How China’s Banking IT Evolved from Mainframes to Cloud: A Deep Dive

How Many Banks Are There in China?

As of September 5, 2017, China had 3,580 legally registered banking institutions, including 3 policy banks, 5 large commercial banks, 12 joint‑stock commercial banks, 1 postal savings bank, 47 foreign banks, 4 financial asset management companies, 162 city commercial banks, 7 private banks, 976 rural commercial banks, 48 rural cooperative banks, 940 rural credit cooperatives, and 1,381 village‑town banks.

Royalty: The Big Five Banks

The five state‑controlled large commercial banks (Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of Communications) enjoy strong credit guarantees and early IT adoption, exemplified by ICBC’s 1974 introduction of the Ricoh‑8 computer for electronic reconciliation.

Urban Elite: Joint‑Stock Banks

Joint‑stock banks such as China Merchants Bank, Shanghai Pudong Development Bank, CITIC Bank, Industrial Bank, and China Everbright Bank belong to the second tier. Their relatively recent establishment, flexible business models, and strong focus on retail and credit‑card services have driven lightweight IT construction, cost accounting, and the creation of fintech subsidiaries.

Local TV Anchor: City Commercial Banks

City commercial banks, transformed from urban credit cooperatives (e.g., Bank of Beijing, Bank of Shanghai, Baoshang Bank, Huishang Bank), form the third tier. While first‑tier cities host well‑funded banks with robust IT resources, most city banks face limited budgets and often join regional IT service alliances to improve their technology capabilities.

Faded Influencer: Provincial Associations / Rural Commercial Banks

Provincial rural credit cooperatives (e.g., Shandong Rural Credit, Sichuan Rural Credit) historically supported agriculture but now confront shrinking market share as larger banks and postal savings expand into rural areas. Many are undergoing restructuring into unified provincial rural commercial banks or financial holding companies.

The Birth of the "Universe Bank"

The modern banking IT story begins with IBM’s introduction of the SAFE core banking system in the late 1980s. SAFE II was deployed across major banks (ICBC, BOC, CCB) and sparked a three‑decade dominance of mainframe systems, culminating in the rise of the so‑called "Universe Bank" (ICBC) as the world’s largest listed bank.

Massive Data Consolidation

From 1999 onward, banks consolidated fragmented provincial IT systems into two national data centers (Beijing and Shanghai), moving away from isolated mainframes toward X86 platforms and reducing reliance on siloed hardware.

The Burdened Vertical‑Silo Applications

New applications are often over‑provisioned for future growth, leading to low utilization of dedicated hardware. Integrating diverse workloads on a shared infrastructure proves difficult, resulting in “vertical‑silo” deployments that waste space, energy, and management effort.

Pioneers' IT Architecture Transformation

Starting in 2008, leading banks began server virtualization (primarily VMware) and later built private IaaS platforms (IaaS 1.0 in 2012, IaaS 2.0 with OpenStack in 2015). By 2017, container technologies (Docker/LXC) and PaaS solutions enabled large‑scale cloud migration, creating a hybrid architecture: centralized mainframe cores plus distributed cloud‑native applications.

Today, banks continue to migrate core, online, and mobile banking systems to cloud data centers, leveraging big‑data analytics and container orchestration to improve agility, scalability, and high availability.

Source: 大鹏杂谈 | Author: Xie Peng