India has taken a mega leap in mobile telephony by joining a select group of countries who provide 5G telephony. The next generation 5G or the 5th generation mobile network has been rolled out in India which is 10 to 100 times faster than its predecessor 4G.5G is characterised by “Higher Speed, Lower Latency and Enhanced Connectivity”. It sets a new wireless standard by delivering low latency, reliablehigh data capacity connections and has potential to transform digital landscape in a disruptive way.Indiahas played a catch-up game as far as 3G and 4G are concerned but government wants India to be a front runner in 5G.Indian telecom companies are hopeful of covering major part of India by the end of 2023. It is estimated that by 2025, there will be more than 2.8 billion 5G connections in the world.
5G is expected torevolutioniseconnectivity, reinvent overall customer experience and therefore it is going to have profound impact on the banking, education, health, agriculture, and many other sectors.It will spearhead the next wave of digital disruption.With 5G, superfast digital connectivity will be a new normal and consumers will begin to expect and demand the same fast banking experience. On the other hand, banks will also ride the 5G bandwagon to improve the speed of digital transformation in banking, enhance the customer experience, explore new revenue streams and achieve greater cost efficiency.Its impact will be all pervasive as it will transform backend processes,physical branches, customer experience and finally banking ecosystem itself.High speed 5G networks will carryout complex banking tasks in real time and help them improve the efficiency of their websites and apps. Hyper personalized IoT device enabled banking services and products which will be the backbone of future banking will get better support from 5G and integration of devices like phones, wearables, and even cars to deliver a uniform interactions and seamless customer experience across touchpoints will be smoother. Combination of physical and 5G enabled digital banking channels will give a more true omni-channel experience.PWC has estimated that 5G will bring around $85 billion to financial services sector by 2030.
Impact of 5G on Banking
Faster speed will lead to faster transactionsand superior connectivity will allow millions of devices per square kilometre. Latency (delay between action and result) will be almost nil making video streaming smooth.All this will ensure further adoption of digital banking and paymentsand help banking sector in giving a seamless banking experience for their customers. Banking services will become more personalised asthey will be available on wearables devices and IoT devices.
Physical branches will get converted into “Smart Branches”. By virtue of technologies like video analytics, virtual reality, augmented reality, and instant facial recognition which are better enabled and supported by 5G, better customer identification and branch monitoring will be possible. Customer gait pattern and footfalls can be analysed to manage branches. The utility of ATMs will increase as with faster connectivity ATMs can work as kiosk branches with AI backed personal financial services offerings. While many banks are running pilot testing some banks in China have already started using 5G to deliver better customer experience.
Customer onboarding and customer care service via video calls will become the norm. Artificial intelligence and machine learning based bots will be able to resolve the customer issues in time efficient and highly personalised manner.
Banks will be able to increase their reach and footprints without building physical branches. Portable micro branch setup or Pop-up branches infrastructure can be transported to remote locations as the connectivity is fast and better to provide a completely authentic banking experience through Virtual Reality.These pop-up branches will be a better tool to take financial inclusion to remote and unbanked areas with VR powered digital banking services. Smart devices will be able to provide bank connectivity to remote and rural areas. 5G will help real time language translation and thus banking in local language be made available on mobile services, kiosks andwearables.Santander bank, the first bank to implement a 5G network has established a smart pop-up branch near Madrid.
5G will also help banks in achieving greater operational resilience and business continuity in case of natural disaster to provide traditional banking services to the affected population.
We are already witnessing a shift in customer behaviour and people are preferring digital payments over physical currency payment. This trend will further pickup pace with high-speed transaction capabilities of 5G. Digital wallets will be available on wearables and IoT devices besides mobiles, making them more popular and lucrative compared to physical wallets to both masses and merchants.
5G high-speed real-time data flow will make big ticket purchases as quick and seamless as grocery shopping. Since real time high quality live stream consultation is possible,big ticket purchases can be presented to lenders for verification and approval through virtual reality. Big ticket purchases which involve securing a loan will become instantaneous as AI backed loan sanctioning tools will comb relevant data to sanction loan and fix the terms of the loan including applicable interest based on customer risk and reality.Banks will be able to do their routine inspection of financed businesses by virtually visiting the business units.
Data is oil today and banks have huge volume of customer data. Immaculate data transfer capabilities and lightning speed of 5G will help banks in data (both behavioural and financial) mining to target customers with highly contextualised advice and better product recommendation.
AI will get a real boost with 5G technology.5G allows large volume of data processing on cloud which may reduce banks dependence on apps. Cloud based products and services will be more efficient and reliable. Immersive and engaging customer experience will become a reality with 5G.Using virtual reality and edge computing customers can virtually visit the branch as edge computing will bring networks closer to user application. Faster movement of data and enhanced connectivity will boost close cooperation between banks and fintechs.
Security and fraud detection will be more efficient assecurity vulnerability and fraud will be detected real time.Repairing of security flaw across apps, websites, payment gateways and wearables is possible without any down time.Biometric checks will become more sophisticated, moving from fingers to faces, voices, and behaviours.Today banks are dependent on one type of biometric authentication but 5G will enable multidimensional biometric security procedures viz. facial recognition, physical characteristics and geo locations etc to give instantaneous verification of customer.Identity frauds in onboarding and account operations will be reduced with Video-based KYC along with continuous voice capture.
Block chain transactions are complex due to their encrypted and distributed nature and take a while to process. Higher speed and bandwidth will enable widescale adoption of blockchaintechnology in banking which willstrengthen function like trade finance, asset tracking, digital identity and cross border payments.
Any new technology comes with incumbent risks. The increase in bandwidth will see an enormous flow of customer data flowing through the network which will increase the responsibility and burden of the bank to protect customer data and they will have to review and strengthen their existing data procedures.Banks need to have modern IT infrastructure otherwise they will be overrun by data.
Faster speed, a tidal wave of new devices and unlimited connections bring along with it many security challenges which will make managing 5G security much more difficult. The amount of data traveling via financial networks could become a hotbed for people with malicious intent.With millions of connected devices,larger and more dangerous attacks are possible. There is increased risk of more sophisticated botnets, privacy violations, and faster data extraction as IoT devices are inherently insecure. Each insecure IoT device on an organization’s networks represents another potential hole exposed to an attacker. All these vulnerabilities require that a more robust and next generation security support will be needed for 5G.5G will increase the vulnerabilities in 4G devices as it is expected to co-exist with 4G.
All Stakeholders will Benefit
Banking is sitting, today, on the cusp of another revolution led by Edge technology and 5G network. 5G will prove to be catalyst andhelp banking in quality digitisation. With 5G banks can sharpen their strategy, system and procedure to meet customer expectations which has undergone a sea change over the last decade. Artificial intelligence, analytics, personal financial management software, internet of things, voice banking, banking as a service and fintech innovation all will get a boost from 5G.Digitalbanking willevolve faster by leveraging 5G to become invisible and intuitive banking andbanking will smoothly get embedded in other daily activities. However,banks will have to align their digital infrastructure with the requirements of 5G which will cost them significantly.Despite willingness of banks to adopt 5G as soon as possible, the benefits of 5G will reach consumers only after a sufficient coverage has been achieved which does not seem possible before 2025.