Friday, 20 May 2022

5G will drive the “financial new normal"

5 min read

By Foo Boon Ping

Shenzhen-based Chinese tech giant Huawei held its Asia Pacific Financial Industry Storage Summit 2020, on 13 August to address the latest trends, developments, and challenges in data storage

  • New technologies enabling massive data storage and processing will revolutionise businesses and industries
  • COVID-19 drives use of data intensive applications and will accelerate adoption of game changing 5G technology
  • Tour of Huawei research and production centre to explore cutting-edge technologies

The theme for Huawei Asia Pacific Financial Industry Storage Summit 2020 is “Unleash the power of data-driven intelligent finance”. It presented a timely forum for business and technology leaders to meet and discuss how the revolution in the data storage world can define the future of the financial industry.

The virtual conference brought together key decision-makers from financial institutions such as Sim S Lim, the group head of consumer banking and wealth management at DBS Bank, Johnny Chung, general manager and head of fintech division at China Construction Bank Asia (CCBA) as well as technology experts from Huawei including Daniel Zhou, president of cloud and artificial intelligence (AI) business group for Asia Pacific, and Chen Kun Te, chief digital transformation officer, financial services industry enterprise business group and former CIO of China Merchants Bank.

They participated in a panel discussion on “The future of banking - challenges and opportunities shaping the financial services industry”, and talked about how transformational technologies are becoming increasingly important for enterprises to rethink their infrastructure amid intense competition and survival.

New technologies enabling massive data storage and processing will revolutionise businesses and industries

Over the past few years, the term “data-driven” has firmly worked its way into business lexicon whenever the conversation falls on AI, big data and analytics. And with good reason – it is an approach to AI which is showing great promise when it comes to developing the autonomous, self-teaching systems which are revolutionising many industries.

Chairman and founder of The Asian Banker, Emmanuel Daniel, the host of this event, explained that many of the hugely successful Silicon Valley and China-based big tech companies of the last 20 years have been business platforms. Fintech and big tech players are demonstrating how an open approach to technology has allowed them to leverage the network effect and big data to create super-apps that are helping grow active user bases at an exponential rate.

These businesses and platforms have dominated because of their massive data strategies. For example, Amazon collects over 2,000 real-time and historical data points for each online order so that it can better analyse, understand and anticipate customers’ future needs. Alibaba processed over $38 billion in e-commerce sales during its Singles Day event in 2019. The first $1 billion was achieved in the first minute, a feat that is impossible without a robust and massive data processing and storage capability.

Winning the platform war means having the ability “to process and manipulate massive data, to create new ecosystems, to create new customer experiences with low latencies and build new business models”.

The future will also be transformed by fifth generation (5G) data systems. Daniel explained that with the massive and low latency data transmission enabled by 5G, not only automobiles will become autonomous but transportation itself can be fully automated and revolutionised with connected vehicles able to communicate with each other as well as with the environment that they are in.

Tesla today produces cars that create and consume more than four terabytes per day for decision making sub-systems that enable them to self-drive. And the same technology for automating critical decision making, behavioural modelling and prediction can be applied across different industries, including finance, to transform user and customer experience.

Today, more banks have embarked on implementing enterprise-wide big data capabilities, aggregating their data into multi nod based real time calculating based platforms. It will also see the banks moving away from the primary use of data warehouses for good. On the other hand, leading banks have realised that a more efficient, reliable and cost-effective data infrastructure is needed to enhance customer experience and reshape the journey of banking experience.

Sim S Lim of Singapore-based DBS Bank said that the bank has been transforming itself into a “technology company, using data and ecosystem partnerships to create great solutions with demonstrable outcomes in a sustainable way”.

He pointed out that 2016 marked the advent of the fourth industrial revolution which is enabled by big data and artificial intelligence (AI). Together with cloud, mobile and 5G connectivity, these technologies will transform the future. DBS Bank is responding to this major technological shift by developing its concept of the “intelligent bank” and hyper personalisation.

COVID-19 drives use of data intensive applications and will accelerate adoption of game changing 5G technology

Since the beginning of 2020, COVID-19 has caused immeasurable losses to the world economy. The impact of the pandemic will be transformational across industries, things may never go back to what they were before, especially for the financial services industry.

CCBA’s Chung observed that remote working is now being widely used due to the spread of COVID-19 and has led many global financial organisations to review their crisis management plan. With the continuous increase in online data and information shared between networks, banks are facing big challenges that require large-scale remote access to office networks and many new requirements for mobile solutions, such as video conference. It is very challenging for banks to quickly build a new platform to meet new demands.

“However, the pandemic can bring new opportunities to banks as well. Because a lot of bank customers turn their activities from offline to online, it is an opportunity to obtain more customer behaviour data, which can help planning future online business strategies and how to optimise online experience. Therefore, this is a good chance for banks to position future online banking strategies and internet business development,” he said.

“It seems like we have to live with the virus for a long time. I don't think it's going to be a short-term show. We have to treat this as a new normal. There are so many uncertainties. For example, supply chains have been disrupted. As a financial institution, when we face uncertainty, we have to build a very robust infrastructure, lead our business to become agile to address the new situation, new changing market. To build a very robust infrastructure, for example, migrate to cloud computing, to the private or public cloud in order to build up a giant digital business platform which can empower your business operations. In China, we commonly use the super app architecture,” said Huawei’s Chen.

Zhou compared traditional and new wireless network technologies, and remarked that the three key features such as ultra-low latency, ultra-large bandwidth, and massive connections in 5G are imperative to drive more fintech innovations.

For example, in contactless service, many banks have started to explore alternatives amid the pandemic, to maintain the usual banking transactions with their customers, while attempting to keep up with the face-to-face customer experience. One of the alternatives would be the video-conferencing where bank customers are able to interact with bank personnel to open an account, apply for credit, make bank service enquiries, etc. This new technology-driven interaction would provide a unique customer experience. The proliferation of 5G will drive the “financial new normal” for banks.

“From a risk control perspective, proliferation of 5G applications will provide abundance of data with various dimensions, require more detail and accurate enterprise credit assessment and anti-fraud analysis. It is expected to form stronger judgement basis in establishing more efficient and effective risk control, credit line models and authentication of transaction backgrounds. All these help contribute to embedding intelligent risk control and achieving higher quality credit rating system,” he said.

The employment of virtual reality (VR) or holographic technology will be the next disruptive innovation to extend bank services to remote areas, mini bank branches, or location where bank service personnel are scarce. Such technology will be able to help form virtual interactions between individuals and banks, while reducing operating costs, extending better bank services to grow customer base, and promoting better corporate social responsibilities to bridge the “financial divide” between urban cities and remote areas to realise inclusive finance objectives.

Chung remarked that 5G can provide a lot of opportunities for many industries, especially the financial industry and bring many new ideas to fintech, but it also poses challenges to traditional banks. It is difficult to manage high-quality and comprehensive data and there is insufficient processing capability to deal with massive multidimensional data.

5G brings a large amount of data and pose great challenges to banks. Traditional banks have been facing fierce competition from fintech players already using big data techniques, while addressing other challenges including pressure to reduce operational costs, increased cyber threats and regulatory restraints.

“Building big data governance is very important. As banks start their digital transformation journey, they have to learn to collect, store, process and make the data unique and dispatch the same to better serve customers and run their business,” Chen emphasised.

It is estimated that the next-generation data storage market is estimated to grow from $56.8 billion by 2019 to $102.2 billion by 2024 at a compounded average growth rate of 12.5% along with the increasing adoption of cloud-based services.  Digital finance trends are pushing traditional data solutions to its limit.

“Digitalisation means exponential growth of data, and this phenomenon is particularly challenging to the financial industry. Two key focus, namely reliability and performance, are imperative to help banks address the data processing challenges in new digital finance business. Huawei had been devising end-to-end solutions that put emphasis on 24/7 continuous data processing while maintaining high performance to support high volume of transactions,” Zhou remarked.

Tour of Huawei research and production centre to explore cutting-edge technologies

Peter Zhou, president of Huawei data storage and intelligent vision product line, led participants through a virtual innovation tour of Huawei’s largest storage research and production centre to explore the cutting-edge technologies and comprehensive quality assurance behind the OceanStor enterprise storage arrays.

Huawei storage research began in 2002, and is now a vast research network with 12 research centres in North America, Russia, Europe, India, and China. The largest centre is located in Chengdu, China. The Chengdu Research Centre occupies 5,000 square metres of the storage lab and holds 2,666 cabinets with 15,000 storage devices and tools for remote data storage, research data storage, solution verification and interoperability verification. The digital management platform of the lab was built for high efficiency, energy economy and security.

Currently, the lab research technologies is being developed in the next three years. It is a long and difficult process and Huawei is dedicated to tackling these industry challenges independently with its global research capabilities. However, it is looking to open up its research to more people in the industry to take on global challenges. In November 2019, it held the first Olympus Awards to encourage scientific researchers to collaborate and develop new ideas for the data storage industry.

“Manufacturing is an important part of making products. It is as important as research, design and testing. Huawei has invested a lot in its production system. Investment helped us create our advanced manufacturing workshop for data storage products. This was all done to provide our customers with the best storage products for the highest level of quality,” Zhou asserted.

Roland Wright Raffensperger, senior transformation expert at Huawei enterprise business group also spoke about “accelerating data infrastructure for future banking”.

He shared how changes in customer behaviour are increasingly influenced by the “all-scenario services” provided by the internet giants and how this is accelerating financial services evolution and digital transformation. Raffensperger added financial institutions lack the necessary new generation data infrastructure to embrace the “intelligent” era and illustrated a China Merchants Bank case-study of how it is enabling its business with the decoupled storage-compute big data solution through OceanStor.

Traditional data storage is siloed, the data storage system is faced with severe challenges such as insufficient flexibility in resource distribution and limited performance expansion capacity. Although new storage technology such as distributed storage is built to bridge the gap, it has its own set of challenges. Singapore has become the first country in Southeast Asia to implement 5G technology. Indonesia, Malaysia, Thailand, and Vietnam will follow suit along with increasing penetration of smart devices, big data, internet of things (IoT) and AI. All these will contribute mass loads of data. Whoever can unleash data power will be a step ahead for a better financial future.

To watch the event click here

Keywords: 5g, Technology, Analytics, Vr Technology, Covid-19
Institution: Huawei, DBS, China Construction Bank, China Merchants Bank, Amazon Alibaba, Tesla
Region: Global
Guest: Sim S Lim, Johnny Chung, Daniel Zhou, Chen Ku Te, Peter Zhou, Roland Wright Raffensperger, Emmanuel Daniel
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