22 October 2016
In the not too distant future, there will hardly be any need for customers to set foot into their banks. Photo: HKEJ
In the not too distant future, there will hardly be any need for customers to set foot into their banks. Photo: HKEJ

How 5G technology could transform financial services in HK

In a world where technology has been disrupting and improving our lives for as long as we can remember, the advent of 5G mobile may turn few heads.

Mobile is already a ubiquitous part of our lives, and technological change has become almost mundane.

For Hong Kong’s banking sector, though, it is worth pausing and looking to the future.

With the advent of 5G mobile, mass adoption of which is expected by 2020, mobile will emerge as a truly dominant force in the city’s financial services industry.

Technology has changed retail banking beyond all recognition – mostly for the better.

We can now pay bills from apps on our mobile phones, we can monitor our investments in real time, and there are very few reasons to physically go to a bank.

This all saves time and reduces friction.

If banking over the past few decades has changed though, imagine what the future holds.

Mobile will continue to play a large part in banking’s future, and for good reason.

A recent global survey by Bain & Co. found that a visit to a branch is 2.3 times more likely to result in an annoyed customer.

The survey also found that those who do use their bank’s mobile app are 40 percent less likely to switch.

On one level, banking will become even less personal than it already is.

We will see mobile going from one of several banking channels to become more of a central “hub” for the consumer, and 5G, with its superior capabilities, will facilitate this.

I believe that, within a decade, Hongkongers will no longer use cards to withdraw cash from ATMs or make other payments.

With the swipe of a mobile and entry of a PIN, ATMs will dispense our money (arguably the future may be cashless anyway, but that is for another conversation).

The same will happen for in-store payments – this may even result in the removal of cashier desks from stores and slash the number of employees in retail – one potential unintended consequence.

On another level though, mobile may force greater personalization.

With faster mobile speeds and superior efficiency, instantaneous and seamless video conferencing with a financial adviser will be made possible.

Small and medium-size enterprises will be able to manage their own financial affairs. 

Retail banking will not be the only sector affected. Even the hallowed turf of Hong Kong’s wealth management industry will experience a change.

Traditionally, the way that most of us would engage with a wealth manager would be through word of mouth, an introduction at the polo club or simply continuing with the wealth manager who has been with your family for decades.

This process (if you could call it that) is inefficient and unlikely to result in a partnership that is suited to the needs of the investor.

The growing use and acceptance of technology not only threatens to change this but could drastically expand the number of people who can access wealth managers.

The internet has allowed us to consume more information, and investors are becoming increasingly discerning about whom they choose to entrust with their savings.

Additionally, if we are prepared to spend thousands a year online purchasing flights, paying bills and even buying cars, then choosing a wealth manager online is an obvious next step.

Greater mobile capabilities will allow more investors from up and down the economic scale – from the mass affluent with US$250,000 in liquid assets to ultra-high-net-worth individuals (UHNWIs) with US$20 million – to access, engage with and benefit from wealth experts.

Investors will be able to follow their performance in real time, allowing for more transparency but also creating new challenges for the industry.

We will see startups appear with new and innovative solutions that could pull the rug from under the established banks.

With the increased capability that 5G promises, there is no reason why every single stock price could not be available from the palm of your hand, or wealth managers cannot “sell” their expertise by the hour via real-time mobile video conference.

While not all of the above may come to fruition, I believe that greater mobile capability will result in further changes to the financial services industry in ways that we cannot foresee.

As Hong Kong is a global hub, this could affect the city profoundly, but if managed correctly, there is no better place to enjoy the next evolution of finance.

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