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How 5G Can Be A Game-Changer For The Financial Services Industry

May 11, 2020

The novel coronavirus has brought the global economy to a grinding halt. As nations struggle to stem the outbreak with the virus claiming thousands of lives and forcing millions of people to stay indoors, the demand for high-speed reliable internet connectivity has skyrocketed. The internet has become the saving grace in these apocalyptic times. Businesses can keep the show running with employees working from home, crucial information is being disseminated through the internet and most importantly people are accessing essential services through it.

Everything that could be moved online has already been done in the wake of the pandemic. As the world relies increasingly on networks, the demand for robust 5G technologies is expected to increase drastically.

5G Deployment in Europe

Europe has been at the forefront in laying the building blocks of 5G infrastructure. In 2013, the European Commission established the 5G Infrastructure Public-Private Partnership, a joint initiative between the European Commission and the European ICT industry aimed at delivering next-generation communication infrastructure solutions. A 5G action plan for Europe was laid out in 2016 targeting to launch 5G services in EU member states by the end of 2020.

However, the COVID-19 disaster has dealt a severe blow to Europe’s 5G ambitions, with major European economies including Spain, France, Italy, and Germany reeling under the pandemic. Although 5G rollout has hit a major roadblock, COVID-19 has reiterated the criticality of 5G. It is expected that 5G rollouts will continue to get a push from governments. The need for higher network capacities is and will continue to remain high as the world grapples with the COVID-19 after effects.

The Impact of 5G on Financial Services

Like most industries, the financial services sector is adopting digital technologies in the wake of the pandemic to continue serving their customers seamlessly even during the quarantine. The shift to digital technologies has far-reaching implications for the financial systems and 5G services can be an indispensable aid in bolstering consumer experience and security.

  • Europe is the largest contactless payment market in the world in terms of market size. What’s more, the global contactless payment market size is predicted to grow from USD 10.3 billion in 2020 to USD 18 billion in 2025 at a compounded annual growth rate of 11.7%. Some of the perks of greater adoption of 5G technology include reduced transaction times, improved operational efficiency, enhanced security, and easier and more customized experience for customers which can boost transaction volumes. As 5G systems will enhance internet penetration, more and more customers will get comfortable with digital transactions.
  • The financial industry can leverage 5G technologies to enhance security. For instance, 5G connectivity can eliminate performance glitches in payments made with wearables and IoT connected devices. 5G will enable edge computing which means data will be processed closer to its source and will reach where it needs to go faster and in a more secure way.

With 5G, more data can travel across networks in real-time which can reduce fraud prevention. Banks and financial service institutions will be able to use artificial intelligence such as facial recognition and multimodal biometric security procedures more efficiently.

  • For insurance companies, 5G will play a pivotal role in transforming the experience of their customers into a digital enabled one, ranging from sending queries, choosing the right policy as well as submitting claims. 5G will revolutionize customer engagement by allowing customers to obtain insurance quotes through digital assistants or chatbots powered by AI and submit claims with the help of augmented reality while insurers can assess the claims and reduce the time for approval using AI software.  Furthermore, the 5G network will be able to support interconnected sensors and devices that can play a crucial role in mitigating and assessing risk.
  • While the benefits of adopting 5G for the financial services industry are innumerable, 5G poses the question on the cybersecurity of the enterprises implementing them. The accelerated implementation of 5G and the lack of security implications make the financial organizations vulnerable to these attacks. These risks extend to the cloud native infrastructure of the 5G networks.

The need of the hour is solutions like network infrastructure, human expertise, and a comprehensive 5G cybersecurity strategy. This will help the financial services companies adopt 5G with ease and finesse.

The coronavirus pandemic will be remembered as an epoch that brought about a sea change in the lives of people across the globe. The trickle-down effects will be here to stay and technology can act as armor for countries in their war against COVID-19. There is no doubt that 5G can help the financial industry scale greater heights and promote innovation and productivity. But for now, the 5G hero has a more pressing task at hand which is to save the world by keeping people connected while at quarantine or working from home.