The pandemic has impacted every industry, forcing many organizations to make rapid and often substantial changes to their operations. Banking is an essential industry service and, in addition to facing its own direct challenges, has had to support customers’ responses to the pandemic.
Appropriate digital technologies and their effective deployment have been key to meeting these challenges, and a recent virtual summit organized by Huawei provided valuable insights into how the financial services industry is leveraging digital technology to meet COVID-19 and other challenges.
The event attracted some of the world’s leading financial institutions — Shanghai Pudong Development (SPD) Bank, China Construction Bank, Sberbank, BBVA, Isbank, and KBZ Bank.
Unsurprisingly, attendees identified mobile, AI, and cloud as the key technologies underpinning the future of banking, and there was a particular focus on the potential of 5G to open up new opportunities.
The challenges facing banking post-COVID-19 were spelled out by Michael Araneta, Head of Research and Advisory at IDC Financial Insights Asia/Pacific. He presented the results of research conducted with Huawei looking at how banks should exploit digital technology to meet these challenges. Results of the research will be published in August.
A data-driven recovery
An overarching theme of Araneta’s presentation was that banks’ ability to easily access and analyze multiple disparate sources of data will be key to recovery.
“Banks are seeing the emergence of a new class of data … that are created by the customers themselves now that their activities have shifted online, and facilitated by open banking sharing standards,” Araneta said. “There is also data-led engagement that emphasizes the need for accurate, reliable, and trustworthy data that allow us to use data from various internal and external sources.”
To create what he described as a “recovery-ready risk framework” he said banks would need, among other things:
- The ability to get to predictions and next-best actions quickly;
- The ability to understand the crisis through the use of new and alternative sources of data;
- Enterprise-wide consumption of on-time, trusted, and comprehensive risk data and risk analytics.
This data will be gathered from many diverse sources using multiple technologies, but it’s Huawei’s contention — captured in the theme of the conference: “Thrive Digitally in a Mobile Future” — that effective use of mobile capabilities will be key to banks’ future competitiveness.
The 3 essentials: 5G, AI, cloud
5G is the future of mobile, said Jason Cao, President of the Global Financial Services Business Unit of Huawei’s Enterprise Business Group: “Mobile is not only applicable to the interface that connects with the client, but also to the internal operations and collaborations with partners, and supporting this mobile-centric business will require new IT architectures and key capabilities of 5G, AI, and cloud.”
Banks will therefore need to successfully integrate these technologies and exploit their synergies to ensure future competitiveness.
Pan Weidong, President of SPD Bank, gave one example of this synergy of multiple technologies, describing the bank’s AI-powered virtual employee, Xiaopu, able to offer risk assessment, financial consulting, and investment advice online.
“In the 5G environment, she can work perfectly on various devices such as mobile phones, smart watches, and cars,” he said.
Also, China Construction Bank described how it used mobile technology to quickly offer a number of “no-contact services” following the onset of the pandemic. These included giving customers the ability to make applications for late personal loan repayments, make charitable donations, and deliver real-time data on the pandemic.
Huawei has more than 1,600 financial institution customers including 45 of the world’s top 100 banks. It says the successful ones are adopting a multi-cloud strategy: deploying separate cloud functionality for individual user groups and focusing on customer experience in smart branches and via mobile services.
Summing up the financial services summit, Huawei’s Cao said: “The COVID-19 pandemic has advanced digital operations in the financial industry, giving banks increased confidence in implementing digital initiatives and greater determination to do so. Moreover, the industry has demonstrated its advantages and value in applying new technologies in digital operations.”
Operational and infrastructure resilience needed
However, there will inevitably be winners and losers. IDC’s Araneta said the successful banks would be those with the infrastructure resiliency and operational resiliency to innovate effectively.
“Banks need infrastructure resilience very, very well in these times,” he said. “They need to be able to use cloud services … as a recourse for availability and security, especially as customers move more and more of their transactions to digital channels. … Operational resiliency allows us to run the best race no matter the shape, the extent, the pattern, and path of recovery that we will go through.”
He promised the forthcoming whitepaper would help identify the banks that will get there first.
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