IT spending by Chinese banks is growing at 23.9 per cent year-on-year and will reach US$10.5 billion by 2006 according to a report by Celent Communications.
According to the report, China's current banking IT system is fragmented and beset with redundant systems. But the country's largest banks are in the midst of a massive IT overhaul which will consolidate redundant IT systems, enhance service delivery channels and build out data warehousing and CRM.
Neil Katkov, author of the report, says a number of factors are forcing Chinese banks to upgrade: "As a result of China's entry into the World Trade Organisation (WTO), foreign banks can compete more freely in the Chinese market. Domestic banks will need to modernise in order to compete effectively with these new entrants."
Katkov adds that there is also intense internal competition in the Chinese market, with smaller regional players winning customers away from the largest banks, in large part due to new integrated, multi-channel IT infrastructures built over the past five years.