Why it means more than just faster data
In a world where more and more voices are decrying the slowing pace of technology innovation, 5G stands as one of the newer technologies most likely to make a significant cross-industry impact. What is 5G and how might it influence innovation in the fintech space?
In a nutshell, 5G stands for “5th Generation” and represents the latest in cellular mobile communications. 5G is seen as superior to its predecessor systems (4G, 3G, and 2G) in a variety of ways including its ability to handle high data rates, a greater system capacity, and reduced latency.
Check out this explainer from PC Mag published earlier this year for more in-depth discussion on the technology behind 5G.
Verizon, which currently offers 5G home internet in four cities, announced last month that it will debut its mobile 5G offering to 30+ cities later this year. AT&T has rolled out its 5G service in 12 cities, and plans to extend the service to an additional seven cities later in 2019, as well. Mobile 5G from Sprint is coming to nine cities – including New York City and Phoenix – by mid-year.
Of course, 5G is not a U.S. only affair. The U.K.’s biggest network operator, EE, will offer 5G in parts of 16 cities in 2019. O2, the country’s second biggest telecom, will also roll out its 5G services this year in four areas, followed by a broader rollout next year. Vodaphone is also planning a launch in 19 cities in 2019.
Around the world, 5G is making inroads in Europe, China, and South Korea. The developing world is also getting in on the 5G action: South Africa launched its first 5G commercial network earlier this month, Huawei announced it would deploy a 5G network in the UAE later this year.
Writing for 5G.co.uk, Jamie Carter highlighted the low latency feature of 5G as the technology’s most critical contribution to fintech. “At the very least 5G will bring a lightning-fast real-time user experience to mobile devices, so much so that consumers will experience banking and payment transactions instantly on their device,” Carter wrote. “5G will mean zero waiting time.”
This means bringing consumers more robust versions of many of today’s most popular fintech innovations like chatbots and intelligent virtual agents. But perhaps the most interesting area where 5G may influence fintech is in leveraging 5G networks to support micropayments.
In order to have a truly transformational impact on fintech, 5G will have to do more than deliver current services better and faster. In many ways, the Internet of Things will rely increasingly on the robustness of these new networks to provide new, quality-of-life enhancing experiences. Fintechs like Dynamics (a multiple Finovate Best of Show winner) have pioneered an IoT-approach to payment cards that includes features like real-time, two-way communications between bank and cardholder.
As developers continue to experiment with ways to leverage augmented and virtual reality into an enhanced customer journey, 5G could play a role in making these technologies more viable and, critically, mobile. As GSMA CMO Michael O’Hara noted, while both AR and VR are “set to revolutionize the way we communicate and consume content,” 5G is key. “AR/VR technology will only become truly mainstream with the broad-scale adoption of 5G networks and its convergence with the cloud.”
A growing number of fintechs have explored more immersive customer experiences, especially in the area of personal finance and wealth management planning. Multiple-time Best of Show winner CREALOGIX, for example, has leveraged VR technology to build a predictive banking solution that incorporates emotion, logic, and creativity to help users make better financial decisions.
Companies like ebankIT (also a Finovate Best of Show winner) have shown how augmented reality can be applied to the e-commerce space with their technology that launches an AR session on a mobile app when a printed document such as an advertisement or brochure is scanned. NCR Corporation has demonstrated how VR can be applied to provide real-time remote collaboration for training and servicing.
These use cases provide a glimpse of what new technologies could emerge from the union of 5G and IoT.
One thing that’s interesting about 5G compared to other emerging technologies is that financial institutions may have to embrace 5G – unlike the blockchain or AI – whether they want to or not.
Global client partner of financial services for HCL Technologies Baskaran Subramaniam wrote “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.” Subramaniam put 5G-enabled smartphones, wearables, IoT devices, and VR solutions in the category of new channels that bank’s will have to pursue. Fortunately, given the 5G arms race around the world, and the continued experiments in everything from AI to IoT to VR, we won’t have to wait long to see how the union of these technologies shapes fintech innovation.
