The Road to 5G: How 5G Will Open Up New Horizons for Fintechs in India?

The fifth generation of cellular networks is here…

With 5G slated for launch in India on September 29th, there has been much uproar in the media—and talks about the 5G promise have even made their way to our dinner-time conversations.

5G’s faster data accessibility will fuel innovations across industries. Fintechs, in particular, are gearing up to seize the limitless opportunities that 5G presents to the world of financial technology. We’re talking lower latency, higher speed and greater bandwidth—all of which translate into high-end, user-centric digital experiences.

Is 5G really the BIG opportunity that Fintechs in India need? Before we get to that, let’s dig into what 5G is all about.

5G in a nutshell

Dubbed the next revolution in cellular technology, 5G is the fifth generation of mobile networks and the latest addition to a line of technologies that started with 1G, back in the 1980s.

The fastest wireless standard to date is expected to aid the boom of the internet of things (IoT) in unimaginable ways, facilitating communication between billions of sensors in industries and smart cities, and connecting everything from smartphones to autonomous vehicles.

How is 5G different from 4G? 

Guaranteeing to bring the people and communities closer, 5G networks will operate in millimetre wave (mmWave) spectrums. So while 4G networks provide a speed of 100-200 Mbps, 5G is expected to deliver a speed of 10,000 Mbps.

To put it simply—the mobile internet speed will be 100 times more on the 5G network compared to the 4G network. 

How will 5G reimagine the world of Fintech?

The unprecedented amount of financial transactions worldwide and the rising volume of circulating data renders the 4G technology inefficient in handling the increasing load.

5G’s higher bandwidth boasts the ability to process more transactions. 5G also promises a very minimal latency of less than 1 millisecond. This will enable real-time access to technology, reducing transaction times and making mobile banking more ubiquitous than ever before.

The technical impact

1. Improved reliability and greater security:

With 5G, Fintechs can add enhancements to secure their applications and products in real time without causing any inconvenience to the customer.

2. Lower latency

The extremely low latency of the 5G technology will enable customers to experience banking and payment transactions instantly on their devices.

3. Enhanced customer experience with AI and VR

5G can help Fintechs incorporate augmented reality and provide innovative solutions like instant facial recognition.

4. Increased speed and bandwidth will ensure a real-time user experience

With 5G’s high speed broadband, virtual reality-based customer services will soon be more prevalent. 

The monetary and growth impact

5G is touted to create a new Fintech ecosystem in India powered by superior customer experiences, improved security of mobile payments and accelerated credit approvals. With 5G’s application across multiple domains, Fintech companies can be assured of massive growth in the coming days with an even larger audience to cater to. 

Globally, 5G services are expected to generate $645 billion by 2026. With Fintechs clocking $800 billion in annual payments transaction value, they have now become a crucial segment that will aid in achieving India’s dream of becoming a $5 trillion economy. Having raised $29 billion in funding this year, we can expect the Fintech growth rate to get a boost with the upcoming launch of the 5G technology.

5G is a gamechanger in the world of finance

5G puts the wireless network at the heart of innovation, allowing players in the financial services industry to meet and exceed rising user expectations.

5G for banks:

While mobile banking is all set to take off in the 5G era, banks can also look forward to accelerating their pace of digital transformation and meeting the competition from their Fintech counterparts by offering data-backed highly personalised services.

5G for supply chain financing

The emergence of 5G coupled with the power of blockchain and IoT will help in unifying the physical and financial realms of the supply chain. 5G can also shorten settlement cycles and enhance real-time mobile trading capabilities.

How will 5G transform lending?

The speed and capacity of 5G will help Fintechs improve the accuracy of lending decisions, roll out innovative solutions and optimize the lending rates to match the applicant’s profile. 

In the world of business, MSMEs have had a rough patch with the economic turbulence and after-effects of the global pandemic. With the advent of the 5G technology, B2B lending will be more streamlined and small business owners will have better access to working capital. With high-speed internet, MSMEs can also easily access end-to-end digital solutions that will help them manage their banking, payments and accounting in one place.

Is India Ready to Ride the 5G Technology Wave?

Going by the reports, 5G subscriptions in India will hit 500 million by 2027.The 5G rollout is expected to take place in all four metros and a few of the big cities such as Gurugram, Bangalore, Kolkata, Mumbai, Chandigarh, Delhi, Jamnagar, Ahmadabad, Chennai, Hyderabad, Lucknow, Pune, and Gandhinagar.

Let’s talk money

The telcos acquired spectrum at an auction that was concluded on August 1st. $19 billion of spectrum in bandwidths ranging from 700MHz to 26GHz was reportedly sold, with Reliance Jio being the top buyer. Additionally, the government also made necessary allocations in the Union Budget 2022 to facilitate the deployment of 5G, especially in rural areas.

Banking on the future of 5G in finance

By 2030, $330 billion will be added to the global GDP by 5G applications. 

The right implementation of 5G will remove bottlenecks from financial services, improve back-end and front-end operations to a considerable extent and accelerate the evolution of digital experiences. In all this, it would be interesting to watch how mobile-business models take centre stage in the financial services industry globally.

Think Working Capital, Think CredAble!