The Impact of Online Banking on Chinese Bank Reform

摘要

The financial institutions play an increasingly important role in a nation's development as the economy grows. With the Chinese economy registerering a sizzling 9.1 percent growth last year, the country's bank reform become a hot topic of the day. For a long time, financial reform has lagged behind the overall reform of the economic system, and in financial reform, the reform of state-owned banks has been at the bottom (Tan Wei 2004). The reform of Chinese Banking System becomes critical and imperative. Pressures are mounting on domestic banks as the country further opened financial sector to foreign competitors with its WTO commitments. China's First WTO year marked its bank' shift system to an environment of free competition. According to the WTO agreement, foreign banks can conduct corporate RMB services two years after China's WTO entry, and engage in retail banking services after five years. Implementing effective methods to carry out the reform tasks will be the key to the reform success. Due to the fast progress of the Internet and wireless communication employ newest high technology in financial institutions is a worldwide trend. E-banking is new electronic way for customers of banks and financial institutions to access their accounts, pay their bills, manage their money and use various services. At present, E-banking is stronger in retail banking although corporate-banking via the Web is also increasing (Smith, 1999). USA banking system is one of the leaders in E-banking and innovation. However, recent evidence suggests that the current growth rates of e-banking in European banks exceed those of the USA (Nolan, 1999). Moodys' (1999a,b,c) say that Sweden and Denmark are the most advanced countries in terms of progress and penetration into banking systems. Fast growth is also occurring in the UK and Germany. Most industries have been influenced, in one way or another, by this promising new technology. (Gunasekaran & Love, 1999; kalakota & Whinston, 1997). The presence of E-commerce has been more apparent than in the banking industry (eMarketer, 2000; Irish Times, 1999). All of these comments and facts represent that Internet banking is banks' future. Chinese banks are lagging way behind their competitors in key area like corporate governance, capital adequacy, and assets quality as well innovation capability. And there is a big gap in bank information system too. When China fully opens up the banking sector, can Chinese banks survive in the international competition? In this paper I will present the implementing online and other high technology in banking services will maximize the bank's profit and improve customers' satisfaction in the most efficient way. The paper also analyzes the impact of online banking on Chinese bank system reform in the following aspects: First: The advantages on applying Internet and other modern technology in the banking practices. Second: The current situation of Chinese banks and obstacles they confront. Third: Implementing high technology is one of the most effect ways to bring the bank system reform to a success. Fourth: Some suggestions on online banking and Chinese bank reform.