IT Spending in the Chinese Banking Industry: Large Banks Still Important, Huge Potential of Small Banks to Be Unleashed

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24 December 2009


Although the financial crisis hurt the Chinese banking industry to a certain extent, its impact on IT spending in Chinese banking was minimal. IT spending in the Chinese banking industry is expected to reach US$11.3 billion by 2011. A major trend is the emerging importance of smaller banks.

In a new report, IT Spending in Chinese Banking Industry: Large Banks Still Important, Huge Potential of Small Banks to Be Unleashed, Celent examines the size of IT spending, and the trends of each tier.

Large state-owned commercial banks have the most mature systems and represent the largest proportion of IT investment. Joint-stock banks are next in line, with a higher annual growth rate than that of state-owned commercial banks. City commercial banks mostly have product-centric systems, but some of the more forward-looking banks are moving them to customer-centric systems. Policy banks and postal savings banks have relatively larger assets, but their profit margins are low. These banks have relatively weak IT infrastructure. Rural banks and credit cooperatives also have underdeveloped systems, but with the ongoing reform of the banking industry these banks will eventually be an important sector in the banking IT market.

“The purchasing methods of different banks in the Chinese banking industry are very different; even within the same bank, purchasing channels for different projects may differ. For major projects, banks will usually select an integrator through which the procurement of the relevant software, hardware, and services will be made,” says Hua Zhang, analyst with Celent’s Asia Research Group and author of the report.