Consumers across India are now using bank branches less frequently and are instead embracing the Internet and mobile phones for banking, says a survey of personal financial services by global consultants McKinsey & Company.
The Asia-wide survey, based on the feedback of 5,000 repondents, says that branch banking in India witnessed a 15% decline as the average weekly visit of a customer to the branch was 0.58 times in 2007, which has come down to 0.49% in 2011. It is customer relations that drive loyalty, not the price of products.
Branch usage has dropped by 27% on average across Asia between 2007 and 2011. "The scale of the branch network is becoming a less decisive factor than before in capturing customers," says Renny Thomas, leader, McKinsey's financial services practice in India.
Mobile and Internet Banking has witnessed robust growth as usage of mobile banking grew by 338% that of Internet banking increased by 130% from 2007 to 2011.
In the last three years, loyalty of Indian customers has dropped by 39 percentage points. "While Indian consumers say they want to consolidate their banking relationships, they continue to shop around because banks are not delivering the products and services, such as frontline services, that can lock them in," said Thomas.
In 2007, 79% of respondents said that they would recommend their financial instituion to a friend, while in 2011 only 40% respondents said so.