The fifth generation of mobile communication, 5G is expected to produce unmatched customer experiences when it comes to digital banking and making electronic payments. You might have already seen the little 5G indicator appear on your phone screen, as 80% of the US population now has 5G coverage.
5G paves the way for digital banking in terms of cost, network infrastructure, innovation and service agility. Newer contactless transaction forms were adopted across the globe with pandemic era restrictions. As a result, fintech startups and ecommerce took the mainstage as traditional banks struggled to see growth.
Surveys show that 72% of people turned to mobile banking since in-person services have become more limited, and 63% of consumers said they are more likely to try out a new banking app than they were before the pandemic. Before we get to the specific ways that consumers and mobile banking services can benefit from the switch to 5G, it’s important to have a good understanding of how 5G came to be in order to have a clear picture of the technology’s trajectory.
5G, mobility, and banking
Making payments, buying products online, and opening bank accounts are all possible through the use of mobile phones and smart devices. The shift toward mobile wallets and digital payments relies on 5G connectivity as its backbone. This is because 5G allows for more information to be transported between databases and devices faster than ever before.
Evolution of 5G
1G – Analog telecommunications
The foundation of mobile communications began with analog based protocols and basic voice services.
2G – Text messaging
2G brought mobile access to everyone and came along with the first digital standards.
3G – Mobile and wireless internet connection
As the foundation of mobile broadband, 3G was designed for both voice and data with circuit and data packet switching.
4G – Cloud, IP, mobile broadband
4G enhanced mobile broadband, making it possible to send, receive and store massive amounts of data with IP based protocol.
5G – Unlimited data capacity
Data capacity increases 1000x with the ability to support over 100 billion connections with near instant speeds.
Levels of 5G
Low-band
Low-band has the most range of any 5G service and is the foundation of all 5G offerings. Slightly faster than 4G LTE, low-band is the most accessible version of 5G.
Midband
This level of 5G probably has the most applications, as it provides higher speeds than low-band with more coverage than millimeter-wave. Because it is so effective, most of the bandwidth is occupied by military operations, meaning it will remain a scarce resource for civilian use until advances can be made in millimeter-wave coverage.
Millimeter-wave
The fastest speed on the market, millimeter-wave 5G uses a much higher frequency than other networks. However, it struggles to penetrate objects such as buildings, glass, and even leaves. Because line of sight is necessary to operate on this level, for now it acts more like a wifi-hotspot than a network.
Ways that 5G is transforming digital banking
1. Digital payments
Enhanced bill-pay experiences are another way that 5G provides a convenient solution to issues that affect both consumers and the businesses they interact with. Electronic bill payment websites will be able to provide instant collections of payments, making it easier for consumers to manage their finances. Since businesses don’t have to rely on things like office supplies, manual printing, or regular mailings, they can pass cost savings to their customers.
Digital correspondence, payments, and invoicing are all streamlined with the speed and connectivity of 5G. Additionally, digitizing invoice data provides businesses and individuals with an easier way to get paid at record speeds. There are already many ways to send and receive invoicing and payments electronically through platforms that come with critical features like invoice templates, accounting, and digital payments.
2. Improve service offerings
In addition to banking activities like making deposits, withdrawals, payments, and sending money, 5G speeds allow banking institutions to process more complicated transactions like auto loans and mortgages with less overhead. Banks will also be able to take advantage of real-time insights that can help them find products and services that can have a meaningful impact on their clients. Without 5G, hyper-contextualized advice and instant recommendations are simply out of reach.
The predictive attributes of analytics software that relies on speed to perform effectively can also have a dramatic impact on overall financial inclusion. In addition to credit reporting, lenders can more easily take advantage of layered data in order to provide more consumers with access to credit. The network capabilities of 5G help bring this information to the surface so that it can be applied effectively.
3. Fraud prevention
5G makes fraud prevention efforts more effective, too. An AI-first approach in banking lays a foundation that sets them up to be able to detect fraudulent activities early. Data processing and consultation, transaction verification and confirmation, and the ability to consult several data instances in real time helps to reduce errors like false positives. This protects both the bank and customer’s assets without unnecessary downtime.
4. Advising
High resolution streaming with 5G enabled bank branches to provide seamless video consultations to their clients, reducing the need for people to walk into a brick-and-mortar bank. Both clients and employees will benefit from ultra low latency that allows data to be sent and received in less than the blink of an eye.
Automated systems will be able to respond instantaneously to customer responses so that they can be connected to the products and information that will best serve them. And with increased bandwidth, the number of devices that can be used to connect them to these services is virtually limitless with 5G.
5. Banking for everyone
Of all of the banking applications for 5G technology, perhaps the one that will produce the most positive change is the opportunity for consumers to be easily connected to traditional and defi banking opportunities.
5G speeds and connectivity allows consumers access to bank accounts and other banking services that are necessary to thrive in the current economy. The defi and crypto movements are fully dependent on connectivity, and as these platforms become more widespread, IoT devices will be designed with these needs in mind.
Conclusion
High speed payments, real-time updates, and integrations are just a few of the ways that banks and digital payments applications can harness the speed and agility created by 5G.
Financial institutions will be able to perform more complex processes in record time, while also having access to a more comprehensive picture of a person’s credit and accounts to provide them with the services they need. As more financial institutions team up with fintechs to provide customers with streamlined and connected banking environments it has become apparent that we are only scratching the surface when it comes to 5G’s digital payment applications. The future of banking with 5G connectivity is only just beginning to form, as the foundations take shape before our eyes.
