CTO and SVP of NetScout, Service Provider – Leads technology strategy for product and service solutions.
With proper implementation, 5G will accelerate the evolution of modern financial services, permuting tasks as routine as obtaining credit information to next-generation edge- and cloud-computing operations, AI, and much more. It is the bridge to the mobile-centric business model that is the banking industry’s future.
“Evolution” is the operative word as 5G builds on existing progress in both telecommunications and banking. Regarding the former, 5G is backward compatible, meaning 5G phones “are capable of functioning on earlier-generation networks outside of 5G coverage areas,” according to the FCC. This means that mobile providers can “maintain their 4G networks as they invest in 5G deployment.”
As to the latter, many financial innovations are already deemphasizing “brick and mortar” banking. The need has only increased during the coronavirus pandemic. A more significant number of financial institutions now focus on building a touchless, safe, fast and easy-to-use customer experience. 5G will help make these features ubiquitous, particularly in rural areas.
Cash usage is a great example. For consumers who still prefer physical currency, their legacy systems will benefit. Currently, ATMs require special phone lines to operate, limiting the locations where machines can be placed. 5G will untether them, meaning ATMs could be located anywhere with 5G connectivity, no matter how remote.
Meanwhile, younger generations who prefer digital payments will also gain added convenience. Nearly 20% of millennials in FIS’s 2019 Performance Against Customer Expectations (PACE) survey (via Forbes) said they’ve stopped using cash entirely. 5G will make the digital payment experience completely seamless, allowing effortless transactions through smartphones, smartwatches, and a wide range of internet-of-things (IoT) channels.
Other exciting segments of financial services — such as machine learning-powered chatbots, direct-to-consumer banking and no-fee trading — are already possible on 4G networks, but 5G will make these solutions more powerful and more secure. 5G supports edge computing, which reduces network latency by bringing network nodes closer to users so data avoids traveling long distances. And whereas 4G networks lack native prioritization of services, 5G networks have “network slicing” capabilities that can segment data by priority. This capability will improve communications and processing security, a critical component for data as sensitive as financial transactions.
Consumers will see these effects in their day-to-day lives in myriad ways. For instance, 5G affords the ability to create “pop-up” banking — in other words, temporary bank branches that still offer a full suite of functionality and data security like comprehensive as permanent locations. Potential uses for pop-up banking include disaster recovery zones, concerts and college campuses.
5G also adds to the fold novel technologies that don’t currently exist in practical applications. One such development will be the advent of widespread augmented and virtual reality in banking. While it’s safe to say no one wants a virtual experience of their local branch, the educational benefits will be manifold, such as vivid demonstrations of the time value of money for consumers pondering investment choices.
Customer service will similarly improve. The promise of AI-powered chatbots today tantalizes, and with 5G, simple “bots” could evolve into virtual avatars to assist customers with requests any time, anywhere. Behind the scenes, AR/VR will give financial services professionals more in-depth and personalized training for any segment, be they professional traders on Wall Street in need of portfolio analysis or repair technicians in the field fixing hardware in real time. While customers may not see it, they’ll still reap the benefits of seamless communications enabled by 5G across the entire financial ecosystem.
The ripple effects in adjacent industries will significantly impact financial services as well. For example, insurers will reap the rewards of two new technologies made possible by 5G in particular: sophisticated drone usage and self-driving vehicles. Widespread commercial drone usage will upend the speed and accuracy of property damage assessments by delivering an on-demand “bird’s eye view.” Self-driving vehicles are not only able to navigate autonomously, but also report ongoing metrics that can calculate coverage.
5G is a leap forward in technology, though the added complexity makes it essential for financial firms to have visibility across their entire network to ensure the best customer experience. With the right implementation, 5G will remove bottlenecks for a wide range of financial services; improve back-end internal operations, front-end client interfaces and middle-office partner collaboration; and further the industry’s overall emphasis on a mobile-centric, human-centric business model.
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