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When I spot a challenge, I’m all in to nail a solution, whatever it takes. But I won’t lie; it comes with its fair share of scares. Picture a world where one tiny mistake in the maths could be the fine line between success and failure. I vividly recall the heart-stopping moment when I realised I’d switched a multiply sign with a divide in a crucial Excel model. This epiphany struck me while showering at midnight after getting home late from the office.
Yet, with innovation, such scares are not setbacks but rites of passage. It’s about facing challenges head-on, correcting the course and pressing forward. As a self-proclaimed productive troublemaker, I have come to learn that it is in those moments of uncertainty that true breakthroughs happen.
This invaluable lesson stems from my involvement in leading a team that contributed to the development of WeBank, China’s first digital bank. Navigating uncharted territory without fear of making a wrong turn was vital to overcoming unprecedented challenges. It laid the foundation for my subsequent venture, Sirius Technologies, guiding our progress and enabling us to replicate success for other banks and financial institutions.
In this article, I’ll share further insights forged in the fires of fintech innovation.
Dependency on a specific technology vendor can introduce hindrances, especially when addressing technical problems or changing the existing technology in a fast-evolving market.
Break free of dependence
Over the past decade, WeBank has emerged as a global leader, amassing a staggering 370 million users—the most extensive customer base among digital-only banks. My journey with WeBank began in 2014, a pivotal time in China’s digital evolution marked by the meteoric rise of mobile technology, surges in internet usage and the flourishing e-commerce sector.
Building a digital bank from scratch brought immense challenges, vastly different from an e-commerce site or social platform. It was a crash course in overcoming fundamental technological hurdles and shaping the future of finance.
WeBank instructed us to build without dependence on third-party technology to preserve technology sovereignty and ensure a decoupling from Western technologies. Dependency on a specific technology vendor can introduce hindrances, especially when addressing technical problems or changing the existing technology in a fast-evolving market. It’s hard to switch to a different vendor or make significant changes to the IT infrastructure without considerable effort and potential disruption.
For us, this meant addressing unprecedented challenges from the outset.
Designing a more straightforward system involves simplifying architecture, reducing dependencies and focusing on core functionalities.
Don’t solve a tech problem with tech; solve it with design
In the banking industry, enterprise software acquisition usually involves building or buying, both entailing vendor involvement. Even the big banks, with their massive in-house IT teams, often project manage their tech for external vendors.
However, before embarking on our journey at WeBank, we were keenly aware of a crucial insight: if your tech problem is solved with more tech, you lose control. Using technology solely for technical problems creates a dependency on that specific technology, a challenge all enterprises face. For instance, if you depend entirely on a particular load balancer for throughput while using a database for scalability, breaking free from them becomes challenging; you don’t know any other way of doing it.
Consequently, WeBank opted to construct simpler systems, as they enable the use of uncomplicated technology, which is easier to replace. It tends to cost less, too. Designing a more straightforward system involves simplifying architecture, reducing dependencies and focusing on core functionalities.
But how do you build simple systems while ensuring powerful overall performance, capable of hosting hundreds of millions of users and processing millions of transactions per second?
The answer lay in aggregating a group of simple systems. By distributing the workload across multiple systems, each handling a portion of the overall capacity, you can achieve scalability comparable to or surpassing that of a more complex, vertically scaled solution. This approach enhances overall performance and often provides greater flexibility and cost-effectiveness in managing increased workloads.
This is a common strategy employed by big internet giants like Amazon, Google, Alibaba, and many others. But while distributed system design isn’t a new concept, it presents a major Achilles heel for the banking sector.
WeBank’s entire infrastructure is based on open-source technologies and PC servers, a groundbreaking move in the banking industry back in 2014. Thanks to our progress, we gained insights into the technical aspects of this approach long before it became a market trend.
A fully licensed digital bank on PC servers: it can be done
The challenges faced by banks in adopting distributed system design are intricately tied to the constraints outlined by the CAP theorem. Formulated by computer scientist Eric Brewer, the CAP theorem posits that in a distributed system, achieving Consistency, Availability, and Partition Tolerance simultaneously is unattainable; one must compromise one for the others.
In the realm of banking, where data integrity and compliance are non-negotiable, the CAP theorem introduces challenges:
- Consistency vs. Availability Trade-off: A delicate balance must be struck between data consistency and system availability. Strong consistency might lead to reduced availability during network partitions or failures and vice versa.
- Regulatory Compliance: Banks, bound by stringent regulations, require robust data consistency and integrity. Harmonising these demands with the inherently distributed nature of modern systems poses challenges.
Traditionally, banks shied away from the distributed system model due to its demand for all three CAP attributes simultaneously. With no established use case, solving the CAP theorem puzzle proved difficult. As my boss and mentor at WeBank remarked, our endeavour had two potential outcomes: either we would become pioneers or martyrs to the cause. From my perspective, there was nothing to lose!
However, we found a well-controlled balance and trade-off, deviating from conventional distribution methods. Our approach involves building a simple system using simple technologies to achieve simple objectives. We then design a robust architecture to aggregate the simple systems into a powerful platform with dedicated tools to manage such a complex enterprise architecture.
WeBank’s entire infrastructure is based on open-source technologies and PC servers, a groundbreaking move in the banking industry back in 2014.
This was the first time anyone had successfully built a fully licensed bank at this scale using this approach. And thanks to our progress, we gained insights into the technical aspects of this approach long before it became a market trend.
Instead of imposing a standardised model, success lies in composable innovation—reorganising internal structures and products to ensure modular offerings.
Driving growth through embedded finance
Sirius Technologies’ commitment to embedded finance is rooted in the lessons we garnered from developing WeBank, where we pioneered the concept of an invisible bank. As a result, 95% of WeBank’s customers came indirectly through integrating its capabilities into other businesses. This strategic approach meant WeBank could provide high-quality financial services within partner businesses’ user journeys.
This methodology, grounded in fostering more robust connections between businesses and their clients, allowed WeBank to acquire customers without needing direct investment. It addresses some key challenges in the financial services industry, contributing to financial inclusion and fostering a better world.
Another crucial lesson from WeBank is that a successful embedded finance strategy requires a tailored approach to product offerings for partners, avoiding a one-size-fits-all mentality. Businesses must be agile and flexible, adapting models and flows for different end-users and changing customer trends. Instead of imposing a standardised model, success lies in composable innovation—reorganising internal structures and products to ensure modular offerings. This approach enables us to rapidly assemble specific flows tailored to individual partner or business requirements.
Putting lessons into action
Our experiences at WeBank, building the IT foundation for the world’s largest digital-only bank, became the DNA of Sirius Technologies. We’ve leveraged those lessons to offer our partners the same benefits—scalability, openness and cost-effectiveness—driving digital transformation across the board.
Our proven model—with no dependence on third-party technologies—enables our partners to take ownership of their technology. In today’s world, that’s invaluable: seize control and ignite growth.