A new report predicts the Asian financial system is on track to surpass those of the US and Europe combined by 2030.

The ANZ bank report, titled "Caged Tiger: The Transformation of the Asian Financial System", finds the Chinese financial system alone will be twice the size of that of the US by 2030 if the government continues on its path of reform and deregulation.

The government has announced plans to allow the first privately-owned banks since the Communist revolution, and last week it extended the foreign exchange trading band for the renminbi, allowing it to rise and fall by a greater amount against the US dollar each day.

ANZ chief economist Warren Hogan expects the deregulation program to accelerate.

"Banks will focus more on consumer finance, funding small-medium enterprises, this sort of thing," Mr Hogan said.

"And of course the industry at the moment has got a huge array of banks - there is the five big banks in China but there's hundreds of smaller banks.

"And, as we saw in Australia in the 80s, and there were many examples of it, there will have to be significant consolidation of that sector over the decade ahead."

China's government has made it clear it is hoping to tackle fluctuations in the supply of credit being created by unregulated lenders known as "shadow banks".

Mr Hogan says the government's intention to remove restrictions on interest paid on deposits is part of a strategy to bring stability to what many see as the major threat to China's economy.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 4 minutes 47 seconds 4 m 47 s China's banking sector tipped to be bigger than US finance industry by 2030 ( Pat McGrath ) Download 2.2 MB

"The Chinese at the moment are the great savers of the world; they're saving almost half their GDP every year - they can't send their money overseas, or not in any great quantity," he said.

"Their equity market doesn't function very well. Those deposit rates are fixed at a low level, and that's why they're having these problems in the property market, because it's really one of the only alternatives for investors."

But such change does not come without risks.

"That will create actual financial market volatility and probably just as importantly it'll have people worried about the risks of a recession and this sort of thing in China," Mr Hogan said.

"But I think it's manageable. The Chinese have significant resources at their disposal. Their government has a significant surplus, the economy."

ANZ operates throughout Asia and like many Australian banks is a good position to capitalise on the unprecedented growth in China's finance sector.

The question for Australia is whether its banks can compete with less regulated sectors in China and elsewhere in Asia.

Deloitte Access Economics seems to think they can.

It has identified wealth management as one of the five industries that Australia should look to as the mining boom subsides, says Deloitte partner Chris Richardson.

"Asia's boom isn't ending, it's evolving, and Australia will have new and different opportunities to sell into that," Mr Richardson said.