The introduction of fifth generation (5G) wireless technology is predicted to transform global communication and data transmission, heralding a new age of connectivity. It will be a force to be reckoned with and something financial institutions must consider in greater detail as we approach 5G rollout. Rachel Hillier and Ferial Khan, explore.
5G uses higher frequency waves, which relatively few applications currently use today. Experts agree that it will become a catalyst and convert the world from being interconnected to hyper-connected which will ultimately increase automation, transparency in operations and arguably result in better decision-making. This shift in macro-technology promises to provide greater stability, the ability to connect more devices at once, move data at greater speeds and lower overall latency.
It is seen as an opportunity to supercharge business processes, increase efficiency and reduce costs, so many businesses plan to deploy 5G technology in the next couple of years. These include financial institutions which are becoming more mobile in how they work using FinTech providers to upgrade services, retain customers and acquire new ones. In order for FinTech providers to stay abreast of growing technology and the inherent risks involved a closer look at 5G is required.
Banks and credit unions are still juggling the best way to deploy mobile technology and to do so in a way that balances security with consumer convenience. 5G offers a tool which FinTech providers can use in addition to other emerging technologies such as machine learning and artificial intelligence, all of which are capable of boosting banking operations including consumer service, and preventing fraud. 5G reduces latency and transaction times which are both essential to ensuring a business’s networks can handle the large number of transactions.
5G is set to drive consumer decisions which will increasingly be decided by the services and experiences that a financial institution can deliver to its consumers not just its products or channel offerings. It will also be a catalyst for intensifying competition in the financial services sector, as it will accelerate data-driven models in finance and set the tone for the further rise of FinTech providers as the financial services sector continues to transform.
The dawn of 5G will also force FinTechs to undertake reforms in the way they use technology for internal operations and consumer engagements alike, for example, through the applications of tools such as 5G smartphones and virtual reality. Such applications can deliver real-time value propositions and better employee experiences.
Despite these clear benefits, a cloud of uncertainty remains around 5G. Not enough is currently known about the potential risks and effects. Given the paucity of direct evidence to date, the publication of a few high-quality independent studies focused on 5G specifically is likely to materially affect scientific opinion and regulation in this area.
The improved connection facilitated by 5G opens up potential cyber security threats that can compromise important personal information. This hyper-connectedness may also increase cyber exposures, with hackers better able to exploit device vulnerabilities and exacerbate information security dangers for businesses.
The way that networks are secured today will need to be completely reconsidered in order to incorporate this technology and new bandwidth. Smart cities and national infrastructure, connected vehicles, digital health care, smart homes and more could use 5G to transform current markets, but if compromised the consequences could be dire.