IT Spending in the Chinese Banking Industry: Large Banks Still Important, Huge Potential of Small Banks to Be Unleashed

by Hua Zhang, December 24, 2009
Operations/ Benchmarking
Asia-Pacific

Abstract

Although the financial crisis hurt the Chinese banking industry to a certain extent, its impact on IT spending in Chinese banking was minimal. IT spending in the Chinese banking industry is expected to reach US$11.3 billion by 2011. A major trend is the emerging importance of smaller banks.

In a new report, IT Spending in Chinese Banking Industry: Large Banks Still Important, Huge Potential of Small Banks to Be Unleashed, Celent examines the size of IT spending, and the trends of each tier.

Large state-owned commercial banks have the most mature systems and represent the largest proportion of IT investment. Joint-stock banks are next in line, with a higher annual growth rate than that of state-owned commercial banks. City commercial banks mostly have product-centric systems, but some of the more forward-looking banks are moving them to customer-centric systems. Policy banks and postal savings banks have relatively larger assets, but their profit margins are low. These banks have relatively weak IT infrastructure. Rural banks and credit cooperatives also have underdeveloped systems, but with the ongoing reform of the banking industry these banks will eventually be an important sector in the banking IT market.

“The purchasing methods of different banks in the Chinese banking industry are very different; even within the same bank, purchasing channels for different projects may differ. For major projects, banks will usually select an integrator through which the procurement of the relevant software, hardware, and services will be made,” says Hua Zhang, analyst with Celent’s Asia Research Group and author of the report.

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

IT Spending in the Chinese Banking Industry

5

 

Chinese Banking Industry

5

 

IT Spending

7

 

Purchasing Channels

9

IT Trends in the Chinese Banking Industry

10

 

Applications Based on Data Centralization

10

 

Information Security

10

 

Customer-Centric Financial Products and Channel Systems

11

 

Risk Management

11

 

Online Banking

12

 

Fee-Based Business Systems

12

 

City Commercial Banks Have Huge Potential

12

IT Trends at Large State-Owned Banks and Joint-Stock Banks

14

Status of IT

14

 

IT Spending Trends

15

IT Trends at City Commercial Banks

17

 

Status of IT

17

 

IT Spending Trends

18

Conclusions

20

 

Trends

20

 

Recommendations for Vendors

21

Leveraging Celent’s Expertise

23

 

Support for Carriers

23

 

Support for Vendors

23

Related Celent Research

24

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