In the past ten years, the financial market environment in China has undergone earth-shaking changes. With the stabilization of the domestic economy and the acceleration process of interest rate marketization of China, digital finance has also developed vigorously. At the same time, as emerging technologies continue to mature, the financial scene has also accelerated. The integration of technologies by banks brought about by profound changes in the economic environment, market competition environment and customer needs has also created new opportunities and challenges to the development of the banking industry and banking information systems.
As the engine of a bank’s business information processing, core system is the most critical link in the bank’s IT system. In the continuous development in banks’ information system, core banking system started from a stand-alone business system (1980s – 1990s) that could only handle the business of a single branch. After a large data concentration (late 20th century – 2008), a thin core (2008 – 2014) and is now ushered in the development overflight and has entered the distributed era.
What is the core banking system development in the past ten years?
The prelude to the distributed era: The implementation of the first-generation JAVA core banking system
In the era of large data concentration due to the enhancement of host capabilities and network capabilities, ‘big core’ is a common form of core business systems. The development of various peripheral businesses and sharp increase in business volume year by year has ushered banks into the ’thin core’ era, stripping various professional and characteristic business systems from the core business systems to optimize the design of the core, causing the creation of a large number of peripheral systems.
The disadvantages of ‘pipe development’ brought about by large-scale concentration are particularly obvious in ‘thin core’ form. A large number of peripheral systems often develop to independent applications, leading to inconsistent data, uncoordinated functions and ultimately unsatisfactory customer experience leading to the exploration and practice of a new generation of core banking system.
Before 2010, the mainstream development language for core banking systems was COBOL, C language or database stored procedures on mainframes. At that time, Sunline judged that JAVA language is inherently cross-platform and can support internet services. Once JAVA based core banking system is successfully developed, it will solve a series of pain points faced by the core banking system. It is based on this judgement that Sunline become the first to develop a JAVA based core system. In 2010, the prototype development was completed and special tests were conducted in the IBM Beijing Laboratory. The test results were very satisfactory and were highly praised by the IBM Laboratory.
In 2011, the first generation JAVA core system in China’s banking industry were ushered into landing opportunity. At that time, Hengfeng Bank needed to refactor their core system and inclined towards JAVA. With the two sides hitting it off and after two years of construction, Sunline’s JAVA based core banking system was successfully put into production for Hengfeng Bank in 2013, becoming China’s first domestic JAVA core system in production.
The beginning of the distributed era: The landing of the first distributed core system
The JAVA based core banking system solves the problems caused by ‘pipe development’ to a certain extent and had made progress business wise but on technology wise, banks’ core systems were still built on imported servers. Under the traditional IT technology architecture development model of banks at that time, the ‘mainframe + X86’ hybrid architecture still failed to make a breakthrough. In the digital field, distributed architecture based on pure X86 servers has developed rapidly.
In 2014, the historical breakthrough opportunity came when China’s first private full digital bank, WeBank was established. With the internet gene of Tencent, the target customers are hundreds of millions of QQ users and WeChat users. Therefore, WeBank proposes a distributed core system with a requirement to support 500 million customer capacity and system support with flexible expansion.
500 million was an astronomical number at the time and legacy core business system based on the traditional architecture cannot be adjusted to meet the design requirements of the distributed system in a short time. In this competition, many vendors participating in the POC withdrew within one week but as Sunline’s core banking system met all the expectations of WeBank. At that time, WeBank requested the connection of MySQL databases that are mainly used in Internet companies which is rarely used in the banking industry. Before, Sunline was mainly developed based on Oracle databases. However, Sunline’s POC team only used one week to complete MySQL docking work which fully benefited from the cross-platform and cross-database forward-looking design of Sunline’s JAVA based core system. The successful connection of MySQL database has doubled the confidence of WeBank to partner with Sunline in building a distributed core system.
“We’ve crossed the river by feeling the stones beneath,” Li Gong, the technical engineer of Sunline who was in charge of the docking at the time recalled. “Before the construction started, we have spent a lot of time designing the business plan and technical framework within the industry. After everything was in place, construction began. Even so, various difficulties were encountered during the development process. Since the industry has no experience to learn from, we can only take one step at a time in the development process of distributed transactions. The method adopted at the time was to pick one transaction, convene all technical personnel, project members and leaders to verify together to analyze the functions that need to be optimized together and then tune, verify and repeat the process again and again until all has been optimized and transformed”.
Li Gong, Technical Engineer of Sunline
After nearly a year, finally in March 2015, the WeBank distributed core system was successfully launched. The system had many pioneering features in the industry at that time, including the use of JAVA language for the development of architecture and business logic, and the use of distribution for all applications It has realized the separation of transaction and accounting, supports hundreds of millions of users and high concurrent transactions, etc., which has become the beginning of the distributed core system of my country’s banking industry.
Fully entered the distributed era: Traditional banks began to deploy distributed cores
WeBank became the first bank in the domestic banking system to adopt a distributed core system. This spark quickly formed a prairie fire. In 2015, Ping An Bank and Bank of Nanjing simultaneously initiated the construction of distributed core systems and the services provided by Sunline have already became a successful experience.
According to Wei Feng, Deputy General Manager of Sunline, the person in charge who is responsible for the construction of distributed core systems said, “During that period, Sunline was under great pressure. At that time, distributed technology was just starting and we are required to send experts who are familiar with distribution to our own bank. Facing the concentrated demand for distributed talents in the concurrent projects of two major banks, we can only urgently deploy the original team involved in the construction of the WeBank’s distributed core system project in the early stage of the project, make full use of evenings and weekends as well as emergency trainings so that everyone can be familiar with distributed development methods and technologies in the shortest time.”
Wei Feng, Deputy General Manager of Sunline
Therefore, at the end of 2015 all the developers of Sunline faced unprecedented pressure. Firstly, these are two heavyweight customers. Secondly, there are many customized development tasks and thirdly, there are not enough talents. Everyone can only grasp every minute and every second. This state continues until the end of January 2016, ensuring that the development tasks of the project are completed on time and with quality.
In October 2016, the distributed core banking systems of Ping An Bank and the Bank of Nanjing were launched at the same time. After the launch, the performance of the distributed core system completely met and exceeded the expected requirements, which gave banks in the industry considering replacing their distributed core systems. Over time, the enthusiasm to switch to distributed core banking systems soared.
In August 2019, the distributed core ushered in a major turning point for the traditional banking field. The first core banking system in the country that adopted a domestic distributed database was successfully implemented in Zhangjiagang Rural Commercial Bank. Service providers were already familiar with distributed technology.
Prior to this, domestic databases were only used on the periphery such as payment systems, customer relationship management systems and query systems. Zhangjiagang Rural Commercial Bank partnered with Sunline to make bold attempts to adopt domestic databases in the distributed core system which not only broke the bank’s long-term dependence on foreign database products but also further accelerated the process of the bank’s core distributed era.
After going online, the new core system effectively supports the docking requirements of hundreds of peripheral systems that runs smoothly with efficient operation and maintenance as well as having achieved good application effects. It provides successful and replicable cases for the bank’s distributed core. There has been a new wave in the field and there are countless banks that have learned from Zhangjiagang Rural Commercial Bank. So far, the core of the bank has entered the distributed era.
Advanced Distributed Technology: The first ‘microservices + unitized’ distributed core system is implemented
From a technical perspective, there are three typical implementations of distributed mode which include distributed transaction database, database middleware and distributed application architecture. Zhangjiagang Rural Commercial Bank adopts the first type of distributed mode, namely distributed database. The second type of distributed middleware needs to rely on mature and stable sub-database and sub-table middleware while the third type of distributed application architecture can be subdivided into three types, namely microservice architecture, modular architecture and ‘microservice + modular’ architecture. WeBank adopted this modular architecture model.
Zhang Mushu, Vice President Sunline R&D believes that unitization is a classic implementation mode of distributed architecture. Combining it with microservices architecture can bring more architecture dividends to the new generation of IT architecture such as unlimited scalability. Based on unit-level expansion and microservices elastic scaling; multi-center deployment architecture, through unit multi-center multi-active deployment, to improve disaster tolerance; gray-scale release capability, based on unit gray-scale and microservices version gray-scale to improve version release reliability; Fault isolation capability, through unit fault isolation and microservices fault isolation, reduces the scope of faults and improves the overall availability of the system but at the same time it will also bring complexity to the architecture including cross-unit distributed transaction problems, cross-microservices distributed transaction problems, service splitting over-fine performance problems, cross-microservices and cross-unit batch scheduling problems as well as business adaptation and transformation issues, etc.
Zhang Mushu, Vice President of R&D of Sunline
Relying on a deep understanding of distributed architecture, Sunline has actively innovated and introduced this design concept into the banking industry and launched the first ‘microservices + unitized’ distributed core system.
The ‘microservices + unitized’ distributed core can achieve flexible deployment and unlimited dynamic expansion at the technical service level which can meet the needs of explosive customers growth in the future. The business level supports rapid product innovation, rebuilds financial business processes and promotes transactions while the driving accounting method is transformed into a customer-centric service model based on product management.
At the time when Bank of Dongguan was preparing to transform into a distributed core, they investigated WeBank’s core and had set their sights on Sunline as their preferred solutions provider and Sunline was developing SunLtts V8. After understanding, the bank found that SunLtts V8 fits their future development direction and the direction of the industry so they were determined to change into the ‘best core’.
In June 2020, Bank of Dongguan’s new-generation core system was launched, fully meeting the bank’s requirements for low cost, high availability, high performance and rapid expansion. It can effectively support the rapid development of the bank’s digital business and meet the explosion of massive customer data and business, fully verifying the demand for rapid growth via the advanced nature of ‘microservices + unitized’ architecture.
With the extensive development of digital transformation, banks as a key area of informatization are bound to further increase their investment in digitalization. The majority of small and medium-sized banks need architecture solutions that can complete digital transformation with lower costs and higher performance and that is how distributed ‘microservices + unitized’ architecture came into being. This architectural model eliminates dependence on specific imported products from design to implementation, laying a solid foundation for banks to achieve high-quality, high-reliability and high-security digital development.
With the constantly surpassing technology, the core banking system has gone through different development stages, especially in the past ten years. Every advanced development cannot be separated from the promotion of technology and innovation but technological development is far more than this. A new round of technological development is constantly being updated and the future can be expected.
