The value of financial products in Chinese banks reached 9.85 trillion yuan ($1.6 trillion) by the end of June, according to a leading specialist.

The size of the financial products indicated growing innovation at Chinese banks, said Wang Yanxiu, chief of the banking supervision department at the China Banking Regulatory Commission. Wang made the comments while addressing a forum held by the financial branch of Sina, a major portal website in China on Thursday.

In 2007, financial products in banks were worth about 500 billion yuan.

Wang said that pressure from competitors, such as insurance, securities and trust funds, has prompted banks to intensify their innovation.

As banks cede their power of setting interest rates to the market, expansion-sustained growth could no longer guarantee success, he said.

Therefore, banks need to tailor their services and streamline their management of assets and liabilities.

Commercial banks must follow certain principles in their innovation, Wang added.

He called for banks to guard against over-expansion in innovation, warning that any kind of new financial products come with certain risks.

Moreover, the products must be simple to use and transparent in information since the more complex the operation is, the riskier it gets for customers, he said.