Digital China, Misys tap into lenders market

Digital China Holdings and Britain-based Misys agreed yesterday to jointly expand their presence in the vast small- and medium-sized mainland lenders network, a segment with great potential but one that has been lying in the shadow of state-owned commercial banks.

Both parties consider the market - estimated to have as many as 30,000 players - to be their main growth target, especially after major state and city-level banks complete their reshuffling to compete head to head in the high-end market.

'There are so many small banks and credit unions in China's second- and third-tier cities and rural areas that need to upgrade their networks and services to keep up with the development in the rest of the country, but they have no tools to do so. I think this is definitely the area we can tap,' said Dong Qiqi, the chief executive of Digital China Financial Software, a unit of Hong Kong-listed Digital China.

Larger commercial banks have started to expand into the medium-sized segment as big commercial lenders seemingly crowd major metropolitan areas, offering a wide range of similar financial services and fight to attract a limited number of high-end customers.

Bank of Communications announced on Wednesday it would take a 10 per cent stake in Changshu Rural Commercial Bank for 320 million yuan to expand into rural parts of Jiangsu province.

In 2006, Netherlands-based Rabobank acquired 10 per cent of United Rural Co-operative Bank of Hangzhou to enter the mainland's backwaters.

But, according to Mr Dong, the majority of the country's about 30,000 smaller lenders have been struggling long with updating their facilities to meet the speed of money transactions of bigger banks.