The term 5G refers to fifth-generation wireless cellular technology, which has evolved through the years from 1G to 4G. According to the International Telecommunication Union, the three major characteristics of 5G are high transmission speed, low latency and massive connectivity to the Internet of Things (IoT), which would lead to widespread use in areas such as autonomous vehicles and smart cities.
Judging from the development of the financial and telecommunications industries overseas, it would also change the service model in the financial industry. Let us take a look at the application of 5G in the various sectors of the financial industry:
First, in the banking industry, 5G would enable the provision of services through wearable devices and IoT equipment, and instinct tells there could be more vehicles for mobile payments. In addition to smartphones, payments could also be done via wearables, such as smart fitness bands or glasses, and people can also expect to make a food inventory and automatic purchases through smart refrigerators.
The technology could also help banks open mobile or pop-up branches. US telecommunications giant AT&T and banks are jointly developing a prototype for 5G-powered mobile branches, which can provide certain financial services — including ATM and interactive multimedia services — at temporary locations, such as music festivals, sporting events and even disaster areas. By doing so, it could help reduce cost and deployment time, while expanding bank coverage.
Next, in the insurance industry, when there is a traffic accident for example, damage assessment could be made by using 5G high-speed connectivity with IoT to activate street cameras at the scene and send dozens of images and videos to the insurers’ offices without having to wait for field staff to gather information.
It would ensure that insurance companies would serve clients promptly and automatically, greatly expediting the compensation process.
In the securities market, as the shift from 4G to 5G is expected to reduce latency from 50 milliseconds to less than 1 millisecond, 5G technology would help the market develop “high-frequency trading,” and therefore change the ecosystem in the securities sector.
For risk monitoring, high-speed 5G transmissions in combination with artificial intelligence and big data would help banks enhance their ability to detect fraud.
When a client activates a mobile payment, it would be possible to locate their geographic position immediately and analyze related data, such as transaction amount and seller information, which would help reduce the occurrence of incorrect fraud detection reports.
Lastly, with ultra-fast 5G networks, it would be possible to conduct 3D video conferencing. This technology, which only appears in movies, would finally be applied in real life. When banks perform remote customer services, they can display holographic images of multiple participants in the same space, allowing them to see each others’ facial expressions, body movements and emotional reactions, and provide more sophisticated customer services.
In the long run, 5G would not only open a new era of Internet connectivity, it would also open up opportunities for innovative services in the financial industry. The development and application of such technology is critical to making financial services ubiquitous, and business operators would be wise to seize this opportunity.
Rich Ong is an associate professor at National Tsing Hua University’s Department of Quantitative Finance.
Translated by Eddy Chang
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