The Next Big Technology after Digital Wallets (Part 3)

Digital Wallets around the Globe

Why Intelligent Risk Management?

Distinguished Aspects of Intelligent Risk Management

  1. Digital footprint, or big data — There is no secret that all digital activities with your smartphones leave traces of personal data with your service providers, be it with Google Map, Facebook Messenger, Amazon Go, etc. The same is true at China, only that there’re a lot more data as smartphone can truly replace your wallet in your daily life at China. Privacy would naturally be a concern. However, there are valid counter-arguments that suggest China’s use of big data might actually be less “Big Brother-ish”.[11].
  2. Relationship networks — Most financial institutions take a threshold-based approach in its credit and risk management activities. For example, if you’re transferring $1,000 dollars to a third party, it will likely not be subject to any scrutiny and thus unnoticed in the grand scheme of risk framework. On the other hand, a transfer of $100,000 would subject you to scrutiny and may even require manual approval and thus lag time in effecting your transaction. This approach is very logical in the old days, when the transaction amount may be one of the most important data point that is risk-tied. This is ineffective in the digital age, when rallying 100 people to transfer $1,000 each isn’t that difficult at all. Harnessing this form of entity relationships through advanced graphical analysis become critical. Recently, multiple U.S. regulatory agencies encouraged lenders to try out new technology and intelligence-gathering methods as they combat evolving illicit-finance threats.
  1. Granularity and adaptiveness — The digital approach (vs manually by the bank operations team) also allows more segmented approach to handle the populations of customers differently. The intelligent risk control systems can for example handle thousands of segments and conditions at ease (if this is indeed required and backed by your analytics), whereas this would drag any troops of the compliance operations at the largest banks to be ineffective. Furthermore, such anti-fraud and risk management approaches can be adjusted at ease across the different channel systems and touchpoints, without the worries of complicated hardcoding that has been a common practice in the old technology days.
  2. Real-time — This requirement is obvious, as any frictions in a digital customer interaction would result in an unhappy customer and likely hurt the adoption and popularity of the services. If each additional second of page load time can inadvertently get your potential customers elsewhere [13], we should think about the case of a customer standing in front of a cashier to complete a transaction. If I’m paying a $5,000 Rolex watch during a leisure trip at Switzerland, and being prompted additional anti-fraud measures, I probably can appreciate. If I go on to pay for a $1,000 hotel bill and being prompted for the same again, I’d wonder if I should take a different payment method. Whilst a credit card transaction of your hotel bill may come only a few days after you’re back home, this is clearly intolerable with digital payments and the associated anti-fraud technologies at China.

Intelligent Risk Management at Alibaba’s MYbank

Do All These Matter?

  • More than risk management — While the technology has grown out of the need to manage the digital finance risks, technologies such as decision engine and the graphical analysis tool are extensible for many other purposes. How would they innovate your digital business model?
  • Foundation — If this indeed becomes important in your business, how would you get your business and IT landscape prepared?
  • What I still don’t know — None of us would be able to catch up with all the latest technology advancement around the world, even in a narrowly defined domain. Whilst we may spend time to research for the best, we may as well take the action to experiment with the good-enough and build upon the successes thus garnered.


  1. The Telegraph, “China’s tech giants have conquered the East, now for the West”,
  2. Forbes, “China Is Innovating Faster Than You Imagine”,
  3. Tech in Asia, “A surprising number of countries now accept WeChat Pay or Alipay”,
  4. Finextra, “Finland opens up to Alipay”,
  5. TechCrunch, “Alibaba’s Ant Financial expands to Korea with $200M investment in Kakao Pay”,
  6. Ant Financial Press Releases,
  7. Alibaba Cloud, “Financial Services Innovation Boom in China”,
  8. PwC China (普华永道中国), “2018年中国金融科技调查报告”,
  9. iResearch, “2018年中国人工智能+金融行业研究报告”,
  10. Markets Insider, “Tongdun Technology Added to CB Insights’ Global Fintech Unicorns List”,
  11. MIT Technology Review, “China’s use of big data might actually make it less Big Brother-ish”,
  12. WSJ, “U.S. Encourages Banks to Innovate in Anti-Money Laundering Compliance”,
  13. Fast Company, “How One Second Could Cost Amazon $1.6 Billion in Sales”,




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