Interview: Jason Cao on Huawei’s fintech frontier and digital transformation innovation
Given its position as one of the largest multinational technology companies in the world, Huawei offers a compelling blueprint for banks and other industry contenders seeking to action digital transformation against the headwinds of entrenched legacy systems.
Jason Cao has led Huawei Digital Finance BU since 2022
This strategic initiative is driven by Huawei Digital Finance BU, which has offered a suite of digital transformation tools specifically tailored to the needs of the financial industry since its inception in 2011.
Having served over 3,700 financial institutions to date, including 53 of the world’s top 100 banks, the division’s advancements have been led by Huawei’s constant innovation in ICT.
In conversation with FinTech Futures at GITEX Global 2024, one of the largest technology events in the Middle East held annually in Dubai, Jason Cao, CEO of Huawei Digital Finance BU, details the rise of new-age security threats, how consumer preferences are rapidly shifting worldwide, and how these challenges have sparked a renewed push towards more agile, resilient and consumer-first platforms among the industry.
Modernising legacy systems
“We are currently in a highly challenging time,” Cao comments, citing how the heightened expectations of consumers have drawn banks’ attention increasingly towards digital tools.
“Discussing customer experience is simple, but meeting these expectations is far from easy. Today’s generations, educated by the internet and fintech, expect all financial organisations to provide the same level of service.”
Detailing these challenges, Cao confirms that although banks, and specifically incumbent banks, hold the ambition to embrace new technologies, bulky legacy systems continue to weigh down their efforts.
“The world faces similar challenges — using the latest technology while managing extensive legacy systems to meet customers’ expectations.”
He notes that while this is a recurring hurdle across many markets, in Huawei’s native market, Chinese banks counting millions of customers have routinely “transformed their extensive, complex and long-standing platforms into new architectures” with ease.
“China is the only country that has achieved this transformation and gained such experience”, he continues, sharing that this experience has also attracted the attention of “a leading bank from Thailand”, which recently sought out Huawei’s expertise with the aim of replicating the same success.
China: a global blueprint for digital banking
As one of the country’s largest and most prominent companies, Huawei is widely recognised as a major advocate of China’s financial technological promise, and has pioneered efforts to extend that promise globally, currently servicing financial institutions across more than 80 countries worldwide.
For Cao, an understanding of where the industry is going, and how digital transformation dynamics will need to respond to such a direction, can be realised in reflecting upon China’s own technology journey to date.
He points to the advancements made by WeChat Pay, a mobile payment service integrated with one of China’s most popular social media platforms since 2013, as a trailblazer to the general ascent of super-apps, as an example.
WeChat’s consolidation of multiple functions within a single interface and subsequent market success has inspired banks to further engage the concept of the super-app, Cao continues.
“China is the first country to succeed with mobile payments,” he comments. “And this mobile payment will drive the whole finance industry to a different level, as payments are the most frequently used function.”
Cao predicts the increasing prevalence of mobile payments driving “significant changes to the business model” of banks.
“They have to upgrade the technology, platform, culture, organisation, talent – everything,” Cao emphasises. “That’s why China has faced these challenges earlier than other places in the world.”
“In my view, no matter where you are — Asia, Europe, Latin America, Africa, or the Middle East — we are all moving in the same direction. The only difference is the stage of development we are in.”
Transform and innovate
Developing these ideas, Cao explains how financial institutions must satisfy three primary objectives for digital transformation to succeed: maintain daily operations, support transformation and retain a competitive edge, and in certain instances, upend traditional models to keep abreast with the blossoming fintech sector.
Many financial services firms are switching from mainframe architecture to cloud architecture
In practice, Cao says this means maintaining a focus in two directions: being able to deliver services across all functions with constant availability, while simultaneously pursuing innovation and transformative systems to keep those operations new and fresh.
Yet while requirements do compare across institutions, Cao cites increasing transaction volumes alongside escalating cybersecurity threats as the key challenges of operating a bank in the present day.
“Even five or 10 years ago, running a bank was very different. New threats, new demands, and increasing complexity have significantly changed the landscape.”
According to Cao, this greater need for operational agility has given rise to traditional banking infrastructures, including mainframes, falling out of favour to hybrid multi-cloud solutions.
“In the past, a single large mainframe was enough. But today, we are transitioning from the mainframe architecture to a cloud architecture. When one mainframe turns into thousands, complexity increases. This shift requires a new set of capabilities on the banking side.”
Four zeros
Huawei Digital Finance BU delivers this capability through its Four Zeros solution framework: Zero Wait, Zero Trust, Zero Downtime and Zero Touch.
Zero Wait describes a bank’s ability to process transactions in real time, without the possibility of delay or failure.
Referencing the Double 11 shopping festival that sweeps across China each November, when bank transactions typically surge 100-times the usual rate, Cao expresses the necessity of this demand being met, commenting: “Transactions must be completed in real-time. Any latency could result in transaction failure.”
Based on the Zero Trust security model, Huawei builds a multi-layer in-depth protection solution through firewall, computing, storage, network, and cloud collaboration, minimising the interruption caused by ransomware and data leakage.
Zero Downtime ensures that “whatever the peak time, the service always on”, Cao explains. This is achieved through a mix of production, disaster recovery and active-active system configurations, which together can lower the recovery point objective (RPO) to zero and reduce the recovery time objective (RTO) from four hours to under two minutes.
Zero Touch, on the other hand, is a concept designed to minimise the need for human intervention in network operations.
Here, Huawei applies an even wider combination of cloud, application, network and device solutions in one, with the identification of network-wide faults slashed from days to under five minutes. This ability has been strengthened by the incorporation of AI to detect and rectify system outages.
Cao goes on to discuss the growing importance of Huawei’s partner network in delivering this framework, stating: “No single technology or party can solve the issue, which is why we built this global ecosystem.”
Regarding the criteria of its partner selection process, he says Huawei designates partners into two groups: global partners and regional partners.
“Firstly, having a strong capability in a specific area is essential for our partners. The second criterion is ambition — they should be eager to expand through collaborations. Equally important is their willingness to work with Huawei.”
The growth of Huawei Digital Finance BU has been facilitated, as Cao explains, through a wide library of partner solutions, including digital interactions, data operations and, most notably core banking.
Looking even further ahead, Cao defines the future of digital finance where real-time data and cloud technologies, paired with the latest innovations in AI, drive financial institutions to new heights of service, where all customer interactions are bolstered through strong security measures.
With a commitment to collaboration backed by a robust partner ecosystem, Huawei is poised to lead the latest charge in financial services innovation, demonstrating how legacy systems need not be barriers but catalysts for change, and why this comprehensive approach could lead the industry into a more dynamic, secure and responsive future.
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