Capable of far greater speed and reliability, 5G, which is set to go live in the next few years, promises ubiquitous and uninterrupted connectivity. Once implemented, 5G will effect sweeping changes across all industries including Banking and Financial Services (BFS).
Like every other industry, mobility has been a game changer in banking as well. The past year or so has heralded in even more changes and given rise to “omni-digital” customers[1] who use only their smartphones, tablets and PCs to interact with banks. In fact, customers that use digital banking services are far more satisfied as indicated by a study on U.S. retail banking by J.D Power[2].
Despite numerous such surveys that showcase digital banking as the most preferred channel for customer engagement, banks continue to be sluggish in their efforts[3] to enhance customers’ digital experiences. But this cannot continue for long. As customer demographics change, there will be an increasing pressure on banks to deliver superior customer services through the channels their users prefer.
The dawn of 5G will further force banks to undertake massive reforms in the way they use technology, for internal operations and customer engagements alike. Many familiar banking operations such as payment services will attain new forms extending to newer channels including 5G smartphones, Wearables, IoT devices and Virtual Reality. The increased security and speed made possible by 5G will also revolutionize the capital markets, shortening settlement cycles considerably and removing latencies with real-time mobile trading capabilities.
Given the ever-increasing number of FinTech competitors, traditional banks must be on top of the changing dynamics if they want to remain profitable. The future of banking and the entire BFS industry is clearly digital, especially considering the intelligence and connectedness that will be a part of Internet of Things (IoT). In order to prepare themselves for this possibility, banks will need to closely align themselves with technology evolutions and the consequent user expectations.
Let’s take a look at how 5G can potentially transform the banking and capital markets:
Mobile as the main channel for banking
With mobile banking adoption rates growing steadily as outlined by the Consumers and Mobile Financial Services[4] report, it won’t be a surprise if the convenience and security enabled by 5G makes mobile the center of all banking transactions.
Mobile as credit/debit cards
The security features of 5G will wipe out the need to carry multiple plastic cards and replace them with a single, all-in-one mobile wallet.
Mobile as digital identity
As biometric security evolves and more and more smartphones are fitted with fingerprint scanners and facial recognition features, the mobile will become its owner’s digital identity gateway. It will also help prevent fraudulent activities through location capture and other features.
Digital deposits, payments and P2P lending
5G along, with the evolution of blockchain technology will make deposits, payments and lending totally digital. Peer-to-peer (P2P) lending made possible through blockchain and distributed ledgers will transform traditional lending activities.
Wearables and smart home devices
Wearables can be empowered with 5G connectivity to enable common banking transactions on the go. This may also include new age innovations such as the voice-first devices and other connected devices (think connected cars).
Virtual personalized services
Banks could use 5G to significantly streamline and enhance their operations, with faster, more reliable network connections and virtual reality.
Internet of Moving Things
Recently, Citibank tested the use of the Bluetooth-enabled beacon technology to provide 24/7 branch ATM access to their customers over their smartphones. In another use case, bank branches could be fitted with sensors to detect when customers approach, to quicken services and roll out targeted offers.
Better asset and mortgage management
Credit underwriting will also get transformed thanks to IoT and sensors that can be fitted to collect the requisite data for monitoring and management.
5G can help make these revolutionary use cases a quick reality. Banks that embrace the technology to reap its manifold benefits are very likely to emerge winners in the digital race. By preparing for this imminent transformation today, you can ensure your organization can better serve an ever-connected customer.
Apart from banking, 5G will also bring in radical changes in capital markets and completely change the face of trading including settlement cycle as we know it. Watch this space!
[1] https://www.pwc.com/us/en/financial-services/publications/assets/pwc-fsi-whitepaper-digital-banking-consumer-survey.pdf
[2] https://www.digitalbankingreport.com/dbr/dbr246/
[3]http://www.mckinsey.com/industries/financial-services/our-insights/whats-the-future-of-mobile-banking-in-europe
[4]https://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201603.pdf
