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Courtesy of HUAWEI's William Genovese, below is a transcript of his speaking session on 'Next Generation Digital Financial Services: Accelerating the Journey to Digital Maturity' to Build a Thriving Enterprise that took place at BTOES Financial Services Live Virtual Conference.
In this session we will have a discussion of the evolution of financial services, and what it may look like in terms of “next generation digital financial services” delivered through innovative new business models and leveraging digital technology accelerators, to deliver ubiquitous, embedded digital financial services in our children’s lives.
There are six prevalent business and technology platforms delivering innovative digital financial services today. Which models and platforms will pull ahead to lead market share in the next 5,10, 20 years? What types of digital technology are they leveraging and how is it applied to make digital financial services more relevant seamlessly in our lives?
Is a real treat for all of us. Lilian Genovese is going to join us directly from Shenzhen China, where he lives, and the talk about the next generation digital financial services accelerating the journey to digital maturity. So, we'll go ahead and turn on your camera, so the audience can see you. And I will give a brief bio on William. William is the Vice President of Corporate Strategy, Global Banking and Financial markets that you're a technologist, business channels and China. Williams Responsibilities include the further development of Hawaii's Financial Service industry strategy, with research and formulation of new solutions, encompassing technology and business architectures, Emergent technologists centered on AI analytics, Blockchain, Quantum Computing Technologies, Mobile Iowa and Digital and IOT, and Evolve in Business Models in the Fintech and Red Tech era across the financial services sector.
Leland is also a CTO and Executive Board Director for Saving Promise, as well as a standard health. He's a committee: Co-chairman, Advisor, board member, and for a number of other, for a number of other companies and the industry associations, such as ... Global, the Fintech Association of Hong Kong. Think Tech for Good feedback symbol, N Y V X, V X, and the Lifeboat Foundation. William, it's a real treat to have you join us. Thank you for sharing your expertise of this global audience today.
Later, right now, you're muted, so make sure that you're unmuted, so that we can hear your audio.
Yep. Can everybody hear me OK? Good.
Thank you very much, OK.
All right, so the Welcome, everybody, and, and for the next 35 minutes, I'm going to be talking about really what's what I've coined with our company, Worldwide Technologies, next generation, digital, financial services.
And that's an important opening point because really, we, in these times, especially we can only really focus on the immediate road ahead in terms of how things are changing or we're back stepping. For example, in the in the crisis we're facing now. So it's really the next generation Our children.
And what's the forecasts look like in terms of next generation, digital, financial services versus traditional? So That's what I'm going to talk to you about and then? How that's going to from our point of view and our solutions Accelerate the journey to digital maturity, OK, and everybody talks about digital transformation and you'll hear a lot about that over the next three days or so, But what does it mean to really become digitally mature and and, you know, what is that made up of in terms of? Metrics or KPIs?
OK, and that's why I kind of focus on next generation, So the scope a horizon is really in the next generation of our children's lives. So Jose did a great job of kind of introducing me. I'm not gonna spend too much time on this. Most of my career I've been with Huawei for four years now. in Shenzhen China. I am from the US. Good, 45% of my career has been outside the US and Europe a number of times, a couple of times now in Asia, spanning about seven years. X, IBM, over 10 years with IBM, IX KPMG, another 7 or 8. And then I've also worked for a blockchain company as a CIO and CTO of ... Bank, which is now Wells Fargo, and then I started my career and Coldwell Banker, which is a big real estate firm internationally.
OK, so, in my presentation, here, are really kind of segment. Did it into four sections. So, at the highest level, across all industry verticals, what do we see? What is, While we see in terms of the game, changing technologies, that will be in play along with new business models? And what's enabling those new business models for all digital enterprises? I'll kinda go into some key industry trends, and observations shifting gears, specifically to financial services, which is the context, as we know of, of this conference. And then how IT is being reshaped by what I'm calling digital accelerators. What is the basket of digital technologies that are being applied in financial services, to accelerate digital transformation, and getting to that Holy Grail, as it's loosely defined in many cases and height of digital maturity.
Now, our mission statement is really, at the highest level, OK, for our company globally, bring digital that every person, home and organization, for a fully connected, intelligent world, OK? But for financial services, specifically centered on financial inclusion, OK. And intelligent connectivity. So, we work in a lot of emerging markets, Africa, Middle East, south-east Asia, far reaches of China, India.
And the mobile device is the access point for financial services for many individuals who don't have access to traditional financial services. So, five G is going to play a very, very important role in that, as is artificial intelligence, to allowing access to financial services for many individuals.
Now, the intelligent world is definitely arriving fast. And I mentioned five G and AI, and these are going to be the two center points in terms of game changing tech that's going to fuel eventually new business models, OK? So we'll be seeing more data and congesting and ingesting more data through super site, OK.
AR and VR will have tailored streets OK through traffic Optimization connected vehicles C two V zero search capability, OK, without using button buttons and, Voice, we can use voice commands and other other biometrics, evidentially enact searches and augment their creativity in terms of AI.
Now, if you kind of look at it, in terms of the three dimensions, OK, in terms of digital transformation, we view it in terms of digitalization, connectivity or connection, OK. Itself, which is really centered on five G, more bandwidth and latency, OK, to use video and streaming, and a lot of other capabilities that will be needed. Or five G will be needed and then even beyond that six G then intelligence.
And then, what this chart is showing here is, you know, through 2025. Grouped in these segments across all industry verticals and that's a key point, including financial services. What are some of the metrics for digitalization, connection and intelligence, OK? And how things are going to exponentially grow, OK? Most of what you're seeing here will be Embedded or ubiquitously, OK?
So, based on financial services, business strategy, and how it kind of permeates into other industry verticals, OK, and lifestyles of consumers, then financial services becomes more ubiquitous and embedded, OK, through what you're seeing here, and these dimensions, and the metrics, therefore.
Now, if you kinda look at this and kinda dive down further into financial services overall, what you see on the left side and the right side is a mapping of traditional financial services functions, OK, some of these are specific to trading, as an example, but many of them are cross segment related, so enterprise risk management, CRM or client risk or relationship management, reference data reconciliations.
But what you're seeing here, the takeaway is that not one individual technology, or quote unquote digital accelerator, will solve everything, or even solve one function, OK, And to a large degree, as technologists, we're repeating some of the mistakes in the past in terms of research and application, in the sense that we pour a lot of effort into individual technologies.
But we're not looking at how they overlap or converge to accelerate digital transformation and maturity. And that's exactly what this chart is showing. It's showing an overlap or a convergence to solve problems that we have with traditional technologies are where we need to move ahead exponentially, OK, so that's the key point here. You know, blockchains are very good example. We've been focused on it as a world for over 10 years. It has not reached full enterprise adoption, digital acceleration yet. There's been a lot of progress.
But if you look at smart contracts that's overlaying with artificial intelligence, IOT will come into the picture as well as big data and advanced analytics.
Some key industry trends and observations. I kinda like to start, at least somewhat in the beginning of the of the presentation. These are some quotes, Charles, Darwin, you're all familiar with, that when I'm sure it's not the strongest of the species that survives, but the one that's most intelligent, or, nor the most intelligent, but, but one that is most responsive to change. one of my favorites is by Peter Drucker, OK? And Culture eats strategy for breakfast.
However, my living, working, and experiencing cultures all over the world, including China. and very, very dynamic times right now.
I would say that if culture is eating strategy for breakfast and you're not addressing culture in your strategy, then you really don't have one, OK, So it's very, very important that your strategy addresses culture holistically, OK, So you're not just covering breakfast, per se, and you're covering all meals in terms of your strategy, that you're laying down and executing, other key things to that are kind of highlighted in yellow. These are more or less some of my quotes, except for the last one there, but I would say And I've seen this many times, that if you believe their choice and infrastructure as a commodity. And it really doesn't matter who you go with either, whether it's, you know, infrastructure, data center, or cloud provider, Then you've got to view your business running as a commodity, too, because it does matter, OK, there is differences, and how open house scalable how secure your infrastructure is. Banks can innovate. If they keep legacy systems alive. Well, we know that, OK. And that gets back to the previous point. How open is your infrastructure to integrate to legacy infrastructure, OK?
So, you have open cloud OpenStack, OK, open APIs, things of that nature. And your goal, as a bank or financial services provider, is to be the best at integration.
You want to integrate within your own four walls, across all hardware platforms, and software platforms, but it also externally to e-commerce, to retail, or financial services, will become embedded in a ....
So, if we kinda look at the evolution of banking, picking on one segment, per se, And this is probably the segment that gets picked on the most in financial services. We've moved from informal banking many, many, hundreds of years ago to, in the, in the next generation or certainly in the next 5, 10, 15 years to embedded banking and financial services. As a utility, that's autonomously being driven based on lifestyle choices, OK? So, you know, if you look backwards and formal banking to a larger respect, we've kind of revisited that with cryptocurrency, nascent currency, and trading systems under the mattress savings while we use bitcoin now.
That's kind of skirting outside the traditional financial system and as these centralize, OK, but the point is, no, Prior prior to that, the industry is kind of shaped itself as a product, loans, mortgages, payments, OK, two more of a service in terms of Omni channel, OK, So consuming any service that an institution for financial services offers through your ATM going into the branch, your internet browser or your phone. But really to get to a ... banking where we're introducing a new term or thinking which is multichannel.
And the difference there is is Multi channel is cutting across industry verticals and platforms, OK, So Amazon, Google, moving into financial services, OK, and the utility itself is banking and financial services, so it's not so much you go to the institution anymore, you're consuming financial services through many other multi channel aspects or access points, OK?
And what's fueling that is really a change in our behavior and our expectations, OK, fueled by Technology, the Internet, OK, the Internet and mobile devices has kind of changed our behavior in terms of what we can do and what we expect? So in the past?
You know you went into that one building or that one house to to take out a loan or put money in the bank with a Passbook OK, you needed to get a new car. What have you, or a mortgage? Now you're moving across industry verticals, OK, and you know, the, it's all powered by APIs, so it's seamless, you don't necessarily need to go into a traditional financial institution to perform a financial services function, OK? So there is a shift in banking to accommodate our expectations and our digital journeys.
Now when we talk about digital financial services, what are we really talking about here? OK, it's really grouped into 3, 3 main areas in terms of consumption or expectations: payments. Number one, we need to pay for things, we need to pay for goods and services. Food, we need to pay our bills, OK and now we expect to do that from the palm of our hand. OK, mobile devices were cooped up or in quarantine. We're in lockdown. We need to buy in order food, we need to pay our bills, and we do it from either an Internet browser or mobile device, OK?
We need to send money to people and family and loved ones in trouble in other countries. So we do that digitally through digital remittances.
once, again, if we can, through our mobile device. mobile financial services.
If we don't have enough money to pay our bills, we're in a bind. We've, we've lost our jobs.
Credit and lending, you don't want to jump in your car in these times and go down to the bank branch, and then wait seven days, or even three days for an answer on a loan.
You may need a micro finance loan, very, very short-term loan, and a smaller amount, so ideally, you want to do that from your device. So digital credit and lending, OK, especially for small to mid to mid-size enterprises. OK, the PPP program in the United States for covert 19, OK, so, all of this should be able to be enacted through the mobile device very, very quickly.
And the last overall grouping, which is insurance, investments, wealth management, and savings and deposits, financial asset protection, probably the last basti on, OK, in terms of disruption, in the traditional industry, But consumer tech, e-commerce is moving into this last error, as well, OK?
In terms of financial asset protection, and they're offering insurance, very, very quick onboarding and policy administration and claims processing, they're offering robo advisory for wealth management and now Google is offering a debit card, OK? So the backend may be a traditional bank that you're all accustomed to.
But in terms of the servicing of the accounts, OK, some of the other players from outside the industry are moving in, so it's meeting those three core buckets of needs to pay, to borrow and to store or protect your assets. That's moving into the digital realm, that's becoming more ...
Now the, the, the business models of the future Excuse me, one second.
Just move that, OK?
are really broken down into four categories in terms of characteristics, their customer centric, Operationally excellent and touch lists, real-time decision support, highly adaptive, obviously, globally networked. So these are not islands or walled gardens, OK? They have to have global reach. OK, so there are systems in China, there's some in the West than the US, but at the end of the day they cannot be walled off. OK, for business models of the future? For the next century, they have to be open and, and reach globally, OK, and then, obviously, they're agile and rapidly, innovative as well, OK. So it's really those four areas in terms of characteristics where things are going to change. So it's less vertical, if you look at it from that perspective, and it's more horizontal, OK, in terms of capabilities.
OK, what's going on here, OK. There we go. So, if we look at the disruption in the industry, you know, you've heard the term fintech.
Big tech, which are the e-commerce players, are platforms.
And then there's Tech thin, as well, to some degree where some of the e-commerce are moving more into offering technology services to support next generation digital for finance, OK?
But the point here is, is really the emerging markets and developed markets, OK, the banks or the traditional providers, in terms of return on equity and engagement with customers are focused on core strategy, around core transactions that have have lagged a bit further behind in terms of being disrupted. So this is commercial and transaction banking.
OK, investment banking to a certain extent and mortgage, OK, however, what's kinda, what's kinda left? The gate OK and where the disrupters are coming in detection, fintechs. And now it's two point four trillion dollars in revenue, 45% of the global revenue pool is in the shaded area that you're saying.
So obviously payments has left the barn, the horses escaped. It's no longer owned by the industry, OK? We all know that consumer finance, OK is, is, is quickly on its heels, OK, In both emerging markets and developed markets, and then slowly coming up behind his wealth management and the context of robo advisors, or augmented robo advisors, with traditional wealth management advisors, OK?
And a lot of the innovation, 70%, is spent from fintech's on innovation, where 35% is only spent from the traditional incumbents.
So that's how they're penetrating both developed markets and emerging markets, and disrupting the traditional industry thus far.
Where are they doing it? And how are they doing it? Well, if you look at this, this is a great chart source PWC. And I like this chart quite a bit. If you look at this in terms of, a, you know, a tree that's been cut down, are concentric rings, and you go very, very much to the center from networks.
Core infrastructure and core systems all the way out to the periphery, which is more consumer oriented finance.
You'll see, you know, the the core capabilities, the key capabilities, and what's being changed, OK, from the network perspective, OK, so the biggest provider has always been Swift OK, now that's being disrupted by Ripple as an example and then you have examples for infrastructure and core banking systems, Transformation functions in terms of regulatory compliance and reg tech, OK, so that's not always now in-house, OK, there's a lot of cloud based SaaS services that do regulatory compliance for know your customer, to share customer information.
If a customer has a financial account and multiple institutions, an anti money laundering, as an example. The next key grouping, though, is really 4 or 5 and 6, OK, which is around integration and then based on your business strategy and your monetization scheme?
Are you providing?
Other institutions, e-commerce, retail, what have you, your APIs, your core products so they can consume them and get customer data, and you enrich that and offer better products tailored to customer experience.
Or are you more inbound and you're integrating external big data. You're integrating APIs, OK. Or are you aggregating? So you could be doing some advertising, IE, like, AKA, Facebook, OK. You could have freemium, you can have licenses, you could have referrals. So 4 or 5 and 6 are key areas in terms of open platforms and transformation for the institution, and where it's being disrupted.
And then on the outside, like I mentioned, you have, you know, in certain segments of financial services payments. I mentioned them earlier, credit lending, and then wealth management, you have individual services that are starting to get disrupted on the on the periphery based on consumption.
The shift in the industry is really coming at two angles to the traditional bank, or the provider, it's coming from the gaffers, the big platform companies, on the left, and then you have, on the right, You have the syntax that are going after specific functions, payments, wealth management, but not typically holistically.
If it's a fintech, are, they going after more than one or maybe two functions OK, and, and you can see, they're coming in through the roof, which is mobile apps, payments. The Internet.
Wearables, OK, to get further into the traditional ownership of the Institution of financial services and the Holy grail is really going to be on converge data on the bottom the digital platform in terms of data and analytics. So you're able to share your data as a traditional financial institution.
And not so much look at this as a competitive picture, but integration both to non bank entrance on the left in terms of the big platforms. And then selectively where you have gaps as an institution to specific fintech's on the right.
If you look at this, a lot of surveys out. There are a lot of research.
The financial brand has put out some some good documents in terms of research. Consumers and the industry feel that, by 2022, the leading business models for financial services will not be the banks. It'll be digital e-commerce platforms, followed by consumer tech.
Fintech startups, Pay pal is still considered a fintech, it's the most well-known fintech in the world, OK, And now it's moved into credit and lending, so it's not just payments.
And then you have Challenger virtual Internet banks, which are the standalone startup banks that are Internet only, no branches, players from other industries ping on here in China.
Started as insurance, and now they're into healthcare and Banking, Orange Bank, or Telco Bank, that started as Telcos and they move into banking. Especially in Emerging Markets.
Orange, is moving into Africa now, offering a bank in Africa. And then you have incumbent banks that either launched their own digital bank as a subsidiary standard chartered with Mocs, as an example in Hong Kong, part of the virtual banking licenses here in this region. Or you have the incumbents.
And some of them are doing a pretty good job of improving their digital services to keep pace. So, city, HSBC, china Merchants Bank, are moving away more from a traditional provider to becoming really a digital bank, OK, to keep pace with some of the others. But you see the shift, OK. We're all working on the digital e-commerce platforms. We're working with consumer tech companies. Internet companies are mobile providers. And that's where our attention is going for financial services, moreso away from the traditional providers.
So the starting point for different differentiation is how you, you know, get table stakes in the game while it very much depends on your geography and your banking model or your financial services model. You know, are you, Are you targeted to consumers?
Are small businesses, small medium enterprises, mom and pop shops, or mid tier companies? Or, are you institutional, mid to large corporation?
But at the end of the day, OK, the starting point is enabling secure data exchange, OK, outside your fall walls, with other platforms. So you must have open infrastructure.
You must have open platforms securely through APIs so that you can grow table stakes and grow your strategy for further growth and fend off disruption. And that's the key point on this chart, based on the initiatives, and how far you'll go in terms of your strategy.
So now we kind of move into, you know, a little bit of specifics around weiwei on what we're doing, OK. So if you look at the Accelerators and digital financial technology, OK, it's really based on five buckets, three of them are pretty much supporting embedded, ubiquitously, financial services using AI digital, and mobile experience, OK?
And open APIs, which I've mentioned a number of times underneath the covers, OK, in terms of further security and protection, our perspective is, is adaptive security with biometrics, facial recognition.
And blockchain, we always for blockchain in our cloud based service, but we're not specializing in developing specific applications for the industry.
We are putting in blockchain to support transaction integrity and trust from the endpoint or the device through networks and into the clouds and an infrastructure for transaction protection.
So, it's really those three that are on the left side that are more focused in terms of industry, digital, acceleration. And then the other two are needed for security, and, and resiliency and stability.
Now, if you look at that, that same context applied a little bit broader, OK? To the models that I mentioned earlier, OK, there's the six models or seven models, six A and B for the incumbents. You'll see that, that kind of plays out. So, this is a, this is from a number of research point points that I've looked at, over the last couple of years, and, which model is using what?
Digital Accelerator, and how, OK, and how much in terms of their services high, medium, and low.
OK, and what really jumps off the page is Artificial Intelligence, analytics.
Cloud computing, which, which kind of makes sense, at least from a high to medium perspective, and a dynamic is shifting in financial services with banks and in other segments becoming more and more comfortable with, with cloud computing.
So, very, very, interesting that the, you know, the usage of what types of ...
of technology and how it's applied, is fairly universal, OK, across these six models.
OK, so that's telling everybody that, you know, the new players that are coming into this industry are using AI and analytics For customer experience, gleaned from payments, Information, credit, and Lending next to move further and further into this industry and penetrate it, OK. And then the incumbents are catching up to that, a little bit slower.
You look at kind of the comparison of fintech business models, OK? So some of them start out helping traditional providers in terms of developing capabilities that move into business incubators, or accelerators. On the right side, which is more of an external focus, they could spun off separate digital banks do to help with fintechs. It could have joint partnerships and offer new products. What's really proactive or innovative, you know.
Some of the bank standard chartered ventures, city ventures, they go into VC and private equity, OK, And invest in fintech portfolios, or in a certain market, some giant's, OK, that competing against each other very vigorously.
For example, in mortgages, they may cross sell each others products on one platform, so to fend off disruption. and to stop competing against each other For, you know, very low amounts of market penetration and expansion against each other. They joined forces on one platform and cross on mortgages. So that's pretty cool, I mean, and that's very innovative. And that's something that's kinda new. That's been kind of popping up. That's using fintech to kind of more of an external focus versus internal capability building.
In China, the picture is a little bit different. China, in my observation for years being here, anything that's financial technology oriented sometimes thrown in the fintech bucket or certainly tech.
OK, so many of the banks in China are partnering with the tele tech or telecom providers such as ourself, China unicom, China Mobile, or The internet companies, OK? And ant financial and 10%, OK, and some of the e-commerce giants.
So there's less individual partnering with individual fintech startups, versus telecom consumer tech, and E-commerce, to move things forward in terms of digital maturity. So, a little bit of a different dynamic I wanted to share with you, versus some of the banks in the West.
Our strategy, you know, kind of pulling this together in a pyramid, or the, what I call the power of three, Back to payments. one, credit and lending to, and then asset protection three. We see the penetration in our portfolio horizontally through mobile and digital financial services first, everything from the palm of your hand. But that doesn't work if you don't have open, open platforms and open infrastructure to connect with IOT and other solutions blockchain that are under the hood. And then what enables that, in terms of the plumbing or the glue is artificial intelligence, we have an AI system on a chip that we've built, OK. And that's from the Edge and our networks into our Clouds.
To support, You know, the, the triumvirate of financial services, digitally, whether it's on an e-commerce platform, a telco, or a lifestyle platform like Facebook. So not just traditional bank.
I mentioned some of these earlier. In the pyramid's as well is that financial accelerator picture OK what we're focusing on, what we have in our portfolio. OK, and the top of the pyramid once again is mobile centric IT architectures. We feel that this is going to be the battleground.
Certainly In the next 3 to 5 years until the mobile device, the smartphone is supplanted by having the capability on any interface to be consumed. But that's really a six G play, probably. OK, and that will come a bit further towards the end of the decade, perhaps, or a bit further beyond that. But the battleground right now, super apps and China that you're seeing, WeChat, super app system. And other geographies are picking this up. It's all through the smartphone.
So that's kinda where we're focusing, OK? We don't do it all, OK? So, we certainly are playing in the resource layer, infrastructure as a service. General platform as a service which is a layer above infrastructure as a service container's API. Gateways. We have a full stack artificial intelligence platform.
Hadoop and big data, massive parallel processing databases.
And then application paths, we start to move in to partnerships and and banking as a service, OK wallets we do have a mobile money wallet that we run through our Carrier Division.
And that is M pesa. We built on pace for safari com with Vodafone, going on, almost eight years ago.
So we're slowly moving up the stack in terms of capabilities, but you can see, based on the Color Code, White, Orange, and Green, where we're partnering, and then where it's specifically partner, which is really the traditional financial services products.
OK? And once again, like I said earlier, you need an open platform, OK?
So it's important to have that to tie your mobile device in terms of a liquid is financial services, for payments, credit lending, and deposits and asset protection across multiple service scenarios and platforms, OK.
So external microservices to healthcare, parking, public transport, OK, and that's got to integrate to partner apps and mobile apps as well. So, open platforms is key here, OK.
Talking very quickly on our, our AI solution, So, it is from, regardless of where the source is and, and the type of diverse data, OK? And we have a lot of power through our AI system, on a chip.
in the device at the Edge, big data Hadoop platform, massive parallel scaling databases that we offer, and then outputs can support a number of scenarios on the right side.
OK, and then if you look at this from a cloud, architecture perspective, we support the traditional architecture, the new digital core, through, through containers, and then ecosystem through, outside the traditional industry to e-commerce, retail, government as well.
So, that's our number one industry sector, is government, public sector to, through private, hybrid, and public cloud deployments, because we're all OpenStack. So, we offer ways to integrate to traditional infrastructure. So, banks, a lot of the big ones have IBM mainframes X, X, space systems, X 86, and unix, a lot, a lot of vertical silos.
And then, through open stack, we're able to kind of open that up, work across multiple hypervisor, is an, integrate to all of those backends, OK. Very quickly, on our AI stack, same point.
We integrate to TensorFlow, Pytorch Paddle Paddle by Baidu.
So are can architecture, OK, for neural networks, integrates across the board and we all We offer three different lines of chips.
RSM line for artificial intelligence. Blockchain is based on Hyperledger.
It's running in our public cloud in China and will soon follow outside China to other countries as we roll public cloud out further and we support a number of cross industry use cases with Hyperledger.
Right now we're also partners with R three for financial services. And then, finally, our engagement model, we work two-way. So we work and engaging with customers.
From the product perspective, if you're having infrastructure issues, to move into cloud choices, which we offer different deployment models to build out digital services. However, I like to spend this the other way and work with customers, in a sense, what are the digital services you want to grow in the next 3, 5, 10 years?
What are your cloud choices in terms of what you're working with, OK, whether it's single cloud, provider, or multi? And then, look at your infrastructure choice that's supporting those decisions for your cloud architecture, as well as your digital services you're building. OK, so, it goes from Service Level Architecture to projects, and That's all I have right now.
Thank you for listening, and we can open it up to any questions.
William, that that's terrific. What a comprehensive view of what's going on in the marketplace. And the fast pace of technological development will ask you to stop sharing your presentation at this time, So the audience can see you and I in their screen.
And, and while you're doing that.
I am going to I'm looking at the many questions that, have come in and the, and I start with, with one them.
Yeah, William, just go into the goto Webinar interface and then click the Stop button on the under Share under the Sharing tab, OK, Got it, you got it. Thank you. So we know one of the things that you talked about is that, which is a great quote from Drucker on the culture, eats strategy for breakfast. And I often say that, that is very true. And that any initiative that you have becomes just a side dish. And, that you've talked about, so many technological initiatives here. Tell us a little bit about your experience semi, you're a true practitioner of this. And, the front cultural perspective, as you're as you're implementing so, many of this changes in the financial sector, what do you see out there in terms of addressing culture? And, well, what maybe what would be your suggestion or for organizations that are implementing some of these changes in terms of successful approaches to addressing the cultural aspect of this change?
Well, I mean marrying it, I mean, the first thing and reaction, that comes to mind and marrying it to technology, culture, and technology. It's all about the data, OK, Data in institutions and enterprises is buried in silos. People get very, very protective, of their performance is tied to their revenue profit, it's tied to it.
But, what I've seen throughout my career is, wherever there is a, an opening of the data, sharing of the data more horizontally across business units, OK, for greater leaning of insights, OK, that everybody benefits from OK, that that is a key input into some culture change management, that I've seen in my career. OK, and sometimes, it takes, along those lines, a mandate that's compliance driven to drive that cultural change through the organization.
So, I've done a number of Basel II implementations for banks, OK. And a mandate coming coming down from above, that says, we're going to put Basel in, and that will open up data sharing, because people have to have greater insights, in terms of credit, market, and operational risk across the institution.
Well, then, all of a sudden, light bulbs going off and culture changes a bit.
Yeah, for sure. Another question that has come up throughout was related to why? What changes have your experience with the pandemic gummy that this, this field is accelerating its natural base which is pretty fast. And then the pandemic happen, what major shifts may have you observed and as a result of the pandemic.
Well, for us, it's accelerated and for me, it's validated what I laid down. When I first came on board here in 20 16, I immediately saw in our company the power that we have a smartphone. That's number two and number one, in the world, they saw in any given month, in terms of volume, we have AI system on a chip, OK?
And all of that power in your hand for financial services, OK, and I've been saying, we need to move more horizontally in terms of our strategy, OK?
In terms of a platform or basket of what we can provide will all of that technology powering mobile financial services on demand for any place anytime anywhere? And then boom, the pandemic hits and it's like everybody's locked up and how are they making transactions happen? Well from their mobile device? So, it's almost like a self self validating strategy that's kinda played out very, very well in our favor, OK?
And, and to a certain degree, also, you know, you know, in other glow, I don't wanna get into global, global politics and and, you know, US China, but but in that respect as well, too. You know, trade war, people still need to lead their lives, OK. They still need to buy, goods pay for stuff and, and live, OK.
And it's all through their mobile devices and the Internet connections, absolutely.
I have a question here from, let me cycle back to the question from Tanya or Keizer, and Antonio asks, Hello, Bill. Interesting perspective on the evolution of banking. His question is, which regulatory changes are required in order to realize to greater expansion? This vision of ubiquitous banking, what you see in the regulatory space that needs to be adjusted for ubiquitous banking to become a reality.
Yeah, and then that's a great question.
And that is the bottleneck, and that's preventing players that are, that are scaling enormously, for example, in China and Financial 10%, to moving into the West, as an example, or another example.
Telco banks are payment providers moving into emerging markets and wanting to get into deposits and credit and lending, OK, it's a very fine line, in many countries, where you start to move into other services, especially when you move into deposits and you're holding people's money, OK. In your institution, well, that typically triggers a regulator to say, Well, hold on, no, wait a minute, you're not a Telco anymore. You're not just enabling payments, are not just enabling credit and lending, just per se, but you're actually storing and protecting people's financial assets. You need to open up a bank license or charter.
Well, it's a different dynamic in different game, that so for it to become fully, fully ubiquitous and continue to cross across industry boundaries, we're going to have to have some cross industry standards put in place.
OK, in terms of specifically, that last Basti on, OK, that I mention of financial asset protection, I see it further loosening up with payments and credit and lending, but the regulators haven't given in yet in terms of asset protection when you're playing with people's financial livelihoods. Not everybody can depart. Can hold deposits.
Yeah, That, that's definitely a great challenge, and then to get that, that collaborations cross country, and on those standards, it can become quite a challenge. The next question here comes from ... Khan, and he's He's he makes a comment on that's interesting to see new players coming into E banking and are there efforts going on to connect, to connect regional banking and global banking and those specifically, what does the banking industry doing to counter this new players? So some of the more established players. What is that they're doing to kind of like, you know, keep these new entrance at bay? Are there strategies that you see out there where the the incumbents are trying to position themselves in a way and protect their tariffs, is, Is there even effective these days?
Well, I mean, back to that chart that I had that kind of show the distribution between fintech's versus fintechs and big tech versus traditional, OK? And, and what, what transactions or services the the incumbents are keeping versus versus the fintechs, OK? and the heavy volume, Institutional Banking Transaction banking mortgages, to some extent, are still being kept in the in the incumbents world, OK?
Where other services that are more commoditized, OK? And deposits are starting to become a bit commoditize, OK, but the problem with the E banks, the virtual banks, the challenger banks. Yeah, just because you get deposit share, and you start signing up customers doesn't mean you're profitable.
So invariably, they need to come up with new business models. Quote unquote new gimmicks are start to try to move into what the incumbents are offering, where they're making large amounts of revenue and profit.
But that's more heavy duty, global, transactional volume and fees associated with it, that the income that the new banks are just, they're just not there yet, OK, they can't, they can't tackle that So, that's a quandary. OK, so, yes, covert 19.
Contextually, as another example, is spurring on a lot of people to go to new Challenger Internet banks, because it's quicker to, to launch an account, get money, and start paying for stuff that you need, versus going down to a traditional bank branch and opening up a new account, so on and so forth. But, you know, then they have other problems. They have infrastructure stability problems. The new banks, the challenger banks can they scale?
Mean, the traditional players have mainframes that, the pump, know, thousands of lines of code and support of transaction, global volumes. So, there's a number of dynamics at play, OK.
So, I don't see the challenger banks disrupting the traditional industry and taking it over, but they're certainly becoming more, more suitable, in many cases, as as provided by this crisis with her.
Bill, thank you so much for sharing what's really the masterclass on, on the state of banking, and financial services, and technology, incredible depth, and the very interesting sites. We really appreciate you taking the time. It's real late there in China right now, and you're here with us. That's really appreciate it.
No problem. I enjoyed it, and thanks for having me. Thank you.
Thank you very much.
Ladies and gentlemen, this wraps up this segment of Financial services Live, at the top of the hour we're going to have. Elizabeth Thorne are joining us to discuss Project Management Best Practices related to Financial Services and certainly deployments of technology and many of the topics that the bill taught and discuss with us. So, as you exit the session there, May there will be a popup that you can fill out a survey with, respect to feed back to this session, and any other sessions we have in the next few days, and I look forward to, we're going to close this session, and we're going to restart and the top of the hour. So we look forward to seeing you there.
Vice President Corporate Strategy Planning | Global Banking and Financial Markets,
HUAWEI TECHNOLOGIES CO., LTD.
William (Bill) is Vice President of Corporate Strategy, Research and Planning – Banking, Financial Markets and IT Services at Huawei Technologies, Shenzhen, China. Bill’s responsibilities include the further development of Huawei’s Financial Services Industry Strategy with research and formulation of new solutions encompassing technology and business architectures, emerging technologies centered on AI/Anaytics, Blockchain, Mobile/Digital and IoT, and evolving business models in the FinTech / RegTech era across the financial services sector.
Bill is also Huawei’s representative and Co-Chair of the China Greater Bay Committee in the FinTech Association of Hong Kong, and a CTO and Executive Board Director for Saving Promise.
Prior to joining Huawei in 2016, Bill was a CIO and CTO for a Blockchain Strategy and Technology company in the US, and a Principal Advisor for a CIO Advisory Consulting firm. Bill has spent most of his 25 year career with IBM, KPMG, and Wells Fargo Bank, stationed in Europe, Americas, and Asia Pacific regions working holding various senior management roles such as CIO, CTO, Principal Technology Architect and Executive Architect. Bill holds multiple industry and professional certifications focused on full-scale enterprise architecture and technology in the Financial Services Industry.
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