Over the past two years, some major banks have been hit by very public and prolonged – more than 10 hours – disruptions to their digital banking services.
And these are just the incidents we know about. Cases like this highlight the fears bankers may have about moving away from existing systems in the name of innovation.
Such unreliability erodes customer trust, impacts revenue and, perhaps most importantly, draws the ire of regulators.
This fear factor also makes it more difficult for traditional banks to embrace the digital shift to combat neobanks and other digitally-focused financial institutions.
So many bankers and executives are taking a conciliatory path to satisfy boards, clients and regulators: small innovations here, a digital-only redesign of the product there.
Existing systems are rarely, if ever, changed. Unfortunately, half measures can only last for so long in the ultra-competitive BFSI space, especially with the increasing rollout of digital banking licenses across different Southeast Asian markets.
Huawei’s 4 zeros for resilience
At the recent Singapore Fintech Festival 2024 (SFF), Huawei advocated that the redefinition of financial resilience in the AI era be guided by Huawei’s guidance. 4 zeros aim.
| Huawei redefines financial system resilience with 4 zeros | |||
|---|---|---|---|
| Zero trust | Zero wait | Zero downtime | Zero contact |
| Provides in-depth end-to-end (E2E) security. | Refers to business agility and ultra-low transaction latency. | This means services always available. | Intelligent operation and maintenance (O&M), similar to autonomous driving |
| 1. Zero data breaches. 2. Virus blocking has gone from seconds to milliseconds. |
1. Service deployment has been reduced from months to days. 2. Transaction latency reduced from 200ms to 50ms. |
1. Recovery Point Objective (RPO) reduced from 15 minutes to 0 minutes. 2. Recovery Time Objective (RTO) reduced from 2 hours to 2 minutes. |
1. Zero human error. 2. Provides 1-3-5 troubleshooting, proactively identifying service exceptions and automatically locating root causes within three minutes. |
Jason Cao, CEO of the digital finance business unit at Huawei, said traditional banks in China have already taken the plunge, choosing the visionary path and making radical changes to their foundations from a point of view. commercial view.
“The visionaries think I have to do this, because if I don’t, my whole bank will lose its ability to innovate.
This requires not only a particularly strong focus on technology, but also a holistic focus on existing systems as a whole: hardware, software but also engineering middleware and database.
“So we take a holistic view of banks that want to make this change: we learn more about the entire architecture, the business and their business objectives. »
he told Fintech News Singapore on the sidelines of SFF.
From Legacy to Software-Defined Banking
In China, more than 80% of major Chinese financial institutions have migrated their critical applications and core banking services from traditional infrastructures to cloud infrastructures.
There is the Postal Savings Bank of China (PSBC), which has 650 million customers. Using Huawei’s architecture, PSBC moved its existing applications from a monolithic structure to cloud-native applications on a private cloud, providing over 5,000 microservices, reducing the deployment time of composable products from two weeks to T +1 and reaching a transaction volume of 67,000 transactions per second (TPS).
Cao said:
Cao said:
“We have also managed to help both traditional banks and neobanks building resilience without existing architectureinstead basing it on user journeys.
Shenzhen-based China Merchants Bank has completely phased out its legacy system and is now a software-defined bank with more than 137 million credit card users and more than 188 million mobile banking customers. As of 2022, it has deployed more than 50,000 products and five million operating points, essentially making it a giant internet company spun off from a traditional bank.
“On the neobank side, Huawei’s solutions helped ensure the reliability of WeBank: its system availability in 2023 was 99.999%, with daily transactions peaking at more than 1.1 billion, for an IT cost of operation and maintenance per account of 30 US cents.
Our customers benefit from access to secure omnichannel services, real-time interaction for a better experience, core transaction and risk management, and SLA assurance through rapid fault isolation.
he added.
Huawei is building new resilience to outperform mainframes and achieve 99.999% uptime by focusing on nine core technology areas: transactional databases, financial grade platforms (PaaS), R&D toolchain, cell-based architecture, accelerating software and hardware collaboration, chaos engineering, data security, lossless upgrade projects, and cloud-native deterministic O&M.
As traditional banks in Southeast Asia fight for a piece of the digital banking pie with non-BFSI competitors as well as neobanks and agile digital wallets, the deliverables of Huawei’s 4 Zeros resilience solution have also attracted customers like the one from the Philippines. UnionBankwhich has more than 15 million customers.
In an impressive 35 days, Huawei and its partner launched a cloud-based core banking system for UnionDigital Bank, enabling access to financial services for millions of unbanked Filipinos. Such a project generally takes three to six months.
Global ecosystem partners
In a post-payment world, Huawei has improved its financial sector strategy, Cao said.
“We provide complete solutions combining hardware and software, so it’s an ecosystem to help customers. But now our customers want us to solve more complex problems beyond simply replacing their existing systems.
“Huawei is therefore developing its ecosystem by working with global partners, for example such as Temenos, a major player in core banking. On the other hand, we also work with many leading regional fintech players in our ecosystem.
Together with our key Chinese partners, we launched the Huawei Financial Partner Go Global (FPGGP) program in 2021.
Today, FPGGP has more than 30 partners and we want to introduce all these best performing partners to the global market.
“Even though we have access to global customers, we do not produce applications. Our partners work on the applications, we work on the platform.
Bringing our Chinese partners to the global market is just the first step. Next, we want to bring partners from all regions to our global platform, giving them global access.
» said Cao.
To date, Huawei has served more than 3,700 financial customers in more than 80 countries and regions, including 53 of the world’s top 100 banks. Huawei has also established strategic partnerships with more than 80 major banks, insurers and securities companies across the world, becoming their trusted partner in digital transformation.
Featured image credit: edited from free pik