As the US and the rest of the world continue to roll out the 5G network, the promises of life-changing advances made by telecom giants continue. Data transfers available from 5G are great, but will this increase over 4G bandwidth materially help the banking and finance world? Absolutely.
Source: KPMG, “unlocking the benefits of 5G for the enterprise market”
The term IoT was coined in 1999, and in the 21 years since, it has been painfully slow to develop, only starting to enter homes and workplaces in 2015 when we had the first “smart” products. Now with the advent of 5G, the promise to add connected products able to keep the workplace or home with us wherever we go is now very real.
The underlying architecture, capabilities, and features of 5G expand the possibilities of IoT. Accenture estimates that mobile data traffic will grow by eight times by 2023. Stefan Pongratz, VP at telecom market analyst Dell’Oro Group, said the ability of 5G in place today already fulfills massive machine-type communications (mMTC); that is, supporting up to a million devices per square kilometer though the average mobile phones of today don’t even have 100 IoT connections. More than enough room for exponential growth.
So the capability of 5G is there, but the same issues which the banking and finance industry must contend with remain. The cost, security, monitoring, and development of proprietary IoT technologies will be ongoing challenges. And assuming these additional hurdles are overcome, what is the current vision for IoT on the 5G network?
Not to be hyperbolic, but the true vision by many in finance is smart everything. There are a few reasons for this. Let us start from an AI and data analysis foundation, and we can build from there.
Source: J.P. Morgan
AI relies on models. The more inputs a model has, the better it will predict the future. When there are many devices; when all of those devices are interconnected; when they have real-time data; when they are combined with cloud-based AI…then we have banking or insurance products created ‘on-the-fly’.
On the most micro of levels, these can be products designed for individuals based on their driving, item usage, lifestyle, location, etc. We can increase the scope of the variables to the most macro.
Micro: a building with IoT sensors, tracking water and electrical usage, can be observed for age and usage. After combining with data of crime in the area, weather predictions, pattens of ownership, etc., we can determine the real-time mortgage or insurance rates. The same building sensors can inform owners if the building requires repairs, if it is energy efficient or not, and if not, where the best return on capital improvements in efficiency can be had.
Macro: connecting everything – from real-time inventory records to crop results and weather patterns to real-time retail sales data, all leads to smart ecosystems. Smart buildings, smart (and driverless) transports, smart cities. All made possible through 5G.
So with 5G the banking sector itself will take interconnectivity and add to it their existing ability of high-touch, digital retail services. Envision this: a smart person uses a smart mobile phone while (not) driving a smart driverless car to easily trade on the latest market news by talking to said phone. Providing this opportunity is the responsibility of any forward-thinking bank.
Additionally, 5G allows the banking world to take advantage of untethered Augmented Reality (AR) and Virtual Reality (VR). The Business Research Company estimates the global market for these to be $18.72B by 2023. Imagine clients completing all their needs by talking with virtual bankers. Before we achieve this, AT&T shows that today we do have the capability to provide ‘a complete branch experience at temporary locations like music festivals, sporting events, college campuses, and disaster-affected areas’. These kinds of branches will aid in the switch to VR as customers see the benefits.
In its 2017 report titled ‘Drones: Reporting for Work’, Goldman Sachs sees a $1.4B total addressable market for drones used for insurance claims and risk reduction. Semi and fully autonomous drones enable insurers to view damages from afar, combined with customer- or vehicle-provided data through 5G, enable near-real-time claims work and settlements, predictive analytics, and safety operations analytics.
For retail consumer payments, 5G facilitates the concept of enabling payments made from anywhere, anytime. This entails automating and streamlining: one-touch interactives, two-factor authentications, plus, geolocation monitoring, fraud prevention, and minimizing false positives (of fraud alerts).
The key first step is to build better collaborative relationships with tech companies leading the way into 5G. From a recent article covering Verizon, we know that ‘its ThingSpace IoT platform, its 5G/LTE network, and its Critical Asset Sensor devices have all been integrated with Microsoft Azure’. This is exactly the kind of move we need, for ultimately it helps the finance industry minimise issues surrounding cost, security, monitoring and proprietary tech development.
As IoT finally reaches the capabilities it promises through the backbone of 5G, we will see vast amounts of new data providing much-needed insights for finance and banking. These will reduce costs for both banks and clients, and fuel the great 5G engine ready to discover those services we haven’t even yet thought of.
Disclaimer: The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltecbank.com.
The co-author of this text, Robin Trehan, has a bachelor’s degree in economics, a master’s in international business and finance, and an MBA in electronic business. Mr. Trehan is a Senior VP at Deltec International Group, www.deltecbank.com.
The views, thoughts, and opinions expressed in this text are solely the views of the authors, and do not necessarily reflect those of Deltec International Group, its subsidiaries, and/or its employees.
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