The use of new technology may help mainland banks outgrow their large international competitors, software supplier Misys Banking Systems predicts. While many key western banks are making do with systems half a century old, frustrating their adaption to change, younger, more agile Chinese lenders are buying up state-of-the-art software to improve treasury trading as well as branch and risk management. 'Stunning economic hypergrowth in China is creating an environment where banks can expand to the extent that they displace many US, Japanese and European banks among the top 20 of the world's largest banks,' Misys Asia-Pacific regional director John Palmiero said. The more visionary Chinese banks are installing software that will enable them not only to compete with international players domestically but also internationally. 'What we've been asked by our clients in China to do is not catching up,' Mr Palmiero said. 'It's leading.' Misys, listed in London, is the only supplier of the entire spectrum of banking software, including those for exchange and money market trading, managing international branches, trade financing, retail banking and risk management. The company counts 1,200 banks internationally as its clients, including 49 of the world's top 50 lenders. Since 2000, the company's China revenue has surged 82 per cent, Mr Palmiero said. In 1997, 87 per cent of Misys' revenue in Hong Kong and China came from overseas branches of foreign banks and only 13 per cent from local customers. Today, it derives about 60 per cent from domestic banks. It signed Bank of China (BOC), one of the Big Four state banks, as its earliest domestic user in 2002. Now its mainland clientele includes 11 domestic lenders, including all the Big Four state banks, which share more than 50 per cent of the country's banking assets among them, China Merchants Bank, headquartered in Shenzhen, Bank of Beijing and city commercial banks in Shenzhen and Urumqi in Xinjiang. Also, between 20 per cent and 25 per cent of foreign bank branches in China have deployed Misys' software, Mr Palmiero estimated. As Misys celebrated its 25th anniversary in Hong Kong last week, it was on the verge of sealing a licensing agreement with its 12th mainland client and in advanced talks with another Chinese bank. BOC, operating in more than 12,000 domestic and offshore locations, uses Misys' software to manage its entire global treasury trading operations from Beijing. Misys' software also allowed the Industrial and Commercial Bank of China (ICBC), the country's largest commercial bank, to centrally manage 15 overseas branches from a single hub in Shenzhen. The China Banking Regulatory Commission has required lenders entering the derivatives business to have adequate systems to manage risk. While treasury and trade finance-related software dominate Misys' China business, Mr Palmiero sees future growth also being driven by demand for risk management systems as scandal-prone mainland banks are under pressure to tighten internal controls. While its treasury software has a component dealing with market risks, no Chinese banks use Misys' enterprise-wide credit and operational risk systems though several are in talks to deploy credit risk management solutions. However, several have hired independent consultancies to advise them on improving enterprise-wide risk management. 'Once they start spending money [on] consulting, it is inevitable that within one or two years they will need to implement software to do that as well,' Mr Palmiero said.