The rollout of 5G networks will not only power banking innovation but also drive wider financial inclusion across the world.
By 2025, one third of the world’s population will be using 5G networks. This is as many as 1.2 billion connections. 80 percent of the United States of America already uses 5G, and the rest of the world is set to follow. 5G, or the fifth-generation mobile network, holds the promise of faster connectivity, lower latency, higher reliability, and greater data processing capabilities. It is expected to transform the way businesses operate across sectors, including banking.
Winds of change within the banking sector
The global rollout of 5G comes at a time when the banking sector is undergoing significant transformation. Consider this: when was the last time you stepped into a bank? When was the last time you even took out your wallet to make a payment? Modern banking is no longer confined within the four walls of the bank, and its strategies are no longer determined by the bank alone. Instead, it is customer centric, seamless, and increasingly integrated with every aspect of a customer’s life. It is online, on the phone, and embedded within third-party non-banking services.
The COVID-19 pandemic served to accelerate the pace of transformation further. Since the start of the pandemic, 72 percent of the population has started using mobile banking, while 63 percent are willing to try out new apps for financial services.
The 5G Edge
5G networks come amidst this ongoing change and transition, and they bring with them 10 to 100 times faster speed than 4G networks, less than 1 millisecond latency, and better and quicker connectivity. 5G can help banks usher in a new era of technology-based innovation by processing data faster to power IoT, AI, ML, and VR-based strategies. Digital banking, better security, authentication and fraud detection, and a smoother mobile banking experience will be possible with 5G.
Not only will banking apps work faster and better, but banks will also be able to roll out AR / VR based innovations for support and customer interaction in addition to seamless and lightning-fast video consultations. 5G’s ability to process vast volumes of data quickly will help banks fine-tune and improve their hyper-personalization strategies and roll out personalised and hyper-contextualized offers and recommendations in real time.
The 5G networks’ lightning-fast speed and low latency are perfect for driving some cutting-edge innovation in banking. For instance, facial recognition features for user authentication and security are already in use in devices like smartphones. But 5G can help banks take it one step further by enabling what I like to call the FEEL model (Face, Eyes, and Language) of authentication and security. It would be a double layer AI-powered biometric system that combines facial recognition, biometric scans, and voice analysis to allow hands-free access to banking apps and services. Live AI-based interactions would conduct retina scans in real time to confirm user identity. The AI engine would then conduct voice authentication, in which the user would have to answer intelligent questions posed by the AI platform or state a command. Their voice, pitch, and tone would then be matched against the sample stored in the system to authenticate the user’s identity. Not only would this be an easy, touchless way to transact, it would also guarantee better biometric-based security.
The two-step authentication process would be built to ensure foolproof security. For example, in case a retina scan or voice command is conducted under duress, the eye movement, pitch, intonation, voice, and actual responses when answering the AI generated intelligent questions will eliminate the risk of any breaches. Quick exchange and analysis of data enabled by 5G will be fundamental to the FEEL model.
Expanding the Financial Inclusion Agenda
Most conversations about modern banking tend to focus on the technology-fueled innovations and the emergence of new business strategies and models ranging from embedded banking and banking ecosystems to BNPL. But it is important to remember that there is still a vast global population that remains outside the formal banking economy. As the world pushes ahead on its digital and cash free banking agenda, it is crucial to expand the scope of formal banking to the unbanked population.
Smartphone penetration across the world has been on a steady upward trajectory, with over 6.92 billion smartphone users currently in 2023. This number is expected to increase exponentially over the next few years. As 5G-powered smartphones make their way to consumers across the world, it is an opportunity for banks to leverage the network’s high speed and reliability to further the global financial inclusion agenda.
There is no doubt that banking will never be the same as technology powered innovations change customer expectations and make it possible to explore new ways to transact and manage finances. The rollout of 5G networks will not only power banking innovation but also drive wider financial inclusion across the world.
(This article is authored by By Sudhindra M Koulgi, General Manager – Global Delivery, SunTec Business Solutions)