5G: A New Digital Era for Banking and Finance

Today, all it takes is one tap on a smartphone screen to make purchases, pay bills or view the latest bank statement. This is merely the tip of the iceberg. Now 5G promises to deliver at speed 10 to 100 times faster than 4G with less than 1 millisecond latency and enhanced connectivity. The potential for impact will be across industry verticals. However, companies will have to adopt a strategic approach in order to make use of this latest technology.

Every new generation in mobile technologies has increased bandwidth, thus enhancing end user experience with rich interfaces. The impact of 5G and future networks goes beyond enhancing user interfaces.  The 5G frequency range of 3-30 GHZ provides flexibility to tailor usage for vertical needs, including banking and financial services, medicine, automobile, gaming, Industry 4.0, etc. The acceptance of cloud computing as the new normal and increasing adoption of Artificial Intelligence/Machine Learning, Edge Computing, Virtual Reality (VR) and Augmented Reality (AR) and other emerging technologies along with 5G is expected to transform banking and financial services.

There are many use cases that banks and financial services companies are expected to build with the adoption of 5G.

The future of customer interactions is virtual

The less-than-a-millisecond latency of 5G with faster data transfers is expected to change customer interactions, opening up the world of AR/VR. The use cases related to loan processing, property purchases, asset inspections and any other interactions with customers are going to be vastly different, allowing rich visualizations without the need for physical interactions. The growing research and industry interest in metaverse (next generation VR/AR with virtual spaces in a digital environment) only underlines the coming shift to futuristic interaction models. 

The internal efficiencies of banks will also improve with the advent of 5G. Typically, banks connect their branches to data centres via MPLS or leased line network for better reliability and faster bandwidth. The faster bandwidth, lower latency and higher reliability combined with the network slicing capabilities of 5G can potentially create a new network backbone. This enables faster deployment of branches and increased adoption of mobile branches. On a similar note, ATM or micro-ATM deployment will become easier and faster.  The enhanced bandwidth in 5G can also increase the utility of ATMs from being mere cash handling machines to kiosk branches.

Secure and yet not secure

Security is paramount in adoption of any emerging technologies in banking and financial services. Like earlier mobile generations, 5G also enhances security by design. Added to that, the enhanced bandwidth and low latency of 5G with AI/ML and edge computing increases adoption of continuous authentication mechanisms. Video-based KYC along with continuous voice capture reduces identity frauds in onboarding and account operations. Payment transactions will transform beyond traditional card and PIN with more secured and faster authentication mechanisms.

While there are many exciting aspects of 5G, the threat vectors are expected to increase significantly. Non-standard IoTs and smart appliances may be used by attackers to launch denial-of-service attacks. The softwarization of 5G can also lead to exploitation of vulnerabilities in the communication stack. As 5G is expected to co-exist with 4G, the vulnerabilities in 4G devices can be aggravated by 5G leading to other potential attack surfaces.

The many-sided impetus

Like any other new technology, 5G will go through its adoption diffusion process. The softwarization of 5G networks, reduced cell tower size and edge computing capabilities will result in faster last-mile connectivity enhancing financial inclusion, a key goal in sustainable development. In India, the Institute for Development and Research in Banking Technology (IDRBT), set up by the Reserve Bank of India, is using 5G and block chain to develop next-gen National Digital Financial Infrastructure (NADI) that provides a roadmap for digital financial services growth. After the Paris “One Planet Summit” for biodiversity, central banks and supervisors started the Network for Greening Financial Infrastructure which requires adoption of 5G and future networks.

Academic and industry research on 6G and 7G confirms that future digital transformation is beginning to change with a confluence of emerging technologies and mobile communication for enhanced user experience. This also provides opportunities for banking innovation labs and regulators to work with researchers, industry and standard bodies to influence specifications before the rollout of new technologies. At the heart of it all is safer and better customer experience, growth and the potential for greater inclusion. 

The author is Dr. Lalit Mohan Sanagavarapu, SVP - Innovation, R&D, Wells Fargo India & Philippines.