Banking on a Future of Things

Traditional banking has been upended by everything from mobile apps to fast-charging fintech competitors, but in today’s uncertain world, financial service institutions are needed to play a pivotal role in economic recovery. After all, in Money Changes Everything: How Finance Made Civilization Possible, financial historian William N Goetzmann argues that finance is what has driven progress and not vice versa. To play this critical role, the financial services industry needs to accelerate its technological transformation activities. Then, it can support other industries to recover, helping them unleash new value and transform.

In the past few decades, we’ve seen mainstream technologies transition from personal computers, to the internet and then to mobile internet. As the Internet of Things (IoT) develops, connections will expand beyond people to things, exponentially increasing the total number of connections. According to Huawei’s Global Industry Vision whitepaper 2019, there were 16 billion connections in 2015, but by 2025, this number is projected to grow to 100 billion.

In this process, the internet will evolve from consumer internet to industrial internet. The consumer internet has enriched our communication and lives, but the industrial internet will go a step further by connecting supply chains as well as internal and external business activities and data. This will reshape the business value chain in traditional industries. The result will be a world where everything, both people and things, are intelligently connected, allowing new concepts like intelligent twins to emerge.

In this rapidly developing digital economy, a variety of new services (such as online trading, digital logistics, mobile payments and remote communications) have emerged and are expanding their impact on national economies and people’s lives. In fact, based on research by IDC, by 2025, the global digital economy is expected to account for 58 per cent of the total gross domestic product.

There are many areas of digital transformation for financial services companies, but some of the most important provide a foundation for the evolving industrial internet. The most important of these are:

• Always on: New information and communications technology has enabled real-time interaction and behaviour interconnection. Mobile devices are the optimal platform to deliver innovative customer experiences while also facilitating internal enterprise collaboration. This has given rise to new, innovative service models.

• Super intelligence: 5G enables intelligence on devices, edges and clouds, supporting distributed all-scenario artificial intelligence and smart contracts anywhere. Ubiquitous intelligence powers intelligent and real-time decision-making models.

• Distributed collaboration: We are now seeing multi-platform, multi-node and distributed collaboration. This bottom-up model that engages a variety of stakeholders will unleash business potential.

What has not yet been generally deployed is the final piece needed to enable the industrial internet:

• Everything intelligently connected: In the digital world where everything is intelligently connected, more than 100 billion IoT devices will stimulate new business scenarios. Unlike traditional banking that only served people, the Bank of Things will also support services for smart things, driving the rapid development of industrial finance.

With all of these in place, exciting new business areas will emerge for the financial services industry by leveraging and supporting new scenarios. From autonomous driving to intelligent coal mines and warehousing, the finance sector will need to be ready to support new business models, while also being the driver for innovation.

In this process, three capabilities are critical.

1. Agility at the core. Financial institutions must perceive and respond to changes faster by adopting technological, business and organisational agility.

2. New risk control concepts and models. When everything is intelligently connected with real-time interaction, risk control needs to be data-based, real-time and intelligent.

3. Robust ecosystem. Distributed collaboration is creating new scenarios. Therefore, a single financial institution cannot take on the entire range of scenarios. Instead, each entity should collaborate with other companies to build an open and integrated cross-industry ecosystem.

Technology companies can support the transformation of the financial services industry in a number of ways, but cloud technologies will be one of the key solutions to all of these needs. Cloud technologies will be able to support agile innovation and data intelligence. They are essential for connecting everything and cross-scenario innovation. And finally, clouds will help connect industry ecosystems and provide untethered services.

The opportunities emerging from the development of the industrial internet are endless; in the financial services industry, ‘subject credit’ is shifting to ‘subject and transaction credit’. As industries go digital, they need to obtain objective and reliable transaction data whenever they need it and in real time. Only if base data assets can be transferred securely can industries build new models and unlock the value of digitalisation.

To this end, Huawei offers full-stack cloud, device and edge capabilities; we have played an active role in the digitalisation of various industries. Huawei looks forward to supporting financial institutions by drawing on these capabilities and our experience. On its platforms, Huawei can aggregate more SaaS offerings, strengthen the ecosystem, and work with financial institutions to build new financial services in all scenarios, creating new value together.