Core Banking Solutions for Small and Midsize Banks in China

by Hua Zhang, June 19, 2012
Asia-Pacific

Abstract

China’s city banks—the third tier banking market in China—have grown rapidly in recent years. Total bank assets grew 38% year-on-year in 2011, and will reach US$2 trillion by 2013. To cope with growth and compete more effectively with both domestic and foreign banks, China’s city banks need to upgrade their core banking systems.

Most of China’s large banks have finished their core banking upgrades. In the next few years, the city banks will play an important role in the core banking market, because many of these banks have been using their core systems for more than five years. A majority of the city banks still use second-generation core systems that focus on transaction processing. But factors such as the reorganization and mergers between city banks, their development into nationwide banks, the centralized processing of banking operations, reforms in process banking, customer-centric marketing, pricing, service and processing, and a need for faster and more complex product design capabilities and multiple-channel integration capability are pushing city banks to upgrade their core banking systems.

In a new report, Core Banking Solutions for Small and Midsize Banks in China, Celent examines the current core banking systems, trends, competitive landscape, and market share of both domestic and foreign vendors in the Chinese core banking market. The report also provides brief profiles of six domestic vendors of core banking systems.

“The greatest obstacle to Chinese banks adopting foreign core systems is their need to reform their organizational structure and to reengineer process flows. Chinese banks can adapt to these changes smoothly only if vendors strengthen their ability to communicate the new paradigm to the banks,” says Hua Zhang, analyst with Celent’s Asian Financial Services group and author of the report. “Foreign vendors also need to improve the speed and performance of their products because city banks in China generally handle more customers than foreign banks.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

5

Status of Core Systems of Small and Midsize Banks

7

Market Trends

10

Market Structure

14

Foreign Core Banking Systems

17

Chinese Core Banking Systems

22

 

Global Infotech

22

 

Digital China

22

 

Sunline Technology

23

 

Longtop Group

24

 

China Financial Computerization Corp.

25

 

Hi Sun Technology

26

Conclusions

28

Leveraging Celent’s Expertise

30

 

Support for Financial Institutions

30

 

Support for Vendors

30

Related Celent Research

31

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