Chinese banks have made enormous improvements in their operations over the last decade, but now they have to modernize even more rapidly as foreign banks aggressively enter the renminbi market following opening of the sector on December 11.

In fact, many foreign banks are already underway with ambitious expansion plans.

Bank of East Asia has plans to double the number of its outlets on the Chinese mainland over the next three years from the current 30 to 60. HSBC says it will hire 1,000 employees this year alone to cope with its increasing business.

While the number of foreign bank outlets may look tiny compared to big Chinese banks, each boasting more than 10,000 outlets, their impact should not be underestimated.

With limited number of outlets, most foreign banks have made it their strategy to target high-end Chinese customers - long the profit center for Chinese banks.

There are now thought to be 320,000 people on the mainland whose personal assets exceed $1 million. And the number is climbing fast.

At present, 20 percent of customers at Chinese banks generate 80 percent of the banks' profits. And 20 percent of the customers own 80 percent of the bank deposits.

So it will be a colossal mistake for Chinese banks to let that premium 20 percent flee to foreign banks.

A number of wealthy Chinese have done just that, opening accounts with foreign banks, which recently started to woo customers with a minimum 1 million yuan deposit. Many rich Chinese switch loyalties for quality services and the international reputation of foreign banks.

There is no doubt that Chinese banks have undergone sea changes in preparation for a wider opening of the industry, under China's WTO commitment.

Their service is now a stark contrast to what offered a decade ago, when clerks behind the counter chatted and even ate roasted melon seeds while ignoring clients. Chinese banks have also worked hard to recruit professionals and introduce new products.

Many Chinese banks have welcomed foreign investors to be their partners.

Major Chinese banks have also been listed on the Hong Kong stock exchange and some on the Shanghai Stock Exchange in an effort at restructuring and improving their international image.

The progress, however impressive, is not enough.

It is still very hard to say how many and to what degree Chinese banks have been fundamentally transformed after going public.