In the last two years, some large banks have been hit with very public, lengthy – over 10 hours – disruption of their digital banking services.
And that’s just the incidents we are aware of. Cases like these highlight the fears bankers may have in moving away from legacy systems in the name of innovation.
Such unreliability erodes customer trust, impacts revenue, and perhaps most importantly, raises the ire of regulators.
This fear factor also makes it harder for traditional banks to embrace going digital to fight neobanks and other digital-first financial institutions.
Thus, many bankers and C-suites take a conciliatory route to keep boards, customers, and regulators happy: small innovations here, a product-only digital makeover there.
Rarely, if ever, are legacy systems changed. Unfortunately, half-measures can only last so long in the uber-competitive BFSI space, especially with the increasing rollout of digital banking licenses across different Southeast Asian markets.
Huawei’s 4 Zeros to resilience
At the recent Singapore Fintech Festival 2024 (SFF), Huawei advocated that redefining financial resilience in the AI era be guided by Huawei’s 4 Zeros goal.
| Huawei Redefines Financial System Resilience with 4 Zeros | |||
|---|---|---|---|
| Zero Trust | Zero Wait | Zero Downtime | Zero Touch |
| Ensures end-to-end (E2E) in-depth security. | Refers to business agility and ultra-low transaction latency. | Means always-on services. | Intelligent operation and maintenance (O&M), similar to autonomous driving |
| 1. Zero data breaches. 2. Virus blocking shortened from seconds to milliseconds. | 1. Service rollout shortened from months to days. 2. Transaction latency reduced from 200ms to 50ms. | 1. Reduced Recovery Point Objective (RPO) from 15 minutes to 0 minutes. 2. Reduced Recovery Time Objective (RTO) 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 Digital Finance Business Unit, Huawei, said legacy banks in China have already made the jump into the deep end, choosing the visionary route and making wholesale changes to their foundations from a business standpoint.
“Visionaries think that I have to do it, because if I don’t do it, my whole bank will lose capability for innovations.
This requires not only a particularly strong focus on technology but also a comprehensive focus on the legacy systems as a whole: hardware, software and also engineering middleware, database.
“So we take a holistic view of banks that want to make this change: we learn about the whole architecture, the business, and their business targets,”
he told Fintech News Singapore on the sidelines of SFF.
From legacy to software-defined banking
In China, over 80% of China’s top financial institutions have migrated critical applications and core banking from legacy to cloud infrastructures.
There’s the Postal Savings Bank of China (PSBC), which boasts 650 million customers. With Huawei’s architecture, PSBC has moved its legacy applications from a monolithic structure to cloud-native applications on a private cloud, delivering more than 5,000 microservices, reducing the rollout time of composable products from two weeks to T+1, and achieving a transaction volume of 67,000 transactions per second (TPS).
Cao said,
Cao said,
“We’ve also managed to help both traditional and neobanks build resilience with no legacy architecture, instead basing it on user journeys.
The Shenzhen-based China Merchants Bank removed its legacy system entirely and is now a software-defined bank with over 137 million credit card users and more than 188 million mobile banking customers. In 2022, it rolled out more than 50,000 products and five million functioning points, essentially turning them into a giant Internet company from a traditional bank.
“On the neobank side, Huawei’s solutions have helped ensure WeBank’s reliability: its system availability in 2023 was 99.999%, with daily transactions peaking at more than 1.1 billion, at an IT O&M cost per account of 30 US cents.
Our clients enjoy omni-channel secure service access, real-time interaction for better experience, core transaction and risk management, as well as SLA assurance through fast fault isolation,”
he added.
Huawei builds new resilience to surpass mainframes and achieve 99.999% availability by focusing on nine foundational technology domains: transactional databases, financial-grade platforms (PaaS), the R&D tool chain, cell-based architecture, software and hardware collaboration acceleration, chaos engineering, data security, lossless upgrade projects, and cloud native deterministic O&M.
With Southeast Asian traditional banks fighting for the piece of the digital banking pie with non-BFSI competitors as well as lithe neobanks and digital wallets, Huawei’s 4 Zeros resilience solution deliverables have also attracted customers like the Philippines’ UnionBank, which has more than 15 million customers.
In an impressive 35-day timeline, 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 usually requires three to six months to complete.
Global ecosystem partners
In a post-payments world, Huawei has upgraded its finance industry strategy, Cao said.
“We provide comprehensive solutions which combine hardware and software, so it’s an ecosystem to help customers. But now our customers want us to solve more complex issues, beyond simply replacing their legacy systems.
“So Huawei is growing its ecosystem by working with global partners, for example, like Temenos, a top player for core banking. On the other hand, we also work with a lot of regional leading fintech players in our ecosystem.
With our top partners from China, we launched the Huawei Financial Partner Go Global Program (FPGGP) in 2021.
Today there are more than 30 partners in FPGGP, and we want to introduce all these top-performing partners to the global market.
“While we have access to global customers, we don’t do applications. Our partners work on 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 across all the regions onto our global platform, giving them global access,”
Cao said.
To date, Huawei has served over 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 large banks, insurers, and securities companies across the globe, becoming their trusted partner in digital transformation.
Featured image credit: edited from freepik