ADOPTING 5G NETWORK IN UPGRADING SERVICE QUALITY IN MODERN

BANKING OPERATIONS.

BY

USMAN DANIEL

NOU144386055

Abstract

This study examines the effects of adopting 5G network in upgrading service quality in modern
banking operations. In addition, it is envisioned how 5G technology will shape the future of the
banking industry. As a result of the analysis, it has been observed that an important innovation
and structural transformation period was lived in the banking sector with the use of 3G and
before 2000, which we define as traditional banking era. It is concluded that with the expected
wide use of 5G technology after year 2022, the banking sector is expected to enter a new and
disruptive restructuring and service innovation.

Introduction

The mobile technology space has witnessed major innovations and produced increasingly
dynamic changes in communication services which have transformed human endeavors and
activities globally. The transgenerational change in mobile technology is currently at the fifth
generation (5G) stage which is a quantum leap from earlier generations of mobile technology
(OECD, 2019).

The evolution of mobile communication since the introduction of 1G in 1980 has significantly
influenced our day-to-day lives and how we perform our daily tasks. 2G rolled out in 1990, and
people started to use voice and text messages through GSM (Global System for Mobile
Communication) technology. After a few years, 2.5G and 2.75G became a reality, enabling
GPRS and Edge services, which helped us, use the internet service through our devices, though
the speed was only a few kbps. In 2001 3G was implemented, also called UMTS (Universal
Mobile Telecommunication Systems), it was introduce by the NTT Company. 3G had a number
of significant innovations. It emerged as a system that has 140 times increased bandwidth, has
internet connection, can define single network protocol (switch among network providers),
provides multi-media sharing, allows choosing different data packets, and can provide
international roaming services (Place, et al. 2014).

4G Long Term Evolution (LTE) was first introduced in Sweden in 2009. By increasing the
bandwidth 200 times, 4G provided high quality data flow, and made it possible to use of
smartphones as mobile computers (Place, et al. 2014).

5G will spawn a new wave of technology, and artificial industries such as artificial intelligence,
cloud computing, big data, 4K/8K video, VR/AR, and unmanned driving will develop rapidly in
the 5G era (Boccardi, Heath & Lozano, 2014; Li, Li & Zhao, 2018). With the continuous
development of society, people are more and more dependent on the network. In order to meet
the business needs of users, it is necessary to strengthen the ability of network decision-making,
and promote the intelligent development and automation of the network (Man-Wen et al. 2017).
Therefore, 5G can fully utilize the network slicing technology to meet the needs of different
service types, effectively alleviate the contradictions and conflicts between different business
requirements, realize effective management of the network, and establish corresponding
behaviors and comprehensive improvement. The rationality of the network configuration in the
future development of 5G networks, intelligent development is needed, and artificial intelligence
is used to change the current network operation mode. Compared with the 2G, 3G, and 4G eras,
the development of the 5G network era has created a good development environment for the
development of artificial intelligence, and promoted the integration between core technologies
and system structures (Man-Wen et al. 2017).
In the 5G network architecture, the smart center is a core part. According to the information
transmitted in the environmental cabin, the corresponding processing can be carried out to
maximize the value of the information. In order to ensure the reasonable formulation of network
decisions, the system will send the calculated results to each network policy module, thus
ensuring the scientificity of network decision-making. On the one hand, the high rate of 5G
brings more possibilities to mobile payments. The theory of 5G transmission speed can reach
10Gb per second, hundreds of times faster than 4G, and it can download a full HD movie in less
than two minutes (Gao et al. 2014). 5G can flexibly support a variety of different devices, so that
end users are always connected, far more than just smart phones, but also all kinds of smart
home devices, such a wide range of connections lead humans into the era of Internet of
Everything. An overall payment solution based on complex biometrics (such as faces,
fingerprints, irises, voices, etc.) may enter people's field of vision (Osseiran, Boccardi, Braun, et
al. 2014).
Statement of Problem

The rapid changes in the field of telecommunication have led to rapid changes in the
organizational and service structure in the banking sector. The most innovative of these changes
for the banking sector was seen after 2000 when 3G technology began to be widely used and 4G
technology became widespread after 2010. The 3G-4G period are defined as a period in which
important structural transformations are experienced in the banking sector. While a significant
part of banking transactions is carried out with digital systems instead of personnel, the servicing
hours has started to be defined as 24/7 that is beyond the daily working hours.
According to Schindler (2021) Mobile banking proved to be convenient, accessible, and secure,
especially during Covid-19 pandemic where the adoption of mobile banking applications
significantly increased. However, the pandemic created a scenario where people had to use more
online services not only for work but other activities like e-commerce, learning, communicating
with family and friends and entertainment. These have resulted in more data traffic being
generated, which made user crave for a better network experience.
The use of internet and mobile technologies in banking business have necessary implications for
the internal operations in banks, the value chain in the entire financial industry and the
interaction of banks with their customers (Roger, Bons, Alt, Lee & Weber, 2012). Therefore, this
paper seeks to investigate the benefit of adoption of 5G network in upgrading service quality in
modern banking operations.
Objective

The main objective of this paper is to investigate the benefit of adopting 5G network in
upgrading service quality in modern banking operations. Other specific objectives are;

i. to compare 5G network with other in terms of speed.

ii. look at advantages of 5G network over previous networks
Literature Review
Nigerian Banking sector
The Nigerian banking industry progressively contributed some N168.4trillion to the country’s
Gross Domestic Product (GDP) between 2017 and 2020, indicating an incredible resilience and
growth, despite two difficult recessions (Business Day, 2022).

The sector contributed about N34.6 trillion to the country’s GDP in 2017; N37.8 trillion in 2018;
N42.7 trillion in 2019; and N53.3 trillion in 2020, a feat enabled majorly by the outstanding
professionalism in the industry (Business Day, 2022).

Modern Banking Operation

Today, banking business is becoming more a cross-border game. The banking sector has
experienced a process of significant structural transformations in the last few decades. The world
is changing in terms of doing work in institutions and businesses. Internet, smartphones, and
applications and social media provided organizations with the opportunity to easily communicate
directly with their clients and establish a close relationship with them (Yan, Shah, Zhai, Khan,
and Shah, 2018). Most of the banks in recent years have become providing their services via the
Internet, where their transactions are completed with one click on the mobile application, which
led to the development of these banks and the growth of their revenues (Basci, 2014). Modern
banking services have changed the work of banks in a very large and accelerated manner, as
communication and relations between customers led and financial institutions to understand and
know the ideas and aspirations of customers, which imposed a great competition between
financial institutions in innovation, development, and service provision (Chai, Tan, and Goh,
2016).

Nigerian banking sector has made rapid strides in reforming itself to the new competitive
business environment which changed its approach from "conventional banking to convenience
banking" and "mass banking to class banking." Banking is re-defined and re- engineered with the
development of sophisticated instruments and innovations in market (Jakada, Bruce and
Danbauchi, 2017).
5G Network

Technological developments in mobile telecommunications have evolved immensely after the

transition from analog technologies that were widely used in 1980s to digital technologies
connecting to globe with wireless cellular technologies. The first commercial automated mobile
network is known as the first generation (1G) (Kang, Gwak, Kim, and An, 2021). It was first
implemented by the Nippon Telegraph and Telephone Company in Tokyo and spread throughout
Japan in 1979. This system, which could not provide a service other than a bad sound quality
(security problem, lack of connection between different operators, coverage limits, etc.), had a
great development potential in technology although it was a very expensive system (limited
number of users). Woodland (2021) Described as the second generation, 2G emerged in Finland
in 1991 and was named Global System for Mobile Communication (GSM). 2G, which increases
the bandwidth by 7 times and allows multi-media communication (SMS and image) apart from
just voice transmission, made it more widely available for users.

3G technology was first introduced in 2001 by the NTT Company. 3G had a number of
significant innovations. It emerged as a system that has 140 times increased bandwidth, has
internet connection, can define single network protocol (switch among network providers),
provides multi-media sharing, allows choosing different data packets, and can provide
international roaming services. Streaming, video conferencing (Skype) and location-based
services began to be provided with 3G enabling mobile phones to serve as small and simple
computers, and gave a big rise to the smartphones (iPhone, Blackberry) market.

4G Long Term Evolution (LTE) was first introduced in Sweden in 2009. By increasing the
bandwidth 200 times, 4G provided high quality data flow, and made it possible to use of
smartphones as mobile computers. (Place, et al. 2014). It was implemented by Samsung and the
speed record was broken in the test environment. In November 2016, Samsung announced that
they had successfully completed a 5G prototype trial in collaboration with the China Mobile
Research Institute (CMRI). With the transmission of high-size data with low latency, internet-of-
things (IoT) became possible. While 5G acts as the skeleton to connect these devices, major
breakthroughs are expected in the fields of smart home, autonomous vehicles, smart
transportation, smart agriculture and smart cities. With the increase in data transmission speed,
the necessary processor capacity for virtual reality and augmented reality applications will be
provided by cloud technologies, thus this processing load will be removed from mobile devices.
This service has already started to be offered to customers in the USA, Switzerland, China, Japan
and South Korea is expected to spread to the whole world in the next a few years. (Samsung,
2016).

Table 1 summarizes the evolution of telecommunication technologies from the first generation
(1G) to the fifth generation (5G) by comparing standards, technologies, hardware and services.

Table 1: Advancements in Telecommunication Technologies

Features 1G 2G 3G 4G 5G
Evolution 1970 1980 1990 2000 2016
Deployment 1979 1991 2001 2010 2019
Data 1.9 kbps 14.4 kbps 2 Mbps 200 Mbps 100 -200 Gbps
Bandwith
TDMA, CDMA,
Standards AMPS WCDMA, LTA, WiMAX Not defined yet
GSM, GPRS,
EDGE, 1xRTT CDMA-2000
Undefined IP and Undefined IP and
Analog Broadband,
Technology Digital Cellular seamless seamless
Cellular Technology CDMA, IP combination of combination of
Technology technology broadband. broadband.
LAN/WAN/PAN/WL LAN/WAN/PAN/WL
AN AN
Mobile Dynamic information
Integrated high Dynamic information
Service Telephon Digital Voice, SMS, access,
e (voice Data quality audio, access, wearable wearable devices with
only) video and data devices AI capabilities
Multiplexing FDMA TDMA, CDMA CDMA CDMA CDMA
Type of Circiut Circuit and Packet Packet Packet Packet
Core Network PSTN PSTN Packet Network Internet Internet
Handsoff Horizontal Horizontal Horizontal Horizontal and Horizontal and
Vertical Vertical
Source: Adopted from Hussain, et al. (2016) and Mukhopadhyay, et al. (2016).

AMPS is Advanced Mobile Phone System, TDMA is Time-Division Multiple Access, CDMA
is Code- Division Multiple Access, GSM is Global System for Mobile, GPRS is General Packet
Radio Service, EDGE is Enhanced Data Rates for GSM Evolution, WCDMA is Wideband
Code Division Multiple Access, LTA is Line Turnaround, WIMAX is Worldwide
Interoperability for Microwave Access, IP is Internet Protocol, LAN is Local Area Network,
WLAN is Wireless Local Area Network, FDMA is Frequency Division Multiple Access, PSTN
is Public Switched Telephone Network.

5G is an indispensable part of digital technology ecosystem where the components are all
interdependent to each other. This digital ecosystem is expected to shape and transform all
industries by providing huge computing power, internet of things, block chain, 5G networks,
artificial intelligence, cloud computing and big data. Enhancements of 5G technology may be
summarized as follows; (see Table 2)

Ultra-reliable ultra-low latency rates are critical especially for industrial IoT (Bertenyi, 2021)
with ultra-low latency rates (less than 10 milliseconds).

Time-sensitive networking (TSN) and time-sensitive communication(TSC) support

simultaneous communication through multiple channels with high reliability and availability.
(Kang, 2021)

Advanced and improved machine learning (ML) and artificial intelligence (AL) enable
advancements in vertical industries where communication between devices and machine-to-
machine learning is critical (massive IoT).

Private networks help to create superior reliability by higher authentication standards and
neutral host models for fully isolated networks enabling authorized users to log on to.

Faster download speed provides more coverage and higher quality internet service compared to
Wi-Fi system.

Device enhancements increases user experience, extensive connectivity through a number

of devices with improvements in battery lives.
Table 2: Enhancements of 5G
Enhancements of 5G Explanation
Ultra-Reliable Ultra-  critical especially for Industrial IoT
Low Latency Rates  ultra-low latency rates that are less than 10 milliseconds
Time-Sensitive
Networking (TSN) and  supports simultaneous communication through multiple channels with
Time-Sensitive high reliability and availability.
Communication (TSC)
 advanced and improved machine learning and artificial intelligence tools
Massive Internet enable advancements in "Vertical Industries" where communication
of Things (IoT) between devices and machine-to-machine learning is critical.
 higher authentication standards and neutral host models
Private Networks  superior reliability and fully isolated networks enable only authorized
users to log in
Faster Download Speeds  more coverage than Wi-Fi providing higher-quality internet service
 improvements in device battery life capacity increases user experience
Device Enhancements
 extensive connectivity and number of devices on 5G ecosystem
Source: Adopted from Kang, et al, (2021), Dahlman, et al, (2019), Cisco (2021).
Networks and Banking Experience

The history of banking services is divided under three sub periods. The first period covers the
years before 2000 and is named traditional banking era. The later period is defined as 3G-4G
banking era and covers a period of 2000-2022. The last period is called 5G banking era for a
period of 2022 and thereafter (Suat, Dilek and Irmak, 2021).

Before year 2000, the banking sector may be located in the traditional banking era where the
banks are people focused, organizations rely on human capital for operations and sales, working
hours are limited for banking services, and transaction fees are high. These make banking
operations expensive and out-of-reach for many people. The most important innovations in this
era are credit cards and ATMs (Akın, 2020).

The 3G-4G period, on the other hand, can be defined as a period in which important structural
transformations are experienced in the banking sector. While a significant part of banking
transactions is carried out with digital systems instead of personnel, the servicing hours has
started to be defined as 24/7 that is beyond the daily working hours.

While cyber security came to the fore, the most innovative products in this period are digital
accounts, IBAN, crypto-currencies and mobile banking. As seen in Table 4, this era brought
mobile banking, digital payments, more branches and availability enabling more customers to
have access to banking system. As the use of mobile banking increased, the need of holding
cash for making payments critically decreased. Mobile banking proved to be convenient,
accessible, and secure, especially during Covid-19 pandemic where the adoption of mobile
banking applications significantly increased (Schindler, 2021).

While the preparation for the 5G era still continues, the expected changes in the banking sector
are the Gait analysis based on biometric data, digital wallet, wearables-VR-voice-based banking
transactions, remote-VR branches and robot personnel services.

5G and Future of Banking

5G banking featuring video communication, data protection and digital wallets are expected to
create a permanent shift for banking customers and their habits. Globally, bank customers have
been adopting to digital apps as their primary touch point for their banks and this
transformation will expectedly change the structure of bank branches as well as financial
services industry.

As the coverage and 5G abled device usage increase, some of its effects on banking and financial
services are projected as below (Khrisna, 2017; Tian, 2019);

 Extended reality - help customers understand banking transactions, visualize paper

statements so they caneasily understand, and manipulate and simulate what-if
scenarios.

 Embedded high-quality video and interaction services - help conduct regulated

activities such as financial advice and secured lending in-app replacing lengthy face-to-
face interactions.

 Sensors in homes, vehicles and offices - create highly personalized and real-time
insurance offerings.

 Branch remodeling - connect existing in-branch devices such as ATMs, Kiosks, and CCTV
cameras.

Banks will soon have a much richer understanding of footfall, services being delivered, the
utilization and design of spaces and adherence to security and safety protocols.

Developed and supported with 5G technology and complementary digital ecosystem

improvements, potential expected impacts of 5G on financial services can be summarized as
below;

Accelerated mobile commerce growth

Shopping while watching a video, in-video commerce

AR/VR enabled shopping experience, commerce growth

Better and more timely geo-targeted offers

Highly personalized customer experience, digital customer engagement

Time-sensitive banking applications

Improved fraud prevention

 Enhanced mobile POS transactions and utilization

Wider financial system inclusion in emerging markets

5G will introduce higher bandwidths and ultra-low latency that will enable mobile commerce to
have faster transactions, users to have seamless video experiences that will help customer
connect with their “bankers” anywhere and improved AR/VR integration into financial and
monetary transactions including wireless electronic check deposits, retail banking and mobile
commerce.

Banking and financial services sector is called as among the top five industries that will be
affected by 5G adoption and will have a good sectoral contribution to GDP growth in the next
5 years. According to Statistic, by use of 5G, sectoral contribution to US GDP next 10 years
may be more than 1.2 trillion USD.

Conclusion

3G and 4G brought a lot of changes for banking and financial services industries. The use of
alternative and digital channels significantly increased as customers adopted to technological
developments and internet coverage. Traditional banking distinctions such as low interest rates,
high loaning capacity, proximity and capital structure became secondary values as regulatory
bodies set new industry standards and technological innovations enabled new value added
services. 5G is expected to carry the banking industry to another level where automation and
machine-to-machine communication act as a game changer. Low-latency rates will bring a
superior speed to recognition, identification, evaluation, approvals/rejections and banking
transactions. High digital security will decrease the risk of fraud, automate regular processes
such as loan evaluation and credit tracking. Bank branches will be forced to change the form,
employment and organizational structure. Robots will extensively be used for automated
divisions. Traditional tellers will be replaced with information technology officials.

Paperless operations will replace the traditional paperwork, and transactions will be monitored
digitally leaving digital trace marks. Cash usage will be minimized, and the use of digital
tokens, credit cards and crypto-currencies will escalate. New players will emerge as financial
services operators are compatible with FinTech developments. Banking regulations will change
including digital transactions and video-based interviews for loan officers. “The Bankers” will
be replaced mostly with artificial intelligence and smart machinery. In summary, 5G is expected
to connect everything faster, more secure and more reliable.

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