Disaster recovery systems for China’s banks

Written by Ken Ding || 05 Apr 2012

In recent years, since Chinese banks have been working on data consolidation at the national level, the establishment of disaster recovery systems has become one of the key considerations for banks. Today, banks must ensure the stability and security of their national data center in the event of a disaster to ensure uninterrupted business operation through disaster recovery systems.

According to IDC’s report “China Business Continuity and Disaster Recovery Market Forecast, 2008-2013, data disaster recovery service and business continuity in China is expected to become the fastest growing segment in the local IT service market during 2008-2013, with a CAGR of 52%.

A standard recovery

The importance of disaster recovery systems has pushed the Chinese government to formulate a series of industry standards. In June 2009, the China Banking Regulatory Commission issued a new guideline on IT Risk Management of Commercial Banks, which has set a higher standard for the information security and business continuity of the entire life cycle of banking IT.

In 2011, China’s regulators also urged local banks to speed up the implementation of disaster recovery systems during the 12th Five-Year Period, by proposing a disaster recovery model named “Two Places and Three Centers”, which specifies a main data center, a remote disaster recovery center, and an intra-city emergency disaster recovery center.

In response to the legislation, recently, more local banks have started building their own “Two Places and Three Centers”. Large domestic banks have been seen allocating more resources to develop the disaster recovery model and already built large disaster recovery centers. The Agricultural Bank of China initiated its Shanghai remote disaster recovery center in 2012; China Construction Bank will complete the establishment of its Beijing data center in 2013. Even though they are somewhat behind the larger banks, small and medium banks have identified “Two Places and Three Centers” as one of their key IT investment priorities in the future.

Looking forward

In 2012, we expect that local small and medium sized banks will lead the demand for disaster recovery systems, particularly for joint stock commercial banks and city commercial banks, as they seek national expansions in their next phase of growth. With increased operating risks, banks have begun to put more value on the benefits brought by disaster recovery systems, which will be key to ensure uninterrupted business operation and improve risk management capability. This trend is also likely to be seen in local insurance and securities sector, where more small and medium sized insurers, securities firms and fund companies will invest in disaster recovery systems.

Compared to self-built disaster recovery centers, outsourcing services on disaster recovery will be much more popular among these companies, as the latter can provide lower investments, shorter construction period and higher service standards; the local market for disaster recovery system is still dominated by global players represented by IBM, HP, Symantec and EMC.

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