Why the Smart Money’s On Smart Banking

The Changing State of Play

The banking industry around the world, particularly in Western countries, has long been seen as traditionally conservative, resistant to change —and rightly so. And even though online banking has been increasing in popularity over recent years, it has taken a pandemic to reshape the industry. With many bank branches around the world forced to close for a large part of 2020, there has been a sharp, swift switch to mobile operations.

However, for several years now, it has been fintech-based enterprises — particularly in China, home to the likes of Ant Financial, the operator of the hugely influential Alipay — that have taken the lead in terms of financial innovation, far too easily managing to draw customers away from traditional banks by offering attractive and highly convenient, mobile-based wealth management and payment services.

Such companies seem certain to have a long-term impact on the industry as a whole. How traditional banks react to them has always been the crux of the matter. Now, the impact of COVID-19 is forcing their hand, accelerating the digitalization of the finance industry worldwide.

Smarter Banking

In China’s financial services industry, smart banking has developed rapidly. With the highest rate of ecommerce penetration in the world, the nation offers some of the most fertile soil for mobile payment platforms. As such, there is much for a global audience to learn from the Chinese experience.

Huawei has played an important role in supporting the digital transformation of banking and finance. As a key provider of the 5G technology that enables efficient online operations — offering low latency, far faster speeds, improved connectivity, and broader coverage — Huawei has enabled the industry is poised to unlock the power of big data through intelligence, to provide more services to customers, bringing them a level of convenience never before seen.

In the intelligent finance arena, for example, we’ve deployed an all-flash storage solution with Greece’s Piraeus Bank to support the ‘reboot’ of the Greek economy. The Bank of China is using a HUAWEI CLOUD platform to boost smart financial services, and Huawei is helping Ghana Commercial Bank implement its mobile money strategy.

Indeed, in developing countries such as Ghana and Kenya, the digital transformation process is already well underway. Just as with the rapid penetration of cellphone use, compared with fixed lines, these countries have essentially skipped an evolutionary step: There were very few physical bank branches to begin with, and many citizens were already unable to access banking services. Instead of building physical banking infrastructure in bricks and mortar, Kenya simply shifted toward a model relying on online transactions and services instead. This phenomenon is explored more closely by in an ICT Insights article by Brett King, renowned thought leader, co-founder and CEO of mobile financial service provider Moven, and author of the critically-acclaimed book Bank 4.0.

How We’re Creating New Value

For both banks and fintech enterprises, the intelligent era creates a wealth — pun intended — of new opportunities as well as inevitable challenges. As in many other domains, data will shape the future of the finance industry. The massive amounts of data that banks and financial institutions will be able to amass — and use smartly — will allow them to provide highly personalized services that accurately meet an individual customer’s unique needs.

Data analytics is also an effective way to detect and prevent fraud, leading to improved security and rebuilding the trust in banks and financial institutions that has eroded since the financial crisis of 2008.

With so many services shifted online, we arrive at an inevitable, final question: What will become of physical bank branches in the post-pandemic period? Certainly the closure of branches enforced by social distancing measures, along with growing familiarity with online applications and processes, will lead to many customers adopting new habits.

Does that then mean the end of bank branches? Not necessarily. But branches will have to become smart and focus on the key areas — such as opening accounts, servicing VIP customers, and providing specialized services — where they will count, supported by a platform that combines Artificial Intelligence (AI), 5G, and cloud.

Further Reading:

• The latest edition of Huawei’s ICT Insights covers the core technologies redefining the financial services industry, Huawei’s role, and the case studies I’ve mentioned.
• Activating Intelligence in Financial Services: Pandemic Edition [Video]
• Minsheng Bank’s journey to intelligence with IP backbone

Disclaimer: Any views and/or opinions expressed in this post by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Huawei Technologies.