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Regulatory Shot! Behind the app downtime of many securities institutions: how to break the digital transformation of securities companies

via:新浪科技     time:2022/5/26 6:06:13     readed:92

Recently, China Merchants Securities and Huaxi Securities have successively experienced information system security incidents, and "China Merchants Securities" once appeared on Weibo's hot search, causing a large number of investors to pay attention.

The 21st Century Business Herald reporter learned that after the information system security incident occurred, the regulatory department issued the "Institutional Supervision Circular", in which the supervision analyzed the causes of the incident from many aspects, and said that it would carry out investigation work in accordance with the law and seriously deal with relevant institutions and responsible personnel.

In fact, China Merchants Securities' information technology investment expenses have continued to grow in recent years, with 653 million yuan, 994 million yuan and 1.192 billion yuan from 2019 to 2021, accounting for 3.49%, 4.09 and 4.05% of the revenue of the year, respectively.

From the perspective of the industry, according to KPMG statistics, the total investment of the 22 listed securities companies that have disclosed annual report data in 2021 reached 14.178 billion yuan, and the average investment amount of the top ten securities companies was 1.130 billion yuan, of which the highest investment of securities companies reached 2.228 billion yuan, the securities companies with the highest year-on-year growth rate reached 294%, and the securities companies with the highest operating income reached 25.17%.

Judging from the above data, whether it is China Merchants Securities or the entire securities industry, with the wave of financial technology, major securities companies have increased their investment in digital transformation, and the scale of investment in information technology in the whole industry has continued to grow.

With the continuous increase in investment, why do information system security incidents still occur frequently?

In this regard, China Merchants Securities gave feedback to the 21st Century Business Herald reporter that it is currently actively rectifying and reforming in accordance with the requirements of supervision and practicing internal skills. A large securities company believes that the regulatory circular pointed out that five major problems such as insufficient compliance internal control have triggered such incidents, although from the data point of view, the scale of investment continues to grow, but the main responsibility and system construction need to be clearer.

Li Jun, general manager of Haitong Securities, also said that the digital transformation of securities companies has a long way to go. Judging from China's practice and the development experience of international investment banks, the digital transformation of securities companies is inseparable from a large amount of scientific and technological investment to build a team of scientific and technological talents and build hardware infrastructure. At the same time, establishing digital strategic thinking, shaping the business philosophy of embracing digitalization, and cultivating a corporate culture friendly to digital transformation are also the magic weapons for securities companies to win the digital transformation for a long time.

  Regulators point to five major problems

Since the beginning of this year, a number of securities companies have had problems in the App, especially China Merchants Securities, which has experienced trading system failures on March 14 and May 16.

On the morning of March 14, a number of investors reported that there was a problem with the China Merchants Securities trading software, and the China Merchants Securities App could not buy and sell normally. "The China Merchants Securities System cannot buy, sell, or withdraw." Some investors said. Some investors said: "I have not been able to withdraw, and I thought that my computer was a problem." ”

In this regard, the relevant person of China Merchants Securities responded that after the opening of the market in the morning, all trading orders of the centralized trading system of China Merchants Securities have been transmitted to the exchange system in real time, but due to the delay in processing the transaction return, some customers have not received the transaction return information in time on the client, and the withdrawal transaction has been affected, which is inconvenient to the customer, and I am deeply sorry.

In response to this incident, the Shenzhen Securities Regulatory Bureau pointed out on April 2 that in the network security incident of China Merchants Securities on March 14, 2022, there were problems such as imperfect change management, untimely and inadequate emergency handling, so it decided to take administrative supervision measures against China Merchants Securities to order corrections.

However, after the opening of the market on May 16, a number of investors said that the China Merchants Securities system collapsed, and the computer version and mobile App could not log in normally. On the same day, the Huaxi Securities App also collapsed.

In addition, on May 18, 2021, the SSE offer procedure of Capital Securities failed. On February 4, February 14, and February 28, 2022, three fund management companies also had a series of network security incidents that made their official websites inaccessible due to viruses or crawlers.

For such frequent incidents, the regulator believes that the incident mainly reflects five major problems:

The first is that the compliance internal control management of individual companies is not in place, and there are weak links in the process of system upgrading and transformation. For example, in the process of system upgrade of China Merchants Securities, the test scenarios, especially the stress test, were insufficient, resulting in two consecutive information system security incidents in the trading system.

The second is that the sense of subject responsibility is not strong, the performance is not effective, and the system architecture of the software provided by external suppliers is not clearly, accurately and completely mastered.

The third is that the operation standardization of the operation and maintenance personnel is insufficient, and an effective authority management and review mechanism cannot be established.

Fourth, there are shortcomings in the development and management of mobile apps, which have become an area prone to information system security incidents.

Fifth, there are vulnerabilities in security management, and network protection capabilities such as external network attacks or bot access still need to be improved.

The regulator said that in the next stage, the Ministry of Institutions will work with the securities regulatory bureaus to continue to increase the supervision and inspection of the compliance internal control and information technology management of securities fund operating institutions in accordance with the principle of "penetrating supervision and full chain accountability", implement "double penalties" on institutions with problems and responsible personnel, and strictly deal with them in the classification evaluation.

At the same time, we will closely track and study the new situations and new problems that have emerged in the process of deep integration of business and technology in the industry under the background of digital transformation, and continue to improve relevant regulatory requirements.

Digital transformation is a game-breaker

In fact, digital transformation has become a new strategic highland for the future development of brokers.

Among the leading securities companies, Huatai Securities invested up to 2.228 billion yuan in financial technology in 2021, ranking first among listed securities companies that have disclosed financial technology investment.

At the same time, some securities companies are also accelerating the gathering of financial technology talents. At the end of 2021, the number of financial technology personnel of Huatai Securities ranked first in the list of listed securities companies, reaching 3169, accounting for more than 20% of all employees. In addition to Huatai Securities, there are also more than 1,000 fintech personnel of six listed securities companies, including Haitong Securities, China Merchants Securities, CICC, CITIC Securities, Shenwan Hongyuan and CITIC Construction Investment Securities.

According to the survey data of the Securities Association of China, 109 securities companies invested 30.355 billion yuan in IT in 2021, an increase of 26.51% year-on-year. The top 10 head securities companies have invested a large amount of 12.486 billion yuan, accounting for 41.13% of the total, and the research and development advantages of head securities companies are obvious.

The report released by He Dayong, managing director of the Boston Consulting Group and global senior partner, shows that looking at the top ten securities companies in the industry in terms of operating income, the proportion of their technology investment in the operating income of the previous year is mostly distributed between 6% and 7%, and some leading institutions even reach 11%; horizontally compared with foreign investment banks, this proportion is about 10%, which shows that the head domestic institutions have basically chased the overseas leading peers in terms of investment in scientific and technological resources.

He believes that overall, the industry-wide concept of digital transformation has initially been in place, and a consensus has been reached on the importance and urgency of transformation. However, with the transformation into the deep water area, many challenges such as unclear direction, insufficient coordination, and unstable foundation have gradually emerged, and securities companies need to find ways to break the situation.

At present, the main problems faced by digital transformation include the lack of top-level design and unclear digital transformation goals; insufficient integration of industry and technology, insufficient release of digital value; unstable digital foundation, restricted by deep digital transformation; scarcity of digital talents, and insufficient long-term motivation for digital transformation.

Li Jun, general manager of Haitong Securities, also pointed out that at present, there are still problems in the industry such as low investment, insufficient depth of digitalization, imperfect data ecology, and incomplete talent echelon.

Li Jun believes that from the practice of our country and the development experience of international investment banks, the digital transformation of securities companies is inseparable from a large amount of scientific and technological investment to build a team of scientific and technological talents and build hardware infrastructure. In addition, the digital transformation of securities companies has put forward new requirements for the current management methods of securities companies such as organizational structure, post setting, and coordination mechanism, and also challenged the pursuit of business philosophy of maximizing income or profit in the current period. At the same time, it also needs the strength of industry associations, regulatory departments and other parties to jointly promote the digital transformation of the industry.

(Author: Li Yu Editor: Wu Yanling)

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