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Using mobile money to foster financial inclusion

By Huawei As mobile devices increase in popularity, individuals are embracing digital transformation more rapidly than most enterprises. People are changing their habits, looking for new ways handling financial transactions, such as investing in stocks and managing portfolios. However, financial services are not as common in some developing countries. In Ghana, for instance, many are ‘unbanked’, meaning they don’t have any proper bank account and are simply excluded from the financial system. The Bank of Ghana estimates that some seven million people are unbanked, representing 22 per cent of the country’s population. But while these people may not have access to appropriate financial services, but many of them have access to the internet, with online penetration in Ghana standing at around 64 per cent. High mobile penetration leads to a new banking model The country also has the highest mobile penetration in West Africa and already outperforms many of its regional peers. By the end of 2019, mobile adoption stood at 55 per cent, higher than the regional average of 44.8 per cent. This is one of the reasons why Ghana is leading the drive to expand financial inclusion by leveraging digital solutions. The government has recognised the role that financial inclusion plays in economic development and poverty alleviation. Measures include renewing regulations under the guidance of the World Bank to allow non-financial enterprise to provide such services. Ghana Commercial Bank (GCB) took the initiative to implement its strategy in 2018 using Huawei’s G-Money solution, in a move to stay ahead in the increasing fierce competition among banks and telecom carriers. Mobile money is a bank business The solution is an extension of a successful scheme in China, where mobile payment has become a key driver that brings banks to take a more proactive position in providing new services. While developing various solutions to fit their customers, these lenders share the same ideology: mobile money services should be a bank business. This is also reflected by GCB. As the country’s largest commercial bank, it looked to develop a mobile money platform that could be used for easy cross-platform payments, with a broader range of services – building a mobile payment ecosystem to give more flexibility to customers. The lender, which has served for more than six decades and already had 200 branches, was committing to include more agents and merchants in its mobile money network to make it reachable by more people. It also upgraded point of service terminals and ATMs, making them capable of supporting mobile money services. The updated G-Money mobile money platform was launched in December 2019, which has since helped GCB to expand its mobile services. The bank gained 60,000 new customers in a single month after the launch, representing a 900 per cent growth. By April this year, GCB had more than 700,000 mobile money users. G-Money facilitates a new service ecosystem On the technology front, Huawei built G-Money with an open cloud and micro-service architecture, which allows elastic scaling and continuous optimisation of service processes, ultimately laying a solid foundation for the digital transformation of all banking services. The strategy continues to expand with several initiatives, with mobile wallet as a pivot. The G-Money platform gives GCB a better competitive edge against network carriers in Ghana, while also facilitating interbank settlements through the Ghana’s central bank as it connects to all banks in the country. The next stage will be a QR code-based mobile payment system, along with smart operations. By using open Application Programming Interfaces (APIs) ,the platform can support pre-sales and after-sales for local merchants, allowing service providers from different industries to take part in an ecosystem. Financial inclusiveness as the ultimate goal Banks can now offer more products and services – ranging from overdrafts and small loans, to insurance and more – to customers via mobile finance. Ultimately, more people will be properly included in the financial system with adequate protections. Financial inclusiveness is a goal for Huawei, as its mobile money solutions have been commercially deployed in 19 countries, serving over 206 million users – accounting for 22 per cent of registered mobile money accounts in emerging markets.
How to build smarter bank branches

By Huawei Industry Experts The Coronavirus has accelerated the need for mobile and self-service banking, with traditional branches seeing a fall in customer traffic, meaning their customer acquisition has also significantly declined. Though it may be tempting to conclude that this will lead to bank branches becoming obsolete, that is not the case. Instead, the development of new technologies – such as artificial intelligence (AI) and 5G – will empower bank outlets by allowing them to become intelligent, being assigned new functions and different objectives. Despite the rapid development of mobile services, branches remain integral in high-value fields, from opening accounts to wealth management and private banking. In these scenarios, customers typically prefer face-to-face communication. Furthermore, branches remain particularly important for brand promotion, as well as delivering an optimal service experience. Next generation smart bank branches will involve multiple intelligent, self-service, and remote video devices to provide promotion and training services — improving the customer experience, while reducing labor costs for banks. They will also be lightweight; with the limited physical space they take up being used effectively. A final, but important, key feature of smart branches will be mobility. 5G wireless connections will be used to provide stable and massive data services, achieving widespread banking services coverage. AI + 5G + cloud = a brand new offline experience Most bank branches in China have been intelligently reconstructed, with service personnel able to identify and categorise customers, so more are now directed to smart equipment to handle services, meaning fewer are led to the counter. Meanwhile, service personnel are available to offer guidance to customers at any time they need. As well as shortening customer waiting times, online e-bank services also deliver a brand-new experience. Huawei believes that the application of new technologies such as AI, 5G and cloud can enrich a bank’s existing network design, provide a full-journey network experience for customers, and optimise network management modes. When a customer walks into an intelligent bank branch, service personnel are able to immediately identify the individual customer using a smart device, as an interactive large screen displays the financial products that the customer has browsed on their app. For offline financial management assessment or account checking services, an immersive experience can be offered through augmented reality (AR) or virtual reality (VR) glasses. Customers don’t need to go to a specific branch to handle complex business services; service personnel can contact experts at headquarters, who are ready to answer customer questions in real-time. Elsewhere, the temperature, humidity, and even the lighting of the building can be automatically adjusted in accordance with crowd density and weather conditions. When customers go to other cities and visit bank branches, their data will be synchronised nationwide. Different branches can continuously optimise the customer route design based on historical service analysis, delivering unique services to each customer. Huawei’s smart bank branch solution Huawei uses AI, big data and cloud platforms to build a unified online and offline precision marketing platform. With full-stack AI capabilities, it can provide intelligent customer services online and cooperate with partners to provide AI robots that guide customers in branches, greatly improving the customer experience. And while intelligent cameras accurately identify VIP bank customers on arrival, big data analytics of the precision marketing platform hosted on HUAWEI CLOUD implements personalised service recommendations and precision marketing. In addition, Huawei’s television product, Huawei Vision, is used to implement precision marketing and ad pushes, efficiently identifying customer requirements. In terms of service handling at branches, AI automatic identification technologies such as Optical Character Recognition speed up service handling and build a comprehensive smart marketing scenario. In a smart branch of a Chinese multi-national bank in Beijing, Huawei’s Atlas AI small cells provide functions such as VIP customer identification and movement track analysis, boosting the marketing capability of the branch. With the development of smart branches and the application of multimedia devices, mobile devices, and high definition video, high bandwidth capacity becomes essential. Huawei uses 5G technology to provide large-bandwidth network coverage and uses SD-WAN intelligent traffic steering technology to enable intelligent selection of private lines, ensuring maximal bandwidth for the key services of bank branches. Compared with traditional Wi-Fi networks, a Wi-Fi 6 network developed based on Huawei’s 5G technology significantly improves network bandwidth, coverage and stability — meeting the wireless requirements of multimedia devices such as tablets as well as HD videos. Huawei’s 5G and SD-WAN products have been successfully applied to the construction of 5G intelligent network points of one of the world’s three largest lenders, providing customers with a vastly improved network experience. Compared with traditional branches, there is a huge amount of both data and IT devices in a smart branch, putting immense pressure on IT operations and management. Huawei’s FusionCube solution integrates a branch’s IT devices – such as servers, storage devices, and switches – providing functions such as plug-and-play, remote attendance, and edge-cloud synergy, meeting integrated IT device management requirements. Meanwhile, the Intelligent Operation Center platform, jointly developed by Huawei and its partners, implements unified management of operations for all branch devices at the bank’s headquarters. The Internet of Things (IoT) asset management system that is deployed, provides full lifecycle management, from asset distribution and monitoring, to asset stocktaking and recycling. Huawei is working with a multi-national Chinese bank in Hong Kong test its IoT asset management system, with the intention of helping the bank build smart branches. Security protection is critical, so smart security protection is indispensable for branch construction. With advanced AI chips and open camera operating systems, Huawei provides a full series of video cloud analysis platforms, to implement surveillance functions such as abnormal behaviour analysis, mask identification and detection of loitering, trailing, theft, accidents and fires. Huawei’s solutions also offer internal control detection, such as heat maps inside a branch, monitoring when employees leave the building, and attendance and access control. The future bank branch: a one-stop financial service centre To gain a solid foothold in the market, amid intense competition, commercial banks must More…
CHEN: How to connect people with the future of finance

By Vincent Chen In the banking industry, the stable running of IT systems is imperative. This is what drove the industry to begin IT construction relatively early and what continues to drive it to make significant investments each and every year. However, the IT architecture of the banking industry – particularly the core system – has stood still for decades. This year in particular, it has become clear that banks need to change their architecture. Mobile internet technologies – such as 4G and 5G – and intelligent terminals are now popular. Open source technologies based on cloud computing are developing rapidly, and the banking habits of customers are changing fast. In this environment, traditional bank services – from deposits and loans to remittances – are quickly evolving to include payment and investment services. Meanwhile, FinTechs have used new technologies such as artificial intelligence (AI), blockchain, cloud and big data to quickly gain a large number of customers, particularly Millennials, with enhanced business competitiveness. In China, alongside FinTech companies, internet giants such as Alibaba and Tencent already occupy a majority of customers’ portals through their own business ecosystems, including almost all payment scenarios. These enterprises also encroach on traditional financial service scenarios, posing a huge threat to traditional banks. Digital banking trend gains momentum For banks, as markets continue to become increasingly open, financial services are disintermediating, with traditional interest margins shrinking. An increasing number of newcomers to the market have also exacerbated the decline of intermediate businesses. In these circumstances, traditional banks must not become complacent. Instead, they must digitally transform. To implement digital transformation, traditional banks require new technologies to reshape businesses and upgrade core systems, reduce operation costs, improve risk control capabilities, simplify methods to acquire customers, and optimise the customer experience, as well as enter the long-tail market, which has yet to be penetrated. Meanwhile, through service transformation and the upgrade of core service systems, the lifecycle of financial products is significantly shortened, with faster service innovation required. With such transformation, banks can also integrate into – or build – more open banking ecosystems, transforming into a Banking-as-a-Service platform that connects various fields, including government, tourism, healthcare and transportation. This enables banking services to be accessed anytime, anywhere, creating new digital banks. It’s not the case that traditional banks are simply trying to transform into digital banks; they’re looking to build entirely new digital banks instead. FinTech companies have identified huge potential in this area of the banking market, and their aim is essentially to become technology giants with a banking license. The construction of digital banks needs a suitable market environment, which should feature adequate network and smartphone coverage, low loan coverage for small to medium-sized enterprises (SMEs) – which increases the need for digital banking platforms – and FinTech with specific functions. In terms of services, the process requires scenario-based products, fast market entry, simpler interactions with customers, cooperation in the ecosystem, always-online services — and strong connectivity. In terms of technology, digital banks require high performance, high scalability and high availability. They also need open source technologies, distributed architecture, a micro-service design, and a continuous integration and continuous delivery model. Unlike traditional systems, a new-look digital core banking system must be constructed using new technologies, with support for digital banking services. There are various ways to construct this new digital core in different countries and regions, and for different banks at different stages, but dual-mode architecture is the most common strategy. The mainstream architecture of bank digitisation The core systems that banks have developed over several years are supported by traditional, stable IT architecture and can’t simply be disregarded or rebuilt within a short period of time. However, banks do need new architecture to support applications and services such as mobile payments, micro-finance and e-commerce in open banking environments. Such applications can’t simply be built and tacked onto the core, stable systems of traditional banks, which are designed for deposit, loan, and remittance services. Instead, most of the new services are cloud-native applications, developed based on new technologies that are open and agile. A dual-mode architecture therefore consists of two types of architecture: stable and agile. This new type of agile architecture is generally open, distributed, or cloud-based. Chinese financial institutions have been progressing relatively fast over the last 10 years, not only as a result of the natural evolution of their own business development, but also in the face of competition from domestic internet companies. China is also arguably the most developed e-commerce market in the world. During annual shopping events, banks – whether traditional or more innovative – need to be able to process massive amounts of online transactions in a very short timeframe. This has driven banks to update their entire technical architecture, to support fast and elastic resource deployment, as well as quick iteration of applications. Changes in expectations regarding user experience are also driving traditional banks to quickly develop new applications, such as marketing applications (for flash sales and similar) and non-traditional financial service applications (for life and e-commerce services), with the aim of attracting new, younger customers. In this context, traditional banks need to quickly build a new digital core based on open and distributed technologies, to better support the rapid development of next generation applications, improve the customer experience and reduce the overall IT operations and maintenance cost per account. This new digital core must also support the construction of a next generation data platform, to enable banks to quickly reconstruct the data plane – with big data, data lakes and data factories – as well as support the rapid development and deployment of innovative banking services. Meanwhile, banks still need to maintain the stability of their traditional core, to continue to provide traditional banking services, such as processing savings and general ledgers. As these services have been running stably on traditional platforms for years, any benefits or incentives for changing these services aren’t particularly significant. So, although many banks are migrating service applications from the More…

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