How 5G could shape the future of banking
Dominic Venturo gets animated when he talks about the possibilities of 5G, the high-speed network technology Verizon and AT&T have begun rolling out across the country.
“5G will begin to unlock some interesting things that we've dreamt about or imagined for some time,” said Venturo, the chief innovation officer at U.S. Bank. “5G is exponentially more powerful than 4G; it has such low latency and such high bandwidth that for a lot of applications, it will make a lot of sense to use 5G instead of Wi-Fi.”
Jeremy K. Balkin, head of innovation, retail banking and wealth management at HSBC USA, has a similarly enthusiastic take.
“Banking today is an experience that our customers want when, where and how they choose," he said. "The benefits of 5G networks offer next-generation mobile internet connectivity, faster speeds and more reliable connections on smartphones and other devices, which we believe will benefit all consumers.”
5G may help Venturo revive projects in his innovation lab he has had to set aside because network technology could not support them.
For instance, several years ago his team piloted an app in the Minneapolis-St. Paul area that used location awareness and augmented reality to display offers from local merchants over the image customers saw on their cameras.
If a customer wanted to see local restaurant deals at lunchtime, she could point her phone down a street and see offers dangling out in front of the businesses.
But wireless networks were not quite ready for this.
“We had to put so much of the smarts of that solution into the mobile app that you ended up with a lot of compute on the phone, which drained the battery,” Venturo said. And the heavy data traffic between phone and network made the visual display choppy.
“5G begins to unlock that kind of capability,” Venturo said.
Better performance of existing apps, websites
Verizon set up 5G networks in Minneapolis and Chicago in early April; AT&T has deployed 5G in 19 markets, including Austin, Los Angeles, Nashville, Orlando, San Diego, San Francisco, and San Jose. Smartphone manufacturers like Motorola and Samsung have begun releasing 5G phones.
Ubiquity will take a couple of years, AT&T and Verizon executives said.
They also say there's no need to wait. Serhad Doken, technology incubation and innovation executive at Verizon, pointed out that 5G is backward compatible, meaning that 5G devices are compatible with 4G and 3G networks. (3G and 4G devices will not run on 5G networks.) And financial institutions could install 5G equipment on their premises any time — they do not have to wait for the national rollout, he said.
Bank technologists are looking forward to better performance on existing apps and sites.
“Fifteen years ago, if you wanted to stream a video, you’d have to download it first, there would be all this buffering, it would pause five times and it got annoying,” said Shari Van Cleave, head of digital labs at Wells Fargo. “Thanks to network speed increasing over just this short amount of time, now not only are we streaming videos left and right, but you have entire companies like Netflix that have spun up around video streaming services. That was only possible because the pipes have increased to allow us to get a lot more data through them faster.”
The higher bandwidths will let banks create richer digital experiences, she said, even if they do not change their core digital banking products.
Today “you can only build so much in to the app and you have to organize that really effectively," Van Cleave said. "So much of digital banking goes into thoughtfully researching and architecting a strong app experience for the consumer."
With 5G, banks may be able to stream an app experience over the internet, without requiring the customer to download an app.
"That could open up lot of possibilities for us, on the phone and on other devices,” Van Cleave said.
Venturo noted that 5G will allow mobile apps to keep less data on the device, he said.
“Because there's almost no cost in terms of latency or transmission time of transporting data from the cloud to the device in a 5G environment, you can create much lighter applications on the devices, whether it's a tablet or a phone or a computer,” Venturo said. “A much lighter solution is more responsive.”
Having most of the “meat” of an application running in the cloud means fewer updates will need to be downloaded to consumers’ devices.
“That's a big deal because it means I have fewer versions to worry about,” Venturo said. “I'm able to make that experience more consistent for the customer, and when I have security or other changes, I can make them in an instant across the platform.”
5G will also solve a problem that arises when many people use smartphones at the same time in a confined space, like a plane or a sports stadium, or when too many autonomous cars or smart objects like washing machines, dishwashers, refrigerators and toasters are connected to a network. The network gets overloaded, and performance drops.
5G allows millions of connections to a network, which should eliminate such performance issues.
Branches and ATMs
It will make sense for banks to upgrade their in-branch networks to 5G, Venturo said.
“Right now, if you have Wi-Fi in the branch, its maximum connectivity and bandwidth is about a hundred megabytes per second,” he said.
Verizon has said that 5G customers should expect speeds of about 450 megabits per second. The carrier has bank clients that are testing the use of 5G in the branches as an upgrade to guest Wi-Fi.
5G could support video communications between branches and headquarters, Doken of Verizon suggested.
And 5G could support the use of virtual reality in branches, Venturo suggested.
“If I'm trying to help somebody understand something really complex, like time value of money, sometimes it helps to see that visually represented,” he said.
Abhi Ingle, senior vice president of digital, distribution and channel marketing at AT&T, envisions banks using 5G for mobile and pop-up branches.
“Think of taking the physical branch to where the crowds are, featuring all the services that a brick-and-mortar store could,” Ingle said. “Yet they could be turned on and turned off in a simple manner.”
The high speed and responsiveness of 5G makes things like facial recognition, with its need to quickly check databases in the cloud, possible in a pop-up branch that 4G cannot handle, Ingle said.
5G could also help banks manage their ATMs, Venturo said.
Where once, banks had to run special phone lines to ATMs, 5G will let them place ATMs anywhere.
"That changes the game dramatically for how easy it is to move ATMs into better locations for events or to support things that are happening in the city,” Venturo said.
5G could be used for remote assistance and remote training, Ingle said.
For instance, a bank might have some decades-old ATMs that few technicians know how to fix. Using 5G, a repair person could get remote help from an expert on a particular ATM model. The on-site person would wear augmented reality glasses with a camera, letting the remote expert see what they are seeing. Then the expert could walk the on-site person through the required steps.
There is a limitation of 5G that networks will need to conquer: 5G networks go short distances, so companies have to set up more base stations in closer proximity, Van Cleave said. And 5G radio frequencies currently do not go through buildings.
Melding physical, digital channels
Ingle also sees 5G helping banks connect digital and physical channels.
For instance, they could feed information about digital interactions to branch and call center staff and help suggest real-time recommendations they can deliver in person.
And when customers are remote and connecting digitally, a human could help them with a complex problem using virtual reality. A financial adviser could walk a client through complex asset allocations, with both looking at a dashboard, for instance.
“That depends on high-speed bandwidth to work; otherwise you have latency in the experience, making you nauseated,” Ingle said.
Doken suggested that banks could use 5G to advance the text-based chatbots some offer today by adding audio and video.
“Think about the early days of Facebook — it was just photos and text,” he said. “Now there are videos shared on Facebook. So you go from a single, text-based interaction to multimodal audio and video interaction.”
In its 5G lab in New York, Verizon is working with a startup called Soul Machines that has created an avatar (or a “digital human,” as the company calls it) named Lia that is based on the New Zealand actress Shushila Takao.
Lia can research and answer customer questions. It also uses the camera on the customer’s device (a phone, tablet, PC or kiosk) to understand the context of the conversation.
“That real-time context is important because you can read the visual cues and understand if the customer is happy, anxious or angry,” Doken said. “I think that's a major upgrade, talking to a humanlike person, compared to talking to a chatbot where it's static, cold and doesn't have that emotional aspect.”
Venturo agrees with this use case.
“We as humans have figured out that we survive better if we can actually understand what somebody is thinking, doing and planning to do,” he said. “If I have a phone call with someone, there may be lots of things that I hear or imagine about how well that phone call went, and I may get it all wrong.”
In a live-stream video chat, there’s a better chance two people will understand each other.
Another use for 5G in customer service is real-time language translation that could be embedded in an application on a phone, tablet or PC, or kiosk, Doken said.
This is possible because of the mobile edge computing component of 5G.
“It’s almost like a polycloud service, but it's not 5,000 miles away; it's very close to you, at the edge of the network,” Doken said. “Because latency is so low and the computation can be done at the edge of the network, I could be speaking Spanish, and you could only be speaking English, but that translation and natural language processing can be done fast.”
Ambient computing, Google Glass, AI
Venturo has been a fan of ambient computing for some time.
Ambient computing involves interconnected devices, machines and sensors that are sensitive and responsive to the presence of people.
“What if, when you're getting ready to pack your bag for a business trip, you could simply ask your smart device, ‘I'm packing for the San Francisco trip. What do I need?’ ” Venturo said.
The app could analyze events on the person’s calendar, the weather forecast for the destination, whether or not the traveler will have time for a workout, and even if they should try to get everything in a carry-on because this particular flight has a high probability of lost luggage.
Once the traveler lands, ambient computing could check them into their hotel and handle other logistics.
Payments and financial transactions are part of scenarios like these, which is where banks come in.
“This ability to access information or to take action in a secure way anytime, anywhere is a big deal,” Venturo said.
5G could let banks stream digital banking experiences to the Google Glass smart glasses, Van Cleave said.
“You can only store so much on a thin, tiny device,” she said. “5G enables that elusive Glass future.”
A hardware manufacturer may produce smart glasses or contact lenses people actually want to wear, she said.
“Maybe that helps us create a transformed experience that makes sense in financial services,” Van Cleave said.
5G could also enable new uses for artificial intelligence. For instance, machine learning can now be embedded in browser code, so a customer does not have to download an app, Van Cleave said.
“Once there’s 5G, and there are a lot of machine learning algorithms that could be communicated through a much fatter pipe, what kinds of things is that going to enable?” she said.
How quickly should banks move?
Can banks just start creating 5G-compatible banking apps, or do they need to wait until most of the customers and geographies they serve support 5G?
U.S. Bank wants to be prepared and have use cases lined up as 5G is rolled out.
“It's been on our list for a few years, and we've worked with a lot of experts in the field to understand what's real and what's hype,” Venturo said.
The bank has a multiple-apps strategy to give 5G users lightweight yet feature-rich apps while continuing to support users with 3G and 4G phones. This is not unusual — in the past, the bank has supported customers with varying degrees of device and operating system upgrades.
Van Cleave does not have a sense of urgency about 5G.
“You don’t have to rush to be first,” she said. “What you have to do is focus on building the right experience for the customer at the right time.”
Could fintech competitors roll out interesting new financial services that take advantage of 5G before banks, and scoop up market share that way, the way Uber and Lyft used 4G to disrupt the taxi industry?
Venturo and Van Cleave say they are not worried; they see opportunity to partner with fintechs on 5G.
“What we want to do is provide great financial services," Van Cleave said. "If augmented reality is a great way to do that, we might partner with a company that uses augmented reality to help us deliver that richer experience. We don’t need to be the best augmented reality platform out there. We want to be the best financial services platform out there.”
Venturo said a lot of creative people are working for tech and fintech firms.
“If you can find a way to partner and work with them and create an ecosystem that enables that to flourish, you have the opportunity to be stronger together and to create new solutions that may have never been created before,” he said.
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