Indians prefer to use the internet for their banking transactions, leading to a 15-percentage-point drop in visits to brick-and-mortar branches, a survey by global management consultancy firm McKinsey & Company shows.

In the latest Asia Personal Financial Services Survey, usage of the internet and mobile banking channels in India rose 130 per cent and 338 per cent, respectively, between 2007 and 2011. The survey was conducted through one-on-one interviews with nearly 20,000 mass affluent and affluent Asians across 13 markets. The largest survey pool of 5,000 came from India.

"For the first time since we started this survey in 1998, we see a marked shift away from using branches as a main channel for interaction in many markets. This is a fundamental shift in consumer behaviour and has significant implications for banks," said Renny Thomas, partner and head of retail banking services for McKinsey India, to a group of reporters following the 20 July release of the study in Mumbai.

Across Asia, branch usage fell 27 per cent on an average from 2007 to 2011, while internet and mobile banking rose 28 per cent and 83 per cent. The condition of loyalty was also raised as there appeared to be a 40-percentage-point drop since 2007. McKinsey said this was more the doing of customer relations than by the price of products and services.

"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," added Thomas.

Seventy-nine per cent of the respondents in 2007 said they would recommend their banks to friends. This dropped to only 40 per cent who said the same in 2011.