The five core components that will drive the next wave of banking innovation

The growth in online banking has been – and will continue to be – rapid. From a valuation of $11.43 billion in 2019, the projections are that it will reach $31.81 billion by 2027, at a CAGR of 13.6%.

For the incumbent banking system, this rapid growth poses a real and ongoing challenge, as it has opened the door to unconventional disruption and new competition. Non-banking companies are now able to bring different business models and expertise in customer experience to the financial services sector. New products and services are being adopted enthusiastically by consumers, and indeed, there is the rise of entirely new forms of currency and payments that are changing how we think about money.

In the banking sector, CIOs are being challenged across several sectors, including:

• Regulatory challenges – where many of these non-traditional financial services organizations are operating outside of traditional banking, incumbents need to grapple with challenging regulatory environments.
• Transformation and innovation – many banks run on legacy systems, with the pressing need to undertake wide-scale transformation projects before they can engage with digital innovation. This poses a risk to the bank, however, as only 30% of transformation projects deliver their expected value.
• The need for new digital products – KPMG research suggests that 80% of revenue growth will come from digital offerings and operations going forward. CIOs need to deliver an environment that enables banks to do this.

Driving to digitalization

The path to digitalization for the banking system will be a key topic discussed at the Huawei Intelligent Finance Summit 2021, which will run from June 3-4. At the event, Huawei will unveil its Smart Finance Cloud Engine I⁵ model, which is specifically designed around assisting banks with transformation and digital services. The five components of the I⁵ model are:

First, there is Robotic Infrastructure – unified management and control, end-to-end automatic deployment, intelligent O&M and fast service provisioning, energy-saving, high reliability, and intelligent financial digital infrastructure – along with deeper Data Intelligence and Analytics and Agile Innovation. In turn, financial organizations can leverage these attributes to gain market share in growing areas such as Financial Inclusion and embedded digital financial services (Industrial Finance).

In other words, the I⁵ model brings together data, intelligence, automation, agility, and business, which will allow banks to become highly responsive, digital-driven and customer experience-orientated organizations.

Huawei and Fintech in action

Huawei has a long heritage of working with the largest financial services enterprises to assist with transformation and innovation. For example, the Union Bank of the Philippines (UnionBank) saw a massive spike in customers using mobile banking through the pandemic of the past year – an increase of 160%, which put its network under unprecedented pressure. This was in addition to the bank’s influx of pure digital customers, which have different demands for financial services compared to traditional customers, such as secure 24/7 availability and T+0 service delivery.

Huawei was called on to help architect a solution. It worked with UnionBank across four technology areas to deploy a new end-to-end network, featuring:

• Active-Active SDN Data Center Network Solution
• DCI Network Solution
• SD-Campus Solution
• Intelligent O&M Solution – iMaster NCE-FabricInsight and iMaster NCE-CampusInsight, integrating and upgrading the exit user/account authentication and network management.

This provided UnionBank with the platform it needed to enable a fully digital banking system for its customers. (Read more about the Union Bank case study here.)

Meanwhile, in Argentina, after the Industrial and Commercial Bank of China (ICBC) acquired a majority stake in Standard Bank Argentina and changed its name to ICBC Argentina, its desire to engage in technology innovation and digital services was being undermined by the bank’s Office Automation (OA) and ICT environments, which were struggling to keep up with the pace of innovation. ICBC Argentina needed a faster and more stable wireless network to improve processing efficiency, real-time handling of business needs, and system cost minimization.

ICBC Argentina engaged with Huawei to develop an Agile Campus Network on a Wi-Fi6 platform. This solution involved a combination of the Wi-Fi 6 wireless Access Point, Huawei AirEngine AP7060DN, wireless Access Controller, Huawei AirEngine 9700-M, and simplified, centralized management via the Huawei eSight.

This solution has assisted ICBC Argentina in significantly improving network capacity and minimizing network latency, and it will underpin the bank’s ongoing digital transformation strategy. (Read more about the ICBC Argentina experience here.)

These two examples highlight how there is no “one size fits all” approach for transformation and digitalization in financial services. CIOs need technology partners and platforms that are versatile and driven by the unique needs and circumstances of the bank in reaching out to customers. Huawei is committed to accelerate intelligent finance and explore what it terms “New Value Together” with partners.

As the Huawei Intelligent Finance Summit 2021 will highlight, the I⁵ model’s strength as a platform for financial services innovation is that it is highly customizable and flexible, and able to assist financial services organisations with their digital transformation strategy, regardless of the maturity of their transformation.

For more information on the Huawei Intelligent Finance Summit 2021, or to sign up to attend, click here for APAC audiences or here for non-APAC audiences regarding different time zones.