5G Creates New Opportunities and Efficiencies for Financial Services Groups

From the development of wire transfers in the late 1800s to automated teller machines a century later, the financial services industry has always embraced technologies that could improve efficiency and enhance profitability. Perhaps none has sparked as much enthusiasm as the ongoing development of fifth-generation (5G) broadband cellular networks.

The faster speed, lower latency and higher data capacity of 5G networks will allow banks and other financial services organizations to launch a number of new customer services while also addressing existing gaps in their operations. According to PwC analysts, the technology could create more than $40 billion in productivity gains for U.S. financial services firms by 2030.

With speed, latency and capacity improvements over the previous generation, 5G networks can deliver fiber-like performance with the versatility of a wireless connection. Near-real-time data delivery opens the door for a host of new efficiencies. Here are some of the ways financial services organizations expect to leverage 5G connections:

• Customer service. 5G’s ability to move massive amounts of data is accelerating the development of chatbots, virtual tellers, enhanced videoconferencing, augmented reality and other technologies designed to streamline the customer experience. Everything from credit checks, loan applications and trading services will become faster and more convenient.
• Fraud prevention. Identifying financial fraud almost always happens after the fact through post-event analysis and digital forensics. 5G makes it possible to detect fraud in progress and take steps to prevent it. 5G networks can ingest data from multiple sources to conduct transaction verification in milliseconds.
• Value-added services. With 5G technology, financial institutions can use network slicing to create multiple virtual networks for different services or customer segments. Each network slice can then be configured for different bandwidth, reliability, security, coverage and service levels in order to support specific application or solution requirements. Slicing also creates security benefits by isolating network segments and restricting the movement of malware within the network.
• Mobile transactions. Surveys show that up to three-quarters of U.S. consumers have increased their use of mobile banking applications since the pandemic limited in-person services. 5G’s extremely low latency rate makes mobile banking even more efficient by enabling near-real-time mobile payments and transactions. Latency, which is the delay between when data is sent and when it is received, drops from about 200 milliseconds with 4G to 1 millisecond with 5G.
• Virtual banks. The speed and capacity of 5G networks is helping drive the development of “neobanks” — digital-only banks that offer a complete range of banking solutions through mobile and web channels without any physical branches or offices. Recent market analysis predicts neobanking will experience compound annual growth of 44 percent over the next decade.
• High-frequency trading. 5G’s high speed and low latency will enable financial institutions to use automated trading applications to conduct high-volume transactions in near real time. Using complex algorithms to analyze markets and spot emerging trends, traders can scan multiple markets and execute millions of transactions in milliseconds. This enables both institutional traders and individual investors to quickly capitalize on market opportunities.

The greater speed, capacity and reliability of 5G mobile networks can help financial services organizations streamline processes, reduce costs and enhance customer service. 5G also benefits consumers and businesses by enabling fast, convenient access to services, information and markets.

SageNet has a long history of helping organizations optimize their networks with the right data transport technologies. Give us a call to learn more about the ways 5G can enhance your operations and enable important new services for your customers.