The company predicts that millions of people will actively evaluate their financial services options for the first time, as the market becomes increasingly deregulated, allowing both local and foreign players a chance to steal a march on rivals with skilful marketing. "There will be a massive review of (customer-bank) relationships over the next three to five years," commented MindShare's director of consumer insights for Asia- Pacific, Annette Nazaroff.
The finance sector in China remains relatively unclaimed territory for marketers as current advertising makes little impact, MindShare concluded.
In a study conducted in Shanghai, Chengdu and Wuxi, the media agency found that banks are generally perceived to be extremely passive when communicating products and services. Chinese consumers recall few bank ads overall, and fail to pick up specific messages relating to services or products from those they could remember.
"Foreign banks will take the country by storm with their sophisticated marketing techniques," Nazaroff said.
Domestic players will need to adopt similar marketing strategies and become more service oriented to compete, she added.
Most people in China tend to use bank accounts allocated to them, using a bank chosen by their employer to manage their salary for example, but these habits are set to change as the Government steadily introduces more competition into the finance sector. Foreign banks are currently set to gain full access to the market in 2007.
Growing dissatisfaction with local banks in the affluent top tier cities and among upscale consumers in second tier cities present the biggest opportunities for foreign banks, with opportunities to gain traction in the market with targeted products and service offerings, MindShare said.
It found that people from Wuxi, a third-tier city, were less likely to switch, despite having a positive image of foreign banks, because the services offered by these banks are less relevant to them.
The main state-owned banks, with numerous branches, still command a sense of trust and security, even though service tends to be poor, MindShare reported. Many Chinese banks have been slow to come to terms with the changing environment but some second tier banks, such as China Merchants Bank which has notably focused on service, are likely to provide serious competition to foreign entrants. China's only private bank, Minsheng Bank, and the Shenzhen Development Bank, on the doorstep of Hong Kong, have also gained reputations as aggressive players.
The market is currently dominated by China's four biggest banks, Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Agricultural Bank of China though foreign banks have already started to establish a toehold in larger cities.