5 trends in 5G – time to wear seatbelts and experience the take-off of next generation banking

The coming of 5G is arguably one of those game-changers that could have a serious impact across multiple industries, although it may still be viewed as simply a shift in gear from its predecessor, 4G. It may be useful to first understand what the big deal about 5G is, and why is it sought after so much. In simple words, there are 3 significant shifts that 5G brings over its predecessor: higher density, lower latency and greater bandwidth:

  • Higher density: 5G supports 10-100 times greater number of simultaneous device connections. So, better performance in clusters where people gather more.
  • Lower Latency: The lag in response is 1/100th of the 4G experience. This means it is 100 times quicker. Naturally, this implies improved customer experience. Let’s say a full HD movie can be downloaded in 10-40 seconds using 5G!
  • Greater Bandwidth: With a data throughput that is 1 GBPS, the ability to send and receive data is 10 times better than 4G, using a higher band of radio frequency, thereby offering higher data rates. A faster connection implies a smoother experience.

Naturally, this is likely to have an impact in every sphere of life, and particularly a much larger implication for the technology-driven financial services industry. Yahoo Finance estimates the 5G services market size to grow at 29.4% CAGR to reach $250 billion by 2026. Besides the rush, we are likely to explore in cloud computing, extended reality (XR), and mobile edge computing (MEC), 5G will likely see better real-time analytics of geographic, demographic, psychographic and behavioural data, driven by artificial intelligence (AI). The ability to have huge volumes of data flow seamlessly also means greater adoption of DevOps and faster time to market in driving innovative products.

5G is expected to be instrumental in driving a paradigm shift in our daily lives and what would be the banking experience of tomorrow. Below we explore five great trends that are likely to be accentuated by the advent of 5G.

Trend-1: Internet of Things – the thing of 5G internet

An ecosystem with greater bandwidth enabled by massive Machine Type Communications (mMTC) is likely to encourage machines talking more with each other, facilitated by AI. Consider wearables that pump in health data in a real-time mode, triggering driving better insurance products, or e-wallets making payments in real-time at a check-out counter. Asset tracking and digital identity enabled by blockchain and 5G may help better cross-border payments. 5G enabled drones can monitor properties in real-time to validate claims and reduce fraud. These scenarios are likely to become commonplace.

Trend-2: Virtual bankers, for real

Engaging with a financial advisor or a service representative of a bank is likely to become increasingly via a video mode, powered by 5G. Even as banks are seeking to reduce their branch footprint, the ability to leverage facial recognition featured ATMs as ‘pop-up’ stations in places of quick demand or having multi-lingual kiosks in remote locations is now much more feasible. Service agents can interact with customers in real-time with reduced lag and communicate seamlessly in what can be called immersive experiences. While the Covid-19 pandemic necessitated virtual banking around the world, 5G would further accelerate the adoption of digital channels thanks to ultra-high speeds, higher video resolution and uninterrupted experience. A further reduced branch footprint would be a natural corollary to the above phenomenon.

Trend-3: Embedding finance that is embedded

Seamless connectivity driven by Machine to Machine (M2M) communication would help accelerate embedded finance and invisible payments in day-to-day transactions. While legacy wearables have been based on local authentication, 5G-enabled validations are likely to be on the cloud, thereby simplifying instant, frictionless transactions. Hyperpersonalisation also helps with contactless payment instruments enabled by sensor-based connectivity of smart devices. Integrated financial and insurance products such as connected car finance are expected to be better delivered on a 5G backbone.

Trend-4: Stability in mobility

Mobile traffic is expected to grow 8x with 5G, per industry estimates. Network slicing, where the expanded bandwidth may be used across multiple devices would enable integrated services across devices, using network function virtualisation (NFV). Enhanced Mobile Broadband (eMBB) would drive a number of new use cases including better quality virtual meetings, in-vehicle video entertainment and holographic projections using Artificial Reality and Virtual Reality (AR/VR). 5G enabled chatbots would be contextual, and not transactional conversations. Customers would significantly benefit from the better omnichannel experience that helps connect physical gadgets and devices without compromising quality.

Trend-5: Securing cybersecurity

High-speed connectivity and reduced latency can also be a threat. The advent of 5G is also likely to drive innovation in cybercrime, thereby necessitating greater vigilance and cybersecurity. 5G necessitates the need for enhanced security across public, private, mobile, and fixed networks. The cost of infrastructure maintenance and upgrades in the 5G context may also move northwards, which banks would need to be wary of. Since IoT brings multiple devices into play, the vulnerability quotient is also proportionately higher. 5G sub-networks help in isolating cyberattacks and enhancing security. Securing the cyber environment would therefore become more pertinent than ever before.

Even as customers begin to experience the benefits of 5G, the bar gets set higher for banks that must compete to deliver on better customer experience. The difference between an average experience and a superior customer journey would be more palpable, and to that extent, also drive customer engagement and preference. The Metaverse powered by 5G, for example, may further expand customer experience expectations, and financial institutions would need to keep pace.

Banks, therefore, need to not only work on delivering best-in-class multi-channel experiences to their customers but also quickly adapt to new standards in the marketplace. At the end of the day, as Darwin famously propounded - it is not necessarily the strongest that will survive, nor the most intelligent, but those that are more responsive to change!

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