The global 5G services market, valued at $41.48billion in 2020, is expected to grow by 46.2% from 2021 to 2028. 5G is 100 times faster and has 1,000 times more capacity than 4G networks, meaning mobile networks can offer far higher capacity and reliability, much lower latency, reduced energy usage, and increased connectivity for devices.
With 5G expected to affect modern financial services, here Dima Kats, CEO of Clear Junction, a payments solution provider, shares how the payments revolution starts with 5G
Most of the UK is expected to have 5G by 2022. 5G isn’t just about faster downloads and better service on phones, its rollout will change the world around us. 5G will accelerate the next phase of modern financial services from routine tasks like acquiring credit information to edge- and cloud-computing operations, and especially in how payments are performed. As the mobile sector rolls out 5G across the UK and rest of the world, financial institutions must start preparing now and develop their strategies to capture the benefits and gain a competitive edge.
Mobile banking benefits
One area of the payments industry that will be affected by 5G is mobile payments. Instant one-to-one payments of smaller amounts of money will overtake cash as the primary payment method. Nearly 20% of millennials in FIS’s 2019 Performance Against Customer Expectations (PACE) survey said they’ve stopped using cash entirely. Mobile payments are an increasingly popular method for consumers as contactless payments offer an alternative to traditional cash or card payments and ensure safety and hygiene in the wake of the pandemic.
Experts predict 72% of UK adults will use mobile apps for payments and transactions by 2023. And it isn’t just the younger generation; older people are becoming more mobile as well with 61% of over-65s saying they carried out a contactless payment last year. The arrival of 5G will fuel the uptake of mobile payments. 5G will make the digital payment experience seamless, allowing effortless transactions through smartphones, smartwatches, and a wide range of internet-of-things (IoT) channels.
With the addition of 5G, mobile banking will be the go-to method for users to make deposits, account transfers, and monitor their spending and earnings—and supporting these activities will be a key differentiator for banking leaders.
Enhanced customer experience
5G will also remove bottlenecks for a wide range of financial services that will drive an enhanced customer experience for payments. 5G will expand the notion of what is possible and expected before, during, and after the transaction. It will improve back-end internal operations, front-end client interfaces and middle-office partner collaboration; and further the finance industry’s overall emphasis on a mobile-centric, human-centric business model.
For example, loan applications and credit checks will be increasingly common on mobile as the increased speed of 5G will expedite the entire process. Customer data and AI (artificial intelligence) compliance checks can be matched in seconds, making payments across the world almost immediate for 5G users. Lower latency means cross-border payments benefit from increased clearance and transfer times.
Another benefit of 5G will be the ability for banks to improve proactive fraud prevention. Processing data, verifying the nature of transactions, confirming transaction amounts and funds availability, consulting multiple data instances in real-time, coupled with customer geolocation and merchant ID, are all areas that will be amplified because of 5G. More capability in these areas will reduce fraud detection errors and false positives, which will protect consumers and financial institutions’ bottom lines.
As transactions move to an increasingly automated experience, maintaining trust, security and compliance is imperative for financial institutions’ credibility. This will prove crucial in maintaining a stronger customer experience through 5G-enabled services.
Captialising on the revolution
Financial institutions must keep on top of the acceleration of the 5G movement and develop their plans accordingly, or they risk falling behind the competition in the newfound digital economy. To capitalise on the revolution in the payments industry, getting the digital foundation right the first time is key.
Knowing where and how to start this transformation can be overwhelming and often complex, but guidance from a partner can help. With support and advice from a fintech partner, financial institutions can offer security, safety, and reliability to customers.
Companies like Clear Junction empower businesses to capture and connect to new opportunities by accessing the tools, networks, and knowledge they need. With a global payments solutions provider as support, businesses are connected to a secure, regulated, and optimised payment infrastructure. This infrastructure helps overcome the challenges of digital transformation and unlocks opportunity. Working with a proficient partner is a definitive way to remain a step ahead of competitors, enhance customer service, experience and loyalty and ensure future success.