Consumers’ attitudes towards online and mobile banking in vietnam

MINISTRY OF EDUCATING AND TRAINING FOREIGN TRADE UNIVERSITY o0o RESEARCH PROPOSAL Consumers’ attitudes towards online and mobile banking in Vietnam Your supervisor’s name Programme Research Methodolog.

MINISTRY OF EDUCATING AND TRAINING

FOREIGN TRADE UNIVERSITY

Ha Noi, 2022

TABLE OF CONTENTS

I Introduction

1 Background and Context

The tendency in using electronic devices in today’s digital age is growing strongerthan ever, leading to people being less dependent on cash and increasing the need to useelectronic payment services

Mobile Banking is an online banking service through the bank's application onsmartphones Customers only need to install the bank's application on their personalphones to be able to use these services Thanks to the specificity of the device, MobileBanking provides users with utilities such as scanning the camera for payment by QRCode, security by fingerprint, FaceID, Tasks that users can perform with MobileBanking are almost similar to Internet Banking Currently, this is the service that is used

by most people because of its convenience and meets most of the needs of users (bidv.vn,2022)

SMS Banking is an electronic banking service that provides information via textmessages In Vietnam today, mainly information sent via SMS Banking is a notification

of balance changes in users' accounts In addition, by composing sample messagesyntaxes, users can perform other financial tasks and utilities through this service(bidv.vn, 2022)

TAM model, also known as Technology Acceptance Model is an information systemtheory that models how users come to accept and use a technology TechnologyAcceptance Model (TAM; Davis, 1989) has been one of the most influential models oftechnology acceptance It identifies perceived usability and ease of use as the two mainvariables influencing an individual's intention to use new technology

“In Vietnam, e-banking (including mobile banking) began to be known in 2000 Inthe early stages, this service mainly existed in the form of "phone message bank" (SMSbanking), which worked through text messages on the phone After 2010, in the context

of the 4.0 revolution and the popularity of smartphones, with two main operating

systems, Android and IOS, this service really started to develop Currently, Vietnam is acountry with a young population, high rates of mobile phone and Internet usage At thesame time, the State Bank has a strategy to promote and support commercial banks indigital transformation of the banking sector According to a survey by Visa FinancialServices Company, e-banking services are receiving great support from Vietnamesepeople (with a rate of 77%) and 31% of people use them in which, the three mostpopular services are bill payment and online money transfer, and account inquiry.According to statistics from the State Bank, as of September 2021, the total number oftransactions through the interbank electronic payment system increased by 1.88% involume and 42.58% in value, respectively ; electronic clearing and switching financialtransaction system increased by 96.63% in quantity and 133.11% in value; payment viamobile phone increased from 50% - 80%/year in quantity; payment via the Internetincreased by 35% - 40%/year in quantity over the same period in 2020; Mobile Bankinggrowth rate is 200% Thus, Mobile Banking has made great progress in Vietnam,especially in recent years.” (Nguyen Thu Quynh, Nguyen Duc Xuan Lam, 2022)

The covid pandemic has contributed to changing people's habits and payment needs.Due to social distancing requirements, the use of electronic payment services is almostmandatory In the post-covid period, although electronic payments are no longermandatory, people have formed the habit of paying and conducting transactions online.However, there is still a large part of people who have not fully adapted to onlinepayment There are many possible reasons for this, users do not really trust onlinepayment services, they have difficulty using their bank accounts or making transactionsvia e-banking, they do not appreciate and trust the safety and security of mobile banking.Therefore, the development of Mobile Banking services requires commercial banks toidentify the factors affecting the decision to use Mobile Banking services of allcustomers, especially individual customers (Le Phan Thi Dieu Thao, Nguyen Minh Sang,2012)

2 Significance of the study

Mobile Banking is still new in Vietnam with the explosion of the digital era inrecent years Acknowledgement of Vietnamese customers' attitude is narrow, so that the

study should be able to reveal more of the customer's perspective of mobile banking inVietnam, furthermore to the whole South East Asia region.

In the next 5-10 years, we will see Vietnam become a rapidly digitaltransformation country Digital transformation creeps into every corner of life, everyaspect of society will change Also in the next 10 years, Vietnam will be different fromthe present, because digital life will go hand in hand with real life

Due to rapid improvement of technology and digital, the research will reveal difficultiesand advantages of mobile banking so that it could be improved to enhance users'experience and to adapt with the moving rapidly of technology and digital

The digital transformation economy has had a significant impact on a number ofindustries in general and the banking and finance industry in particular Digitaltransformation in the financial and banking sector is understood as the integration ofdigitization and technology into all areas and services of the bank The application ofdigital technology of the banking industry has promoted the development of newpayment products and services in a modern and user-friendly direction such as cardpayment, payment by phone, payment via the Internet Mobile Banking bringsadvantages to banks, such as they could gain profits from analysing customers to deliverpersonalized services; reduce transaction price to build loyal customers Banks can alsodeliver marketing campaigns to their customers via online platforms The researchprovides suggestions and solutions of improving online banking, as well as giving aninsight about customer’s perspective From the research, banks could conduct surveysand offer new personalized services and products to customers and improve their user’sexperience Banks in Vietnam should be able to improve their mobile bankingapplications

Although online banking is gradually becoming popular in Vietnam thanks to thebenefits it brings, the development and use of online banking services still face manydifficulties and challenges Investing into digital technology still requires a high cost ofregular manufacturing and improving, causing troubles for small and intermediate banks

In contrast to how quickly technology is developing, the legal environment for digitalbanking is still developing slowly Limited human resources for information technology

leads to boundaries in developing mobile banking Security of customers is notguaranteed since bugs and internet connection are not always stable, leading to a chance

of stealing information and system hacking The habit of using cash instead is stillpopular, especially in rural areas, where the network of banks is sparse and theintellectual level of people is not adequate to approach mobile banking services This lead

to boundaries in improving mobile banking infrastructure in Vietnam

Successfully developing online banking service and bringing it closer to customers

is one of the important issues of banks today Accurately identifying and assessing thefactors that affect customers' attitudes towards online banking services, thereby makingsuggestions and solutions to improve the quality of online banking services of greatsignificance to banks in Vietnam

This study aims to reveal consumers' attitudes of mobile banking, particularly inthe current era of digital change The findings will significantly contribute to the currentrapid development of mobile banking Through the study, future researchers could use theanalysis as a reference to explore more areas in mobile banking services Thus, it couldbring more benefits to customers along with traditional banking

3 Research objective

● Vietnam has adopted mobile banking since 2000, However, with the explosion ofthe 4.0 digital era in 2010, E-mobile has been growing significantly Thus, it iscrucial to study its target customers and market The literature also stated thatconsumers' actions, viewpoints, and intentions played a significant role indetermining whether they would adopt new financial services based ontechnology

● To investigate customer’s attitude toward online banking services and theirbehaviors

● To identify potential customers for online and mobile banking

● To improve strengths and correct any drawbacks of online banking and mobilebanking services

● To suggest new ways of using mobile banking to enhance user experience

4 Research subjects

Research subjects: Consumers’ attitudes towards online and mobile banking in Vietnam.Survey subjects: individual customers who have been using Mobile Banking and intend

to open accounts at commercial banks in provinces and cities in Vietnam

5 Research question

The Vietnamese economy is still a cash-consuming economy when compared to developed nations Additionally, banks in industrilized nations use better technology than banks in Vietnam For Vietnamese banks today, developing resources for the delivery of mobile banking is a crucial challenge So the topics stated the following questions

● What are the kinds of customer’s attitude toward mobile banking ?

● How can banks develop their online banking services to serve more customers ?

6 Research scope

● Spatial range: the topic is limited to the scope of research in the commercialbanks in some provinces in Vietnam

● Primary data collection timeframe: 07/2022 – 10/2022

● Secondary data collection timeframe: 2018 – 2022

II Literature review

1 Review of previous studies

Mobile Banking can be understood as an automatic digital banking service that allows users to conduct transactions online This is a service provided by banks

themselves to help customers make transactions more conveniently and quickly Through the medium of a phone or tablet along with an internet connection, it is possible to

download Mobile Banking apps and make virtually all transactions online (MSB, 2022)

Juniper Research report states that in 2020, more than 1 billion users in 2017 and

to double to 2 billion users by 2020 (Morris, 2013; Danny, 2017) will join the mobile banking service Since 2010, many banks in Vietnam have started to manage their own mobile banking services The number of mobile banking users in Vietnam has been increasing sharply with the providence that up to now, Sacombank's e-banking system

has nearly 1.8 million Internet Banking users and more than 1.6 million Mobile Banking users (Sacombank, 2019)

AL AMIN, Md (2021) noted some advantageous hypotheses why more customerstend to use online banking services The first hypothesis is that usage benefits affect the users’ positive attitude toward online mobile banking According to statistics of the

Ministry of Industry and Trade, in the 2016-2020 period, Vietnam's e-commerce market always grows steadily up to 30%/year In 2020, when the COVID-19 epidemic was complicated, people gave priority to online shopping over in-person shopping, creating new shopping habits According to the Government's e-commerce development plan for the period 2021 - 2025, by 2025 Vietnam will have 55% of the population participating

in online shopping, 50% of the cashless payment when shopping online Currently,

banks are also participating in promoting online shopping and payment with attractive incentive programs In which, BIDV also contributed with the BIDV Visa Platinum Cashback credit card product with a 6% cashback incentive (Trường Thịnh, 2020) The second one is that consumers can gain a more positive shopping experience Various activities such as gaining vouchers or special offers truly increase the user acceptance of using online mobile banking (Cruz and Laukkanen, 2010)

Shuhaida Mohamed Shuhidan (2017) stated that there are 5 types of risks related

to mobile banking services The most specific risk is Performance Risk It refers to the deficiencies of mobile banking For example, most electricity devices have either limitedbattery life or wireless connection Therefore, when systems are suddenly disconnected

or breakdown, it is understandable that consumers will be insecure in their banking accounts Apart from the study mentioned above, Internal risks of service providers are also a matter of concern that managers need to pay attention to due to two sides In terms

of internal fraud, employees collude for personal financial gain through technical

systems Regarding Identity theft, Employees access and exploit customer information without permission Therefore, because of the above risks, customers are easily hesitant

to use electronic payments The following are researches referring to solutions to the problem of information security when customers transact online

Ministry of Information and Communications of The Socialist Republic of

Vietnam, 2022 (2022) noted that at the end of November 2021, Vietnam has licensed three telecommunications enterprises (VNPT), MobiFone and Viettel to pilot the use of telecommunications accounts to pay for goods and services of small value services

(Mobile Money Service) Mobile Money has opened up the opportunity to close the digital divide in finance, creating opportunities for everyone to access modern and

simple financial services, contributing to promoting the digital society However, along with opportunities, security risks and risks when deploying Mobile Money are problems that need to be paid due attention There are some solutions to control and overcome security risks The most useful solution today is research There is very little research on risk in Mobile Money services, as this service has just been launched in Vietnam

Research will help service providers understand the unique rationale of security risks, risks, frequency, patterns, responsible parties, and effectiveness of the different

interventions implemented implemented to reduce risk In addition, banks need to take measures to protect customers Customer protection measures are measures taken to protect consumers and other users of the Mobile Money service from unfair practices A formal assessment of our ability to optimize customer protection, reduce operational, fraud and reputational risks can be done through a series of interviews with agents,

customers, and employees company

2 Research gaps/ similarities

Evidence gap

Evidence gaps are defined as resulting from studies that allow for conclusion in their own right, but are contradictory when examined from a more abstract point of view (Miles, D A, 2017) Phan Thi Hoang Yen (2022) pointed out that in digital trend banking

in Vietnam, Therefore, if commercial banks do not want to be knocked out of the market and become an empty link in the financial system, commercial banks need to make a change in the way they operate and provide goods and services to customers To be able

to do this, commercial banks need to build for themselves a strong operating model on the basis of digital technology, because only digital technology can meet the integration needs of customers quickly and safely, complete and conveniently However, such

evidence is not enough because commercial banks also need to consider external factors when they want to have a strong position in the market In addition to improving service and technology quality, banks need to carefully consider the development trend of the market, especially watch out for unexpected events such as COVID-19 so that they can make decisions that are along with the strategy in the long term In addition, Phan Thi Hoang Yen (2022) also stated that customers are not satisfied with the variety of products and services provided by the bank, and have not optimally met the needs of customers

The services provided are still of a mass nature, not focusing on the characteristics

of the customer's industry or the specific characteristics of each region Such evidence is not really appropriate because when it comes to banking services that need to be

responsive to all industries and regions, research has not shown the similarity in the development of digital banking services on the Internet worldwide with quality service

in Vietnam Thus, the requirement that banking services need to be met in all fields and regions across the country is insufficiently grounded In summary, the research needs more convincing evidence to show the customer's attitude towards digital banking

services in different stages

Knowledge gap

In definition, a knowledge gap exists when desired research findings do not exist (Miles, D A, 2017) Phạm Thị Kim Ngọc (2022) stated that to shorten transaction time, banks need to simplify transaction documents by integrating the maximum amount of information on each type of document For each of these types of documents, customers need to re-enter general information such as name, identification number, signature, etc

In order to reduce the procedure, it is necessary to reduce the information on one type of document Thus, customers can save time filling out general information, signing

documents and especially customers feel that there are few types of documents when transacting However, the problem of simplifying procedures will need to go hand in hand with how to ensure the interests of customers when problems occur Part of the reason banking procedures are complicated is that banks want to make sure they

minimize any problems for customers Up to now, there has not been a specific study on the correlation between minimizing procedures at banks and ensuring the safety of

electronic payments in Vietnam Therefore, more research is needed to clarify the

selected topic

Similar patterns between those studies

Apart from the gaps between this research and previous studies, there are some similar patterns in those research mentioned below The most important thing is the

research methodology applied in our studies, to be more specific, it’s data collection

Chuleeporn Changchit (2019) collected data from a direct survey administered to

students attending two universities in the U.S and Thailand The main target users are students who tend to be users of mobile phones, therefore applying most of mobile

banking services For the United States, four hundred forty-seven (447) subjects

participated in this study For the Thai subjects, four hundred (400) subjects participated

in this study In our study, Eligible respondents include the majority of E-banking users

aged 18-30 who are from more urbanized parts of the country and are generally more adaptive to the usage of E-banking Even though the sample size likely won’t be a

complete representation of the Vietnamese population, it still includes users using mobile banking regularly Besides, in terms of measurement development, our study applies questionnaires used in Technology Acceptance Model (TAM), which have been used in previous studies (Changchit, 2019)

III Theoretical framework

1 Mobile Banking

Mobile Banking is defined as an online banking service via application on

smartphones , allowing customers to trade anywhere at any time With an

internet-connected smartphone, customers can use some of the services provided by the bank

Mobile Banking has some benefits It allows customers to track any changes in their account, which could save their time and effort Transactions could be done quickly and 24/7 Its application provides many convenient services such as linking with

insurance companies, securities companies, financial companies, etc Transaction fee on Mobile Banking is also lower than traditional banks

Mobile Banking still has some drawbacks Due to online platforms, safety and security are not guaranteed and customers are at risk of being hacked The procedure of using the app is still complicated for new users Thus, bugs could make the application become unstable

2 Customer Attitude

Customer attitude is defined as a composition of behaviours, beliefs and feelings toward any objects These parts are considered as a unit because of their close

interdependence and collectively because they represent forces that affect how the

consumer will respond to the product Xiaoyan Li and Laforet ( Customer attitude

towards mobile banking and online banking in China - 2005 ) showed that there are several factors that could affect a customer’s attitude toward online and mobile banking such as “demographic, motivation and behaviour towards different banking technologies and individual acceptance of new technology

A customer may have both positive belief and negative belief toward any object

In addition, there might still be some neutral beliefs such as “sky is blue” Beliefs can vary depending on the situation or that person For example “ ice-cream is sweet and cold, but it is only good in summer.” Most important thing is that beliefs are not

necessary to be accurate

Customers hold their feelings toward any business brand or other objects These emotions can occasionally be influenced by beliefs, but some are independent from beliefs

Behaviour is what a buyer intends to do in relation to the object is known as the behavioural intention This might be a result of the beliefs and effects.

Previous research has shown that there are five key elements that contribute to customer’s attitude toward mobile banking These are usefulness, easefulness, relative advantage, perceived risk and perceived cost