Wireless carriers have been diligently rolling out 5G (a.k.a. 5th generation) wireless communication technology since December 2018. While still not available everywhere in the U.S., this high-speed, low-latency mobile technology is already having an impact on industries across the board. So what does it mean for banking?
Before you start having tech-induced nightmares, it’s important to remember that data readiness and an inclusive posture towards trustworthy vendors are far more important than sinking money into the rollout of your “new 5G banking app.” But it’s also a good idea to keep your finger on the pulse of how 5G develops so you’ll be ready to take opportunities as they open up.
Here’s what you need to know about 5G technology and the possibilities it provides.
What exactly is 5G technology?
In many ways, the mantra of 5G could be “More. And faster.”
Industries from health to transportation are beginning to dream up ways of using 5G to enable AI and virtual realities that improve customer experiences all over the world.
That’s because when it comes to 5G connectivity, “more” is a lot more. And “faster” is a lot faster. 5G will be capable of handling millions of devices across a very small geographic area as opposed to tens of thousands for 4G/LTE, and the data transfer speeds will be much faster — as in 10 to 100 times faster.
What will we do with all this power?
For the banking industry, it seems popular for experts and technologists to cast a vision where 5G enables augmented and virtual reality experiences to create “remote” branches. This is a possibility, but is it likely? Most consumers have adopted technology to avoid having to go into a branch. It’s so much simpler and faster to transact via an app, ATM, or website. 5G-enabled virtual reality seems more likely to be used for much more exciting experiences. Virtual skydiving? Sounds pretty amazing. Visiting a virtual bank branch? Not exactly a riveting experience.
Remember: Adopting a technology because you can, without considering why you should, is a recipe for disappointment. And this seems like the biggest potential pitfall for community banks and credit unions.
Prioritize eliminating pain points ahead of chasing what’s next.
The same rules about user experience will apply to 5G that apply to your current technology efforts. Look for the needs and pain points of your account holders and then plan out ways to solve them. People use their mobile phones because it’s faster and more convenient, not because they’re tech-obsessed first-adopters who just want the novelty of poking at a piece of electrified glass.
One potential consideration would be to check 5G connectivity in your branches and look for ways to boost the signal within your branch. Just imagine how frustrating it is to shop at a store where your current 4G-enabled cell phone won’t connect; then imagine consumers walking into buildings where they expect connectivity, but finding it absent. That’s a real pain point in the making.
Regardless of what happens in the world of technology, you should be thinking about how you can offer better experiences, services, and products to your account holders. Doing so will naturally open doorways to innovative uses of new technologies.
Enlist a third-party vendor to develop 5G capabilities.
Some high-dollar institutions may be able to compete by spinning up in-house product development teams and paying the research and development costs to innovate with 5G directly. That’s not the case for many community financial institutions.
Partnering with vendors who can provide similar innovation at scale, without bespoke software development, is a smart way for local institutions to keep up with changing technologies.
Consider the unevenly distributed future.
Another consideration (especially for institutions that cater to a rural audience) is that 5G is currently deployed in select urban markets, where the high population density makes the infrastructure installation more worthwhile for carriers.
Although current 4G/LTE connectivity may feel ubiquitous, it isn’t. And the rollout didn’t happen overnight. You can view some of the 5G release timeline here, but it shows feature rollout, not the time it will take wireless carriers to deploy 5G capable antennas and other infrastructure.
There’s no question that the rollout of 5G technology is a big change that will affect our digital lives in yet unimagined ways. However, the best thing your community financial institution can do is use technology as a force-multiplier on current efforts to improve the products and services you already offer.