"It is time for the big banks to focus on the people and process side," says Charles Richard, co-founder of Quantitative Risk Management Inc., a risk management consulting firm in Chicago.

Chen echoes this view. "I don't think the weakness lies on the IT side," he says. "It's on the business side."

To keep their best customers and compete with foreign banks, Chinese banks are also investing in technology to support new lines of business. Last year, for example, Agricultural Bank of China went live with software from London-based Misys PLC to handle trading and risk management of treasury market derivatives and structured products. It uses a straight-through processing system that covers transactions all the way from the front office to the back office.

The move was also driven by the China Banking Regulatory Commission's requirement that banks implement technology before engaging in certain types of business.

"We did it to meet CBRC's regulatory requirement," says an IT manager at China Merchants Bank, another early adopter. "If we want to trade derivatives, we must have this kind of system."