The improvement mobile banking services at bidv, dong do branch

SWOT MODEL FOR MOBILE BANKING IN THE DEVELOPMENT OF COMMERCIAL BANKS IN VIETNAM:...38 3.3.2 Weaknesses...40 3.3.3 Opportunities...41 3.3.4 Challenges...44 CHAPTER 4: RECOMMENDATION TO IM

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM

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BACHELOR’S THESIS IN FINANCE THE IMPROVEMENT MOBILE BANKING SERVICES AT BIDV, DONG DO BRANCH

Student’s name : Duong Thu Thuy Class : Advanced Finance

Student’s ID : CQ502620

Supervisor : Dr Nguyen Huu Anh

The report is the result of my internship in Personal customer services dpartment of BIDV Dong Do branch – Ha Noi By that time, I have worked with a great number of people whose contribution to the research It is a pleasure to convey my gratitude to them all in my humble acknowledgement

In the first place, I would like to express my thanks to Mr Nguyen Huu Anh for his supervision, guidance and encouragement during this time I appreciate all his time and effort in helping me during the time of my internship

In the next place, I would like to express many thanks to all staffs in BIDV Dong Do branch in general and in Personal customer services Department in particular, for theirwarm treatments and enthusiastic helps during my internship I am very grateful to Mrs Nguyen Thi Ngoc, my supervisor in Dong Do branch office, for her

encouragements and guidance

Besides, I gratefully acknowledge all lectures and officers from Advanced Finance Program for their shared knowledge and experiences

Last but not least, I would like to delivery my gratitude to all of my classmates in advanced class intake 50 Their supports are one thing making this thesis possible

TABLES OF CONTENT

1.1 Rationale 1

1.2 Research objective 2

1.3 Research scope 2

1.4 Research methodology 2

1.5 Research structure 2

CHAPTER II: FUNDAMENTAL ISSUES OF DEVELOPMENT IN MOBILE BANKING SERVICES 3 2.1.1 Definition 3

2.1.1.1.Mobile accounting 4

2.1.1.2 Mobile Brokerage 5

2.1.1.3 (Mobile Financial Information) 5

2.1.2 Services of mobile banking 7

1.1.2.1 Browser-based Applications 7

2.1.2.2 Messaging-based Applications: 9

2.1.2.3 Standalone application downloaded by clients 10

2.2.1 The importance of the development of mobile banking 10

2.2.1.1 For bank 10

2.3.4.2 for clients 13 2.1.5 Criteria for evaluating the development of mobile banking services14

2.1.5.1 Qualitative indicators 14

2.1.5.2 Quantitative indicator 14

2.2 FACTORS AFFECTING THE GROWTH OF MOBILE BANKING SERVICES 16

2.2.1 subjective factor 16

2.2.1.1 Platform technology: 16

2.2.1.2 Security and privacy 17

2.2.1.3 Development of the commercial banks strategy 19

2.2.2 Objective factor 19

2.2.2.1 Environmental laws 19

2.2.2.2 Economic Environment 20

2.2.2.3 The social environment 21

CHAPTER 3: THE REAL SITUATION OF THE DEVELOPMENT 23 IN MOBILE BANKING SERVICES AT BANK OF INVESTMENT AND DEVELOPMENT- BIDV- DONG DO BRANCH 23 3.1 Formation and development process of BIDV- Dong Do branch 23

3.1.1 Overview of BIDV 23

3.1.2 Foundation of BIDV, Dong Do branch 24

3.1.2.1 The process of formation and development: 24

3.1.2.2 Functions BIDV Dong Do Branch 25

3.1.2.3 Organizational structure 25

3.2.3 Mobile banking services at BIDV, Dong Do branch 29

3.2.1 Size and experience 29

3.2.2 Main customers 30

3.2.3 Relationship 30

3.3 REAL SITUATION OF MOBILE BANKING AT BANK OF INVESTMENT AND DEVELOPMENT- BIDV- DONG DO BRANCH 30

3.3.1 Performance of mobile banking servies at BIDV Dong Do Branch .30 Fund Mobilization: 32

Outstanding loans 34

3.3 SWOT MODEL FOR MOBILE BANKING IN THE DEVELOPMENT OF COMMERCIAL BANKS IN VIETNAM: 38

3.3.2 Weaknesses 40

3.3.3 Opportunities 41

3.3.4 Challenges 44

CHAPTER 4: RECOMMENDATION TO IMPROVE MOBILE BANKING SERVICES AT BANK OF INVESTMENT AND DEVELOPMENT- BIDV-DONG DO BRANCH 47 3.2.1 Product promotion 47

3.2.2 Diversification Mobile banking services 48

3.2.3 Development of the system to accept payments via mobile banking 48

3.2.4 Strengthen cooperative relationships with mobile network providers49 3.2.5 Development of technology safety and security 49

3.2.6 Solution quality resources 49

3.2.7 Expanding the client system And to promote research, improve customer service 51 CHAPTER 5: CONCLUSION AND SOME SUGGESTION FOR FUTURE

LIST OF FIGURES

Figure 2.1: ROA and ROE 32

Figure 2.2: Fun mobilization of BIDV, Dong Do branch 33

Figure 2.3: Total fund mobilization in term of currencies 34

Figure 2.4: Total outstanding loans 34

Figure 2.5: Other business activities 35

LIST OF TABLES Table 2.1: Business results of Dong Dong branch from 2006 to 2010 31

Table 2.2: Total fund mobilization in term of time 32

Table 2.3: Services performace at BIDV- Dong Do branch 35

Table 2.4: Performance of mobile banking servies at BIDV Dong Do Branch 36

Table2.5: assesment of mobile banking at BIDV, Dong Do branch 37

CHAPTER 1: INTRODUCTION 1.1 Rationale

It is a common knowledge that the rushing development of science and technology,especially information technology sector, has affected all aspects of life, changed theawareness and production methods of many business sectors, including banking Theconcept of E-banking, online trading, online payments, etc began to become thetrend of development and competitiveness of commercial banks in Vietnam It can beobjectively said that the development of bank services based on informationtechnology is the inevitable trend in this era of international economic integration.One of the modern service, high utility of that is mobile banking services Thanks tothat, nowadays, customers, banks are herited the quickness and accuracy oftransactions through mobile banking

As a result, to survive and develop in a high competitive business environmentnowadays, almost all commercial banks are striving with all efforts to catch up themodernization process of the bank, focus not only on the perfection of traditionalbusiness, but also on the development of modern banking applications, and mobilebanking services is an example However, the practical development of mobilebanking services of commercial banks in Vietnam but also shows the difficulties andlimitations

Despite being one of the best and biggest banks in Vietnam, BIDV also is not anexception The development of mobile banking at BIDV still copes up with manydifficulties which is influence business activities of BIDV, not only in financialfactors but also in reputation of the bank

Therefore, after practicing at department of customer services at BIDV Dong Dobranch, stemming from above knowledge, I decided to go with the thesis:

“IMPROVEMENT IN MOBILE BANKING SERVICES AT BANK OFINVESTMENT AND DEVELOPMENT- BIDV- DONG DO BRANCH”

This thesis studies about the theories of mobile banking, factor affect the development

of mobile banking services and some successful example of mobile banking in the

world After that, this thesis studies mentions about the current situation of mobilebanking at BIDV Dong Do branch, before providing some recommendations for boththe government and the bank in order to improve the mobile banking

1.2 Research objective

Through this thesis, I aim not only at the theories of mobile banking but also somefactor affect the development of such kind of services Besides, I also aim to theperformance of mobile banking in Dong Do branch, the achievements and limitations

of the branch in this services Moreover, based on the conditions of banking industry,domestic economy and international economy in this recent years, I intend to proposesome possible solutions and recommendations for the bank and the government inorder to improvement the mobile banking at BIDV Dong Do branch

1.4 Research methodology

In my thesis research, both qualitative and quantitative research method are used.Qualitative method concerns about the causes of risks and the impacts of them onmobile banking Meanwhile, quantitative method concerns about data, information ofthree recent years, using statistic, analysis, and making comparison in order to have apractical view about the real situation of risks and performance of mobile bankingactivities at BIDV Dong Do branch

1.5 Research structure

My thesis research consists of 5 main parts:

CHAPTER 2: FUNDAMENTAL ISSUES OF DEVELOPMENT IN MOBILEBANKING SERVICES

CHAPTER 3: THE REAL SITUATION OF THE DEVELOPMENT IN MOBILEBANKING SERVICES AT BANK OF INVESTMENT AND DEVELOPMENT-BIDV- DONG DO BRANCH

CHAPTER 4: RECOMMENDATION TO IMPROVE MOBILE BANKINGSERVICES AT BANK OF INVESTMENT AND DEVELOPMENT- BIDV- DONG

of a bank, offering a full suite of financial transactions

Next, the launching of Internet banking in the mid-1990s had allowed consumers toaccess their financial accounts by using a computer connected to Internet at home.Over the long run improving Internet banking to build consumer belief, today, Internetbanking has gained an important position, with about 35% of U.S householdsconducting banking transactions online However, Internet banking services still havesome serious drawbacks Firstly, only 62% of American households have a computer,according to a study conducted by organizations U S Census Bureau in 2003; andonly 28% of Americans have broadband Internet access All above, the mostimportant issue is portability (Even with a laptop, customers can connect only whenthe laptop is successfully connected to Internet) This will not happen with mobilephones Mobile access can be done anytime and anywhere - by a very large number ofpeople More than 238 million people in the U.S have mobile-accounted for 78% of

the population, and there are more than 3.25 billion mobile subscribers worldwide andthis number keeps growing in the future

It is not effective if banking transaction is done only by voice function of mobile, evenmore limited disclosure Moreover, mobiles phones todays are offered many diversefeatures that can send text messages, access to websites with high speed All abovemake the mobile phone becomes an ideal vehicle through which banks can deploy theservice to expand the mobile banking service with many outstanding features

2.1.1 Definition

“Mobile banking (also known as M-Banking) is a term used for performing balancechecks, account transactions, payments, credit applications and other bankingtransactions through a mobile device such as a mobile phone or Personal DigitalAssistant (PDA) The earliest mobile banking services were offered over SMS, aservice known as SMS banking With the introduction of the first primitive smartphones with WAP support enabling the use of the mobile web in 1999, the firstEuropean banks started to offer mobile banking on this platform to their customers.”

(Sources: Wikipedia)

A platform of mobile commerce is built by Mobile Banking It includes service in thefield of accounting, brokerage and financial information Mobile banking is growingbecause almost all banks in the world deployed it to generate additional revenue,reduce costs or meet the needs of customers For example, the use of Mobile TradingNordica Bank Finland increased by 30% in 2004 In fact there is a positive change inthe perception of customers about Mobile Banking On the other hand, thedevelopment of technologies such as Universal Mobile Telecommunications System(UMTS) has provided a new platform for mobile applications Unlike in the past,offering mobile services could be meet many risks due to lack of customer care andtechnology Today, the services offered by mobile banking may include bankingtransaction, as well as other related services primarily which is served the informationneeds around financial activities These services can be classified as follows:

2.1.1.1.Mobile accounting

Mobile Accounting is sometimes described as banking services based ontransaction revolves around a bank account and are integrated via mobiledevices However, not all Mobile Accounting services must be necessarily based

on the transaction Mobile accounting can be divided into two categories todistinguish between 2 services: Account Operation and Account Management:

Mobile subscribers

Transfer in and outside the country Manage access

Transfer money to sub account Block card (if lost or stolen)

Online payment (peer to peer payment)

- Checkbook: Customers who use checkbook can buy a new book via mobile devices

as needed

2.1.1.2 Mobile Brokerage

Brokers, in view of banking and finance, refer to the intermediary services related tothe stock market, such as: buy and sell shares Mobile Brokerage can be defined as atransaction-based mobile financial services around a securities account They allow thesubscriber to react to market developments in a timely manner and in all places

Mobile Brokerage can be divided into two categories to distinguish betweenservices which are services related to operating a securities account andsecurities account management services

Mobile brokerage

Manage portfolio

Of which:

- Manage access is also the management of account access: E.g.: change the PIN orrequest a new transaction

- Manage portfolio: order to buy or sell the stock when it reaches a pre-set threshold

2.1.1.3 (Mobile Financial Information)

Financial information relates to mobile transactions and non-bank financialservices information It is the combination of banking and financial services andthose customers can access information anytime, anywhere Information may beinterest, securities account of customer securities or it could be related to marketinformation with the appropriate level for the individual customer Informationcan be customized based on preferences by the customer The transactions arenot based on financial information services, but the combination withinformation services is essential On the other hand, information services, thatmay be offered as a standalone module

Mobile financial information

Request account information, recent

transactions

Exchange rate

Initial transactions, balance thresholds,

threshold alerts for stock price

bank services information

Status inquiry checks / stop checks Securities information

Credit Card Information Goods prices (e.g: price of gold, price of

petrol )

-Helpline and emergency contact

-Information about customer account

Eg notice account debit / arise

-Of which:

- query account information: customers through this service can access the requiredinformation about their account, and can simultaneously query information nearesttransactions

- Transaction Threshold: SMS will be sent to customers whenever transactions(credits or debits) exceeds a certain amount, be made on account

- Threshold balance: Customers can be notified via SMS whenever equilibrium wasbroken account

- Threshold alerts for stock price: The Bank may send notifications to customers viamobile devices or SMS messages as part of some stocks fell abruptly or exceeds the

threshold that customers have identified before and also required directives fromcustomer activity.

- Credit card information: customers can check the status of credit card as well asmoney they can use at that time

- Also this service also provides information about exchange rates, banking services,stock prices

2.1.2 Services of mobile banking

There are many methods to deploy mobile banking services We can split into mainlythree methods: browser-based application, messaging -based application, standaloneapplication:

1.1.2.1 Browser-based Applications

This application creates user interfaces on the server and then transfers to mobiledevices A common application for banking services is an application through thebrowser wireless application protocol (WAP banking), i-mode, or on the webapplication (PDA banking) Of which prominent are WAP I-Mode banking andbanking

WAP banking:

WAP is a technology architecture that makes the Internet site can be accessed frommobile phones It includes the concepts of browsers, servers, URLs and gateways.This technology enables a mobile phone can access the web browser as you are using

a computer This is an attractive feature for many banks and banks appreciate the factthat customers do not need to download any proprietary software that can still accessand use most of the traffic translation

This is a quite popular channels and many banks are famous around the worldsuch as Nordica (Finland), Credit Suisse (Switzerland), Bank of America,Deutsche Post bank, application deployment Here are some Benefits ofdeploying mobile banking via WAP in some big banks in the world

Account operation

Transfer in and outside the

country

Post bank, Bank of the Philippine Islands, Maybank, Nordica

Pay bill Bank of the Philippines HDFC, May bank,

Nordica Bank of AmericaTransfer money to sub

-Block account Post bank, May bank, Bank of America

Account operation

Sell and buy stock Post bank, Bank of the Philippine Islands,

Nordica, Bank of America

Account management

Manage portfolio Post bank, Bank of the Philippine Islands, Nordica,

Bank of America (BOA)

Initial transactions, balance

thresholds, threshold alerts for

Post bank, Bank of the Philippine Islands, Maybank, Nordica, BOA

Status inquiry checks / stop

checks

May bank

Credit Card Information Post bank, Nordea.BOA

Branch and ATM locations Post bank, May bank, Nordica, BOA

Helpline and emergency contact Post bank, Credit Suisse, May bank

Information about customer

account

May bank, Nordica

Market information

Exchange rate Credit Suisse, Nordica, UBS

Bank services information Nordica, UBS, BOA

Securities information Post bank, Credit Suisse, Nordica, May bank, UBS

Goods prices BOA, May bank, Post bank, Credit Suisse, Nordica,

UBS

I-mode:

i-Mode is the packet-based service for mobile phones offered by Japan's leader inwireless technology, NTT Do Como Unlike most of the key players in the wirelessarena, i-Mode eschews the Wireless Application Protocol (WAP) and uses asimplified version of HTML, Compact Wireless Markup Language (CWML) instead

of WAP's Wireless Markup Language (WML) NTT DoCoMo has said that eventually

it will support WAP and WML, but the company has not said exactly when this willhappen First introduced in 1999, i-Mode was the world's first smart phone for Webbrowsing The i-Mode wireless data service offers color and video over many phones.Its mobile computing service enables users to do telephone banking, make airlinereservations, conduct stock transactions, send and receive e-mail, and have access tothe Internet As of early 2000, i-Mode had an estimated 5.6 million users

(Sources: http://searchnetworking.techtarget.com/definition/i-Mode)

2.1.2.2 Messaging-based Applications:

In Messaging-based Applications, the contact information between banks andcustomers should be processed via text messages These messages can beautomatically activated whenever transactions is done

• SMS banking:

SMS is a very familiar concept to mobile users Most of the today's mobile phone aresupported this services In addition, the cheap cost of this services has been pushingmany banks implemented some form of mobile banking services based on SMSapplications This is a simple application; banks can send short messages to mobilephone customer, or response requirements of customers

2.1.2.3 Standalone application downloaded by clients

Some banks are offering customers the software which can download to mobile andtheir applications can use to access banking services These mobile applicationsprovide a trusted channel and allow the user to perform more complex transactions.Strength of security is a major advantage of this service

2.2.1 The importance of the development of mobile banking

2.2.1.1 For bank

From bankers’ standpoint, we will consider the benefits that mobile banking brings toshow a clear tendency to develop mobile banking in the future

• Increased competition in banking

The banking products and services are increasing rapidly with the help of computernetwork Global computer network provide customers with services around the world,such as the use of credit cards while they are abroad The launch of the EU market hasled to increased competition in all business sectors including the banking sector.Globalization enables banks to provide services to remote areas, and there is no need

to investment money to build bank branches and additional staff

However, opportunities are duality also On the one hand, banks are able to accessnew markets On the other hand it faces increased competition in the domestic market

To ensure this, the bank have to keep business stable and growing Therefore, banksmust simultaneously retain the customer loyalty, both to attract and appeal to potential

new customers To do this, banks are forced to introduce new products to attractpotential customers while maintaining the customer loyalty Although the bank'sreputation as an important factor in deciding the confidence of customers, process ofglobalization and technological development has reduced the barriers; so the number

of reputable banks is increasing, this is synonymous to the growth of competition

• Meet the requirements of each customer group

Bank, this day, are faced with an increase in customers preferred technology, whooften have to move very much According to Wolfgang Klein, managing director ofprivate client group at Post bank, a leading German bank, said: "Customers todaywant to make banking transactions even when you travel, do not distinguish openinghours or not The bank meets this requirement by developing mobile services Thegroup of customers that the bank aims to include:

- Youth Group: 14 - 18 years, plays an important role in the development of mobiletechnology and associated services Client groups are preferred technology productsand test new services This group of young people regularly has travel demand,requiring the use of services anywhere, anytime Although the perspective of thisgroup have little financial transactions with banks in the future but will act as potentialcustomers, so should be included in long-term marketing strategy of banks

- Group of young people: this client group is said to be friendly with the development

of technology Although this group did not have the financial resources of powerful,but fairly large numbers in this age group are engaged in the stock market Moreover,this group is expected to soon join the group of potential customers for banks,Therefore need to be concerned note

- Customer business group: this group is often between the ages of 26-50 years old,said to be the most important group of customers for mobile banking services Themembers of this group often qualified and affluent economy They need professionalservice, often moving and always carry mobile devices to ensure accessibility For thisreason, they are ideal candidates for use in providing services through mobile devices

In the perspective of banks, this group has potential especially because of theirfinancial capacity and demand for financial services like loans to buy houses

Also in some such as China, and most developing countries such as Vietnam,Philippines, the majority of the population may reach banking services but has thecommunity using mobile phones is huge, demand for bank transfer, small retailpayments in the residential high clientele poor and middle-income group has alsodeveloped an important potential customers account for the bulk of the population.

To meet all the needs of this group, banks tend to see mobile banking as a promisingchoice

• Mobile banking serves as a distribution channel

• Increased sales

One of the main tasks of a distribution channel is increased demand for client products

at most favorable rates This objective is achieved by increasing operationalefficiency Furthermore, the rapid response requirements of the client will make agood impression, to increase the demand for bundled services by customers Mobilebanking contributions help achieve this goal by offering services to the utility:

- You can use banking services anywhere, anytime

- The direct counseling face to face with the consultants via phone service

- To meet requirements of customer transactions quickly in emergency situations, such

as a requirement to sell certain shares during the economic crisis erupted

• Reduce distribution costs

The increased competition in the business environment forces organizations to makebusiness processes more efficiently to reduce distribution costs This can be achieved

by streamlining the organizational structure to increase productivity Mobile bankingcan meet this need by:

- Collect manually, the process of transferring, storing information by employees inthe branches of banks assumed to be replaced by automated processes such as ininternet banking According to an American study, a transaction made in a branchoffice of bank average cost $ 1 while the cost will only lose $ 0.5 if done by phone.With similar transactions and, if done with the Internet or mobile devices will onlytake 1 cent cost

- Bank will save a large expenditure for construction work more affiliates, and costsfor banks operating in the branch.

- Superior to Internet banking, Mobile banking allows customers to use the serviceanywhere, anytime

- The variety of distribution channels to help reduce business costs increase asdeclining sales by distribution channels collapse and help minimize customerdissatisfaction

For example, the use of transaction-based mobile services of Nordica Finance, one ofthe leading pioneers in the field of mobile banking, have increased 30% in 2004.Nordica reports success in cutting costs by encouraging customers to switch to mobilebanking Vice President at Nordica Mobile banking division said: "Customers ofNordica was convinced Net banking and use mobile banking system because this ishow banks use cheaper and far more convenient"

• Increase customer satisfaction

Mobile banking can increase customer satisfaction in the following ways:

- Streamlining business processes to enhance efficiency

- Increase attention and better advice to customers due to automate operationalprocesses

- Service providers can meet "anywhere, anytime" depending on individualrequirements of users, regardless of geographical location has increased benefits tocustomers

- The data collected can be used to create customer profiles

Increase in customer satisfaction will reduce the rate of customers leaving the bank touse other bank services

• Mobile banking is a source of revenue

Mobile banking can also be seen as a revenue source The telephone service can beprovided on the basis of security Prices in this case must be reasonable enough so thatcustomers are willing to pay but also sufficient to pay the costs incurred by the bank.Increased revenue can be achieved in 2 ways:

- The fees while providing new services for existing customers

- To attract more new customers by offering new services, creative Accordingly, newcustomers contribute to the revenue of the bank not only by the use of mobile servicesbut also by the use of other convenient channel.

There have been numerous reports of the banks have succeeded in the development ofmobile banking services act as sources of revenue for banks French bank SociétéGénérale has launched SMS-message security service called "Mesalia" with all thesubscribers generally € 4.00 / month This service has attracted 640,000 subscribers bythe end of 2004 with growth of 11% compared with the end of 2003 This service hasbeen profitable ever since it came out

• Mobile banking act symbolic products

Finally, mobile banking can be used as a symbolic product to achieve strategicadvantage A bank can hope to win or sustain a positive image in the area of technology development and strengthen the social prestige of the brand as a strategicvision and creativity Become a pioneer of modern technology will help the bankattract customers preferred technology in search of products and services modernwhile retaining customer loyalty has been the her Moreover, banks can profit fromthe advantages of early technology development themselves by building a separatetechnology standards based on the strength of bank This course also containsrelatively high risk to financial losses and takes pictures of the bank if the technologydeployment failed

2.3.4.2 for clients

Mobile banking offers convenience, quick, move services to meet customers’ need.Customers are not going to the bank but still be able to know about accountinformation, information about exchange rate fluctuations, stock prices and canperform a transaction quickly, efficiently and reduce the administrative procedures.Use Mobile banking services, customers can save a large amount of time, travel costs

to invest in things more useful And more, with the criteria are standardized;consumers are best served instead of having to depend on attitude of serving differenttypes of bank employees

Particularly in developing countries, development of mobile banking services hasbrought benefits to millions of customers - those who do not have a bank account andstill in need of payment and transfer money safely, easy Mobile Banking isdeveloping in poor markets, helps ATM permeable to the remote location and difficult

as in rural or mountainous regions, islands-but which is not convenient for thedevelopment of branch banking So visitors can add a secure payment channel, handywith a much cheaper cost than other types of communication Also most customers areboth involved in bank services

2.1.5 Criteria for evaluating the development of mobile banking services

2.1.5.1 Qualitative indicators

- The development of banks, raising the prestige of the bank

A bank offers modern, good quality mobile banking services will definitely leave agood impression and preserve the confidence of the regular customers of the bank,while increasing the prestige, attract more new customers, in particular the youngcustomers, likes high technology

- Quality Mobile banking services banks provide the feedback of customers.

Quality of service is shown in the registration procedures to use the service initially:how fast it is, the staff is good or not Mobile banking service quality also shows inthe transactions done through Mobile banking: how long it takes, transmissionproblem, or a data connection, etc

- Technology platform that banks deploy services.

To deploy the mobile banking service, a service requires a relatively high growth inbank technology Banks forced to upgrade the technological base if you want toprovide mobile banking services with better quality Based core banking technologyfrom banks, each bank to choose a particular solution to develop mobile bankingservices

To calculate net profit from mobile banking services, the commercial banks have tocalculate the costs incurred for providing this kind of services The net profit is

calculated by the difference between revenue generated by mobile banking services

and the expenses to provide this service

Profitability of Mobile banking services continued to increase steadily This is thebasic goals that all banks are targeting

Net Profit = Revenue - Expenses

To maximize profits, the banks cut operating costs, increase efficiency on the basis of

application of new technologies and improve their employees.

• Target revenue from fees for the provision of mobile banking services.

Of which:

DT: Revenue from Mobile banking service charges

Pi: i-th service charge in the services provided by mobile banking

Qi: The number of services made in the i-th period

• The ratio between the cost of providing mobile banking services with revenue due

to bring mobile banking services.

Rate cost of providing mobile banking services with revenue due to bring mobilebanking service = Cost Mobile banking service / sales of mobile banking services

This indicates that, to obtain a revenue from Mobile banking services, how muchmoney banks have to pay This indicator also reflects the ability to adjust therelationship between the rate of output, input to achieve an efficient level The smallerthis rate is, the higher efficiency.

• Number of customers using mobile banking services of banks.

The number of customers using mobile banking services will show the growinginterest, acceptance and use of customer service At the same time, the outlook forbanks to develop mobile banking services in the future to bank early-oriented, service

plan development.

• The number of mobile banking services offered.

The number of mobile banking services provided such as providing account

information, market information, look up account balances, pay bills reflects thegrowth of mobile banking services of banks

2.2 FACTORS AFFECTING THE GROWTH OF MOBILE BANKING SERVICES

2.2.1 subjective factor

2.2.1.1 Platform technology:

It is a common knowledge that technology platform is an important factor indeveloping leading mobile banking services Technology platform in this systemincludes technical infrastructure, Core banking system and mobile communicationtechnology

a Core banking system

“Core banking is a computer software system integration module basic business ofbanks such as customer information management, deposits, loans, money transfer,treasury, general accounting, finance commerce, data warehousing, port interfaceswith other payment systems used to record transactions, management accounting,calculate loan interest, deposits, monitor and record changes balance of each client,

providing electronic distribution channels and support the activities of currencytrading, investment and payments between banks in the country ”

(Sources: Wikipedia)

With the outstanding features, such as online transaction processing, high-speed datastorage focus at the office, core banking is the most important platform for thedevelopment of banking services

More details:

- In the past, when banks do not have core banking, customer management are

scattered and extremely inconvenient for customers Customers could not take inanother transaction to set deposit, although these transaction are in the same bankingsystem How more transaction place customers want to set deposit, the more accountthey must open This inconvenience is "obstacles can not be relocated" on the path ofdevelopment banking services With the introduction of core banking, customer justhave a unique code at the bank that can deal with a lot of product at any point in thesame transaction or not in the same system This is a prerequisite for the development

of banking services

- With the capability of handling up to 1,000 transactions /second, admiring axis

million customer accounts, and focusing databases, core banking closely helps banksexpanding the distribution network easily

- Core banking contains very large parameter to each bank to develop a service, theproduct will be easier, banks just need to define parameters that can create newproducts instead of having to build a software to for new services

- In particular, the characteristics of "online transaction processing speed, centralizeddata storage and transaction support system 24 hours a day" is the indispensablefoundation for the development of distribution channels electronics distributors such

as ATM, Mobile banking, Internet banking, POS,

- In addition, the database is not only managed but also specified for each product line

will help the bank to calculate the effective cost / income for each type of service as abasis analysis and assessment, chose the kind of service need to be developed,contribute to overcome the state of development services in a scattered and ineffective

b The development of telecommunications networks

As we know, mobile banking services are based on the development platform ofelectronic payment services of banks themselves combined with the development oftelecommunications networks In this relationship, the telecommunications networkprovider serves to provide a new medium, a new way can help customers access theiraccount information in the bank as quickly as possible at all times Therefore, thedevelopment of telecommunications networks play an important role

The development of telecommunications networks can be considered based onindicators such as number of mobile subscribers, the number of retail channels, agentsfor network providers, technology data transmission how to use technologies such asGPRS, 2G, 3G and extent of consumer use

The development of telecommunications networks, along with the cooperation ofrelationship banking and the network provider is also a very important factor inparallel with the development of mobile banking services In contrast, thedevelopment of mobile banking will also bring competitive advantage to both partieslinks This will help banks, the network provider an unfair advantage in itself, help toattract more customers, which provides in particular for the development of bothparties and the rise development in general, improve the quality of products andservices provided to consumers

2.2.1.2 Security and privacy

Along with the boom of information technology - communications, Internet bankingand telephone are increasingly important tools to the business activities of banks.Although these new factor is effective, economic but more and more the appearance

of online fraud, theft accounts is a major concern that banks can hardly be ignored.Without a certification system to ensure high security, banks can not offer itscustomers the value-added services through new distribution channels Therefore,security has become vital to the banking industry in electronically It is also a topconcern of consumers when deciding to choose the form of non-cash payment

In the past, the use of a password (password) is said to be simple and effective enough

to protect sensitive information However, the increase of fraud and steal online

account brings that protect high security has become more necessary than everbefore: a simple password now is no longer safe for the user.

According to a confidential report on mobile banking, customers that are so wary ofsecurity issues in the use of mobile phones for banking transactions According to anactivity report, 47% of customers who do not register for this service because ofsecurity Although there is no attacks on any mobile phone on a large scale, 73% ofconsumers fear that the hacker can access remotely to their mobile phones The surveyalso found that concern the sensitive data of their mobile banking can be stolen by awireless signal, regardless of sending information was encrypted and there is morethan half worry about it What would happen if their phone stolen

With security programs are well designed and appropriate cell phone has theadvantages of safety, mobiles can be one of the best protected channels foruntraditional banking It can be used to improve security in general, through theadvantages of giving notice and speed mobile access anytime, anywhere

Currently there are a number of information security measures, such as:

• Encrypt transmission:

To keep the information between two entities, people encode it Encoded information

is transferred information into a form other original form, this new format is referred

to as encoded text

• Electronic signature:

Certificate number (CA) is a file containing data about the owner The data is supplied

by a digital certificate validation and authentication Users will use their digitalcertificates that are granted to sign the electronic message The electronic signaturemeans encrypted message before sending it via the Internet Now digital certificate

issued to customers is seen as the electronic signature The electronic signature is data

that has been signed and encrypted by and only by the owner These identificationtechnologies asymmetric encryption on the transmission line and determined that: onthe client side are identified as transactions of the Bank are identified as transactions

with customers Certification by a unit of work in the field of software managing the

Bank's choice to supply, for customers using this service

• Security technology

- SET (Secure Electronic Transaction) is a security protocol developed by Microsoft,

SET with privacy, authentication and is very difficult to penetrate to create highlysecure, however, rarely used by SET complex and require special card readers forusers

- SSL (Secure Socket Layer) security technology developed by the companyNetscape, built in the customer's browser, which is an encryption mechanism(encryption) and set up a transmission from computer security Bank's customers(https), SSL is simple and widely used

2.2.1.3 Development of the commercial banks strategy

Through research on Mobile banking services, we can see the importance of theseservices, the benefits and convenience that it can bring to customers, typically asbeing able to help customers understand capture information, manage accounts,execute transactions on their accounts anytime, anywhere The question for the banksnow is not whether or not to develop mobile banking services for the developmentfront rushing technology, competitive business environment, banks need more offersmany innovative services and bring more new utility customers can maintain theirposition Mobile banking services in the near future will develop, and will play animportant role for creating image banks

The question here is how the bank will now develop this service, which comes with isthe question of mobile banking services will include what, how the development,deployment services and finally that this service will target customer groups To solvethis problem and orientation dependent, the development policies of each bank

However it should be noted that bank must recognize the development of mobilebanking services is not only the development of information technology platform butalso to consider recognition of this service under a business perspective, with business

objectives, develop specific strategies Technology solutions play an important role in

the development of mobile banking services, but also to recognize technology as atool for managers to use in strategy development services

Therefore, to develop mobile banking services, banks must develop a strategy for theirown development By analyzing market research clearly with specific businessobjectives, combined with the development of technology platforms will lead to the

establishment and successful development of mobile banking services.

2.2.2 Objective factor

2.2.2.1 Environmental laws

Environmental laws is objective factors played an important role in the decision of theelectronic payment services in general and mobile banking services in particular.Basically to provide mobile banking services in the best way, it is required a closelinks between banks and mobile network operator Moreover, this type of mobilebanking services will relate closely to the bank accounts of customers Transactions ortransfer goods trading is turns intos the transfer of money in the form electronics, alldata are recorded electronically and stored in computer systems

There are many issues that may arise during the implementation of developmentactivities through Mobile banking They have raised the need to have a unified legalsystem to ensure the right benefit of the user and specifies the responsibilities of banks

as well as network providers associated with it Only when the advent of unified lawsstable business operating this new service can ensure customer trust to help developmobile banking services

2.2.2.2 Economic Environment

In modern times, when the services industry is developing rapidly, we can see thenumber of this sector increased significantly But this growth rate is not comparable tothe increase in the number of participating enterprises, service providers today Thisputs the business in a more competitive business environment To find a foothold inthe market or maintain their business position in the market, companies were required

to provide the best service to get the customer satisfaction but still have to maintainfee rates at least

The story is the same in the banking sector Banks today also serves as an providingfinancial services organization Moreover, during the period of economic developmenttoday, the issue of competition in this sector can be considered the hottest in the

economic sector It is difficult to squeeze into this market, more and more difficult todevelop and maintain its position Therefore, bank must also provide a growingnumber of utility services which provide maximum benefits to customers in thereasonable cost Combined with the trend of customers today are fancy on newtechnology, product utility, requirements on the birth and development of mobilebanking is inevitable.

Mobile banking can bring high utility for customers, help banks attract morecustomers to use its services, increasing competitiveness with rivals in the industry,increased prestige, creating images up- to- date on technological development in theeyes of customers

Moreover, linking between banks and the network operator to launch mobile bankingservices will not only bring a competitive advantage for banks alone, but also offerscertain advantages for the operator network Banking industry is not only facingcompetition problems in the telecommunications industry, there are more and moremobile network providers to become more competitive prices, to maintain its positionforcing operator to find the solution provide more competitive products, the addedbenefits to attract customers The launch Mobile banking services have met the needs

of both parties.

2.2.2.3 The social environment

• The technology absorption and customer habits:

Mobile banking services also requires the user a certain level of knowledge aboutelectronic payment technology, at least grasp the method of using the service Fordeveloped countries, electronic payment services have become extremely familiarwith, the use of cash in circulation and sales of goods have become very rare, mostcenters are trading goods accept payment via credit card system On this basis thedevelopment of mobile banking services by banks will be very many advantages.Factors favorable technology infrastructure as well as convenient for customers whoare familiar with the use of electronic payment services will not be difficult whenusing new types of services such as Mobile banking

However, in developing countries, cash consumption habits is very common Peopleare not adapting to payment by card or bank transfer When developing mobilebanking services or any other electronic payment services in any other country, bankswill face more difficulties in access and attract customers using its services Therefore,the level of technology absorption factor is one of the issues plays a decision on thedevelopment of mobile banking.

• Factors of age

Age factor has an impact on the customers habit of new technology absorption Forexample, young people aged between 18-35 years old prefers technology, are willing

to try these types of services with high technological level and provide greater utility

In contrast to the older clientele, most payment options, types of services or usefamiliar Therefore, to develop a new service, to obtain the acceptance of this groupbanks, service providers need to spend quite a lot of effort Before making anydecision to develop what services, the provider always carefully research the marketfor their products So elements can say age is a factor in bringing objectivity to decidethe development of mobile banking services - a service type high-tech nature andoffers many benefits for the handy to use

SUMMARY OF CHAPTER II

Chapter 2 draw an overview of the basic concepts of mobile banking services ofcommercial banks, the advantages and disadvantages, as well as its utility It can besaid that the development of mobile banking services have become an inevitable trend

of many countries around the world

It is a common knowledge that banking sector is now extremely fierce competition

To be able to maintain the position in the market, banks have to provide more services

to bring maximum benefits to customers Mobile banking service with theconvenience has been brought significant advances in technology in electronicpayments and help increase the competitiveness of banks

Besides, the boom of information technology in recent years in Vietnam has broughtmany new benefits Moreover, a very important factor is customer demand In this era

of technology development today, customers increasingly demand to use the servicewhile in high technology, bringing more benefits Mobile banking is an extremelyutility services It will help customers control their own bank accounts, maketransfers, pay bills sales and services at anytime, anywhere, easily and quickly withjust a mobile phone

By analyzing the elements of the banks, mobile operators, customers can clearly seethe need for the establishment and development of mobile banking services inVietnam

CHAPTER 3: THE REAL SITUATION OF THE DEVELOPMENT

IN MOBILE BANKING SERVICES AT BANK OF INVESTMENT AND DEVELOPMENT- BIDV- DONG DO BRANCH

3.1 Formation and development process of BIDV- Dong Do branch

This chapter is to provide readers the overview of Bank for Investment andDevelopment of Vietnam (hereinafter abbreviated by BIDV) Dong Do branch, itsunique characteristics, its mission and outstanding achievement from the foundation torecent periods

3.1.1 Overview of BIDV

According to Decision 177-TTG of the Prime Minister, BIDV was established

on April/26/1957 with the name: Vietnam Bank Construction and under the control ofVietnam Ministry of Finance The main role is to allocated capital constructionaccording to the State plan As one of the earliest banks established in Vietnam, fromits beginning, BIDV has held an important position in the country's finances

Since its establishment to 1980s, the bank only acted as an agency issued thegovernment's net capital, specializing in capital investments, rather than an actualbank in the sense as at present In 1990, along with the renewal management system inVietnam, this bank also performed comprehensive renovation of monetary operations,credit towards business in general multipurpose model Bank officially changed itsname to Bank for Investment and Development of Vietnam, abbreviated as BIDV,with international transaction name as Vietindebank, had the following main tasks:

- Raising capital for medium-long term investment projects

-Get to budget funds for loans to projects under the State plan targets

-Trading in currencies, credit and banking services primarily in the fields ofinvestment and development

This is a step forward in the implementation of the subsidy removal in the model notonly in investment and development but also in the field of banking activities.However, this model is still limited by the binding between BIDV and State Bank ofVietnam

Since 1995, operating capital allocation is transferred entirely to the GeneralDepartment of the Investment, under directly control of Ministry of Finance On28/03/1996, Decision No 186-TTg of Prime Ministry allowed this bank to operate inthe model of state-owned companies, and recognized BIDV is a state enterprise- rated

as special class That decision was put BIDV into orbit of a real commercial bank

Diversification of products and services, and other modes of raising capital to increasecompetitiveness, strengthen PR and its position in the market is acceptable from nowon.

3.1.2 Foundation of BIDV, Dong Do branch

3.1.2.1 The process of formation and development:

Bank for Investment and Development of Vietnam (BIDV) - Dong Do Branchwas established on the basis of upgrade “Room Transaction 2” of Exchange 1 atBIDV This branch was officially taken into operation on July, 31, 2004 as decision191/QD-HDQT signed on 5/7/2004 by Board of BIDV The establishment of Dong

Do branch contributed to the target network expansion, market share and developbrand of BIDV

The establishment of Dong BIDV branches was suitable with policy reform,diversification of customers from all economic, development and improvement ofproduct quality, improvement safety systems required by the market mechanism,pioneering the development of financial conglomerates versatile of BIDV

In the first phase, Dong Do had face up with many difficulties: the competition,lack of relationships to the familiar group of customers, lack of human resources withhigh education and experience

After more than two years, Dong Do branch became one of the most effective

in business and prominent member of the banking system Branch received highappreciation as one of 10 branches of raising capital in BIDV whole system

In 2007, branches were established retail branch model with appropriatecertification standards Quaker - under the General Standard, metrology and qualitycertification of quality management system standard ISO 9001 : 2000 in the field ofactivities: Providing payment services, credit and guarantees

By 2008, the branch has achieved encouraging results of operations as well asfull compliance with the policies of the Government of Vietnam and BIDV Branchalso reform organizational and human: building and redesigning the functions of theoffice of AT2 model, the right to appoint the professional staff, aspirations, and needs

of the of each department