By Ray Birch
TAMPA, Fla.—Global fifth-generation cellular wireless, better known as 5G, is going to have a big impact within financial services–including in one way that will be “counterintuitive” to many CUs, according to the experts.
5G will dramatically enhance what mobile banking apps offer, put online lending on steroids, and help FIs reach the underbanked, analysts told CUToday.info. The best part: it likely won’t cost more money to develop and deliver services on that platform.
Lou Grilli, AVP of product development and thought leadership at Trellance, said 5G will provide a big boost to mobile banking apps, as many more sophisticated services can be offered.
“Currently, the typical credit union mobile banking app is limited to fairly basic functions, with some credit unions starting down the path of more complex operations such as digital loan originations,” said Grilli. “Education and explanation become more important with bigger financial transactions. Explaining a four-year versus a six-year auto loan—or a fixed versus variable rate mortgage—is difficult and boring in text. However, a short animated interactive clip could help the member make a more informed decision as to the monthly payment amount versus total interest paid over the life of the loan. 5G’s speed will permit this.”
Text, Video & More
In addition, text-based chat sessions with member care representatives are becoming an increasingly popular way for mobile and online users to communicate with their credit union, noted Grilli.
“At the same time, facetime for Apple phone owners, and third-party video calling apps, such as WhatsApp and Facebook Messenger, have become the norm for peer communications,” said Grilli. “5G networks can change the game when it comes to personalized member care—video chat with a member care representative.”
Artificial intelligence, which can be data intensive, becomes more attainable with 5G, too, Grilli pointed out.
“A mobile banking app with natural speech recognition is one use case. Using the camera on the phone to detect if the user is happy or frustrated while interacting with the app is another,” he said. “Real-time language translation, allowing a member who speaks any language to communicate with a member care rep who does not speak the same language, becomes a realistic possibility. In fact, the possibilities are only limited by what user interface engineers can think of.”
A recent Forbes article pointed to how 5G will make car purchasing and auto lending faster and easier for consumers.
“The arrival of the high-speed, real-time data flow that 5G enables will help streamline cumbersome processes that often accompany big-ticket purchases,” Forbes reported. “Find a car at the local dealership you want to buy today? 5G can speed up the whole process—from application to credit check to personalized financing offer to approval and funds availability in one slick, end-to-end experience. Want to secure a mortgage? 5G will help streamline the digital application process.”
By leveraging the speed and capacity in this new wireless world, financial institutions that invest in tools to combine artificial intelligence, data and 5G will be able to run many parallel processes in real time. In turn, it could improve the speed and accuracy behind lending decisions and will optimize lending rates to match each unique applicant’s reality, the Forbes analysis stated.
5G might also be a big boost for digital wallets, which have been struggling for consumer acceptance, added Forbes.
“As 5G marches toward ubiquity, consumers will experience a newfound uniformity between their phone, watch, wearable and connected car—to the extent that they can rely entirely on digital payments,” Forbes said.
A Boost for the Underbanked
Brian Scott, chief growth officer at PSCU, is also among those who believe 5G will revolutionize the banking industry. A big part of that change will be giving the underbanked much greater access to financial services.
“5G will level the playing field for the underbanked, much like M-Pesa did in Kenya,” said Scott. “With more people having access to low-cost, high-tech services, 5G will improve the banking lives of those without quality access currently. Now this presumes there is an appetite for banks to get deeper into this segment.”
Scott said today it remains difficult for the underbanked to access financial services online due to their lack of access to high-speed, broadband connection in the rural and low-income areas in which they live.
“Typically the underbanked have had to go to the branches for their banking services, which can be difficult for them,” said Scott. “With 5G the credit union can get more money management financial services and share financial advice with these consumers. It's going to provide more services to those who traditionally would not have access to them.”
And a big boost from 5G may come in its cost, insisted Scott, who said the thought of lightning-fast 5G being less expensive for the CU to work with may seem counterintuitive.
“Not only is 5G better technology it will be less expensive technology,” said Scott. “When you think about the credit union having to build technology that works on a slower device, you have to be really prescriptive with what you build out. You can't build out a lot of really cool whiz-bang things, card management features and money management features easily because you are not certain if what you build will work over the current network and current devices. With 5G you won’t have to be prescriptive and watch out for all of the restrictions of having to build something for slower devices. It will become easier and faster to build out applications and services, therefore it will be less expensive.”