International pressure on China for faster reforms is unfair and stems from the poor understanding of the country's challenges, according to Michael Smith. The Australian and New Zealand Banking Group chief executive, in an exclusive interview with the South China Morning Post, commended Beijing for its focus on reforms and urged the West to allow China the wriggle room to time and calibrate its policies at its own pace. "The reform agenda in China is still pretty focused," Smith said. "There is a question mark over whether some of it has been fast enough, particularly in the restructuring of state-owned enterprises. Possibly the interest rate liberalisations and convertibility could have happened earlier. But China has to manage many issues. "I think the important thing to understand here is the country has to manage the economy for itself, and to ensure the social balance doesn't get out of step. International pressure for faster change or certain reforms is not appropriate. It is up to China to make those decisions in its own best interest. "The sheer size of the task ahead for China is sometimes totally underestimated by Western governments, which have gone through that development stage many years ago. They don't appreciate the significance of some of the social implications that have to be dealt with." Capping a 37-year-long career in commercial banking, Smith's role in raising the international profile of ANZ ranks among his crowning achievements. During his time at the helm, revenue contribution of the bank's international business rose from 7 per cent to 25 per cent of overall group income while its regional ranking by Greenwich Associates leapt from the mid-30s to fourth, placing it just behind Citi. Smith, 59, who resigned as HSBC's head of Asian operations in 2007 after serving with the bank for 30 years to join the Australian lender, said banks had to catch up with technology. "If you think about banking products, they haven't changed very much since Charles Dickens. He wrote out his bill of exchange with a quill. Over the years, that has moved to typewriters, PCs, credit cards and payment systems. The whole thing is computerised and even now, it continues to evolve. "Retail customers are going to require a bank which is basically digitally enabled. Customer experience has to be far richer than it is presently. I'm not worried that the banking industry will not be able to evolve. I just don't know whether it will be able to evolve quickly enough. It's evolution but at revolutionary speed." On Chinese banks' efforts to become international financial institutions through acquisitions, Smith said the biggest challenge would be to create common values as integrating cultures was the most important, yet most difficult, task in any acquisition. "If you have a very domestic culture, it's very hard to run an international culture. If you have an international culture, it's very difficult to understand domestic. The scale of that task is significant. It's not impossible, but it's hard work." Smith sees similar difficulties in integrating the various financial businesses under one roof, as Chinese banks have been attempting to do. "If you are trying to integrate different cultures within a business, it's very hard to do. It is easy to build an integrated approach joining an institutional bank, a commercial bank and a retail bank. The fundamentals are the same. But asset management is very different from banking. So is investment banking. Putting them all together is not easy." Going forward, Smith sees low growth and regulatory burden as the biggest risks for banks. "The sheer cost of compliance and the ability to implement and execute a lot of regulation is probably not understood fully." Set to retire next year, Smith's hobbies include making wine, playing tennis and collecting classic cars, which he says help him beat the stress of high-powered banking. Once out of office, he might spend more time cultivating soil and nurturing his vineyard, which, he admits, is in the red. "I'm still losing money on the vineyard. But I've always wanted to grow wine. On my honeymoon in Bordeaux, I thought what a fantastic thing to do. So it's sort of a dream. And of course, when you try to realise your dream, you realise it's actually quite hard work. It's not quite as easy as it looks. But I enjoy it. I like being on the land."