People’s Daily reports:

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.

As anyone who has ever spent some of the best hours of their life waiting in a Chinese bank’s branch can tell you, retail teller operations in China remain amazingly inefficient. The ATMs, however, offer the same speed and convenience as elsewhere in the world. China’s finance industry leads other sectors in its adoption of technology. Like in the financial sector elsewhere the world, technology provides both operational efficiency and (possibly) competitive advantage. It’s not a question of if to invest, but how much.

So it’s surprising to see that these investments seem to have overlooked a critical element: scalability:

Heavy stock and fund trading had contributed to system failures at five commercial banks in the past year, said Guo. The five were the Bank of Communications, the Industrial and Commercial Bank of China, the China Merchants Bank, the Bank of Beijing and the 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.

…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.

A fundamental consideration when designing a solution is anticipating and planning for growth. For the underlying infrastructure of networks and communications links it’s typically done through some combination of design, planning, service level agreements, different wire-level technologies, and occasionally spare bandwidth that can be brought online. The problem is rarely the network.

It’s the applications and servers that really need effective capacity planning. Depending on the software architecture and the platforms it runs on scalability can either be achieved horizontally or vertically (and sometimes both). Horizontally means adding more computers to serve the solution and vertically means making more single platform resources (processor, memory, etc.) available to the solution.

In any event, it seems that the banking industry’s IT architects didn’t consider domestic card industry growth or that a lot of foreigners are coming to Beijing in August. So much so that the CBRC felt it necessary to publicly humiliate five of them, make a prominent announcement of its concerns, and start a six month program of inspections.

If it’s really that bad, July might be a good time to go to the mattresses. Better to sleep on lumps of cash than to sit in a Beijing Bank of China branch in August.

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