Digital Banking Fueling Digital Banking Transformation CONTENTS 1
Digital Banking Fueling Digital Banking Transformation
CONTENTS 1 Financial Service Transformation in the Internet Era 2 Digital Banking: Reshaping IT to Fuel Digital Transformation 3 Building an Ecosystem to Drive IT Architecture Transformation 2
Financial Service Environment in the Internet Era Customer Structure 20% 80% 3 Profit Model Service Channel Undiversified Diversified profit sources Market Environment Physical channel e-Channel Internet finance Basel III
Financial Institutions Need Better IT Abilities for Digital Transformation Innovative services Online, remote, interactive Agile business Fast and iterative development, updates, and upgrades Timely service response and accelerated innovation Intelligent analysis Real-time risk control, precision marketing, market insights, refined operations Technological trends Open architecture x 86 and open-source software will prosper in the FSI. 4 Open platform The industry ecosystem develops centering on banking platforms, allowing API economy with partners. Cloud infrastructure 95% financial innovation will take place on clouds. Industry clouds will become new sources of income.
CONTENTS 1 2 3 Financial Service Transformation in the Internet Era Digital Banking: Reshaping IT to Fuel Digital Transformation Building an Ecosystem to Drive IT Architecture Transformation 5
Huawei Digital Banking Solution Branch e-Banking Telephone banking Remote banking Mobile marketing Mobile banking Reshaping services: Omni-channel Banking Risk control Precision marketing Smart decision-making Reshaping data: Financial Big Data Intermediation Core banking Credit loan Accounting Credit card Wealth mgmt Precious metal Payment High-Performance open platform Operating mgmt Supervision Marketing and report mgmt Financial cloud Reshaping platforms: Financial Cloud 6 Customer Challenges Channel: Traditional brick and mortar branches need transformation to support ubiquitous services. Data: Application scenarios are mostly post-event analysis. Platform: Traditional closed architectures have high costs, low agility, and long resource delivery periods. Customer Benefits Finance mgmt Channel: Efficient, cost-effective customer acquisition and optimized business layout Data: Real-time Big Data analysis (pre-, during-, post-event) enables precision marketing and risk control. Platform: Open architectures for normalized product innovation
RESHAPING PLATFORM – FINANCIAL CLOUD 7
Why Should We Use Cloud Unified device management Faster service response A large bank may have tens of thousands of computing nodes, hundreds of storage systems, and a variety of software and hardware. These banks need smooth evolution to protect their investment. 8 Time-consuming infrastructures delivery (> 3 months) slows down financial product rollout. Higher resource usage Traditional IT architectures cannot flexibly cope with transaction surges, suffering a low resource usage of 30%. Automatic IT O&M Manual configuration brings massive workload. Firewalls have 20, 000 policies that change for 10, 000+ times every year. Other devices have even more.
Huawei Financial Cloud: Open IT Architecture with High Performance, High Scalability, and Easy Management Use: Automatic, on-demand resource allocation Management: Unified, efficient, intelligent O&M Unified Operation Unified O&M Platform Unified Maintenance Paa. S Fusion. Stage Iaa. S Fusion. Sphere Open. Stack Resource pools in traditional IT architectures Resource pools in distributed IT architectures Server Unix server Kun. Lun (open architecture) Virtualized resource pool SAN Highly reliable resource pool Virtualized resource pool Storage resource pool NAS Fusion. Storage Virtualized resource pool Network Storage Physical machine resource pool New virtualized resource pool Construction: Unified framework, open architecture, and resource sharing 9
Recommended Cloud Transformation Path: Go Fast Step by Step, From Peripheral to Core and Innovative to Traditional Opportunity Traditional software and hardware upgrades Cloud and Big Data architecture Traditional architecture Mainframe Unix server Storage Network Innovative application development Paa. S Management plane General hardware Now Office and desktop cloud R&D, test, and disaster recovery Enterprise OA Mobile office Contact center R&D and test 10 Data plane (Big Data) Iaa. S Basic virtualization software Future Peripheral production and innovative applications Data analysis, content mgmt, e-Banking, mobile banking, and payment…. Evolution Core production cloud Credit card, core banking, financial management
Success Case in Bank A: Financial Private Cloud Fusion. Sphere + DJ + AC: building converged pools to host heterogeneous computing, network, and storage resources Intelligent O&M platform: fast application deployment and elastic scaling based on service catalogs 30 days 50 steps 30 mins 1 step 200+ databases deployed Fast application deployment 10 peripheral services are migrated to the cloud 11 80% Self-service coverage HQ's and 72 T 1 branches' data centers
Success Case in Bank B: Agilely Launching Intermediation Services Using the Cloud Platform's Micro Service Architecture Iaa. S and Paa. S technology on the Open. Stack architecture Long R&D period 1 -2 weeks Repetitive coding 50%+ code reduction Agile development 97 city branches 12 Cannot cope with traffic surges Second-level Elastic deployment 22 FEP systems Slow upgrade and deployment 4 hours One-click O&M, iterative rollout 1000+ services
Core Banking Applications' Cloud Transformation: Using Kun. Lun to Build High-Reliability, Cost-effective Core Banking System Application Credit card Database Payment and settlement Credit & loan e-Banking DB 2 HANA OS Kun. Lun OS High-reliability cloud platform for unified core banking service management Kun. Lun World's first 32 -socket Unix server with an open architecture 13 High performance No service interruption Faster innovation 8 -32 sockets RAS 2. 0 Open ecosystem Vertical scale up and down Highest-level reliability Replacing traditional Unix server
From RISC to x 86, OLTP Performance Improved by 40% and TCO Reduced by 50% Kun. Lun 9016 VS. RISC Server 16 S RISC 16 S Unix server with a closed architecture 120 100 Latency TPS 25%↓ 40%↑ Kun. Lun 9016 Unix server with an open architecture Transaction success rate 100% TCO comparison in all phases 100 80 50 60 40 50 40 20 30 24 9 12 0 Hardware investment 初期硬件 Software investment 初期�件 IBM Power 780 IBM 780(16 S) 14 5 -year O&M 5年�保 Huawei 9016(16 S) Huawei. Kun. Lun 9016 OAM 管理运�
Not Just Cost Reduction: Cloud Transformation Brings Five Benefits to IT Architectures Financial Service Trend Traditional IT Architecture Financial Cloud 1. Product rollout period Year month week Time-consuming IT environment preparation: 50+ steps, at least 1 month Self-service, ready in 1 week 2. Daily transaction 1 M 100 M Low resource usage down to 30% Improving resource usage to 80%+ 3. O&M efficiency Series, manual automatic, self-service In manual maintenance and upgrade, each technician can maintain fewer than 50 physical devices With automatic O&M tool mgmt, each technician manages more than 200 physical devices. 4. Cost per transaction High low 5. System continuity 8/5 (selecting channels) ubiquitous (consistent experiences) l l 15 CNY 10 per account CNY 0. 1 per transaction Quarterly version updating, service interruption upon major changes l l CNY 1 per account CNY 0. 01 per transaction 0 service interruption
RESHAPING DATA – FINANCIAL BIG DATA 16
Financial Services Industry's Data Requirements Marketing support Risk control Building a real-time anti-fraud platform to improve risk control and fraud prevention abilities Using Big Data analysis (real-time stream processing) to optimize marketing models and improve production efficiency Customer acquisition Establishing Big Data clusters to analyze customer needs, consumption trends, and target customer groups Data assets Mining historical transaction and operational data to extract more value Service innovation Leveraging Big Data to address market competition, predict requirements, categorize markets, and analyze sensitivity Matching business strategies and leading service innovation 17
Huawei Financial Big Data: 6 Application Scenarios Help Banks Build the Second Data Plane Tools and apps (ISV) Real-time antifraud Log analysis Query traffic shifting Centralized image storage Historical data archiving Second data plane (Big Data platform) First data plane (traditional data warehouse) Big Data hardware (infrastructure) New data warehouse MPPDB Offline/Near-line computing Memory computing Core banking Credit loan Payment Big Data storage Ocean. Stor 18 Real-time stream processing Product support Card Anti-fraud x 86 server Card approval Settlement Convergent infrastructure Fusion. Cube Numerous apps: open data platform Concurrent database Service mgmt Asset and debt Finance mgmt Cloud platform Fusion. Sphere Hybrid load: batch, interactive, mining, real-time stream, etc. Reshaping data Module installation: brick -style component assembling using plug-ins Future-oriented: distributed, linear expansion
Data exchange platform Source system Huawei Helps ICBC Build the Next-Generation Converged Data Warehouse and Replace Teradata with Fusion. Insight Libr. A Data integration and batch processing platform Fusion. Insight Libr. A Enterprise data integration Data market Upper-layer app (BI, supervision, etc. ) Batch dispatch system Basic data sharing zone Data market (hybrid load) Fusion. Insight MPP Temporary data zone Analysis platform Basic data zone Historical data zone Fusion. Insight Libr. A Convergence zone Data market Batch dispatch system Unstructured data zone Fusion. Insight HD l … Analyst platform SAS Goldengate Storm Flume l Open architecture l Lower costs l Enhanced, real-time data processing ability l Data exchange platform: longer data storage … Fusion. Insight HD l Credit Stream processing platform CDC l Perfor mance Replacing Teradata with Libr. A Real-time applications duration MPPDB supports 6 data warehouses and markets: CBRC supervision data collection, enterprise data integration, credit and loan service query platform, performance management, etc. Cluster scale: 100 computing nodes, 4 management nodes, 4 loaders, 40+4 small clusters, 60+4 large clusters Data scale (by October 2016): 110 TB for small clusters, 120 TB for large clusters, 0. 5 TB daily increment, 4000 tables (large table contains more than 50 billion lines), etc. 19
Huawei Helps Join-Stock Bank C Mine Data and Explore Internet Financial Services Real-time query of historical transaction data Real-time credit query New service innovation Data storage duration extended from 13 months to 7 years Credit card query accelerated from 2 weeks to real time Customer prediction accuracy (small loan) improved by 40 x Offline historical data query Credit query: 2 -3 weeks Account data Traditional data plane 20 Credit query: 2 -5 seconds Online historical data query Contingent assets Financial Precision relationship recommendation Account, transaction, customer service, and social interaction Big Data plane: Fusion. Insight …
Big Data Real-time Anti-fraud, from Post-event Tracking to Live Event Control Online payment Transaction channels Core system Online transfer Branch Card consumption e-Banking Withdraw Self-service POS Credit & loan Safe transaction Credit card Payment & settlement Traditional anti-fraud systems Feedback Outgoing call confirmation Anti-fraud system External data Rule mgmt Multi-dimensional report Data collection Workflow mgmt Case mgmt System integration Suspicious transaction Transaction termination Case transferring Real-time anti -fraud system Data query Stream processing system Flume, Kafka Big Data risk control platform 21 Real-time fraud detection Farmer RTD Fusionlnsight Offline analysis Hbase, Spark Traditional anti-fraud Real-time anti-fraud
Retail customer assessment Internal mgmt. ü Optimized mgmt process ü Better operational Real-time risk prevention efficiency Brand reputation Blacklist User position Knowledge map Employee retention Info security analysis O&M log analysis Customer risk report Anti-fraud Real-time credit query ü Lower mgmt costs Real-time risk control Product performance evaluation Knowledge mgmt. Product operational KPI Customer risk assessment Risk control Efficient business operations Website analysis Accounting tracing Business risk control Intelligent customer services Small loans Secure and reliable channel risk control Customer contribution Opportunity mining Corporate customer categorization Personalized wealth mgmt. Cross sales Overall solution and tailored services Customer retention Customer acquisition Professional marketing and sales Public opinion analysis Customer profile Flexible and refined customer categorization Customer label Data Product operations Marketing support Event marketing Scenarios Services More Scenarios to Explore Users' consumption trend Third-party credit Internal service data Internal non-service data New data Third-party data Account, financial, component, and module logs O&M logs and internal service system data Mobile apps, We. Chat, contact center, and Weibo Internet, telecom, healthcare, transportation, and consultation 22
RESHAPING SERVICES – OMNI-CHANNEL BANKING 1. MOBILE BANKING 23 2. MULTIMEDIA BANKING
Banks Are Planning to Take Financial Inclusion as a New Strategy Annual revenue banks could get by reaching out to the un/underbanked in emerging markets alone. $380 billion Source: Billion Reasons to Bank Inclusively by Accenture Banking Countries with national financial inclusion strategies Reduce poor people’s financial cost 29 million subscribers 50+ Increase poor people’s financial capability Generate economy efficiencies Banks providing financial services with mobile money Countries … 24 160, 000+ agents … 80% market share
Huawei Mobile Banking Solution Builds New Internet Banks Providing financial services with the help of mobile telecommunication l Mobile Money l l Mobile Banking Mobile Payment l l Mobile Finance l l l 25 Deposit Withdraw P 2 P transfer International remittance QR payment Online payment Direct debit Loan Insurance Investment Financial advice BI/AML/Life services
Serving Unbanked Customers with Huawei Mobile Money Flexible agent network to boost financial inclusion availability Agent Customers Merchants Bank Card network Distributors 1 Agent 1 Distributors 2 Agent 2 … Agent 3 Traditional bank for fund custody Mobile Money Platform Clearing house … MNO … Customers Traditional bank A 26 Traditional bank B Traditional bank c Traditional bank …
Huawei Mobile Money Business Overview Enables banks to provide innovative, asset-light, reliable mobile financial services for unbanked and underbanked customers Cash In at Agent P 2 P Transfer Cash In from Bank fund Cash In at ATM Registered to Unregistered Money Transfer Unregistered to Unregistered Openness Cash Out at Agent Cash out to Bank Account Cash Out at ATM Buy Goods Pay on POS (ATM Card) Cash Out IR Merchant Payment Utility Bill Payment Bulk Payment Salary Distribution Welfare Distribution 27 e-Top up International Remittance (receive and send) Flexibility Pay Utility Bill Pay Post Paid bill Top up by Customer Top up at Agent Availability Security
Centering on Customer Experience and Offering Fast Response to Market Needs Up to 2000 TPS Response Time < 100 milliseconds (0 Data Loss) Reliable Open 99. 99% reliability Dual-node backup 100+ open API: fast, cost-effective ecosystem convergence 99. 99% HA, RPO = 0, meeting regulatory requirements AML High concurrency Geographical DR 2000 TPS Distributed applications Low latency Latency < 100 ms Cloud infrastructures Transportation Report IMT Hub AG (ESB) e-Commerce Infrastructure Phone charge Mobile access Open API Interface compatibility Real-time monitorin Operation support Secure Bank Payment alliance Agile Financial security certification International standard certification National laws and regulatory compliance 28 Retail Elastic data models enable flexible configuration, reduce customization workloads, and support fast GTM Elastic data models enable account, menu, commodity, and interface configuration Mobile wallet Mobile payment Mobile finance
Success Case: b. Kash of Bangladesh b. Kash, a subsidiary of BRAC Bank, has become No. 1 mobile financial services providers in Bangladesh, accounting for 80% market share. 29 M registered subscribers 11 M active subscribers l l Challenges facing b. Kash l l Huawei solution l l l 160, 000+ agents 2016 revenue: 170 M Market share 80% National Financial Security Rigid system & High OPEX Obsolete platform can’t satisfy diverse needs Inefficient service supporting Local deployment to meet regulatory needs Flexible platform, 80% requirement can be realized by configuration Offer diverse services in short TTM Tremendous supporting resources, delivery within 5 month Roadmap Alignment with b. Kash 29 Huawei platform is very well-designed. It not only can handle the scale, buy also can handle specific needs that we may have for different customers… -- Kamal Quadir, b. Kash CEO
Smart Branch: Self-service + Assistance, Dedicated Expert Services, Fast Deployment + Remote O&M Remote expert services Mobile marketing merce E-Com e zone nc experie Meeting room 1 -to-1 financial consulting services Self-service zone l l Issuing bank cards Selling wealth mgmt product IC card payment services … l l ices ice v er s lf. Se ne zo 24 -hour service zone All-in-One financial appliance l l Expert resource usage 30 Exhibition Applying for credit cards Applying for small loans Managing wealth M Door, closed in nonbusiness hours ATM+voice and video interaction+remote assistance, efficiently dispatching remote tellers for service support l VT rv dded se a e lu a V Equipment room l Customer satisfaction Travel cost Deployment efficiency All-in-one deployment: network + voice + Wi-Fi +video surveillance + UPS Remote O&M: network, energy, and infrastructure management
Multimedia Banking Offers Ubiquitous Service Experiences to Financial Customers Customer Challenges l l l New branches: unstable traffic and costly customer acquisition Mature business areas: inappropriate branch deployment Popular branches: long waiting queues Customer Benefits Remote counter nceling accounts, Issuing card, opening/ca g, managing signing contracts, investin tion, queuing wealth, remote collabora Self-service Issuing card, opening/canceling accounts, signing contracts, promoting products Mobile marketing 31 l l Wireless Private line l Efficient, cost-effective customer acquisition from multiple channels Branch deployment optimization cuts down channel investment costs. e-Channels shift 80%+ counterservices. Internet Wealth mgmt at home Remote expert s ervices
Multimedia Banking Supports Flexible Distribution of 80%+ Counter Services in Diverse Channels Query Modify info Transaction Consulting Loss report Card Small loan Signing contracts Bank book Wealth mgmt Opening account Medium Branch Transaction Wealth mgmt Consulting Loss report Card Small loan Sign contracts Bankbook Opening account Wealth mgmt Media Community banking Info changes Media Mobile banking Loss report Query Home banking Retail banking 32 Transaction Small loan Consulting Modify info Transaction Consulting Sign contracts Wealth mgmt Transaction Modify info Tablet banking Query Modify info Query Branch Modify info Query Tablet banking Corporate banking
ICBC's Intelligent All-in-One Cabinet Customer Challenges l Difficult management and inefficient O&M: ICBC needs unified branch management and automatic O&M l High land leasing fees: ICBC wants all-in-one hardware solutions to reduce equipment rooms' footprints and cut down land leasing costs. l No onsite O&M personnel: Remote, unmanned O&M has become a must. Huawei Solution l Fusionmodule 500 integrates the mainframe, network cables, UPS, power distribution, and monitoring modules. l All products are easy to configure and deploy, dramatically accelerating solution delivery. l The independent monitoring system intelligently monitor the environment and device status. Users can conduct remote O&M using SMS messages and mobile phone apps. Customer Benefits Fast deployment and intelligent O&M -- Intelligent all-in-one cabinet in Tongxiang branch of ICBC 33 l The system uses standard interfaces, allowing unified monitoring on the HQ. l Equipment rooms support unmanned operations, lowering the TCO by 30%. l The all-in-one design reduces the hardware footprint by 50%.
CONTENTS 1 Financial Service Transformation in the Internet Era 2 Digital Banking: Reshaping IT to Fuel Digital Transformation 3 Building an Ecosystem to Drive IT Architecture Transformation 34
Focus on Serving FSI Customers and Building Digital Platform, Data, and Service Abilities 300+ global financial institutions Typical cases 6 of the world's top 10 banks 10+ customers in strategic cooperation Reshaping platform Reshaping data Reshaping service ICBC financial cloud ABC open platform Shanghai-Hong Kong stock connection (1 0, 000 TPS) CMB: real-time credit query system PBOC: suspicious transaction analysis platform China CITIC Bank (International): unified data warehouse HSBC: remote video banking system CMBC: mobile financial services platform Bank of Shanghai: 24 -hour remote teller services … 35
Centering on Customers and Working with Partners to Build an Open Financial Ecosystem Omni-channel Service Data … Precision risk control Precision marketing Data warehouse platform Core banking service migration (RISC to x 86) Intermediation … … … Production cloud … RDT cloud Desktop cloud Platform Computing … Storage Network 36
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