The demand for high-speed, reliable internet connectivity has skyrocketed in recent years. Whether it’s the rise in remote working due to the COVID-19 pandemic, or an increased number of businesses now storing and backing up their data in the cloud, having access to high-speed internet has never been more crucial to businesses across every sector – and financial services is no exception.
It’s no wonder, therefore, that 5G communications has been top of the telecoms agenda of late. Europe in particular 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 with the European ICT industry aimed at delivering next-generation communication infrastructure solutions. A 5G action plan for Europe was also laid out in 2016, aiming to launch 5G services in EU member states by the end of 2020.
Where will 5G lead the finance sector?
Of course, many industries were looking to adopt 5G long before the current COVID-19 crisis, especially the financial sector, with banking giants like Barclays offering insights into how businesses can best put it to use. However, adoption of new technology has been speeding up in the wake of the pandemic, as businesses look for ways to guarantee they can continue serving customers seamlessly even during the lockdown. The shift has far-reaching implications for the industry, and 5G services can be an indispensable aid in bolstering consumer experience and security.
Three areas of financial services in particular will see the benefits of 5G:
1. Driving the adoption of contactless payments
Europe is the largest contactless payment market in the world in terms of size, predicted to grow even further from $10.3 billion in 2020 to $18 billion in 2025. What’s more, social distancing measures due to the COVID-19 pandemic have made contactless payments even more important, with the transaction limit increased to £45 to make socially-distant shopping easier. Crucially, greater adoption of 5G technology will bolster contactless payments even further. For example, 5G offers perks including reduced transaction times, improved operational efficiency, enhanced security and easier and more customised experiences for customers which can boost transaction volumes. As 5G systems allow instant connectivity from a range of devices, more and more customers will get to grips with digital transactions.
2. Enhancing security
The financial industry can also adopt 5G technologies to increase their organisation’s security. With the rise in digital wallet services such as Apple Pay, for instance, causing anxiety about how secure such transactions can really be, 5G connectivity can eliminate performance glitches in payments made with wearables and IoT connected devices. We have the edge computing capabilities enabled by 5G to thank for this, as data will be processed closer to its source and will reach where it needs to go faster and in a more secure way. Not only this, but 5G also enables more data to travel across networks in real-time which can reduce fraud prevention, while banks and financial services institutions will be able to use artificial intelligence technologies such as facial recognition and multimodal biometric security procedures more efficiently.
3. Digitising the insurance industry
For insurance companies, 5G will play a pivotal role in transforming the experience of their customers into a digitally-enabled one, ranging from sending queries to choosing the right policy as well as submitting claims. 5G will also revolutionise customer engagement by allowing customers to obtain insurance quotes through chatbots powered by AI and submit claims with the help of augmented reality. At the same time, insurers can assess the claims and reduce the time for approval using AI software, while the 5G network will be able to support interconnected sensors and devices that can play a crucial role in mitigating and assessing risk.
Thinking of the bigger picture
The benefits of adopting 5G for the financial services industry are innumerable, with a range of firms set to capitalise on its potential to revolutionise the services offered to customers. Some financial organisations may be concerned that the accelerated implementation of 5G could make them vulnerable to security risks, but as long as organisations remain vigilant and remember the multitude of security enhancements 5G actually offers, the combination of human expertise and a comprehensive 5G cybersecurity strategy will ensure the financial services sector can adopt 5G with ease – and confidence.
The long-term impacts of the coronavirus pandemic should also be kept in mind, but ultimately, financial services firms should remember 5G’s potential to mitigate some of its effects. There is no doubt that 5G can help the financial services industry scale greater heights and promote innovation and productivity – all while keeping people connected during these unprecedented times.