Yucheng Technologies has signed a partnership agreement with China Financial Certification Authority (CFCA) to jointly launch an e-banking Application Service Provider (ASP) platform to serve city commercial banks and city/rural credit unions in China.

Under the agreement, Yucheng will deploy the necessary hardware and its e-banking solutions under an ASP model, which will allow subscribing banks to leverage shared processing infrastructure to enable processing of online banking transactions, thereby expanding the range of services offered to their end customers. CFCA will host and maintain the e-banking platform to ensure the highest level of transaction security and service availability. In exchange of the services, clients are expected to pay a fixed annual fee for hosting and maintenance, as well as to share with Yucheng and CFCA revenues generated through transactions on the ASP platform. As part of the agreement, Yucheng will also provide customization to the ASP platform per request of the clients, and is expected to receive fees in relation to such customization.

The platform will allow banks to avoid costly dedicated infrastructure, as well as provide them with best-in-class applications, support and maintenance, together with the highest standard for transaction security in China today. With the mission-critical nature of this function, subscribing banks will save on the recurring cost of qualified maintenance staff and system redundancy. With this platform, city commercial banks and city/rural credit unions can avoid necessary up-front capital expenditures and quickly acquire the capabilities for online accessibility for their customers, rather than risk losing them to the larger banks who have dedicated in-house online banking platforms.

As of the end of 2006, China’s banking industry consisted of 5 national commercial banks, 12 joint-stock commercial banks, 115 city commercial banks and more than 19,000 city/rural credit unions and other financial institutions. As of today, very few of the 19,000 smaller banking institutions in China provide e-banking services to their end-customers.

Update: On 22 October Yucheng announced that its e-banking ASP was fully functional and already hosting five banks. The platform is expected to host several more small to mid-size banks (SMBs) in the near future.