- Investment in modern banking software solutions will lead to Chinese banks displacing US, European and Japanese banks as the largest in the world -
HONG KONG, 17th November 2005 – Misys Banking Systems, a division of Misys plc, the global software and solutions company, says the world’s banking landscape is changing and huge new opportunities are already emerging for banks in China.
Speaking at an event to mark the 25th anniversary of Misys in Hong Kong, Misys Banking Systems Regional Director, Asia Pacific, Mr John Palmiero, said several Chinese banks were ideally placed to become the largest in the world.
"Stunning economic hyper growth in China is creating an environment where banks can expand to the extent that they displace many US, Japanese and European banks currently among the top 20 of the world's largest banks,” said Mr Palmiero.
“Technology represents one of the biggest opportunities here, but also one of the greatest risks. Major western banks typically rely on systems that date back half a century. The complexity of managing this aged technology and making it work effectively with successive generations of newer systems is a huge inhibitor to their ability to compete with younger, more agile banks.”
“In many large Western banks, IT departments with over ten thousand staff are not uncommon, but in order to avoid some of these resourcing challenges, Chinese banks are already consolidating their global processing systems to ensure they maintain their agility as they grow.”
As examples of this approach to global banking, Mr Palmiero pointed towards the steps taken by both Bank of China (BoC) and the Industrial and Commercial Bank of China (ICBC) to manage the expansion of their banking empires overseas.
In 2002, Bank of China appointed Misys OPICS as the bank’s preferred treasury solution. This was essential in order to support the processing and settlement of the wide range and volume of transactions generated by the banks existing systems. In addition, consolidating operations on a single treasury back-office solution as part of the bank’s global settlement project has greatly enhanced the management process, as well as allowing it to compete more effectively in world markets.
All transactions from Bank of China’s 11,608 locations throughout the mainland and the 560 branches overseas are now being processed into one centralized location in Beijing. The facility allows the bank to process four times as many transactions using the same number of staff.
“The need for banks to be more international, efficient and competitive in light of China’s WTO ascendancy is a major driving force,” commented Mr Palmiero.
“Our software solutions for handling treasury processing and derivatives trading have been the most popular in China and we are now seeing growing demand for core banking, risk management and trade processing systems.”
“These systems also help banks deal with compliance and transparency issues which are now becoming prerequisites for doing international business.” Misys does business with 1200 of the world’s banks, including 49 of the top 50. In such an environment, growth is fuelled by adding new names clients. Asia leads this growth, adding over 60% of the company’s global new name clients since 2003.
“Hong Kong has always traditionally been viewed as the gateway to China but as the banking sector develops, Hong Kong is playing an even bigger role as the gateway from China,” said Mr Palmiero.
In 1997 more than 80% of Misys Banking Systems revenue in Hong Kong and China came from the overseas branches of foreign banks. “We were a foreign company selling to foreign banks, with 13% of our revenue from local customers” said Palmiero. Today, more than 60% of income is generated from domestic banks.
Nowhere is this more evident than another of Misys Banking Systems clients, ICBC, one of China’s largest Banks.
In 2003, ICBC awarded Misys Banking Systems a contract for both Midas and Trade Innovation products, which licensed the bank to run up to 15 international branches from a single Overseas Data Center hub, enabling them to benefit from increased operational efficiency and lower costs.
Running all international branches, the Midas and Trade Innovation software operates from a sophisticated hub in Shenzhen, Southern China. The consolidated hub not only resulted in a significant cost reduction but also gives the bank greater control as customer information is centralised for risk management purposes and is, therefore, easier to manage regulatory and business change.
Specific local requirements are also supported through the Midas hubbing environment which caters for different end of day run times, holiday calendars and enables branches to tailor their service to meet local needs.
These developments have seen Misys Banking Systems stream of revenue increase dramatically, contributing to record revenue growth of 82% in China since 2000.
“Misys Banking Systems is the only provider of software solutions across the entire spectrum of banking business – that is our unique point of difference from our competitors,” said Mr Palmiero.
“The four top tier banks in China were the early adopters in upgrading their capabilities. We then set our sights on the 10 joint stock banks and over 100 tier three City Commercial Banks throughout the mainland. Since putting in place our strategy for this segment 18 months ago, we have already signed 5 contracts, with all of those customers now live.”
“Future new business opportunities are extensive and Misys Banking Systems is well placed to provide excellent products and services to banks as they continue to develop. China is a key market for us and we are committed to delivering value here for the long term,” Mr Palmiero concluded.
About Misys Banking Systems
Misys Banking Systems supplies over 1,200 customers in over 120 countries, among them 49 of the world's top 50 banks (Source: The Banker, July 2004), with software and solutions for retail banking, wholesale banking, treasury and capital markets and risk management. It has 2,600 people around the world, over 70% of whom are outside of the United Kingdom, and sales, implementation and customer support teams in over 28 countries. Misys Banking Systems is part of Misys plc.
About Misys plc
Misys plc (FTSE: MSY), the global software and solutions company, is one of the world's longest-established providers of industry-specific software. Founded in 1979, Misys serves the international banking and healthcare industries and the UK general insurance industry, combining technological expertise with in-depth understanding of customers' markets and operational needs. In banking Misys is one of the top four software providers worldwide and the largest outside the US, with over 1,200 customers, including 49 of the world's top 50 banks. In healthcare Misys is a top five software provider in the US market, serving more than 92,000 physicians in 18,000 practice locations, 1,250 hospitals and 600 home care providers. In UK general insurance Misys is the market leader in software solutions. Through Sesame, a wholly-owned subsidiary, the company is also a leading provider of support services to over 8,100 financial advisers in the UK. Misys employs over 6,500 people who serve customers in more than 120 countries. For more information, visit www.misys.com
Misys. Making things that really matter, work better.
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Issued by Professional Public Relations Asia on behalf of Misys Banking Systems. For further information, please contact:
Professional Public Relations Asia
Tony Turner
Tel: 3111 9928
Email: tturner@ppr.com.hk
Monika Yeung
Tel: 3111 9964
Email: myeung@ppr.com.hk
Misys Banking Systems
Christine Goh
Tel: (65) 6416 4092
Email: christine.goh@misys.com
Irene Leung
Tel: 2230 2318
Email: irene.h.s.leung@misys.com
