Ever since the introduction of banking, we have seen major technology changes that have had a positive impact on the way banks interact with customers as well as how they manage their operations. Some of these changes have completely evolved to full implementation while others are still slowly gaining acceptance. I would contend we are still in the early stages of the evolution to a cloud computing model and some banks continue to believe a large fixed cost infrastructure provides a more secure, competitive infrastructure solution, but we will not debate cloud computing today.
I do want to discuss what I believe is the next big thing that will drive both enhanced customer interaction as well as impact back-office operations at financial institutions, the migration to 5G networks.
In a nutshell, 5G will provide significantly faster wireless speeds with reduced latency compared to the current 4G LTE wireless networks. It will also allow banks to move their parts of their current wired infrastructure to 5G wireless. The most obvious impact will be the additional function that can be delivered to the mobile banking channel. A bank will soon be able to provide full video banking to consumers across any channel including mobile devices for not only banking functions but also customer support and enhanced marketing. 5G will also make an impact on other banking delivery channels. Examples include, bank branches which have been constrained by traditional wired networks where most banks still have in-branch servers to support and manage branch operations and provide a stand-in environment for potential wired network outages.
I have had many discussions with banks about moving to a thin client model in the branch allowing the branch systems to consume the same catalog of enterprise business services used by other channels. The answer I consistently hear is the concern over a potential loss of the branch telecom circuit and having to “close the branch” as a result. The ATM channel will also be a huge beneficiary of 5G where most ATM’s now are either sharing the wired circuit with a branch or are on a very slow stand-alone network. Limited ATM functionality is based on a legacy protocol between the ATM device and ATM switch with technology that is over 40 years old and was designed for slow networks. 5G will also allow the ATM to also move to a thin client model as well as driving additional function to the self-service devices.
Like all new technologies, this will take time to roll out. But in this case, the major telecoms are making huge investments in 5G and want to begin to see those investments hit their bottom line, so expect this sooner rather than later.
Understanding 5G is just around the corner should begin to drive functional and technical roadmaps at financial institutions allowing them to better serve their customers and provide more efficient operations.
Has your company started to explore 5G?