Track the tech, benchmark the best, and remember the customer is king

Gavin Allen: So, what does digitalization mean for the banking industry right now?

KT Chen: Customer behavior is changing and everybody is using mobile. Customers have come to expect all service providers to use technology to serve them.

For example, people are getting used to using mobile QR codes for payments, because it's secure and convenient. So if customers are already used to digital technology and a good digital experience, then, as a bank, you have to deliver that kind of experience to them.

Gavin Allen: So, the customer is king or queen, and the banks, particularly legacy banks, have to really respond to that. Is that the key digital challenge for them?

KT Chen: Exactly. And customers can switch between different apps. So, if any Internet company like WeChat, a popular social media platform in China, gets into the payment business, customers quickly get used to using it. This disrupts the payment market.

Gavin Allen: Are the established legacy banks changing fast enough to adapt to that?

KT Chen: Banks are conservative because they are highly regulated. They usually don't change quickly.

Gavin Allen: What can Huawei offer in terms of services to help banks make that transformation?

KT Chen: Huawei has significantly invested in networking, storage, infrastructure, cloud-native; architecture, and mobile. For mobile usage, China is probably the leading market in the world.

China Merchants Bank, where I used to work, was pretty much the first bank to 100% adopt the mobile application. Forget the bank card, forget the cash, and focus on the mobile. Do everything mobile first. Recently, they got rid of the legacy system and migrated the total banking application into cloud-native architecture.  

Gavin Allen: It's quite daunting. I mean, if you're a legacy bank, it can be quite a daunting experience to adapt everything. 

KT Chen: Usually, you have failed and learned lessons when you compete with big tech companies. You have to have different sorts of philosophy and technology, or you even have to change yourself.

For example, if the customer uses a mobile phone with a small screen, and you want it to be easy for a customer to use, you have to put all your products and services on that mobile screen. That means it's not just a technology issue. It is also an organizational issue. You have to have somebody take care of the mobile homepage, run mobile brand campaigns, and so on.

Gavin Allen: Are you seeing a willingness to do that? Are you seeing legacy banks really putting technology at the heart of what they're doing, rather than tacking it on as an extra?

KT Chen: In the past three to four years, we have seen banks moving in that direction. It depends on the bank. Every market has its pressures and its special characteristics. But we can see the trend clearly.

I think Huawei can offer a lot of experience to share with the customer when they undergo digital transformation. We can provide experience and advice, plus robust infrastructure to help the customer smoothly transition to modern architecture and applications, so their business adapts better to the digital era.

Gavin Allen: What impact do you think AI could have on banking?

KT Chen: AI is really changing consumer behavior. For example, everyone uses ChatGPT.

Gavin Allen: Even me.

KT Chen: Exactly. So, you can feel AI coming. In financial services, you have to follow the technology, you have to understand your customers' behavior, right? If they are changing…

Gavin Allen: But do you have to wait until the customer changes, or should you be anticipating change?

KT Chen: You've got to prepare for it. You can try to build, but you need to prepare the data because the banks have so much of it. We have hard-copy documents,  dialogue with the customer. All kinds of things. We’ll need high-quality data in the future to build our AI models. Nobody can escape this change.

Gavin Allen: Finally, what is your message to banks that don't fully embrace digital change?

KT Chen: I would say you always have to benchmark against the leading bank, the leading tech company, and cutting-edge technology, at all times. And if you are working in banking as a technology head, you better watch out for new technology and keep an eye on what is changing.

Usually, technology people in banking don't care so much about the customer. They are in the back office. But right now, I would suggest that everybody watch what is changing the world, especially the technology that is changing your customers.