Banks must upgrade their information technology (IT) systems to avert a possible collapse caused by heavy volume during the Olympics, when hundreds of thousands of foreign and domestic visitors could be using debit and credit cards in the capital, China's bank watchdog warned on Tuesday.
A combined surge in card use and stock trading could overload the country's electronic payments system during the 29th Summer Olympics in August, said Guo Ligen, vice-chairman of the China Banking Regulatory Commission (CBRC), in a statement on the commission's website.
Guo urged banks to have trial runs, beef up equipment and expand the operating capacity of their IT systems. He announced that the CBRC would inspect major banks' IT systems between February and July.
"We can't bring the problems to the Olympics and spread hazards outside the banking industry," said Guo, who said that the industry was on "first-class emergency status".
Heavy stock and fund trading had contributed to system failures at five commercial banks in the past year, said Guo. The five were Bank of Communications, Industrial and Commercial Bank of China, China Merchants Bank, the Bank of Beijing and China Construction Bank.
The last of these had to halt trading with stock dealers for two hours due to system failures in October when the Communist Party of China held the 17th National Congress.
Guo advised banks not to take on fund and bond release businesses as agents during the Olympics.
"Problems occurred at banks with relatively advanced information technology and risk control ability. Some happened even at a crucial moment," said Guo. "It revealed the fragility of our banking information system."
Banks must ensure the safety of their data operating centers and have contingency plans, said Guo.
Beijing is expected to have 800,000 visitors from abroad and 900,000 domestic tourists during the Olympics. Total overseas visits this year are estimated at 4.6 million.
The city government has announced plans to install point of sale (POS) terminals at 90 percent of the retail outlets at or near the Olympic venues by the end of June.
The number of bank cards issued in China totaled 1.47 billion at the end of last year, up 30 percent year-on-year, according to the People's Bank of China, the central bank.
However, banks' IT infrastructure hasn't kept pace with their rapidly expanding card business. The average utilization rate of host computers of core business systems at five major commercial banks stood at 67 percent, exceeding the international standard of 60 percent. That situation demands a capacity enlargement, said Guo.
He added that 48 percent of China's banks had serious IT management and risk control problems.
He said that most high-end equipment at Chinese banks was imported and most software development was outsourced, a combination that could be both limiting and dangerous for IT safety.
The shortage of talent was a bottleneck for improvement, he noted.
Inter-bank card transactions surged 78.42 percent to 3.22 trillion yuan ($450.3 billion) last year, according to China Unionpay (CUP), which operates the country's bank card network.