The Challenge: Overhauling Legacy Systems

The rapid evolution of financial technology has left many traditional banking systems needing to catch up, exposing a myriad of operational vulnerabilities. 

Concurrently, the overhaul process needs to factor in the new government regulations, namely,

• Cybersecurity Law (2017): Introduced data localization for critical information infrastructure operators, mandating storage of personal and vital data within China.
• Data Security Law (2021): Established a comprehensive data security framework with strict controls on data processing and data transfer critical to national security.
• Personal Information Protection Law (2021): China’s first dedicated personal data protection law, setting standards for personal data processing and transfer by financial institutions.

The bank's previous solution providers had a long-standing reputation and were well-recognized in the market for their stability and established presence. However, these systems, developed during an earlier era of technology, faced limitations in keeping pace with the rapid advancements in the financial sector. While reliable, the infrastructure did not offer the agility and modernization required for the bank's evolving operational needs. The discrepancy shared below highlighted the necessity for an update to more contemporary, adaptable solutions that could seamlessly integrate with new technologies and regulatory environments.

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1. Data Silos

The bank’s antiquated systems hindered efficient data aggregation and analysis across various departments. This fragmentation led to data silos, where crucial information remained trapped within departmental confines, obstructing a holistic view of operations and customer needs.

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2. Inadaptability to Technological Advances

The legacy systems showed a marked inability to integrate cutting-edge technologies such as artificial intelligence (AI) and machine learning (ML). This resistance to innovation meant that the bank could not leverage these tools for enhanced predictive analytics and adaptive threat response.

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3. Scalability Challenges the Limits of Outdated Technology

Traditional systems were hamstrung by the need for more scalability and flexibility, primarily due to their reliance on outdated technologies and programming languages. This rigidity made it challenging to integrate new models and strategies and adapt to the growing demands of a global customer base.

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4. Not Meeting Real-Time Processing

The bank’s legacy systems were not designed for the speed required by modern banking, leading to delays in transaction processing and fraud detection response times. In an era where milliseconds can make a difference, the need for real-time processing capabilities has become starkly evident.

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5. Complexity in Navigating China’s Regulatory Compliance

Navigating China’s stringent cybersecurity and data protection laws added another layer of complexity to the bank’s operations. With laws mandating the following, the bank had to align its technological overhaul with these regulatory stipulations to ensure compliance and operational continuity.

• Data Localization Requirements: Chinese laws necessitate storing specific data types within the country, favoring local anti-money laundering (AML) and fraud detection solutions for financial institutions.
• CIIO Designation: Financial entities, often deemed CIIOs, are subject to stringent cybersecurity standards, influencing their choice of technology providers.
• Cross-Border Data Transfer Regulation: Transferring data outside China might require official approval, affecting the use of international solution providers.
• AML Practices: Guidelines from regulatory bodies on AML necessitate robust monitoring and reporting systems, impacting technology adoption.
• Local Provider Preference: Regulatory intricacies and understanding of the local market can give an edge to local solution providers.
• Dynamic Regulatory Framework: The evolving nature of China’s data and financial regulations requires ongoing vigilance and local expertise for compliance.

As the regulatory landscape in China continues to evolve, financial institutions like this bank must remain vigilant and adaptable, ensuring their systems are compliant and capable of meeting the challenges of an increasingly digital world. The bank's systemic overhaul was not just a response to internal inefficiencies but also a strategic move to align with the country's regulatory environment and maintain its competitive edge in the market.

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Our Solution: Building the Numerical Intelligence Core Platform

1. Advanced Data Integration and Real-Time Analytics

The transformation of the bank's system extends beyond mere upgrades to a complete reinvention of data processing capabilities. By transitioning to a cloud-based storage solution, the bank is now empowered to perform real-time data analysis, making swift and informed decisions. The integration of AI and ML-powered analytics tools enables the detection of intricate patterns, pinpointing potential fraudulent activities with a precision unattainable by the previous systems. These cloud-based risk decision platforms are pivotal in fostering trust and enhancing operational security. They give the bank the agility to adjust to emerging risk patterns rapidly, ensuring it remains at the cutting edge of financial operation resilience. 

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2. Enhanced Risk Identification and Predictive Analysis

The bank has significantly amplified its risk identification performance, achieving a 3 to 5-fold enhancement by harnessing the power of machine learning and knowledge graphs. This strategic move is underscored by a commitment to precision, integrating advanced analytics with real-time data, and leveraging AI to stay ahead of emerging fraud patterns proactively.The system's predictive capabilities represent a substantial advancement from the older reactive models, enabling the bank not only to identify but also to forecast potential future threats. This forward-looking approach is critical for preemptive fraud prevention, maintaining operational integrity, and preserving customer trust.Moreover, integrating diverse global data sources ensures a more comprehensive risk assessment, enhancing the detection of risks that may be obscured within isolated data sets. This holistic view of data strengthens the bank's ability to identify subtle, sophisticated risks, marking a significant leap in their risk management capabilities.

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3. Scalable Risk Management Infrastructure

The bank's intelligence platform has been engineered with foresight, emphasizing both proactive measures and scalability to meet the institution's expanding requirements. TrustDecision enhances this infrastructure with its device fingerprint technology, enabling real-time fraud detection and comprehensive cross-device tracking. Additionally, the newly implemented infrastructure empowers the bank to dynamically scale its capabilities in alignment with the latest AML and fraud detection methodologies. It streamlines the deployment process, significantly accelerating the integration of new models and ensuring that the bank's risk prevention measures can evolve at the pace of technological advancement and regulatory changes​​.

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4. Accelerated Decision-Making Through Real-Time Data Processing

Real-time monitoring and risk handling were pivotal, allowing the bank to support high transaction processing speeds within 50 milliseconds. This capability has elevated every aspect of the bank's functions, including identity verification, profiling, transaction monitoring, and fraud detection, enhancing the overall speed and effectiveness of the bank's risk management. Modernizing user interfaces and infrastructure has been equally crucial, providing the bank's team with swift access to essential information and decision-making tools. The synergy of real-time data processing with these modernized systems enables the bank to significantly reduce the occurrence of account takeovers, all while delivering a frictionless user experience.By focusing on rapid data processing and user-centric design, the bank ensures that its operations are not only quick and accurate but also fully compliant with regulatory standards. This balance is essential for meeting the high-speed demands of today's financial landscape.

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The Results

The bank’s adoption of a proactive stance towards risk management marks a significant strategic evolution. TrustDecisions has impacted beyond achieving the bank's objectives, setting a precedent for other banks to follow. The bank’s risk control effectiveness is now considered the best among its peers.

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Achieving:

• 700 million transactions volume per day
• 10 milliseconds response time in decision making
• 200,000+ transactions per second

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The Impact: Enhanced Risk Management and Recognized Savings

• Significant Reduction in High-Risk Transactions: The bank has witnessed a substantial decrease in both the inflow and outflow of high-risk transactions. This reduction signifies a more secure and controlled financial environment.
• Decline in Risk-Associated Accounts: There's been a marked decrease in the number of individual and business accounts linked to high-risk or blacklisted activities, as well as a drop in fraudulent new credit card activations. This indicates a tighter grip on account security and a more stringent vetting process.
• Effective Fraud Interception: Implementing our Risk Control Management System has been pivotal in accurately and efficiently intercepting fraudulent activities. This proficiency has led to the bank saving billions in RMB, a feat acknowledged by both the Ministry of Public Security and the People’s Bank of China, underlining the system's effectiveness and alignment with national regulatory standards.

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Future Outlook

Envisioning a Resilient, Intelligent Banking Infrastructure

The transformative journey of the bank is leading towards a future where strategic significance is paramount in the industry. This outlook is grounded in three core advancements that the bank has integrated:

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Smart Risk Engine, the Bedrock of Intelligent Banking

The bank has developed a smart risk engine, an intelligent decision-making risk control engine that spans the entire risk experience and operation. This reflects a broader trend in the banking sector towards intelligent automation, where artificial intelligence and machine learning are becoming central to financial institutions' risk management strategies. Such engines cannot only detect but also predict potential risks, thereby preventing them before they manifest.

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Advanced Monitoring System, a New Paradigm in Decision-Making Efficiency

In line with the bank's advancements, an advanced monitoring system has been implemented, which serves as a unified enterprise-level platform. This system enhances the efficiency of decision-making processes and provides real-time warning capabilities. Integrating such systems is critical for banks to remain vigilant against emerging threats and respond to market dynamics in real-time.

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Distributed Architecture, the Framework for Global Agility

The bank’s embrace of a distributed architecture underscores its commitment to reliability, performance, and scalability. This type of infrastructure is designed to support vast global transaction volumes and allows for flexible deployment to meet the diverse demands of international operations. As banks like this one adapt to market changes, improve risk management, and navigate the challenges of globalization, a distributed architecture offers the resilience and adaptability needed to manage these complexities effectively. The strategic significance of these advancements cannot be overstated. They are not merely incremental improvements but are indicative of a shift towards a more resilient, intelligent, and global banking infrastructure. As the bank continues to evolve, these systems will play an integral role in shaping the financial landscape, enabling the institution to respond to the fast-paced changes in the market with agility and insight.

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Conclusion

This transformative journey of the bank illustrates the potential of technology in revolutionizing banking operations. It serves as an inspiration for other banks to adopt similar strategies to stay competitive and thrive in a rapidly evolving industry.