A market war has broken out between Microsoft and Chinese IT firms to supply software for the country's financial industry.

The financial sector is scheduled to fully open to international competition this year under China's commitment to the World Trade Organization.

Domestic banks are desperately seeking new and better IT systems to enhance their competitiveness.

"Current IT systems are failing to cope with the banks' business expansion and innovation," said Lu Yu, general manager of the computer and software consulting department with China Center for Information Industry Development (CCID).

Dated IT systems affected their responsiveness to customers and their efficiency, she said.

A report by the CCID shows 40 percent of banks are either changing or planning to change their systems, while 42.1 percent are still undecided and 17.9 percent say they have no plans to change in the short term.

The trend toward IT upgrades has opened opportunities for software companies, leading to heated competition between Microsoft and its main Chinese rival, Linux.

A report by U.S. research institute International Data Corporation (IDC) shows Linux revenues rose 27.1 percent last year to 11.8 million U.S. dollars mainly due to government procurement and banking sector upgrades.

However, it is still too early to tell who could win the battle.

Changing to Linux costs 21 percent more than changing to Microsoft's Windows, shows the CCID report.

"High cost is the major factor restricting the adoption of Linux in the banking industry," said Lu.

Government procurement has made a major contribution to the development and growth of Linux. However, Chinese software firms have yet to see the explosive growth experienced by their Western competitors due to lack of skills and customers' credibility, said the IDC report.

Source: Xinhua