Transforming Digital Banking with 5G

Aritra Mitra • December 17, 2021
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The advent of the 21st century marked a noticeable change in the way businesses and customers interact. Digital transformation was the new buzzword in the industry, and everyone progressed towards a shift from brick-and-mortar stores to smart devices.

The banking and financial services industry has also responded to the shift, with one tap on the smartphone enabling people to carry out transactions, pay bills, and view the latest statements. There are sophisticated online systems installed to encrypt, store, and manage sensitive data.

There is an endless list of possibilities that the digital transformation of banking will bring and, with the new age of 5G connectivity, continuous improvement will be at the core of it.

5G – A Fantastic Opportunity for Enterprises

To begin with, let us understand what 5G brings to the table and how it helps unfold the world of cutting-edge connectivity that enterprises globally will look to encash on.

The three most significant upgrades that 5G brings over its predecessor 4G as the next generation of mobile communication service are:

  • Speed: 5G is up to 100 times faster than 4G. This enables a massive amount of data transfer over digital networks in an instant.
  • Lower Latency: 5G is much more responsive than 4G as it brings down latency time to under 1 millisecond.
  • Better Connectivity: 5G will help unravel newer possibilities in connectivity, especially through the Internet of Things. More smart devices in the world will be connected to the internet and each other in real-time.

Looking ahead, 5G will likely provide substantial enterprise opportunities with a list of possible uses and benefits across all industries. McKinsey expects the GDP impact of 5G to be likely around $280 billion globally by 2030. This is where banks will also harp on the 5G bandwagon to improve the speed of digital transformation, enhance the customer experience, explore new revenue streams, and achieve greater cost efficiency. 5G’s use cases in IoT, streaming, big data, AI, and more are bound to be implemented at a radical pace in the banking ecosystem to change it forever.

How Will the 5G Wave Transform Banks?

1. Faster and more efficient data transaction

The implementation of 5G will lead to a disruptive rise in the generation of data. With millions of transactions happening every second, banks have access to huge piles of data. Gartner suggests that presently only 10% of enterprise data is being generated and processed outside a centralized server, which is slowing down data transmission. With 5G, this share is expected to further rise to 75% by 2025.

2. New Network, Newer Possibilities

Edge computing coupled with 5G is ushering banking to an era of new possibilities. With edge computing, data is processed in real-time at the point of generation, and the 5G network plays a crucial role in accelerating the process. According to Verizon, 5G networks can provide speeds beyond 450 Mbps to their customers as compared to 100 Mbps on a 4G network. Further use cases will emerge as more and more banks will explore the potential of these technologies.

3. Hyper-Personalisation On-the-Go

Banks are beginning to look at a future where they will be able to provide highly customized and immersive services to their customers on-the-go. By replacing Wi-Fi networks with 5G, bank employees will not be restricted to just their branches and can help solve customers’ requirements more efficiently. Personalized products can be offered to customers based on the real-time analysis of data generated on their phones and tablets.

4. Richer Experience with Reduced Lag

For the new generation of users, who prefer to use banking services from anywhere, 5G will allow a richer experience. Further increased network speed and a substantially lower latency rate will translate into faster computing for users and higher savings for banks. Virtual interactions will become much more meaningful with faster audio and visual streaming.

5. Financial inclusion, banking for all

Banks can come together to achieve the goal of ‘Financial inclusion’. Setting up new age kiosks and establishing white label branches in remote areas with a 5G network can help collect anonymous data from personal devices using near-field communication. This infrastructure, with the aid of AI, can be used to connect with the most suitable service agent for the customers’ needs.

According to Forrester, by 2030, banks will be invisible, connected, insights-driven, and purposeful.

Invisible. Leading banks will use technology coupled with deep customer insights to provide financial services to the customers when required. Distribution models to utilize 5G are emerging to connect finance with various devices like homes, machinery, vehicles, and others. These are going to be testing times for multiple banks as their retail brands become increasingly invisible to the end consumer.

Connected. Banks can only maintain their relevance by being present in the ecosystems and products customers use. This can be viable if banks accept a transition of their brand, facilitating an association beyond banking to add value into frictionless, rich customer journeys. They can differentiate themselves from their competitors by being “trusted advisors” for all touchpoints, offering embedded financial services.

Insights-driven. The focus for banks will shift towards building a very valuable asset – a higher level of consumer trust, through the vast amount of insights inferred from data. This will grant customers finite control of their financial and digital lives. Banks will have to leverage these insights to boost customers’ trust by developing a financial intimacy through sound advice.

Purposeful. Consumers will prefer banks that are in sync with their environmental and social values in a more purposeful age, with principles aligning to matters of global responsibility. Hence, open innovation and interaction through code, content, and knowledge will create communities driven by a common motive, causing collective product development to assist everyone.

The Banking Industry is sitting on the cusp of another revolution led by edge technology and 5G communication networks. Banks will need to holistically align their technology infrastructure towards creating use cases that will add value to customer interactions and enhance customer experience. Hence, future leaders in this space need to seamlessly match technology and experience with efficient risk management.

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