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Empowering the Financial Industry in the Intelligent Mobile Era

By Cao Chong, President of the Global Financial Services Business Department, Huawei Enterprise BG

In the intelligent mobile era, Huawei — with its vision, insights, solutions, ecosystems, and experts — is uniquely positioned to create new value. The global outbreak of COVID- 19 has disrupted the lives and businesses of countless people, and the transformation to digital business models poses huge challenges to every industry.

The Financial Industry Enters a New Era

The global outbreak of COVID-19 has impacted the lives and businesses of countless people, and the transformation to digital business models poses huge challenges to every industry. A new era has arrived, as vertical industries accelerate digital and intelligent transformation, to adapt to new business models and respond to future uncertainties.

During the pandemic, leading digital banks have continued to provide digital and contactless services, allowing customers to access various financial services, manage their finances, and receive financial support — all from the safety of their homes. We have seen that these leading digital enterprises have excelled in terms of their risk resilience, agile collaboration, and market response efficiency. The underlying reason for their success comes from each enterprise’s ability to proactively rebuild service processes and the relevant technological capabilities, to further digitalize and personalize their operation models, which in turn enables them to flexibly respond to changes in the market and provide tailored services for customers.

The digital transformation of financial enterprises starts from digital channels, such as mobile banking, and gradually expands to the digitalization of employees’ work arrangements, branch resource management, data management, and risk control policies. With digitalization, managers and employees alike can re-think and redesign the overall operation of a bank, driving the financial industry into the intelligent digital era.

Accelerating the Digital Transformation of the Financial Industry

For the financial industry, certain measures will be crucial to overcoming business challenges in the long run and will help increase the industry’s overall resilience:

Redesign the customer service journey: Even though online banking has been widely adopted for many years now, customers still need to frequently physically visit the bank for more advanced financial services due to regulatory requirements or complexity issues. As bank branches have closed due to the pandemic — drastically increasing the demand for contactless services — banks have begun to focus on improving their online customer service through mobile banking. Financial Technologies (FinTech) can be used to increase the number of services available online, enhance the customer experience through the overhaul of the service journey, and reconstruct the existing services of banks around people’s daily online habits. Online services such as making reservations and pre-filling out forms are combined with offline QR code scanning, one-click interconnection services, and cross-selling, enhancing the customer experience while making the entire process more efficient and secure. Banks can also use these technologies to maximize their resource usage and further improve the banking experience for customers.

Business agility and mobility: The development of technologies such as 5G, Artificial Intelligence (AI), and the cloud has transformed services: They have become more mobile and personalized, and — notably — card- and cash-free. Moreover, by undergoing digital transformation and adopting a mobile first strategy, financial institutions are boosting their service agility and relationship with customers. We predict that the main challenge banks will face in the future will come from mobile applications. The core capability of bank operations will be digitalized, including customer acquisition, services, and operations. Meanwhile, the mobile first strategy that had, up until recently, remained largely theoretical, has now become the go-to strategy for the banking industry in the real world. Many leading banks in and outside of China have incorporated this strategy into their organizational principles and key targets. But mobile first isn’t merely a strategy; it will fundamentally transform systems, processes, and the organizational culture, with advanced Information Technology (IT) and collaboration platforms in turn digitalizing bank operations. To realize this transformation, financial institutions need to collaborate with partners who not only have a deep understanding of technology, but are also adaptive to changes and prepared to face the future head-on.

Smart branches: Technologies such as 5G, Wi-Fi 6, Internet of Things (IoT), AI-enabled smart cameras, and Smart Teller Machines (STM) will make operations more intelligent and mobile. These smart branches will use newly acquired intelligence to identify customers, measure their temperatures (while the pandemic continues to spread), and guide service processing. With the help of smart tellers, more experts can be involved in the customer service process. New additions to branches such as smart temperature control, smart cameras, and smart experiences will make branches more secure and comfortable for customers, as well as increasing the bank’s management and operation efficiency. In addition, branch distribution and resource allocation can be optimized.

Digital payment: Today, Internet giants have made mobile payment a must-have service. According to research conducted by market intelligence firm International Data Corporation (IDC), the use of mobile payment has increased by 60 percent in the first quarter of 2020 in some Asia-Pacific markets. As a result of this increase, banks have been grappling with a range of mobile payment issues and need to find ways to provide better support, improve convenience, seamlessly merge with existing banking services, and increase the accessibility for more Internet players.

Digital customer acquisition and operations: With the transformation of traditional bank branches and the surge of Internet users, the Internet has become a key channel for banks to acquire new customers. Financial institutions need to not only use the Internet to strengthen digital customer acquisition capabilities, but also the capabilities of big data, AI, and FinTech — such as Electronic Know Your Customer (eKYC) — to better understand customers’ needs, mitigate risks, and improve the precision of customer services. Additionally, financial institutions need to use digital means to improve their internal operation capabilities and efficiency.

Customer communication: Through their platforms, Internet companies can provide 24-hour support, send relevant notifications, and respond to needs quickly, increasing customer satisfaction and loyalty. Banks — with siloed multi-channel services — are facing ever bigger challenges. The best way forward is for banks to build an interactive platform that offers direct communication with customers, pushes services in real-time, and responds to customers’ needs at any time. Doing so will improve customer service quality and satisfaction immensely.

Cloud architecture: Hybrid cloud isn’t merely a trend for the digital transformation of banks — it has become a foundation itself. The cloud is always available and resources can be flexibly expanded, enabling financial institutions to improve their resource usage. Additionally, the cloud can provide micro-services and development tools at any time, which banks can use to quickly launch and iterate Internet-native services and products in a collaborative development mode, greatly shortening the Time To Market (TTM) of ideas. Quite simply, the connection of cloud architecture and the Internet enables banking services to be available to customers anytime and anywhere.

5G+ trend: 5G and IoT technologies can enable the connection of countless terminals, which will create massive amounts of information and even change the very way information is exchanged. Ultra-broadband — made possible by 5G — broadens the variety of applications, from text and voice services to video, Virtual Reality (VR), and Augmented Reality (AR). Moreover, 5G’s low latency and high reliability enable banks to migrate even more services online and connect with a billion individual and enterprise customers. Meanwhile, working together, edge computing and AI enable banks to deploy more personalized service capabilities that are closer to customers; banks can use these technologies to quickly identify customers, improve service capabilities, and guard against risks. Although 5G hasn’t yet been widely adopted in the financial industry, the impact of 5G+ applications is potentially huge. 5G+ financial scenarios will enable remote and virtual financial services, and promote the upgrade and transformation of the financial industry. Lending services as well as investment and wealth management can be conducted virtually through smart terminals. To meet enterprises’ financing requirements, banks can effectively evaluate overall risks through big data analytics (enterprise business performance), AR (onsite inspection of enterprises), and IoT technologies (mortgage information), based on 5G. Essentially, 5G+ finance can increase the efficiency of information sharing, which will greatly improve the user experience, increase the transparency of credit and loan information, improve the fund allocation efficiency of financial institutions, and reduce the costs of transaction and risk control. The application of these new cutting-edge technologies will also increase the diversity of financial services and realize more inclusive and flattened financial services.

Huawei’s Vision and Solution for the Financial Industry

With decades of experience in the financial industry, Huawei has served over 1,600 financial customers in more than 60 countries, including 45 of the world’s top 100 banks. Huawei believes that, to successfully implement both mobile first and digital transformation strategies, the financial service industry needs to focus on three aspects: connectivity, digitalization, and business agility.

Connectivity: Ubiquitous connectivity is the core of mobility and digitalization. Without high-speed, high-reliability, and high-quality network connections, mobile terminals can’t provide customers with a rich interactive experience, financial services can’t rapidly respond to every customer, and business will become stagnant.

Digitalization: With ubiquitous connectivity, all services can be digitalized and offered online, enabling financial institutions to adapt resources to changes in the new era. Indeed, efficiency can only be maximized when financial services and operations shift from a traditional mode to an Internet-native digital service mode.

Business agility: The COVID-19 pandemic has revealed the impact of uncertainty on society at large, for millions of people around the world. Financial institutions must respond more rapidly to changes and use digital technologies to adjust their business models, resource capabilities, and measures for risk control, to maintain their leadership and growth.

Huawei’s vision is to help customers in the financial industry embrace the new era of mobility and intelligence, realizing full connectivity, digitalization, and business agility. Based on a wide range of products and solutions, and supported by a global ecosystem, Huawei has launched “ABCDE” — a series of key enablement services and technologies for financial customers.

Finance Cloud Architecture: Financial enterprises need to use a new architecture to implement smart financial transformation. Huawei not only offers hybrid cloud, data centers, and service cloudification, but also service continuity and High Availability (HA) disaster recovery, internal networks based on Software-Defined Networking (SDN), as well as storage systems based on dual-active and all-flash technologies. Financial cloud architecture integrates the hybrid cloud with the cloud capabilities of the company’s data center to ensure secure and proper use of public cloud resources.

The Bank of China (BOC) is currently collaborating with Huawei to build a hybrid cloud-based financial ecosystem to provide flexible accessibility to financial services. The new architecture supports one billion users and 100,000 transactions per second. BOC’s eCommerce platform supports more than 10 million online users while the open third-party service access platform supports more than five million transactions per day. Yet the cost of the new architecture is significantly lower than that of the host architecture. The new architecture also has to provide the data infrastructure required for collecting, storing, and processing massive data, which is integral for the new data platform. In the case of Singapore’s DBS Bank, Huawei’s full-lifecycle intelligent storage solution has greatly improved its service data storage and access efficiency.

Smart Branch and Services: With the continuous growth of mobile services, the role of physical bank branches is changing and needs to be redefined. We believe that the digital and intelligent transformation of branches through the application of new technologies, such as 5G, AI, and cloud, is essential for the current construction of branches: The role of future bank branches lies in the provision of a high-end, convenient, and comprehensive financial service experience for customers. Huawei provides intelligent marketing, connection, management, and security protection solutions for bank branches, and is committed to transforming branches into user-friendly, efficient, and diversified comprehensive financial service centers, with reduced operation costs.

For example, China Merchants Bank customers can reserve services ahead of time through the bank’s app so that the branch can prepare the required resources in advance. The branch’s smart cameras identify customers as they arrive for appointments, measure their body temperature, send reminders to managers, guide customers into the service area, and efficiently access services through simple operations such as scanning barcodes. With edge computing and IoT technologies, operation personnel can use mobile devices to manage branch security, devices, and resources, as well as dynamically adjust branch operations. In the waiting area, targeted financial service information promotion and interactive devices can be used to improve the customer experience, which will in turn improve customer loyalty. Evidently, the intelligent transformation of branches is still the key development goal for most banks.

Digital Core: The core system is a key component of a bank. The core systems of most commercial banks still use centralized architecture. However, with low scalability, high costs, long service provisioning periods, and complex Operations and Maintenance (O&M), traditional core systems are no longer able to meet the requirements of modern banks. Despite this, banks still need to maintain the stability of basic services of the traditional core, as well as quickly build a new digital core to achieve service agility. The digital core must be built based on open and distributed technologies, to support the rapid development and rollout of new generation applications as well as speed up customer acquisition, enhance the customer experience, and reduce IT costs. In addition, the new digital core must be able to support the construction of a next generation data platform, so that banks can quickly reconstruct the data plane (data lake, data factory, and more).

Huawei has worked with world-leading banking partners, including Sunline Technology, Forms Syntron, and Temenos, to jointly develop a digital core solution for various scenarios. Huawei and its partners use their strengths to build a distributed architecture based on the micro-service concept at the Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS) layers. The solution also supports modular deployment of the core systems of open banks and can become a new digital service platform that enables banks to develop “super apps.” Over time, the traditional core of banks can be migrated to the new digital core. At a large bank in Thailand, the traditional core system struggled to support the rapid growth of users. Huawei and its partners jointly developed a new digital core solution for the bank, which helped the bank offer benefits to tens of millions of users through a digital wallet feature. In the future, it will carry new services of various ecosystems in addition to taking over traditional services.

New Data Platform: Data is the core asset for digital transformation, but traditional databases of financial institutions can’t support that digital transformation. Therefore, a new data platform is urgently needed. Huawei has been working with partners to build a new data platform solution that helps financial institutions acquire customers, control risks in real-time, and reshape operation capabilities end-to-end, in order to provide personalized products and an intelligent experience. The solution architecture consists of innovation application, convergent platform, and intelligent infrastructure layers, and provides multiple innovative service applications, such as marketing, operations, and risk control.

For example, the Industrial and Commercial Bank of China (ICBC), which has 500 million customers, has migrated and expanded more than 2 PB of data in the theme data marts, including marketing, mobile banking, financial market, and risk prevention and control over the last three years. They have also replaced their traditional data warehouse platform with a new data platform, which greatly improves platform scalability and system performance, such as query and analysis, and greatly reduces the Total Cost of Ownership (TCO) of the platform. In addition, the platform’s ability to analyze customers’ use of financial apps in real-time has enabled ICBC to continue to refine the recommendation model and further improve the customer experience.

Open Ecosystem: Huawei provides industry-leading digital cloud foundations for customers in various industries and collaborates with many business partners to offer end-to-end solutions. In the finance domain, we have more than 200 solution partners worldwide, with solutions ranging from bank cores, AI chatbots, and intelligent networks to mobile office apps, business intelligence, and intelligent data pools.

Indeed, there are success cases all around the world. In China, we have worked with partners to build new distributed core systems for multiple banks as well as insurance and securities customers. In Africa, we’ve worked with our partners to build an inclusive financial credit platform for a leading bank in Kenya. In Southeast Asia, we’ve built a new digital core system for leading regional banks. Specifically, we’ve worked with our partners to build a payment ecosystem with banks to enable users without debit cards to enjoy financial services in Indonesia.

Huawei has become a strategic digital transformation partner for multiple global financial institutions, thanks to our technical expertise and strategic investments in the financial industry. In the future, 5G, AI, and cloud will impact the financial industry on a huge scale. Huawei has invested heavily in these technologies for many years and has become a global leader in related fields. To further drive the digital transformation of the financial industry, we will provide customers with superior options based on our open technical architecture, ongoing Research and Development (R&D) investment, and proactive cooperation model, as well as the successful transformation practices of Huawei and global leading financial institutions.

Vision, insights, solutions, partners, and industry experts — these are what Huawei can bring to the financial industry in the mobile intelligent era. We look forward to working with all our customers to help them on their unique digital transformation journey.

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Issue 29 — Intelligent Finance Special

Thriving in a Mobile Future: Working Together Toward Smart Finance

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