NEW DELHI, SEPT 20: The domestic retail banking market is expanding with annual revenues expected to more than double to $16.5 billion by 2010 from about $6.4 billion at present, says a McKinsey study.

The report adds that an increasing number of banking customers in India value the skills and portfolios of products offered by multinational banks, whose experience could help them break through the wall of loyalty that the customers here display.

Retail banking customers in India, like their counterparts throughout Asia, have shown a very high level of loyalty towards their domestic banks.

However, the study also points out the differences among customer segments could throw open huge opportunities to the foreign players.

Out of a total 300 urban banking customers with annual household incomes over $1,150, 69% of the respondents said that they would prefer to stay with their current bank, even if competitors offered lower fees and higher interest rates. Needless to say the state-owned banks with 75% of the total assets and vast branch networks dominate the sector.

State Bank of India, for example, has more than 9,000 branches while leading private sector player ICICI Bank, has less than 600.

Interestingly, only 10% of the respondents in India have used a financial advisor, which is a relatively large share compared with the percentage in other Asian countries.

According to the report, foreign entrants hoping to cash in on these trends “would have to accommodate a preference among Indian customers for dealing with people rather than machines”.