THE IMPACT OF INFORMATION TECHNOLOGY ON BANKING SALES PERFORMANCE CASE STUDY IN TECHCOMBANK

1.1.Rationale Banking can simply express as the business of keeping, lending, exchanging and issuing money. The Key business priorities of the banking and financial services industry are Efficiency, Growth and Resilience. The technology helps the sector to fulfill the requirements of the business priority areas. Implementation of information technology began in right earnest in the sector. Starting from back office automation, which was aimed largely at processing of voluminous data and automation of cheque clearing operations; the technology moved to the front desk in the form of total branch automation. At the same time, the development in communication technologies made technology implementation more widespread and it became cost effective to network bank branches. Investments in information technology also helped cut down operational costs drastically. Technology means application of knowledge or a technical process method or emerged as powerful tool to reduce operating costs, making it viable for financial institution to expand into rural and low-income areas. Technology plays an important role in Financial Services for monitoring and controlling of their services; currently some of the technology use by financial institutions (FSIs) These help FSIs to provide efficient, better customer service, greater product variety, shorter response time, enhanced product quality and better customization of products and services. There are about 4 billion unbanked people in the world which is more than two third of the population of low- and middle-income countries financial institution such as commercial bank is still unable to reach poor population, because of high cost for building and maintain branch network and developing. According to Nielsen''''''''''''''''s Insights 2017 Report, Vietnam thein Vietnam in 2017 was 84%, an increase of 6% from the previous year. More notably, in rural areas, 68% of the population now use smartphones. The above figures show an impressive trend – the ubiquity of smartphones and tablets. Habits and behaviors of people in all regions, of all classes and ages are changing. Online services, whether for shopping, making friends, exchanging information, or dating, are becoming more popular. The Banking sector is no different. Users expect to be able to access and use banking services at anytime, anywhere and on any device. Each bank has its own approach to digital banking, which focuses on the customer experience or the ability to provide online services. However, these options can only be successful when delivering the best value to the customer. Right from the start, Techcombank has focused on technology, believing it to be the best way to serve customers and promote business development. During 26 years of operation, Techcombank has continuously strengthened its systems and capacity to best meet the needs of customers. In recent years, Techcombank’s application of technology has delivered remarkable progress, creating breakthroughs to improve operational efficiency and customer satisfaction. The aim is to identify and understand the changes that IT is causing on the banking sector, in order to examine in detail how the recent (and foreseeable) advances in IT are affecting the sector and can affect its future evolution. As IT is having a strong influence on the evolution of the banking, the study investigates the influence IT has on the banking sector and the payments system. Therefore, the purpose of this study was to investigate the relationship between IT and Banking sales performance, and case study in Viet Nam Technological and Commercial Joint stock Bank (Techcombank) 1.2.Research objectives -To review theoretical backgrounds of Information Technology on Banking Sales performance -To analyze the impact of Information Technology adoption on the Sales performance of TCB. -To give some solutions and recommendations based on the findings emanated from the study 1.3.Research questions -What is theoretical framework of information technology applied for the Sales Performance at Techcombank? -How is the impact of Information Technology factors influencing on Techcombank Sales performance? -What are the main factors which affect to Sales performance at Techcombank? -What should Techcombank do to improve Sales Performance via Information Technology? 1.4.Research methodology 1.4.1.Research process The research conducts with the following process: Figure 1.1 Research process Source: author 1.4.2.Data collection To achieve the research objectives, several data collection methods were applied in the research, including secondary data collection methods and primary data collection method. Secondary data collection Secondary data was collected in this research from: -Textbooks, journals, magazines and newspapers, publish researches, internet, etc. -Relevant documents, reports from TCB from 2016 to 2019 Primary data collection Staffs survey: Survey objectives: To evaluate the importance of information technology on TCB sales performance Respondents: Staffs of TCB with positions: + IT Manager + Financial Manager + Business Manager Sample size: 200 Sampling method: Convenience sampling by directly surveying staffs who have been working at TCB are concerned to introduce their evaluation on the importance of information technology on TCB Sales Performance. Questionnaire design: questionnaire is designed with 2 main parts including survey content and personal information as Annex attached. In order to make convenience for staffs who answer the questionnaires, all questions were designed with closed questions under 5-point-Likert-scale (in which 1 indicating very no extent to 5 indicating very great extent). Respondents who answered the questionnaires only circle on the suitable levels that reflected truly the situation asked. Among 200 questionnaires sent, there were 170 valid answers, reaching the ratio of 85%. Questionnaire distribution: The researcher distributed customers questionnaire papers at TCB offices. The researcher helped them to fulfill the questionnaire papers. Then the researcher got back immediately. 1.4.3.Data analysis Findings data are systematically linked to the format of self-developed questionnaire attached in the appendix. Data are collected by using questionnaire and distributed with link through Email and also hard copies around the area of Ha Noi. Collected data are analyzed to identify, describe and test the impact of Information Technology in banking sector via survey TCB’employees. The author use “Excel” and “Word” software to process the data. 1.5.Research scope Research object: The impact of information technology on TCB Sale Performance as the research object. Research location: the research was implemented in Hanoi. All the primary data was gathered in Hanoi, Viet Nam. Timing for research: -Secondary data was collected from the Viet Nam Technological and Commercial Joint stock Bank in the range from 2016 to 2019 -Primary data was gathered from the 15th of June, 2020 to 20th of August, 2020. 1.6.Thesis Structure outline The thesis includes 4 chapters: Chapter 1: Introduction Chapter 2: Theoretical background on IT Chapter 3: Current Information Technology at TCB Chapter 4: Some solutions and Recommendations for TCB

-NGUYEN VAN HAI

THE IMPACT OF INFORMATION TECHNOLOGY

ON BANKING SALES PERFORMANCE

CASE STUDY IN TECHCOMBANK

MASTER OF BUSINESS ADMINISTRATION THESIS

HÀ NỘI-2020

-NGUYEN VAN HAI

THE IMPACT OF INFORMATION TECHNOLOGY

ON BANKING SALES PERFORMANCE

CASE STUDY IN TECHCOMBANK

MASTER OF BUSINESS ADMINISTRATION THESIS

SUPERVISOR: Assoc.Prof Dr VU DINH HIEN

HÀ NỘI-2020

First, I would like to send thanks to my thesis supervisors, AssociateProfessor Doctor Vu Dinh Hien, who instructed and taught me a lot, gave me hisvaluable time and preciuos comments to contribute much to my thesis.

Second, I send my sincere thanks to managers and colleagues atTechcombank Vietnam for catering me in collecting full and accurate data inresearch process

Finally, I also would like to thank my family and friends for their support in finishing this thesis

Thank you very much!

October 2020

Nguyen Van Hai

CRM: Customer relationship management

EFA: Exploration Factor Analysis

FSIs: Financial institutions

IT: Information Technology

NFI: Net fee income

NII: Net interest income

ROA: Return on Asset

ROE: Return on Equity

Techombank (TCB): Viet Nam Technological and Commercial Joint stock Bank

TOI: Total operating income

Table 3.1 TCB business results from 2015 to 2019 46

Table 3.2 Response Rate 47

Table 3.3 Time works with current bank 49

Table 3.4 Adoption of IT in the Improvement of Banking Sales Performance 52

Table 3.5 Importance of Adoption of IT Innovation in the Improvement of Banking Sales Perfomance 52

Table 3.6 Extent to Which IT Adoption has Improved the Sales Performance of the Bank 54

Table 3.7 Rating the Adoption of Various Technological Innovations 54

Table 3.8 Cronbach alpha of IT (Time 1) 56

Table 3.9 Cronbatch’s Alpha Banking Sales Performance (Time 2) 56

Table 3.10 EFA 57

Table 3.11 Regression Analysis 58

Table 3.12 Coefficient Results 59

Figure 1.1: Research process 12

Figure 2.1 TOI Structure 26

Figure 2.2 NFI Structure 27

Figure 2.3: Model of Organization 31

Figure 2.4: The theory of Technology Acceptance Model 33

Figure 2.5: Research Model 34

Figure 3.1: Oganizational structure of TCB 39

Figure 3.2 Working Experience in the Banking Industry 48

Figure 3.3 Position Held in the Organization 50

Figure 3.4 Level Education 51

EXECUTIVE SUMMARY

The increased demand for information technology (IT) in banking sectorbecame imminent and unavoidable in the world at large and Vietnam in particular.Invariably, the future lies in the IT driven banking systems and services Banks haveembarked on deployment of IT based banking products and services such asautomated teller machine (ATM), internet banking, mobile banking solutions, point

of sale terminals… TCB has to recognize the current impact of informationtechnology on Sales Performance so that the author decided to do my final researchnamed “The impact of information technology on Banking Sales performance Casestudy in Techcombank”

The aims of this study were (1) To review theoretical backgrounds of InformationTechnology on Banking sales performance; (2) To analyze the impact of InformationTechnology adoption on the Sales performance of TCB; and (3) To give some solutionsand recommendations based on the findings emanated from the study

In order to get the research objectives above, the author implemented thestudy based on the Model of Organization (Leavitt, 1965) and TechnologyAcceptance Model (TAM) (Davis, 1989) to develop the survey with 3 independentvariables to measure current information technology components, 1 dependentvariable to measure overall TCB Sales Performance The research also used bothquantitative methods and qualitative methods to analyze the impact of informationtechnology to TCB sales performance

From doing this research, the author found out the adoption of IT hadimproved TCB operations, not only increased their market coverage but alsoremained competitive in the market The usage of IT can lead to lower costs, but theeffect on profitability remains inconclusive, owing to the possibility of IT effectsthat arise as a result of consistence high demand of skilled work force, issues ofincreasing demand to meet customer's expectation for customer service delivery,trustworthiness of the information system and competition in financial

Through understanding deeply, the impact of information technology on TCBsales performance, the author proposed to implement following solutions in order toimprove TCB Sales performance: TCB seeking to improve Sales performanceshould embrace IT Some financial innovations decrease risk and volatilityassociated with globalizing markets With greater globalization, firms, investors andgovernments are exposed to new risks such as exchange, interest rate and politicalrisks which IT seek to manage TCB should proactively monitor customerspreferences with regard to technological innovations such as ATMs and try toimplement these preferences in their features in order to enhance theirfunctionalities leading to enhanced Sales performance TCB should Improve thecurrent the information technology services to help customer get better experienceand more using the information technology products TCB shoul also invest more inhuman resources in order to enhance responsiness factor, should focus on trainingstaffs as well as constantly improving the ability of serving customers of employees.

The author hopes that this study will be considered and implemented in TCB

to invest move in Information technology in the future to increase its Saleperformance

CHAPTER 1: INTRODUCTION

1.1 Rationale

Banking can simply express as the business of keeping, lending, exchangingand issuing money The Key business priorities of the banking and financialservices industry are Efficiency, Growth and Resilience The technology helps thesector to fulfill the requirements of the business priority areas

Implementation of information technology began in right earnest in thesector Starting from back office automation, which was aimed largely at processing

of voluminous data and automation of cheque clearing operations; the technologymoved to the front desk in the form of total branch automation

At the same time, the development in communication technologies madetechnology implementation more widespread and it became cost effective tonetwork bank branches Investments in information technology also helped cutdown operational costs drastically

Technology means application of knowledge or a technical process method

or emerged as powerful tool to reduce operating costs, making it viable for financialinstitution to expand into rural and low-income areas Technology plays animportant role in Financial Services for monitoring and controlling of their services;currently some of the technology use by financial institutions (FSIs)

These help FSIs to provide efficient, better customer service, greater productvariety, shorter response time, enhanced product quality and better customization ofproducts and services

There are about 4 billion unbanked people in the world which is more thantwo third of the population of low- and middle-income countries financial

institution such as commercial bank is still unable to reach poor population, because

of high cost for building and maintain branch network and developing

According to Nielsen's Insights 2017 Report, Vietnam thein Vietnam in 2017was 84%, an increase of 6% from the previous year More notably, in rural areas,68% of the population now use smartphones The above figures show an impressivetrend – the ubiquity of smartphones and tablets Habits and behaviors of people inall regions, of all classes and ages are changing Online services, whether forshopping, making friends, exchanging information, or dating, are becoming morepopular The Banking sector is no different Users expect to be able to access anduse banking services at anytime, anywhere and on any device

Each bank has its own approach to digital banking, which focuses on thecustomer experience or the ability to provide online services However, theseoptions can only be successful when delivering the best value to the customer Rightfrom the start, Techcombank has focused on technology, believing it to be the bestway to serve customers and promote business development During 26 years ofoperation, Techcombank has continuously strengthened its systems and capacity tobest meet the needs of customers In recent years, Techcombank’s application oftechnology has delivered remarkable progress, creating breakthroughs to improveoperational efficiency and customer satisfaction

The aim is to identify and understand the changes that IT is causing on thebanking sector, in order to examine in detail how the recent (and foreseeable) advances

in IT are affecting the sector and can affect its future evolution As IT is having a stronginfluence on the evolution of the banking, the study investigates the influence IT has onthe banking sector and the payments system Therefore, the purpose of this study was

to investigate the relationship between IT and Banking sales performance, and casestudy in Viet Nam Technological and Commercial Joint stock Bank (Techcombank)

Identify Problem, Objectives

Select theotical Framework

Build scales of Information Technology

Analyze current Technology Information at Techcombank and main inluenced factors

Some solutions to improve Sales Performance at Techcombank via Information Technology

- To give some solutions and recommendations based on the findings emanatedfrom the study

- What are the main factors which affect to Sales performance at Techcombank?

- What should Techcombank do to improve Sales Performance via InformationTechnology?

1.4 Research methodology

The research conducts with the following process:

Figure 1.1 Research process

Source: author

1.4.2 Data collection

To achieve the research objectives, several data collection methods wereapplied in the research, including secondary data collection methods and primarydata collection method

Secondary data collection

Secondary data was collected in this research from:

- Textbooks, journals, magazines and newspapers, publish researches, internet, etc

- Relevant documents, reports from TCB from 2016 to 2019

Primary data collection

of information technology on TCB Sales Performance

− Questionnaire design: questionnaire is designed with 2 main parts including surveycontent and personal information as Annex attached In order to make conveniencefor staffs who answer the questionnaires, all questions were designed with closedquestions under 5-point-Likert-scale (in which 1 indicating very no extent to 5indicating very great extent) Respondents who answered the questionnaires onlycircle on the suitable levels that reflected truly the situation asked Among 200questionnaires sent, there were 170 valid answers, reaching the ratio of 85%

− Questionnaire distribution: The researcher distributed customers questionnaire

papers at TCB offices The researcher helped them to fulfill the questionnairepapers Then the researcher got back immediately

Findings data are systematically linked to the format of self-developedquestionnaire attached in the appendix Data are collected by using questionnaireand distributed with link through Email and also hard copies around the area of HaNoi Collected data are analyzed to identify, describe and test the impact ofInformation Technology in banking sector via survey TCB’employees The authoruse “Excel” and “Word” software to process the data

1.5 Research scope

 Research object: The impact of information technology on TCB Sale

Performance as the research object

 Research location: the research was implemented in Hanoi All the

primary data was gathered in Hanoi, Viet Nam

 Timing for research:

- Secondary data was collected from the Viet Nam Technological and Commercial Joint stock Bank in the range from 2016 to 2019

- Primary data was gathered from the 15th of June, 2020 to 20th of August, 2020

1.6 Thesis Structure outline

The thesis includes 4 chapters:

Chapter 1: Introduction

Chapter 2: Theoretical background on IT

Chapter 3: Current Information Technology at TCB

Chapter 4: Some solutions and Recommendations for TCB

CHAPTER 2: THEORETICAL BACKGROUND ON

INFORMATION TECHNOLOGY 2.1 Information Techonology

Information Technology (IT) is the use of any computers, storage,networking and other physical devices, infrastructure and processes to create,process, store, secure and exchange all forms of electronic data Typically, IT isused in the context of enterprise operations as opposed to personal or entertainmenttechnologies The commercial use of IC encompasses both computer technologyand telephony

Information technology drives innovation and innovation is the path tobusiness success Innovation in business has the same impact that steam had on theindustrial revolution In fact, it’s hard to imagine any business that has not benefitedfrom the digital revolution Even something as hands on as agriculture usescomputers Farmers use computers for production records, financial planning,research on technical issues, and procurement

Nowadays the formula for business success is simple: drive innovation withinformation technology So, the first thing startups in any industry try to figure out

is how to make smart IT recruiting choices Without a backbone of informationtechnology, a business is not going to go far

2.1.2 Significance of information technology (IT) in the banking industry

The revolution in IT has distorted the normal banking culture and created theavenue for banks to emerge into various markets thereby creating value wherecustomer needs are sorted into various categories for prompt attention (Aliyu andTasmin, 2012) Through this means, the banks are able to sell other products such as

insurance and securities together with the banking products they already sell whichare all unique to the particular firm (Delgado and Nieto, 2004) However, the basicreason for making use of the internet and other IT tools as delivery channels isits power to reduce operational expenses by eliminating the cost of runningphysical branches This becomes relevant in the Spanish banking system whichhas too many branches across Europe since the banks using the internet and other

IT tools as delivery increase their income drastically than those using normaldistribution channels DeYoung (2005) and Delgado et al (2006) Haq (2005) positsthat financial institutions are able to survive by maximizing income through thereduction of operational costs The unit cost of using IT tools in banking reduce rapidlythan the cost associated with physical branch deliver as income grows Thus, Internetbanking has become the only innovation that can substitute physical branches in theservice delivery of banks (DeYoung et al 2007) Birch and Young (1997) posit thatexpectations of consumers are about comfort ability, prompt and quality servicedelivery and transactional security The introduction of IT tools in banking has raisedthe awareness of customer to the existence of a fast and efficient customer servicedelivery

In Viet Nam, Banking industry is a backbone of Viet Nam financial systemand it is afflicted by many challenging forces One such force is revolution ofinformation technology In today’s era, technology support is very important for thesuccessful functioning of the banking sector Without IT and communication, wecannot think about the success of banking industry, it has enlarged the role ofbanking sector in Viet Nam economy For creating an efficient banking system,which can respond adequately to the needs of growing economy, technology has akey role to play In past 10 years, banks in Viet Nam have invested heavily in thetechnology such as Tele banking, mobile banking, internet net banking, ATMs,credit cards, debit cards, electronic payment systems and data warehousing and datamining solutions, to bring improvements in quality of customer services and the fastprocessing of banking operation Heavy investments in IT have been made by the

banks in the expectation of improvement in their performance But important in theperformance depends upon, differences in the deployment, use and effectiveness ofIT.

In the development of Viet Nam Economy, Banking sector plays a veryimportant and crucial role With the use of technology there had been an increase inpenetration, productivity and efficiency It has not only increased the costeffectiveness but also has helped in making small value transactions viable.Electronic delivery channels, ATMs, variety of cards, web-based banking, andmobile banking are the names of few outcomes of the process of automation andcomputerization in Viet Nam banking sector

2.1.3 Challenges of integrating IT in banking operations

Information Technologies has proved to be a valuable tool to business forthat matter banking Notwithstanding, implementing IT has not been withoutchallenges The following are some reviewed papers in relation to the challenge’sbanks encounter with the integration of IT Related literatures on the challenges ofintegrating IT in banking operations were reviewed extensively in this particularsection Kevin et al (2013) investigated into the impact and Challenges ofInformation Technology Adoption in the Tanzanian Banking Sector Descriptiveresearch design was employed as it facilitated collection of information fromvarious categories of bank managers i.e Customer relations manager who informedthe study on how customers use technology to relate with the bank, Cash managerwho informed the study on how cash flows using technology and the IT managerswho informed the study on technical issues and challenges and allow them to statetheir perceptions on impact and challenges on IT adoption in the banking sector

Their research instruments captured under the methodology was categorizedinto two sections; that is the first part comprising the demographiccharacteristics/profile and the second part exploring positive impacts of IT adoption

in banking sector, bankers and banker’s opinions on the need, what encouragedthem to adopt IT and section two which consisted of 8 questions on challenge’sfacing IT adoption The main data collection they adopted was questionnaire Fromthe empirical findings, they discovered that majority of the respondents agreed that

IT has a major impact in banking Other findings included; informationtechnologies like mobile banking products, internet banking products helpcustomers and bankers have remote access of banking solutions; IT related internetbanking products like digital financial services saves time in making transactionsand can be accessed from any anywhere at any time; IT has a positive impact where

by it enables ;wider networking and links banks globally therefore enhancing smartbanking solutions and services to the customers and also enabling widernetworking, global links of banks They therefore outlined a number of challenges

in their study in including; slowing down of IT systems and equipment’s, networkcommunication errors; ignorance by majority of the customers about IT usageespecially online services and they don’t own IT gadgets which can enable themaccess online services;

Sonja (2010) investigated the effects of computerization on savings andcredit cooperatives in Uganda They found out that, majority of the respondentsagreed that information technology has really promoted microfinance sustainability,reaching the poor people and Management information systems However, one ofthe challenging aspects of the usage of IT revealed as lack of human resourcecapacity in the banks in Uganda to man the administration of the computingservices They therefore suggested that more training should be required to ensurehuman resource capacity

Information technology has become the engine block of every bankinginstitution worldwide and Viet Nam banking institutions are not exempted Theyadopted the historical and survey research methods Data were collected from bothprimary and secondary sources using chi-square and regression analysis were used in

the aspect of formulated Hypothesis testing They discovered that, banking system isnot in line with global trends and that the application and usage of informationtechnology in the banking system is necessary for efficient service delivery They alsorealized that, the usage of electronic banking contributes to significantlyrevolutionizing service delivery to improve customer satisfaction through the variouselectronic fund transfer and payment services such as the automated teller machine(ATM)

The study recommends that, TCB and other financial institutions shouldembark upon training program for all operational staff of all banks and publicawareness should be instituted to improve the knowledge of information technologyand for performance adequacy to support the much-needed efficiency andoperational effectiveness and also to control the regular system failure thatcustomers face They used both qualitative and quantitative approaches in gatheringthe relevant information for the study In order to address the challenges faced bythe TCB based on the adoption of IT, a survey was conducted on some of the staff

of the banks A cross sectional comparative analysis approach was adopted throughsampling a cross section of workers in TCB

2.2 Banking Sales Performance

Profitability has been widely examined as a performance measure of thebanking sector in developed countries (Sufian & Habibullah, 2010) Profitabilityratios are financial metrics used by analysts and investors to measure and evaluatethe ability of a company to generate income (profit) relative to revenue, balancesheet assets, operating costs, and shareholders’ equity during a specific period oftime They show how well a company utilizes its assets to produce profit and value

to shareholders A higher ratio or value is commonly sought-after by mostcompanies, as this usually means the business is performing well by generatingrevenues, profits, and cash flow The ratios are most useful when they are analyzed

in comparison to similar companies or compared to previous periods.

The widely used indicators to assess commercial banks performance arereturn on total assets (ROA) and return on total equity (ROE)

ROA is the ratio between the profit after tax to total/average assets and is theprofitability indicator that determines the efficient utilization of any bank's assetsand revenue generation proficiency from the assets of any enterprise The higher theROA ratio, the better bank profits (Rasiah, 2010)

ROE is expressed as the ratio of profit after tax to total/average equity Thisratio is used as a profitability indicator that determines the ability of a bank to usethe money invested by shareholders to make a profit

2.3 IT and Banking sales performance

Worldwide, in the last few years, a massive investment has been done in thebanking sector and its impact on performance is still a paradox Numerousstudies, using alternative methodologies, have been done on different countrybanking systems Following section is a synoptic view of some representativebanking sector related studies

• Positive relationship in profitability and IT

A lot of studies have found positive impact of IT on the performance ofbanking sector Shaukat (2009) examined the impact of IT investments onprofitability and employee productivity in Pakistani banking sector over a period of1994-2005 They found that IT has a positive impact on performance of the bankingsector Parsons, Gotlieb and Denny (1993) reached at the same conclusion afterstudying the impact of IT on banking productivity in Canadian banking industry.Using data from 1974-1988, a trans-log cost model has been estimated Theresearch found a 17-23 percent increase in productivity with the use of IT

Cooke (1998) studied some new and fast-growing financial innovationslinked to IT investment, e.g., assets securitization and derivatives in US banking

sector Thestudy found that IT has enabled the banks to offer new products, expand intonontraditional areas, operate more efficiently and minimize risks Deyoung, R.(2006), analyzed the impact of investment in information technology (IT) systems

on bank’s profitability in UK Using panel data, the study supported the view that

IT has a positive impact on bank’s profitability through several factors such asreducing the labour costs and transactions costs Claudia et al (2002), empiricallyexamined Italian banks based on univariate and multivariate regression models andfound a significant relationship between offering of internet banking activities andbank’s profitability

Eyadat and Kozak (2005) investigated the impact of IT on the profit and costefficiencies in U.S banking sector during 1992-2003 They found a positive andsignificant correlation between the levels of implemented IT and both, profitabilityand cost savings Hung Viet Nguyen (2005) studied Vietnamese commercialbanks in terms of their efficiency change, productivity growth and technologicalchange during the period 2001-03 The Study used Data Envelopment Analysis(DEA) and Malmquist Index with four inputs (labour, capital, technology anddeposits) and two outputs (interest income and non interest income) It showsthat total factor productivity increased by 5.7 percent in 2003 relative to 2001.Aghdassi, M (2008) analyzed the strategic value of e-banking for Iranian banksand revealed that bank manager’s performance through e-banking is quitepositive and effective They also concluded that information technology stockcontributes to value added growth significantly and use of information networkshows positive impacts on TFP

Rahman, I.U (2007) analyzed the financial statements for 26 banks from1991

through 2001 They used ROA, ROE and net profit as performance variables,and computer budget ratio and capital budget ratio as the information technologyinvestment variables The results revealed the strongest relationship between

computer budget ratio and ROE/ROA Similarly, Malhotra and Singh (2006), M.Chandrasekhar (2010) analyzed the implications of internet banking for theIndian banking industry for the period 1998-2005 and found that internet banksare larger banks and have better operating efficiency and profitability ascompared to non-internet banks

Agboola (2007) used Likert-type ratings to measure and analyze the degree

of utilization of identified technologies and the variations in their adoption rate inNigerian banks The study revealed that the adoption of IT in banks has improvedcustomer services, facilitated accurate records, provided home and office bankingservices and enhanced faster services

Illyas-Ur Rahman (2007) examined the role of information technology inbanks and studied the perception of bank employees towards theimplementation of information technology The study considered differentinformation technology variables like net banking, credit cards, mobilebanking, electronic funds transfer, phone banking, card to card funds transfer.The study found a positive relation between implementation of informationtechnology and delivery of services

Ahmad Mashnour (2009) investigated the way in which informationtechnology investment created value in the Jordanian banks The study measuredsome variables which determine financial information system performance i.e.(a) IT integrated in IS; (b) software quality; (c) investment in training; (d)customer services; (e) productivity; (f) user satisfaction; and (g) cost benefitanalysis The study concluded that information system provides a competitiveadvantage to the banking industry and the effectiveness of information systemshas a positive impact on Jordan banks

Ombati and Magutu (2010), analyzed the relationship between technologyand service quality in the banking industry in Kenya The research is a cross-sectional survey and the respondents of the study are customers of banks using e-banking services (Internet banking, mobile banking and ATMs) The findings

banking has improved the service quality of banks Madume Stella (2010)analysed the impact of information and communication technology on theproductivity of the Nigerian banking sector using CAMEL and the transcendentallogarithmic production function also called Translog The study found that bankoutput such as loans and other assets increase significantly due to increase inexpenditure on information and communication technologies

Leckson and Leckey (2011) ascertained and documented the extent to whichinvestment in information technology may affect profitability in Ghana bankingsector The study used an enhanced Balanced Scored Card (BSC) approach

proposed by Kaplan and Norton and used the extensive panel data set of 15 banks

year period (1998-2007) The study found that higher IT level banks have thetendencies of increased profitability Alpar and Kim (1990) studied 759 US banksduring 1979-1986 to analyze the impact of IT on economic performance

Applying cost function approach, they found that IT was able to reduceoperating costs, increase capital expenditures of banks, save personnel costs, reducedemand deposits, and increase time deposits Ekata, G.E (2012), examinedtechnological change, its relationship to firm size, and its impact on the efficientscale of output and product mix for large US commercial banks The resultssuggest that technological change lowered real costs by about 1 percent peryear, increased the cost minimizing scale of outputs, and affected product mix

To study the efficiency and productivity of banks, many researchers usedDEA

model Das et al., (2000) used DEA approach for all the three types of ownership—public, private and foreign Kamakura & Ratchford, (1996) used DEA with translogcost function to measure efficiency of multiple retail stores While applying DEA,different IT related input specifications have been noticed Some studies usedcomputer (hardware) as input measure (Oral and Yolalan, 1990; Vassiloglon &Giokas, 1990) whereas some others have taken Number of ATMs (Zenios etal.,1999) Choudhari & Tripathy, (2004) used DEA with a lot of variables likeprofitability, financial management, growth, productivity, and liquidity Many otherusers of this approach were Mukherjee et al 2002; Kumar & Verma 2003; Sathye2003; Gunjan M Sanjeev; 2006; Gupta et al., 2008; Rezvanian et al., 2008; Awdeh &Moussawi, 2009; Sunil & Rachita, 2010 etc Review of studies is indicative of the factthat the relation of information technology input and performance is a tricky one Itneeds proper metrics or quantification of the two prime variables, the IT andperformance There are very few studies that quantitatively indexed both theinformation technology and the performance of banks This work is a step ahead to fill

Trend of Growth in Earnings and IT useage at TCB

The following section of the study sought to show the trend in growth ofearning for the last three years since the bank adopted IT The following table 3.7shows the growth in earnings Figure 1.2 shows the change in TOI structure atTechcombank, the percentage of Net Fee income (NFI) have been increasing since

Figure 2.1 TOI Structure

Source: TCB Viet Nam

Core fee income continues to develop, contributing 19% of total revenue

Figure 2.2 NFI Structure

Source: TCB Viet Nam

Core Fee income in 2018 at Techcombank was almost card services andpayment cash services which accounted for 14% and 20% of core fee income,respectively The growth rate of these fees reflects the ongoing payment demand aswell as the increasing demand for using cards, ATM services among retailcustomers The strong growth in non-interest income in general and fee incomeinparticular also contributes to higher returns on assets, as Techcombank can driveprofits while continuing cautious management of balance sheet growth

In line with the SBV’s plan to drive more cashless transactions,Techcombank implemented a program titled “Unlimited 1% cash back for debitcards” for retail customers, building on the success of the “Zero fee” online bankingprogram that was launched in late 2016 As a result, Techcombank became themarket leader in Visa credit and debit card transactions This is a meaningfulmilestone recognizing Techcombank’s efforts to deliver high quality card TCB alsosigned up over 1 million new customers, growing our e-banking transaction value

by 191% year over year Currently, 85% of customer activity is purely digital andthis will only expand

Table 2.1 Aspect of Performance

Number of Customers Over 5 millioncustomers Over 6 millioncustomers Over 7 millioncustomers

No of ATM 1117 machines 1180 machines 1219 machinesEbanking users 200,000 users 1,6 million users 2,4 million users

Source: TCB Viet Nam

After ROE had surged to 27.7% in 2017 (ranking No.1 in the industry), itdeclined to 21.5% in 2018 (ranking No.5 in the industry) However, thisimprovement did not come from the downward operating effectiveness but from theTCB capital raise in the year The current ROA of TCB is 2.87%, the best level inthe banking sector, and the leverage ratio is very low at 6.2x Therefore, TCB canabsolutely bring ROE to the 1st ranking in the sector in 2019 Continuous

improvements in ROA over the last few years were achieved thanks to manyfactors:

- NII saw a sustainable growth while Non-NII continuously made strongbreakthroughs

- The operating cost is well managed; CIR is always the lowest of the sector (about30%) due to the effective application of technology in trading activities and thebank operation

- Provision for risks/profit before the provision kept falling due to: 1) All of VAMCbonds were provisioned in 2017; 2) The loan structure was improved in the way ofrisk elimination; 3) The ability to reverse bad debts is gradually improved

2.4 Theoretical framework seleted for the research

The study will rely on theoretical models to determine the impact ofinformation technology onorganization performance The study will therefore relyon; Model of the organization (Leavitt,1965) and the Technology Acceptance Model(Davis et al., 1989)

2.4.1 Model of the Organization

The research theoretical framework to be applied in this study is based on theModel of the organization (Leavitt, 1965) He suggested that an organizationconsists of four interrelated components: structure, task (strategy), people, and

technology as presented in Figure 1.2 Tasks: To deliver the value we must do

something And “something” in this model is “tasks” The department team andindividuals all perform tasks In an organizational change context, it’s important tounderstand what these tasks are in the current state and then compare these to whatthe tasks will be in the future state By understanding this Organization can thendevelop communications and training programs to bridge the gap In organizationalrestructures, perhaps where roles are made redundant or shifted to otherdepartments it becomes critical to identify all the tasks and who and how they will

be performed in the new environment “Structure: The structural component of

Leavitt’s Diamond is about how individuals and teams are grouped in the

organization This is not only the hierarchical structure but also the relationships,communication patterns, and coordination between different management levels,departments, and employees This would also include how authority andresponsibility flow within the organization The structure needs to be altered whenchanges are made to any other component of the diamond”. “People: People in this

model are the actual people and their skills, attitudes, and behaviors in theworkforce People bring all this as a context to perform their work (or tasks) It’simportant to understand the skills, behaviors, and attitudes people must have to

succeed in the new environment.” Technology: Technology is about the tools that

people use to perform the tasks.”

Leavitt (1965) reported that if any of the four components changes, the otherthree must also change It is the interaction between these four components thatdetermines the fate of an organization This framework has been chosen for thisstudy because it covers many critical issues that could lead us to a comprehensiveunderstanding of the relationship between information technology andorganizations This study focuses on the impact of information technology on theorganization which is part of the technology component, and organizationalcharacteristics

Figure 2.3 Model of Organization

Source: LeaVitt (1965)

2.4.2 The Technology Acceptance Model

Emerging information technology cannot deliver improved organizationaleffectiveness if it is not accepted and used by potential users TechnologyAcceptance Model (TAM) is one of the most successful measurements forcomputer usage effectively among practitioners and academics (Davis, 1989).TAM is consistent with (Rogers, 1983) theory on diffusion of innovation wheretechnology adoption is a function of a variety of factors including; relativeadvantage and ease of use

TAM deals more specifically with the prediction of the acceptability of aninformation system The purpose of this model is to predict the acceptability of atool and to identify the modifications which must be brought to the system inorder to make it acceptable to users This model suggests that the acceptability of

an information system is determined by two main factors: perceived usefulnessand perceived ease of use

Perceived usefulness is defined as being the degree to which a personbelieves that the use of a system will improve his performance Perceived ease ofuse refers to the degree to which a person believes that the use of a system will

be effortless Several factorial analyses demonstrated that perceived usefulnessand perceived ease of use can be considered as two different dimensions (Hauser

et Shugan, 1980; Larcker et Lessig, 1980; Swanson, 1987)

As demonstrated in the theory of reasoned Action, the TechnologyAcceptance Model postulates that the use of an information system is determined

by the behavioral intention, but on the other hand, that the behavioral intention isdetermined by the person’s attitude towards the use of the system and also by hisperception of its utility According to Davis, the attitude of an individual is notthe only factor that determines his use of a system, but is also based on theimpact which it may have on his performance Therefore, even if an employee does

not welcome an information system, the probability that he will use it is high if heperceives that the system will improve his performance at work Besides, theTechnology Acceptance Model hypothesizes a direct link between perceived usefulnessand perceived ease of use With two systems offering the same features, a user will findmore useful the one that he finds easier to use (Dillon and Morris, on 1996).

Figure 2.4 The theory of Technology Acceptance Model

Source: Dillon and Morris (1996)

The theory of Acceptance Model (TAM) is important to the study as it isaimed at predicting and explaining what causes potential adopters to accept or rejectthe use of information technology The theory guides us in understanding whatinfluences the use of various IT components by the commercial banks Commercialbanks use all or some of the following IT components: Mobile bankingtechnologies, internet banking transactions, ATMs deposits and withdrawls…amongothers The theory makes us understand why banks may choose to adopt the various

IT components which may influence the Banking Sales performance For Davis(1989) the people tend to use or not certain technology with the objective toimprove performance at work - perceived use The theory therefore guides us in thestudy in trying to find out the perceived use of IT and the Performance impact thatthis will have on the commercial banks in Vietnam

Source: The Author’s proposal

 Mobiles Banking

This mode of e-banking makes use of the Global System for Mobilecommunication (GSM) phones as the primary electronic device GSM has improved theoperational efficiency of many banks in the country The mobile banking services basicallyallow customers to operate their accounts with the operating banks from mobile phones to

a large extent as long as their phones and network support SMS (short messaging service).The user could be able to check account balance up to his two last transactions This savescustomers time, and gives more convenience for higher productivity

 Automated Teller Machines (ATMs)

ATMs are a computer-controlled device that dispenses cash, and may provideother services to customers who identify themselves with a Personal IdentificationNumber ATMs dispenses cash at any time of the day and night, unlike the

Figure 2.5 Research Model

traditional method where customers have to queue for a very long time in order towithdraw cash or transfer funds.

 Internet Banking

With the aid of information technology, internet banking provides theopportunity of paying bills and performing transactions of any kind electronically.Electronic payments can be credited or debited the same day Customers can makepayments for goods or services without necessarily coming in contact with physicalcash and running the risk of handling a large amount of money

• Measurements

Banking Sales Performance – this variable has often been measured usingreturn on asset (ROA) and return on equity (ROE) Return on asset is defined as netincome after tax divided by total assets This ratio is an indicator of managerial efficiency;

it indicates how capable the management of the banks has been converting the bank'sassets into net earnings, while return on equity is measured as net income after tax divided

by total equity capital It measures the rate of return to the shareholder (Adegbaju andOlokoyo, 2008; Ahmad and Khababa, 1999; and Kim and Kim, 1997) But in this study, Ihave used return on equity as a proxy on Banking Sales Performance

The explanatory variables in the model are also measured as follows:

 ATM’s this variable was measured by the number of ATMs used by TCB

 E-banking services (Mobile banking and Internet banking) in order to showthe level of e-banking application

• Model Specification

In trying to assess the impact of IT on Banking sales performance, thefollowing model has been used:

BP = β0 + β1ATM + β2MB+ β3IB + µ Where:

BP: Banking Sales Performance

β0: Constant parameter

ATM: adoption of ATMs

MB: adoption of mobile banking technologies

IB: adoption of Internet banking transaction

Certificate of Business: The State Bank of Vietnam (SBV) issued us with

Banking Licence # 0038/GP-NHNN on 6 March 2018 (replaced # 0040/NH-GP issued 6 August 1993)

ninety-Address: Techcombank Tower – 191 Ba Trieu Street, Le Dai Hanh Ward,

Hai Ba Trung District, Hanoi, Vietnam

Phone number: +84 (24) 3944 6368

Fax: +84 (24) 3944 6395

Website: http://www.techcombank.com.vn

Stock code: TCB

• VISION: Techcombank aspires to be the best bank and a leading business in

Vietnam.

• MISSIONS:

- To be the preferred and most trusted financial partner of our customers, providingthem with a full range of financial products and services through a

personalized/customer centric relationship

- To provide our employees with a great working environment where they have

multiple opportunities to develop, contribute, and build a successful career

- To offer our shareholders superior long term returns by executing a fast growth

strategy while enforcing rigorous corporate governance and risk management bestpractices

• CORE VALUES:

Techcombank’s “corporate culture” is based on 5 core values which createstrength for Techcombank and is the foundation for the organization’s sustainabledevelopment, as well as bring greater success for customers

• Customer centricity:

"Because we only succeed when customers succeed"

Techcombank always put ourselves in customers’ position in every thoughtand action to bring the best benefits and experience for customers TCB protect ourcustomers' interests by always complying with the laws and the Bank’s regulations

• Innovation & Creativeness:

“To always lead" All Techcomers are always ready to lead the change to

create new results with new working ways, and great results with breakthroughways

• Collaboration for common objectives:

To form a collective strength for a sustainable development and greatersuccess with the Bank" Techcombank's strength is created from a collective with thefoundation of unity in thinking, in action

• Self-development:

To be able to grasp the opportunity of development with the Bank"Techcomers always actively learn to improve their capabilities and to continuallyset higher goals for themselves along with the development and success of theBank Techcombank also creates conditions and opportunities for the staff todevelop and to succeed.

• Work efficiently:

To bring about greater success with suitable resources" With the goal of "Allactions are directed towards specific and clear results", TCB always work with aplan and discipline in implementation, as well as ensure resources are allocatedoptimally

3.1.1.2 History of Techcombank Viet Nam

- 1993: Vietnam Technological and Commercial Joint Stock Bank (Techcombank)was established with an initial charter capital of VND 20 billion;

- 1996: Charter capital was raised to VND70 billion;

- 2005: Charter capital was raised to VND555 billion;

- 2006: Raised the charter captial to VND1.500 billion;

- 2007: Became a public company, implemented internet banking system;

- 2008: Charter capital was raised to VND3,642,014,710,000;

- 2009: Rewarded in the list of Top 500 largest enterprises in Vietnam 2009(VNR500);

- 2010: Charter capital was raised to VND6,932,183,710,000;

- 2011: Charter capital was raised to VND8,788,078,710,000;

- 2012: Charter capital was raised to VND8,848,078,710,000;

- 2013: Charter capital was raised to VND9,578,078,710,000;

- 2014: Launched mobile banking application F@st Mobile;

- 2015: Acquired and renamed Vietnam Chemical Finance Joint Stock Company asTechcom Finance Co., Ltd (TechcomFinance);

- 2017: Charter capital was raised to VND11,655,307,200,000;

- Early 2018: Divested its capital from Techcom Finance Co., Ltd (TechcomFinance);

- 22/05/2018: Listed on Hochiminh Stock Exchange (HOSE);

- 04/06/2018: Traded on Hochiminh Stock Exchange (HOSE);

- 10/08/2018: Charter capital was raised to 34,965,921,600,000;

3.1.1.3 Oganizational structure of Techcombank Vietnam

Figure 3.1 Oganizational structure of TCB

Source: TCB Viet Nam

3.1.2 TCB Business Struture

Techcombank has 3 principal business divisions: personal financial services(PFS), business banking (Business Banking), and wholesale banking (WholesaleBanking)

PFS is essentially the retail banking division It offers a broad range of retail

products and services, including mortgage, credit cards, automobile loans,bancassurance, and wealth management This division had a total of 5.3 millionretail customers, including 1.5 million active ones as of 31 Dec 2017

Business Banking serves small and medium enterprises (SMEs), with an