EB1 - Transform your IT for Banking's Digital Revolution

Transform Your IT for Banking’s Digital Revolution Building the foundations for digital enablement Part 1 of 2

Why Read This E-book?

Retail banking’s digital revolution is gaining momentum fast. It is becoming increasingly obvious that maintaining the status quo is no longer an option if banks are to stay competitive. Some banks have already embraced the need for change and made big strides, while others are just starting out. All banks must accelerate their digital transformation or they risk being left behind. This first of two e-books reviews the compelling case for digital change and the crucial role interconnection has in that process. Whatever stage your bank is at, it’s worth reminding yourself of the fundamental issue at stake—your bank’s continued competitiveness. The second e-book focuses more on specific applications in retail banking—how interconnection can help in the four key areas of innovation, sustainability, data security and compliance, and differentiating the customer experience.

What’s in this e-book?

We hope that together, these resources will help you transform your IT for banking’s digital revolution.

2 © 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

The Crucial Role of Digital Enablement Digital enablement is a top priority.

31% of APAC consumers give access to personalised and advanced settings as their top driver for switching banks 1 300% The growth experienced by digital banks in the APAC region compared to traditional banks 2

The digital revolution is creating numerous social, economic and industry-related challenges, making it more important than ever for banks to transform their digital capabilities. Customer expectations ar e expanding Customers, and particularly younger customers, have new needs and growing expectations around highly personalised customer experiences. Banks must find new ways to offer more innovative ideas, products and services to meet these needs. Competition is getting fierce New, digital-led entrants are engaging customers and winning loyalty, piling pressure on established banks to innovate and find new revenue streams.

1. FICO, “Advancing new experiences in digital banking through enhanced features, a secure transaction environment and deep personalisation”, The Asian Banker Research, Feb 2021. 2. Fintech and Digital Banking 2025 Asia Pacific – 2nd edition IDC Feb 2021.

3

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

The Crucial Role of Digital Enablement Continued

90% of APAC bank chief risk officers are now seeing climate change as a top long-term emerging risk over the next 5 years that requires urgent attention in the next 12 months 3 >50% of transactions in Asian markets are made using digital wallets 4 88% of consumer-bank interactions are predicted to happen through smartphones by 2022, and 90% of banking interactions will take place via chatbots 5

Sustainability is a growing concern Increasing pressure from regulators, conscious consumers and the rise of ESG-focused investors is driving banks to operate more sustainably and ethically. Unless banks can find ways to improve their credentials, they are at significant risk of damaging their reputation and attractiveness. Customer behaviours are changing With the global pandemic forcing the closure of many bricks-and-mortar branches, retail banks are having to serve customers remotely. Even within the physical branches that remain, the model has changed to include a more self-service, digitally enabled approach. These changes have created an appetite for a more convenient self-service and always-on banking model and changed retail banking irrevocably. Banks need to offer more digital interactions or risk losing customers.

3. 11th EY and Institute of International Finance bank risk management survey, June 2021. 4. TechWire Asia “Where’s digital banking in Asia headed over the next 5 years”, April 2021. 5. “The World Branch Report 2019,” The Financial Brand, 2019.

4

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

Digital Transformation Must Be Accelerated

39% of financial executives name regulation as the overall biggest threat to their current business 6 80% of APAC bank CEOs expect to see the introduction of new or additional regulatory requirements on operational resilience 7 238% increase in cyberattacks against the financial sector in the three months February to April 2020 alone 8

The forces driving the demand for digital transformation aren’t going away. Pressures from customers, suppliers and competitors will continue to mount. The question is not if or when, but how quickly banks can make a digital transformation to secure their place in the market. Accelerated transformation must be balanced with greater resilience While banks must embrace digital transformation to protect their market position, they are also facing increasingly stringent regulation and a constant threat from data breaches and cyberattacks. As digital transformation rolls out, and digital interactions increase, so too does the volume of data and the security risks. Banks must match their transformation with greater resilience to safeguard themselves against the threat of breaches and regulatory non-compliance. Failure to do so can result in significant fines and reputational damage.

6. “Open banking investments in the UK,” Tink, 2019. 7. 11th EY and Institute of International Finance bank risk management survey, June 2021. 8. “Modern Bank Heists 3.0,” VMware Carbon Black, May 2020.

5

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

Transforming to a Digitally Enabled Bank Flexible IT provides the foundations for digital transformation. A flexible and dynamic IT infrastructure is a common feature of all of today’s digitally enabled banks. It is what lets banks innovate at such speed and deliver new digital experiences, while maintaining the necessary resilience and security.

Flexible IT enables banks to:

Collect customer insights in real time Providing better understanding of changing customer demands, to enable faster innovation and more personalised products and experiences. Quickly implement new digital technologies Integrating new technologies such as AI, ML and IoT, to support the development of differentiated, seamless digital experiences.

Exchange information securely and reliably Minimising the risk of cyberattacks and improving access to information for regulatory reporting, to reduce the risk of reputational damage and fines. Reduce the carbon footprint of IT Supporting the organisation’s sustainability practices and CSR goals to meet the needs of different stakeholder groups.

6

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

Digital Transformation’s Handbrake: Legacy IT Inflexible, centralised legacy IT hampers transformation.

While growing numbers of banks accept the need for transformation and have already embarked on the journey, most are still operating at least some legacy IT infrastructure. Typically, legacy IT infrastructure is too inflexible and centralised to support the scale and speed of digital transformation that retail banks need today.

7

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

How Legacy IT Slows Down Digital Transformation

The wider business implications of legacy IT on retail banks is significant.

Inability to gather real time customer data Legacy systems lock data in silos, hampering the understanding of customers’ needs and the ability to respond quickly. It’s one reason only 6% of banks believe they’re able to provide highly personalised outreach. 9 Constrained collaboration with dispersed teams Restricted communication limits the ability to innovate and get to market quickly to prevent more agile entrants from getting established. The infrequent release of new products is attributed to legacy IT systems by 43% of global banking executives. 10

Hampered integration of digital technology Poor integration of new technologies such as AI or ML limits the ability to generate new revenue streams, deliver new products and engage with customers in new ways. Poor digital experiences for customers Legacy IT delivers disjointed digital experiences with geographic limits, resulting in dissatisfied users, especially as omnichannel service and seamless experiences across communication methods are expected by 9 in 10 consumers. 11

9. “Innovation in Retail Banking,” Efma and Infosys Finacle, October 2018. 10. Capgemini Financial Services Analysis, 2020 COVID-19 Customer Survey. 11. “CX Transformation Benchmark,” NICE inContact, 2018.

8

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

How Legacy IT Slows Down Digital Transformation Continued

The wider business implications of legacy IT on retail banks is significant.

Restricted gathering of compliance information Legacy IT has only limited ability to gather the reliable communications and data that regulators demand. That increases the risk of fines, breaches and reputational damage. Over 42% of global bankers say legacy banking systems create regulatory risk. 12 Overloaded networks Inflexible legacy IT limits your ability to quickly scale up and down, creating overloads that reduce access to tools and business systems, affect connectivity with customers and ecosystem partners, and impacts on your market responsiveness.

Limited secure customer data exchange The less-than-secure data exchange typical of legacy IT creates risks for reputational damage, business disruption, data breach and ransom costs. Inefficient, environmentally unfriendly data centres Legacy IT systems have an unnecessarily big carbon footprint that can handicap your efforts to meet society’s growing demands for more sustainable practices. Excessive costs Running legacy IT reduces budgetary headroom for digital transformation and adds unnecessary cost across the business. Nearly 88% of financial services CIOs have had a digital project fail or been reduced in scope due to the costs of updating legacy IT. 13

12. Capgemini Financial Services Analysis, 2020 COVID-19 Customer Survey. 13. “CIO Survey,” Couchbase, 2018.

9

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

Interconnection: The Key to Accelerating Transformation How interconnection enables digital transformation

Retail banks can address many of their current IT challenges by using software-defined networking and interconnection services via interconnection hubs, such as those provided by Equinix. Interconnection enables the transition to a more dynamic, distributed IT architecture. It integrates people, clouds and data, facilitating secure delivery of high-quality digital experiences to customers around the world. Interconnection lets banks achieve the resilience and digital transformation they need to succeed.

10

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

How Retail Banks Benefit from Interconnection

Interconnection is the key to the agility, responsiveness and resilience banks must achieve to succeed in the face of the digital revolution.

With interconnection, data and analytics are located closer to customers Getting closer to customers means customer insights can be received in real time, improving business responsiveness. Information is exchanged in real time, via interconnection hubs Real time data exchange improves collaboration across the business and with partners, driving faster product/service innovation. Interconnection gives access to a cloud/IT ecosystem Ecosystem access lets you scale and deploy new digital technologies quickly to keep up with new digital market entrants. IT resources are located closer to customers Greater IT proximity improves digital experiences for customers, wherever they are.

New technology and platforms can be integrated with mission-critical legacy systems Being able to integrate new technologies alongside legacy IT minimises digital transformation disruption and reduces legacy IT migration costs. Quickly add new network locations and capacity The ability to add capacity lets you scale quickly to meet changing customer demands and address new challenges and opportunities. Enables secure, real time data exchange, both internally and externally Greater security reduces the risk of data breaches that erode consumer confidence. Information is shared on a single, global platform Gaining global visibility of audit data to support real time compliance reporting.

11

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

The digital revolution is changing the face of retail banking. It has never been more important to be sure you’re on top of developments and positioning your business for the future. ​ China Telecom (Europe) works closely with Equinix to enable retail banks like yours to fast-track their digital advantage. Together, we are ideally placed to help you meet the challenges of today’s digital revolution and transform with a more dynamic, flexible and sustainable IT infrastructure.​ China Telecom (Europe) and Equinix: Your Partners for Success

12

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

Platform Equinix®: Ensuring Your Success as a Digital Leader

Equinix is the world’s digital infrastructure company. Digital leaders in every sector harness Platform Equinix to bring together and interconnect the foundational infrastructure that powers their success. They enjoy the advantages of:​

Global data centre footprint: The Equinix network of 220+ International Business Exchange™ (IBX®) data centres across five continents provides a global footprint to support dispersed banking operations. Secure, scalable data exchange: Equinix IBX data centres serve as the interconnection hubs that allow secure and scalable data exchange between banks, their partners and their customers in controlled environments —reducing the costs and risks of transferring data over large physical distances.

Direct access to IT providers: Platform Equinix provides direct access to an ecosystem of 2,900+ cloud, network and SaaS providers via secure, private, high-bandwidth connections. Dynamic interconnection: Equinix Fabric™ Securely and dynamically connects distributed infrastructure and digital ecosystems on Platform Equinix via global, software-defined networking and interconnection, enabling banks to optimise their networks and accelerate the deployment of new resources. Rapid, digital edge deployments: Network Edge allows virtual network services to be deployed to new digital edge locations—closest to banks’ customers, users, clouds and networks—in minutes, and without capital investment.

13

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

China Telecom (Europe): A one-stop shop for China-Europe digital operations

China Telecom (Europe) provides a leading range of premium carrier and telecoms services, between Europe and China-APAC, that is complementary to the Equinix Data Centre solutions portfolio.

Whilst Equinix provides connections between their data centres, China Telecom (Europe) is able to provide excellent last-mile connectivity from these data centres to the rest of a customer’s business locations across China and the APAC region. We also provide premium internet access to China, including low latency connections to the stock exchanges in Shanghai and Hong Kong. Our strong European presence plus extensive terrestrial and submarine cables to China and APAC enable high-performance connections between China and Europe. All of our solutions are fully compliant with European and Chinese regulations, and we further support multinational businesses with our local language, technical and cultural skills.

We work closely with digital leaders in European and Chinese multinational businesses to help them understand the role of interconnection in supporting their bank’s digital strategy.

By leveraging the power of Platform Equinix, China Telecom (Europe) helps retail banks transform digitally and scale at the speed they need while realising the full potential of a distributed IT infrastructure.

14

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

Discover the power of interconnection in the second e-book of this mini series: ‘How interconnection can enable digital advantage: a practical guide’. Download e-book part 2

Questions? chinatelecomeurope.com/contact-us Equinix.com/Contact-Us

15

© 2021 Equinix, Inc. & China Telecom (Europe) Ltd.

Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15

www.chinatelecomeurope.com

Powered by