identify features that consumers are likely to adopt to make their lives easier and more productive? As oppose to a gimmicky set of features that fail to pick up any traction with users.

The answer is not to try and fit in the whole trading experience on a smartwatch, but instead offer instant notifications and simple interactions that are easy to execute.

Leave a Reply

Your e-mail address will not be published. Required fields are marked *