China’s Core Banking Tech Stack

China’s Core Banking Tech Stack | Generated by AI

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Question: What financial systems do banks in China use for mutual funds, trading, and similar functions, comparable to Avaloq in global banks?

Answer:

In China, banks primarily rely on domestic vendors for core banking and related financial systems, unlike global banks that often use international platforms like Avaloq (a Swiss wealth management-focused core banking and wealth platform used by institutions for private banking, investment management, mutual funds, and integrated trading/wealth services).

Avaloq equivalents in China emphasize wealth management, mutual funds distribution, investment products, securities trading support, and digital platforms, but the market is dominated by local providers due to regulatory preferences, scale needs, data sovereignty, and integration with China’s unique financial ecosystem (e.g., interbank markets, Stock Connect, wealth products).

Key Domestic Vendors and Systems

Sunline (Shenzhen Sunline Tech) — A leading player in modern core banking, widely adopted for next-generation, cloud-native systems. It supports large-scale retail banking, wealth management, and digital finance features (including mutual funds and investment products). Sunline powers systems for major banks (e.g., Ping An Bank, WeBank, Bank of Nanjing) and recently went live with banks managing over CNY 5 trillion in assets. It is often seen as a strong equivalent for integrated wealth and investment functions in a Chinese context.
Yusys (Yusys Technologies) — Provides comprehensive banking suites, including core systems with wealth management and investment modules. Used by many Chinese banks for integrated operations.
DCITS (Digital China / Shenzhou Info) — A long-established vendor offering core banking and related solutions, including support for wealth and securities-related functions.

Other notable domestic vendors include Hundsun Technologies, Neusoft, and iSoftStone, which provide specialized modules for wealth management, asset management, and trading support.

Specific Areas

Mutual Funds and Wealth Management:
- Chinese banks offer mutual funds, wealth management products (WMPs), and structured investments through their own platforms or subsidiaries (e.g., Bank of China Investment Management for mutual fund series; China Merchants Bank wealth products).
- Digital platforms like Ant Fortune (from Ant Group) dominate retail mutual fund distribution and wealth management, often in partnership with banks.
- Banks use in-house or vendor systems for portfolio management, fund distribution, and advisory tools. Foreign banks in China (e.g., HSBC China) use their global platforms (like HSBC’s Wealth Dashboard) or localized versions.
Trading and Securities:
- Securities trading is handled by brokerages/securities firms (e.g., CITIC Securities for investment banking, equity trading, and derivatives) rather than commercial banks directly.
- Commercial banks integrate with exchange systems (SSE/SZSE) or interbank platforms (e.g., CFETS for bonds) via domestic middleware or vendor solutions.
- Trading systems focus on equities, bonds, funds, and derivatives, with support for Stock Connect/Bond Connect for cross-border.

International vs. Domestic Usage

Major state-owned banks (e.g., ICBC, Bank of China) often use proprietary or domestically developed core systems (e.g., ICBC’s fourth-generation system with FOVA for overseas).
Some foreign or joint-venture banks in China adopt international platforms (e.g., Avaloq has been used by China CITIC Bank International), but domestic banks overwhelmingly prefer local vendors for onshore operations.
The market favors cloud-native, distributed, and AI-integrated systems from vendors like Sunline to handle massive scale and regulatory compliance.

In summary, while no exact one-to-one match for Avaloq exists (due to China’s localized ecosystem), Sunline stands out as a close functional equivalent for modern wealth management, mutual funds, and investment/trading support in Chinese banks.

References:

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