economy - Fundamental banking questions

Nice discussion yesterday with Bliss Khaw, who is currently stationed at the US Consulate here in Shanghai to finish her investigation into the market for banking services. Since we both have no financial interest in the sector itself we could ask ourselves some relevant questions. Are the stringent banking regulations not a blessing in disguise as they stop foreign banks from losing more money? And: is the market for financial services as large as the foreign banks hope. China is still a cash society and training banking staff makes little sense if their is not a substantial customer base.
Anyway: 95 percent of the banks is only here to support their existing customers, so for them the China market is not that relevant. We are not alone.