Foreign-invested banks have become popular with Chinese consumers, particularly the new upper class who believe banking with a foreign bank is the mark of a high social status, according to an AC Nielsen study.

Consumers in the three largest cities -- Shanghai, Beijing and Guangzhou -- are increasingly aware of foreign banks' services in China, said an AC Nielsen report in the latest issue of Personal Finance Monitor.

Though most consumers still choose domestic banks, the gap between foreign and local banks is narrowing, it said.

In China's commercial center Shanghai, less than half of the people surveyed last year could even name a foreign bank. This year, an additional six percent of the interviewees in Shanghai can name a foreign bank, according to the magazine, after conducting a telephone survey of 7,500 people in 10 big Chinese cities.

This year's survey found that in the three largest cities, young couples with no children tend to deposit one third of their monthly earnings into a saving account, invest five to 10 percent and leave the remaining 57 to 64 percent for miscellaneous spendings.

"Local banks enjoy many advantages in the domestic market," said Bega Ng, Director of Financial Research from AC Nielsen China. "They are more familiar with the local market and most of them have set up a comprehensive network of branches and ATMs."

For foreign banks, the key to surviving the competition is to communicate effectively with their target group and build brand loyalty in the long run, said Ng.

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