What the Apple Watch Means for the Future of Online Investing

NEW YORK (TheStreet) -- Wearable technology like the Apple (AAPL) Watch will spark a new wave of innovation and contribute to online investing in a more dramatic way than you may think.

Wearables will offer an avenue to quickly consume time-sensitive, bite-sized information and execute simple actions. The limited real estate of the screens on smartwatches will drive design tradeoffs that will further distill customer experiences to their very essences, similar to the way smartphone apps simplified personal computing 10 years ago. Eventually, this will "trickle up" into the design ethos for smartphones, tablets and desktops.

To be clear, wearables will not be a dominant investing channel. Yet investors and traders are seeking convenient ways to interact with their banks and brokerages, and they crave a "many-tech, smart-touch" approach to fulfill their needs -- and wearables will assume an important role.

Here is the current state of online investing and ways in which wearable technology will make inroads: 

  • Customers use smartphones for monitoring and transacting. Investors and traders today primarily use their smartphones for monitoring -- reading and reviewing quick bites of information and updates such as overall market movement or individual stock prices -- and transacting -- making quick trades based on market events or previously researched signals. According to the most recent wave of E*TRADE's (ETFCStreetWise quarterly tracking study of experienced investors, 42% use their mobile devices for stock quotes. Some 34% use their devices to monitor the market. (This wave of the study was conducted from March 31 to April 10 among an online U.S. sample of 1,002 self-directed active investors who manage at least $10,000 in an online brokerage account. The survey has a margin of error of plus or minus 3.1% at the 95% confidence level.)
  • Customers use tablets for researching and learning. Tablet applications go a step further, allowing users to engage and interact more with content. As a result, today's investors and traders often turn to tablet devices for more in-depth research, planning and reflection, especially outside market hours, from the comfort of their home.
  • Customers use Web sites for the full life-cycle of investing. Sites continue to represent the broadest set of content, features and functionality catering to traders and investors, at work or at home, from account opening to portfolio monitoring. The rise of mobile apps does not mean the death of browsers, as some have speculated. In the new normal, browser widgets will allow for research and trade execution without leaving a Web site, further shortening the distance between research and execution.
  • Sophisticated traders use platforms for advanced trading. For highly active investors and day traders, trading platforms continue to offer a highly immersive and high-velocity experience, with customizable tools to scan the markets and analyze strategies while delivering real-time streaming data, advanced charting and first-rate trading execution, from equities to options to foreign exchange.
  • Customers seek in-person experiences for advice and support. Affluent investors want to speak face to face in some situations, if they are seeking assistance to plan for retirement, advice on investment products or help in answering a margin call. That said, we see technology lending a helping hand to enrich the dialog between investors and financial consultants or customer service reps through interactive planning tools and video via desktop or mobile devices.

The greater processing power of smartphones, paired with bigger screens, is why we see these experiences evolve from monitoring and transacting to far richer and more comprehensive uses. Think about asset allocation, professional advice, or executing a complex multi-legged options trade. These experiences are increasingly happening through smartphones. Customers are using their phones to get intelligent education and guidance, which was traditionally available only via in-person interactions.

Individuals are starting to use smartphones to watch educational videos (7% for all investors, but 12% for investors under age 34) and search and screen for stocks and bonds (18%) while continuing to use these devices to monitor or check in on portfolios (37%), according to the StreetWise study. Many smartphone apps and sites are also boosting their content offerings to include more videos and relevant news, such as live streaming CNBC and one- to three-minute segments on trending news.

Tablets are delivering the desktop, and smartphones are delivering what used to be available only on tablets. Going forward, wearables will deliver what was previously available only on smartphones. Over time, the phone will no longer serve as the primary monitoring device, because charts, quotes and watch lists will be readily displayed on your wrist.

Regardless of technology or device, companies involved in online investing must look outside their industry to deliver the high-tech experience consumers enjoy as they browse their retail, social media, fitness and media apps -- blended with the expert advice consumers want when making important decisions about their nest eggs. 

Platforms like the Apple Watch will contribute to the evolution of online investing in innovative ways, expanding the digital experience that investors and traders seek. Across channels, wherever they are, whenever they want it. The future is in the hybrid model: the right channel for the right context.

This article is commentary by an independent contributor. At the time of publication, the author held shares of ETFC.

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