The advent of 5G will impact fintech; enhance customer experience

Authored by Ram Deshpande, Senior Vice President and Head of Marketing at Lendingkart

An all-time favorite movie franchise for many people is the ‘Rocky’ series. Sly Stallone went against behemoths by re-telling the David vs Goliath story. In each Rocky movie, there is a montage sequence of Rocky training like a maniac. Aided by a rousing background score, the scenes of Rocky training in an unconventional manner remain inspiring to this day. My favorite is the sequence from Rocky 2 where coach Mickey (played by the phenomenal Burgess Meredith) eggs Rocky to move faster than he could even imagine. There are close-up shots of Mickey shouting “speed” “speed” “speed’ interspersed with Rocky getting faster with each frame. Micky might as well be sending a message to future fintech startups. Speed is the key to winning the game in the world of finance.

Fintechs, aided by the India stack, have changed the face of finance in India. Many areas of finance (the biggest example is peer-to-peer transfer via UPI) have been revolutionized in the last few years. Waiting for a money transfer, for example, seems like a distant memory now. Similarly, other finance domains whether it is insurance, stock trading, personal finance, lending, and the like have seen disruptions of varying magnitude. The causality here is the ubiquity of mobile internet. Affordable smartphones with great connectivity have helped overcome the hurdle of clunky desktop computers with difficult human-computer interfaces.

Where to now?

Fintechs rely heavily on real-time communication, including text, voice, and video. Advent and spread of 3G and 4G amped up the usage of mobile data for financial purposes. Affordable data rates and devices have enabled financial inclusion and have improved access. 5G will further improve access, inclusion, and quality of service because it promises much higher bandwidth, lower latency, and better connectivity.

Fintechs have led the way in speeding up finance. The technologies used include cloud computing, AI, ML, blockchain, and many others. Higher data speeds and lower latency will only help fintechs to further develop these technologies to have an even larger impact on the financial ecosystem.

Let’s look at the specific areas of fintech that will benefit from 5G:

Discovery of products and services

Customers are discovering newer products and services via digital channels. Consequently, advertising for fintechs is significantly more digital than before. Higher data rates available via 5G will allow advertisers to improve the experience utilizing tech such as VR, 3D video, and multi-device communication. Discovery and intent-driven decision-making for financial services/products are reliant on expert advice. Hitherto this has been a predominantly offline experience. 5G can help bring the online discovery experience as close to offline as possible.

How 5G will improve marketing and advertising is a separate topic, which might need another 1000-word essay. Given their advertising spends and the size of the market in India, fintechs along with e-commerce companies will the first to adopt the 5G-enabled marketing tactics.

Create meaningful customer experiences

Going beyond discovery, 5G has the potential to completely revolutionize customer interaction at all stages of the purchase funnel. Speeding up process aspects such as field investigations, and asset evaluation will help speed up the entire purchase funnel.

Financial services are heavily dependent on the processing of large data sizes. Thorough data analysis helps fintechs tailor specific products for each customer segment. Slow data processing introduces a delay in execution. This can be alleviated by utilizing better tech, like ML/AI infrastructure and cloud computing. Like we saw in the past few years, fintechs that scale up the processing of financial data can provide a significantly better user experience. 5G will help accelerate the adoption of these technologies and therefore, will help fintechs further improve process execution.

Higher emphasis on privacy and data security

While the benefits of 5G tech are apparent, it is important to note that the spread of 5G will also attract bad actors trying to take advantage of the capability to transfer larger amounts of data. Companies will have to scale up big on ensuring data privacy and security. The nature of threats is still to be seen but fintechs will have their guard up. Fintechs will be expected to respond to such threats with urgency and necessary rigor. Fintechs have shown resilience to such threats in the past. With the advent of 5G, fintechs will lead the way by implementing advanced security and data privacy constructs. This will take the entire financial ecosystem forward.

The impact of 5G will depend heavily on the speed of deployment and cost of adoption. Nevertheless, 5G is here and will be launched in a big way. Imagination is the only limiting factor!