GROUP ASSIGNMENT course title commercial banking TOPIC customer centricity of agribank

Up to now, Agribank has provided more than 200 products and Services tocorporate customers, household customers, and individuals, and to credit institutionsand íinancial institutions in

Banking Academy Advanced Program

GROUP ASSIGNMENT

Course Title: Commercial Banking

TOPIC: Customer Centricity of Agribank

Ha Noi, tháng 12 năm 2021

TABLE OF CONTENT

CONSUMER CENTRICITY OF AGRIBANK

I INTRODUCE ABOUT AGRIBANK

Agribank was established on March 26, 1988 under Decree No 53/HDBT of theChairman of the Council of Ministers with the name of Vietnam AgriculturalDevelopment Bank After that, the Bank changed its name to Agricultural Bank ofVietnam according to Decision No 400/CT dated 14/11/1990 of the Prime Minister.According to Decision No 280/QD-NH5 dated November 15, 1996, the Bankchanged its name again to the Bank for Agriculture and Rural Development ofVietnam as it is today On January 30, 2011, the State Bank of Vietnam (the StateBank) issued Decision No 214/QD-Ngan , approving the transformation of ownershipform of the Bank for Agriculture and Development Rural Vietnam from State-ownedenterprises to one-member limited liability companies owned by the State Agribank isthe bank in the BIG 4 banks in Vietnam This bank is mainly invested in agricultural,farmer and rural development

International payments and remittances

SERVICE REVENUE STRUCTURE 2020

Up to now, Agribank has provided more than 200 products and Services tocorporate customers, household customers, and individuals, and to credit institutionsand íinancial institutions in the market, capital market, open market, interbank market.

Products and services are divided into groups, including: Capital mobilizationproducts; Group of domestic payment services; Card service group; Group ofinternational payment services; Service Group Forex Trading; Remittance ServiceTeam; E-Banking service group E-Banking; Treasury and money managementservices group; Agency entrustment service group; Group of associated products andservices;

Besides, service fee revenue continued to have good results; safety ratios areguaranteed according to regulations of the State Bank Agribank continues to affirmthe steadfastness of a brand associated with the mission of agriculture, farmers andrural areas, always being a pioneer, the main source of credit, convenient products andservices for the economy

In terms of network operation: Agribank's network system is very large, this is

an advantage when providing banking products and services, especially paymentservices, and is a necessary basis to increase convenience and meet the increasingneeds of customers Currently, Agribank has relationships with nearly 740 banks andbank branches in more than 86 countries and territories with nearly 2,300 branchesand transaction offices, the largest automated banking network (more than 3,000ATMs, 80 CDM and over 24,500 POS machines serving over 12.6 million cards)

About the number of products and services provided in the market: Currently,Agribank has more than 200 products and services, contributing to diversifying

products, increasing income, and meeting the needs of diverse

also developed strongly in insurance - banking products Products and

individual and institutional customers are divided into 10 groups: Capitalmobilization, credit, domestic payment, international payment, Treasury,investment,

card, E-Banking, banking services fund and money management, meeting thebest

needs of customers

In addition, Agribank has received support from the Government andinternational organizations such as the French Development Agency (AFD), the AsianDevelopment Bank (ADB) to sponsor many agroforestry development projects This

is a favorable condition, providing many products and services to each object withmany incentives, ensuring the beneíits between the parties

About the brand and quality of service: The care and support for customers isdone methodically and professionally by Agribank In particular, in 2019, Agribankimproved the quality of products and services, added utility features, implemented24/7 interbanking, online deposit, new payment services on E-Banking, etc partners,and met customer needs according to market trends

In addition to developing products and services, Agribank focuses on developingdistribution channels in line with the 4.0 trend Agribank's distribution channels ofproducts and services are diversified including: Traditional product and servicedistribution channels (2,233 branches and transaction offices, including: 158 grade 1and 2 branches; 784 grade 3 branches and 1290 transaction offices; 7 companies).affiliated; 03 representative offices and 01 foreign branch Mobile transaction point);Distribution channel via ATM and EDC/POS (2,626 ATM and 19,015 EDC/POS);Distribution channel via Mobile Banking; Distribution channel via Internet Banking;Distribution channel via payment connection with customers (CMS); Distributionchannel with correspondent banks (Agribank currently maintains agency relationshipswith 825 banks in 86 countries and territories)

In order to increase the convenience of products and services, Agribank offers amobile transaction point by specialized car that provides customers with convenient

services such as: capital mobilization and lending, opening payment accounts andregistration Sign to use the services on a payment account; domestic debit card;

domestic payment Services; bill payment, collection and payment on

payment of remittances, sale of ABIC insurance; E-Banking Services and otherconvenient banking services of Agribank As of June 30, 2021, Agribank hasdeployed 68 cars in 66 branches, 454 communes, with 1,622,201 customers,17,065

transactions

Currently, Agribank has issued more than 14 million active cards and has alwaysmaintained its position of the Top 3 commercial banks in the market with more than3,000 ATM/CDM, more than 24,000 POS installed and distributed across theprovinces, remote areas of the country

3.1 Strengths

Agribank's biggest strength is the commercial bank with the largest equity Thisbank is supported by the Government and development assistance funds ofinternational organizations such as ODA, AFD, and ADB to íinance projects onagricultural and rural development, industrialization of agriculture, forestry andíishery This makes Agribank a particularly important position in the country'seconomic development; play a leading role in the rural íinancial market However,Agribank has absolute strength in the distribution channel network With a widenetwork, Agribank has its own advantages such as: stable market share, abundantcustomers In addition, Agribank has modern information technology infrastructure,multi-function business, multi-industry, multi-field, a large and experienced staff

3.2 Weaknesses

The first weakness of Agribank is not meeting the minimum capital adequacyratio; íinancial sustainability is not high Financial capacity is still weak byinternational standards Second, the branch network system in urban areas has notbeen arranged and planned in a secure and effective manner Infrastructure is notsynchronized leading to difficulties for the process of investment and perfecting hightechnology Third, products and services are not diversified, service quality has notbeen paid due attention, and has not met the actual needs of consumers Fourth, the

organizational model at the Head Office is not streamlined and effective;

3.4 Threats

Vietnam's economy is integrating deeper and wider into the internationaleconomy, both an opportunity and a challenge for the banking industry in general andAgribank in particular Challenges when Vietnam relaxes operating conditions forforeign banks in line with Vietnam's implementation of WTO commitments, creatingcompetition between domestic and foreign banks Not only that, among domesticbanks, there is also competition between state banks and joint stock banks Thesebanks are increasingly dynamic, ílexible and responsive However, products thatreplace banking services are increasingly being perfected and become rivals andheavyweights Even within the bank itself, there are many difficulties whenimplementing digital transformation in terms of synchronization and standardization

of technical infrastructure Besides, the COVID-19 pandemic is a thermometer thatmeasures the "health" of the economy and the bank itself

The Vietnam Bank for Agriculture and Rural Development (Agribank) has justreleased its separate íinancial statements for mid-2021 Despite operating in thecontext of difficulties due to the impact of covid-19, with many synchronous andeffective solutions, Agribank has fulfilled its political mission and the role ofVietnam's leading commercial bank This bank is mainly invested in agricultural,

farmer and rural development, with the proportion of "Tam nong"investment

accounting for 70% of the total outstanding economy, accounting for thelargest

proportion of agricultural and rural investment credit market share in Vietnam

Accordingly, at the end of the first 6 months of the year, the bank's pre-tax profitreached VND 9,464 billion, profit after tax was VND 7,572 billion, up 40% over thesame period, ranking third in the Big4 group after Vietcombank and VietinBank Themain reason for the positive increase in bank profits is the reduction of operatingcosts, increased debt recovery to handle risks, and all business segments of the bankare profitable

Specifically, accumulated in the first 6 months of the year, Agribank continues to

be the leading bank in terms of total operating income with VND33,581 billion, anincrease of nearly 32% over the same period In particular, the main contribution is netinterest income with VND 25,973 billion, an increase of 29% Interest incomeincreased by 3.9% while interest expense decreased by nearly 11% compared to thesame period in 2020, helping the bank's net interest income increase sharply

As of June 30, 2021, Agribank's total assets reached more than VND1.6 million,

up 3.4% compared to the beginning of the year and up 10.5% compared to the sameperiod last year In particular, customer lending reached VND 1,232,051 billion, aslight increase of 1.6% compared to the beginning of the year and continued to leadthe market in credit market share Customer mobilization reached VND 1,467,071billion, an increase of 4.2%

In the context of Covid-19, Agribank has promptly implemented many solutions

to support and solve difficulties for customers affected by the pandemic under thedirection of the Government and the SBV, such as restructuring the repayment term,interest exemption, fees, and new loans

In particular, restructuring, exemption of interest and fees for 12,500 customerswith outstanding debts of VND 30,109 billion, new loans of more than VND 203,000billion to more than 50,000 customers Agribank also implemented many credit

programs with preferential interest rates, including: Doubling the limit of

million; large-scale customer loans of VND 15,000 billion; consumer loans ofVND

Despite the decline, Agribank's business performance indicators are still verypositive compared to the Big 4 in particular and the banking industry in general.Agribank's return on equity (ROE), surpassing that of Vietinbank (9.75%), reachedthe highest with 10.17% in the Big 4 At the same time, the proíit margin on totalassets (ROA) reached 0.47% ranked second, only after 0.6% of Vietinbank Nonperforming loans (NPL) are a very important indicator in evaluating the performance

of a bank According to statistics, the average NPL ratio in the íinancial statements ofVietnamese banks is at 1.96% in 2020 In the second half of 2021, Agribank's baddebts accounted for only 0.82% of total outstanding loans, the lowest in the Big 4(BIDV: 1.39%, Vietcombank: 0.91% and Vietinbank: 1.38%) and decreased to nearly0.9% compared to the end of 2020 The above indicators show that Agribank isoperating very well, the credit quality has improved significantly

Although the business results in the first 6 months of the year are positive, it islikely that Agribank's proíit for the whole year is unlikely to increase sharply Covid

19 is taking place very complicatedly, a series of provinces and cities must beseparated in the third quarter of 2021, causing credit to slow down, bad debts tend toincrease, the recovery of bad debts through civil proceedings and handling collateralwill also be very difficult

II The Nature of Customer-centricity (thế giới/ VN nói chung)

Customer-centricity is a business strategy that puts the customer at the center,puts the customer first, the customer is the number one priority Customer play anreally important role, they have direct impact on bank’s revenue It is customerunderstanding that is the foundation of customer-centricity For banks, customer-centricity is a banking practice based on trust and fairness, using customer knowledge

to meet their needs and achieve lasting relationships , valuable, lasting

Roles of Customer - centricity

For businesses that want to stay ahead, creating a customer-centric culture isimportant In fact, research by Deloitte and Touche shows that customer-orientedbusinesses are 60% more profitable than those without a customer-oriented strategy

Customer orientation creates a loyal customer community, which brings morerevenue to the business in the long run According to the Temkin Group, loyalcustomers are 5 times more likely to purchase, 7 times more likely to buy newproducts, and 4 times more likely to recommend your company to friends or family

In addition, customer-centricity plays a role in many other aspects:

Firstly, customer-centricity will help employees find meaning in their work,

increasing employee engagement with the business

Secondly, the customer-centric organization has good adaptability to the market.

Changes in the market stem from a shift in customer needs and behavior Theseorganizations are characterized by activities closely tied to their customer base Soeven the smallest changes are recognized quickly and strategies are updated promptly.For example, during a pandemic, consumer behavior will shift from buying in-store tohome delivery Customer-oriented businesses that can recognize this trend early andpromptly upgrade the quality of their website platforms and shipping services willgain a great advantage over their competitors

Lastly, take the customer as the center to improve skills for personnel HR is

encouraged to interact and maintain relationships with customers in a variety of ways

As a result, their roles will be more diverse and their skills will be enhanced not only

in expertise but also in effective customer interactions

With customer expectations at the highest level and competition from íintechcompanies waiting to claim their market share, it is imperative that banks work tounderstand their customers on a direct level and please them at every opportunity.While technology can help a bank achieve these goals, it still needs a solid customer-focused strategy to continue growing.

Today, banks are facing signiíicant challenges in terms of proíitability andgrowth Erosion of customer coníidence, slow economic recovery, and pressure fromvarious sources are among the many factors contributing to the current difficulties Inthe Americas, Europe, and Asia-Pacific regions, íinancial institutions have launchedmarketing campaigns with slogans such as Banking Innovation, Restoring Trust, andDeepening Banks customer relationship The goal is to make customers feel that theirbanking needs are well taken care of - more "customer-centric"

In the context of the "new normal" after the Covid-19 pandemic, customerexperience is a top priority According to the Government's plan "National DigitalTransformation to 2025, Orientation to 2030", banking is clearly a field with socialimpacts, related to people every day Accordingly, customer-centricity is a key factor

in the digital transformation race of the banking industry

Models

Three Patterns of Customer-Centiic Banking Are Emergíng

The patterns are observed consistencĩes ĩn the approach of

customer-centric banks and are not necessarily prescriptive

Image

Evoking emotion, human face,

engaged in socíety

Sales process

Thorough reviewof needs,

counseling on best producí,

partner for long term

Human, engaged, triendly, helpíủL supportive

Communication

Engaged dialogue, tailored to personal circumstances and commitments

Products

Simple to ưse, fast to start

up, convenient to choose

Channels

Easy interactỉon, sìmple

to búy Products, áccess at times and places desired

Pricing

Fair and relationship-based

pricing, proactive suggestions

Service (emotional)

Friendly and personal Service,

suppórtive staff, engaged

to help

Meeting customer

Convenience

Eítortless, accessible,

Guardian

counselíng, protective, partnếring, Thorough, solid, relationship-nninded

sĩrpple, no hassle, fast, seamless

The importance of customer-centricity with Agribank

Customers are those who directly use the bank's products/services The

each bank is to bring the best and most useful products to meet the needs andsatisfaction of users Customers play an important role in building a business strategy.Banks need to base on their customer portraits to determine the goals of providingproducts and care services that both satisfy customers and increase revenue

The importance of customers to Agribank is even more evident with the goal ofmaintaining the position of the leading retail commercial bank in Vietnam, performingwell the key role of providing products and services (SPDVs), convenience andconvenience, banking interests in the íinancial-banking sector Especially in the TamNong area, which is diversiíied, modern, and high-quality based on digital technology

in the direction of customer-centricity, Agribank has implemented many incentiveprograms, as well as increased many products facilities that meet customer needs.With the motto "Rural is the market, agriculture is the loan object, farmers are themain customers", Agribank is trying to innovate day by day in the direction ofmodernity, simplifying processes and procedures, applying digital banking to servemany conveniences for customers, especially customers in rural areas

With a key role in the capital and credit markets for agriculture, rural areas andfarmers, Agribank's activities are really associated with villages and hamlets and close

to farmers Agribank's capital has created new jobs, restored traditional craft villages,contributed to restructuring agriculture and rural areas in the direction of developinggoods, industry and services Agribank has become a companion close friendship,effective capital support for farmers to rise up in production and business, creatingoutstanding achievements in agricultural production and new rural construction Whilecommercial banks "stick to" mainly in the city, Agribank always tries to find ways tobring banking services to rural and remote areas of the country, contributing to pushback credit black

2.

Through programs, actions, improvements, and enhancement of the quality ofproducts and services as well as customer experiences, Agribank demonstrates itsdetermination to work with the banking industry to realize the NationalComprehensive Financial Strategy until the end of the year 2025, with a vision to

2030 and the Government's projects (Development of non-cash payments for theperiod 2016-2020; Improving access to banking services for the economy; Promotingpayment via banks) goods for public services); at the same time, implementing theplan on digital transformation of the banking industry to 2025, with a vision to 2030

III Customer centricity in Agribank

1.1 Investment and developmentpolicy " Tam Nong"

As a bank likened to a "farmer's bank", Agribank has been making efforts tobring banking and financial services to every village, commune, and family in ruralareas to realize a comprehensive financial strategy nation

Agribank always promotes the pioneering role of a 100% state-ownedcommercial bank in seriously and effectively implementing monetary policy andguidelines and policies of the Party and State, especially credit policy servingagricultural and rural development By the end of 2020, Agribank has provided 1.6million billion dong of capital for the economy, of which 70% of the outstandingloans are for investment in agriculture and rural areas, accounting for nearly 50% ofthe total outstanding loans of the bank The entire banking industry invests in thisarea

Implementing the State's policy, each year, Agribank spends thousands ofbillion dong to apply preferential interest rates to agricultural production Currently,Agribank is effectively implementing a number of policy credit programs and 02national target programs on new rural construction and sustainable poverty reduction

Agribank has supported sustainable poverty reduction for 61 poor districts withloan turnover of over 13 trillion VND; loans under Decisions 63, 65, 68 on supportpolicies to reduce losses in agriculture with sales of nearly 15,000 billion dong; loans

to replant coffee with sales of over 1,300 billion dong; loans to íisheries developmentpolicies under Decree 67 with sales of over VND 6,000 billion

For loans for new rural construction, Agribank has provided loans to 100% ofcommunes nationwide with outstanding loans of nearly VND 600 trillion, of whichover 50% of new rural construction loans are for investment Production, Processingand trading in agriculture, forestry, íishery and salt production to help raise the value

of key agricultural products; nearly 35% of investment capital for commercialservices; over 15% of investment capital to build rural infrastructure

Through the implementation of policy credit programs, Agribank has beenmaking a very important contribution to the eradication of poverty and hunger,building new rural areas, promoting the restructuring of the agricultural sector, andcreating motivation for the development of new rural areas Agriculture plays the role

of "supporting platform" of the economy At the same time, propagandize anddisseminate guidelines, guidelines, policies and laws of the Party and State, bankingcredit policies, new technologies in production and processing, etc., contributing toraising people's intellectual standards people, creating absolute coníidence in theleadership of the Party and State for the development of agriculture, farmers and ruralareas

In addition, Agribank also segments speciíic customer groups with differentloan levels:

For customers being individuals, households, cooperative groups, business households, farm owners, cooperatives and unions of cooperatives according to the following levels.

Loans from customers

Maximum amount (million VND)

1

Customers are individuals or households residing outside of

rural areas with production and business activities in the

agricultural sector (except for the case mentioned in Point 3