Online banking may not be ringing in the cash for foreign lenders in the mainland, but it does offer them a way to match the massive branch network and reach advantage of China's giants. Hong Kong bankers said the lack of boundaries on the internet provided a way around restrictions from Beijing. 'Of course, it cannot replace all the functions provided by branches, such as taking deposits, but customers can make fund transfers or give remittance instructions online without having to go to a branch physically,' a banker said. This is a great convenience to non-Chinese as under mainland regulations, foreign banks will only be allowed to conduct personal banking from the end of next year. Analysts warned, however, that banks should not rely solely on internet banking to increase business volume unless they had branch networks that had reached a certain scale. A good example of the need for a branch structure is in Hong Kong. Although the big players such as HSBC and Standard Chartered offer many internet banking services - with substantial transactions online or by phone - they still have to maintain branches, especially when they are hoping to expand their wealth-management business where personal contact is vital. 'Citibank, which targets high net-worth customers in Hong Kong, has 25 outlets [in China]. As the mainland market is so big, I believe foreign banks should have at least 40 to 50 outlets in major cities,' an analyst said. That said, however, the focus is on 2007, when the mainland market is fully opened. That is also expected to boost internet banking further as more transactions will be allowed, including securities trading. China now has 103 million internet users and that number is growing. Some foreign lenders, such as HSBC and Bank of East Asia (BEA), are already providing internet banking services in the mainland. Any BEA account holder with personal or joint accounts in the mainland, yuan or foreign-currency accounts, or onshore or offshore corporate accounts can apply to use the bank's Cyberbanking account. Customers can make account balance and transaction inquiries, fund transfers, remittance instructions, time deposit instructions, deposit-rate and exchange-rate inquiries, or cheque book and statement requisitions online. HSBC, which launched mainland internet banking in late 2002, saw the penetration rate reach 30 per cent of its customers last month.