James Slaby, Director of Cyber Protection, Acronis
SO WHAT EXACTLY IS 5G?
Short for “fifth-generation”, 5G wireless is the next evolutionary step in the development of broadband wireless services. It offers much faster download speeds (especially for mobile users, but also for fixed services like residential internet access), boasts lower latency (which means real-time apps like video work better), provides much greater capacity for providers, and uses less power on mobile devices. US telecom carriers like AT&T, Verizon, T-Mobile and Sprint have just barely begun their rollouts of 5G services, but it should see much wider rollout (including many options for 5G-capable mobile devices) and better geographic coverage over the next two to three years.
Typical 5G speeds will increase by a factor of ten to twenty over today’s 4G speeds, meaning peak speeds will reach 20GB per second and typical speeds will be around 100MB per second. Combined with greatly increased network capacity, these faster speeds should enable a flood of new applications, including autonomous vehicles, telemedicine, virtual and assisted reality, and more highly-distributed machine learning (ML) and artificial intelligence (AI) engines. Mobile devices will become much more capable, and it will be easier and cheaper to deploy smart sensors (so-called Internet of Things, or IoT) devices everywhere.
WHAT DOES 5G MEAN FOR FINANCIAL TECHNOLOGY FIRMS?
The potential impact of 5G on fintech, both good and bad, is enormous. For a historical example, consider one big development that was enabled by the speed increase from 3G to 4G (LTE) wireless mobile: ride-share apps. 4G’s additional bandwidth made Uber and Lyft possible, creating a new transportation option while massively disrupting the taxi and limo industry. 5G will enable similar disruption and opportunity in fintech: the only question is whether you ride the wave or get swept under by it. (As with surfing, timing will be crucial.)
Better video performance should have a transformative impact on financial services marketing, particularly for the younger consumers that have driven over half of mobile traffic to video. More ubiquitous, higher-performing AI and ML will touch fintech everywhere, from delivery of smart agents for investment advice to providing greater protection against security threats like phishing, ransomware attacks, identity theft and payment-card fraud. 5G’s greater bandwidth, ability to support more devices, and lower power consumption make it a great fit with wearable computers. Thus, new financial apps (e.g., micropayment agents) on smartwatches and similar devices should be much more feature-rich and appealing. Innovators might also start planning now for how to enable banking apps with virtual or assisted reality elements.
There’s always a political dimension to these maneuvers. Remember that President Trump is in the middle of negotiating a new trade deal with China, and there are several ancillary objectives he could be pursuing here: like showing his ability to hurt China economically by damaging the prospects of one its biggest, most successful tech companies; and projecting strength, leadership, and technological solidarity with our Western allies. But the potential security risks of allowing Huawei’s telecom hardware and software to be installed throughout the West have been discussed by Western security analysts for years. The current migration to 5G wireless and the popularity of Huawei gear outside the US has made this threat more urgent and timely.