RESEARCH BACKGROUND
The development of the retail banking segment is increasingly recognized as a lucrative opportunity for banks, especially amid challenging domestic and international financial markets As credit growth has slowed in recent years, banks are shifting their focus to modern retail banking models that generate revenue through value-added services rather than relying solely on traditional interest income from loans Expanding into retail banking allows banks to access a larger market and diversify risks, enhancing overall stability Vietnam's nearly 90 million population and rising income levels position it as a promising retail market for financial institutions Additionally, the growth of small and medium enterprises (SMEs) presents substantial opportunities, as their expanding scale and income contribute to future market growth Retail banking encompasses providing banking services directly to individual customers and SMEs via physical branches and digital channels such as internet, mobile, and telecommunications platforms These services include savings and transaction accounts, mortgages, personal loans, debit and credit cards, and online banking solutions.
From 2008 to now, the foundation of retail banking model has been begun to appear
Debit and credit card services, along with consumption loans, are the most commonly used financial products among customers As of April 2012, there were approximately 44.6 million cards in circulation, representing a significant increase—up to 12 times—compared to the end of 2006 Additionally, the infrastructure has expanded with the installation of over 13,700 ATMs and 83,000 POS terminals, nearly 32,000 of which are connected, enhancing accessibility and convenience for users.
The continued growth of online banking in Vietnam highlights its expanding role in the financial sector According to the State Bank of Vietnam, the number of banks offering online banking services increased from just 4 in 2004 to 25 in 2008, and further to 40 banks by the third quarter of 2012 These services primarily include information provision, bill payments, and periodic cash transfers Additionally, banks are increasingly integrating related financial products, such as bancassurance—selling insurance through banking channels—which enables banks to broaden their customer base, diversify services, attract deposits, insurance premiums, and facilitate payments via ATM cards.
The expanding banking market has made competition in retail banking inevitable, prompting banks to continuously enhance service quality to strengthen their market position and brand reputation To pursue a successful retail banking model, banks focus on cultivating client relationships and serving prestige clients to mitigate risks and ensure sustainability According to a Capgemini Group survey of 18,000 retail customers across 35 countries, 79% of customers in 2012 intended to change banking products and services, reflecting a 12% increase from 2011 In Vietnam, 69% of customers remain uncertain about their loyalty to their current bank, primarily due to concerns over service quality, interest rates, and fees.
Customer retention is crucial for banking success, prompting banks to focus on understanding the key factors that influence customers' perceptions Identifying these factors helps banks implement targeted strategies to enhance positive perceptions, foster loyalty, and strengthen long-term relationships By improving service quality, personalized experiences, and trust, banks can effectively increase customer satisfaction and retention.
Previous research indicates that frontline employee performance plays a crucial role in shaping the quality of service operations, as these employees serve as the primary representatives of their organizations to customers (Harline & Ferrell, 1996; Schneider, Wheeler, & Cox, 1992).
To enhance service quality, banks require frontline employees who demonstrate high performance to attract and retain customers through exceptional service These employees should possess extensive knowledge and experience to effectively consult on services and products, introduce new offerings, and resolve customer issues Providing relatedness, assurance, empathy, and reliability from staff is essential in meeting customer expectations (Brady and Cronin, 2001) Consequently, improving frontline employee performance has become a key focus for managers and economists aiming to elevate overall service quality.
RESEARCH OBJECTIVES
In order to solving problems that mentioned above, the study specify the following objectives:
-Figure out the most important factors that contribute to change frontline employee’s performance to customers in Vietnam retail banking sector
-Examine the extent of each factor influence on frontline employees’ performance
The remainder of the paper presents the literature review and hypotheses and articulates the research method.
RESEARCH METHODOLOGY AND RESEARCH SCOPE
This study involved developing a questionnaire based on extensive literature review and prior research, initially drafted in English The questions were carefully selected to align with the needs and cultural context of Vietnamese respondents and then translated into Vietnamese An in-depth interview was conducted with the first ten participants to gather feedback and make necessary amendments A pilot test with 50 responses was carried out to identify and address potential issues before launching the larger-scale study The finalized questionnaire was distributed through two methods: face-to-face interviews and an online survey via Google Drive shared on social networks and banking websites, ensuring wider reach and higher response rates.
The sample was selected in Ho Chi Minh City, the largest and most densely populated city with nearly 8 million residents To ensure meaningful analysis, a minimum of 200 frontline employees and 200 customers were included in the observations This approach provides comprehensive insights into customer and employee interactions within the city's bustling environment.
After collecting comprehensive data, SPSS software was utilized to conduct multiple linear regression analysis The process began with testing Cronbach’s alpha to assess the reliability of the measurement scale, followed by Exploratory Factor Analysis to evaluate its validity Once the assumptions for regression analysis were confirmed, the multiple regression was performed to interpret the relationships between variables.
This research includes five chapters:
The first chapter presents the background and purpose of the study through following part: Research Background, Research Objectives, Research Methodology and Scope
Chapter 2: Literature review and Hypotheses
This chapter reviews previous research to support and strengthen the proposed hypotheses, highlighting key findings from global studies on frontline employee performance The author emphasizes the positive influence of three main factors—personality characteristics, human resource practices, and organizational climate—on frontline employee performance Based on this evidence, the chapter develops and tests a conceptual model within Vietnam's retail banking sector.
Chapter 3: Research Methodology tot nghiep do wn load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
This chapter outlines the research methodology, detailing key processes such as identifying target populations, selecting appropriate sampling techniques, and implementing data collection procedures It also discusses the measurement scales used for survey items to ensure accurate data analysis The chapter is divided into two main sections: Sample and Measurement Scale, providing a comprehensive overview of the research approach.
Chapter 4 presents the survey results, detailing the analysis of data through reliability testing and factor analysis Key procedures include calculating Cronbach’s Alpha Coefficient to assess the reliability of measurement items and conducting Exploratory Factor Analysis to identify underlying constructs These steps validate the data quality and support the testing of hypotheses and the conceptual model, ensuring the robustness of the research findings.
Analysis and Multiple Regression Analysis
Chapter 5: Conclusions, Implications, Limitations and Further Research
The final chapter synthesizes the research results and discussion, highlighting their significance to the thesis It also discusses practical implications for real-world applications, offering valuable insights for industry professionals Additionally, the chapter addresses the study’s limitations and suggests areas for future research, ensuring a comprehensive understanding of the topic.
CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES
In this chapter, the literature that concerned to frontline employees will be provided and hypotheses will be suggested:
Frontline employees play a crucial role in banking by directly engaging with customers and observing their reactions to products and services Their interaction significantly influences customer access to bank services and overall satisfaction Recognizing the importance of these staff members is essential for enhancing customer experience and ensuring successful service delivery.
Frontline service employees are crucial in shaping customer perceptions and organizational success, as they directly interact with customers and represent the brand during service encounters Their performance can determine whether a bank secures a sale or loses a customer, highlighting the importance of effective customer service Banks tend to prioritize acquiring new customers over retaining existing ones, making each frontline interaction impactful on public opinion First impressions formed during these interactions influence customers’ willingness to explore or recommend banking services, emphasizing the need for knowledgeable and skilled staff According to Chase and Tansik (1983), highly competent frontline employees are essential in high-contact situations involving unpredictable and complex decisions, as they facilitate better communication and problem-solving Additionally, Schneider and Bowen (1984) noted that frontline employees serve as a valuable source of innovation by providing insights for developing new services and ensuring successful implementation that resonates with customer needs.
Previous studies have explored factors influencing employee performance in high-contact services, which involve direct, prolonged interactions between service providers and customers (Chase, 1981) Schlesinger and Heskett (1991) identified human resources and service delivery systems as critical elements shaping service strategies for these organizations, with human resources encompassing experience, education, training, and personal characteristics, while service delivery systems involve processes and infrastructure Harline and Ferrell (1996) summarized earlier research, highlighting that employees’ attitudes and behaviors significantly impact customer perceptions and perceptions of service quality They noted that inexperienced or conflict-prone employees tend to have lower job satisfaction and performance, negatively affecting customer satisfaction, whereas employees with greater control over service encounters—such as self-efficacy, job satisfaction, and adaptability—are more capable of satisfying customers.
Goldstein (2003) indicated three dimensions of service strategy in a high contact service environment which mirror those addressed by Schlesinger and Heskett (1991): Work systems
Effective work and job design are essential for organizations to optimize employee performance and productivity Staff education and training programs enhance employees' skills and knowledge, supporting organizational growth Training and development initiatives are strategically aligned with key organizational goals to address specific needs and foster continuous improvement Prioritizing staff well-being involves creating a positive work environment that promotes employee motivation, satisfaction, and overall mental and physical health, ultimately contributing to organizational success.
Liao and Chuang (2004) developed a conceptual model exploring the factors influencing employee service performance and customer outcomes, highlighting the significant role of managerial practices and service climate They emphasized that customer perceptions of service quality and business-unit financial performance are shaped by these organizational factors at the store level Additionally, their research linked employees' personalities to their service performance, presenting a multilevel framework that considers both individual employee characteristics and the service environment as key determinants of service excellence.
Previous researches just focused on either organization- level or individual-level analysis
This pioneering study uniquely combines store-level and individual-level approaches to measure employee service performance, providing a comprehensive understanding of factors influencing frontline employees However, a key limitation is that the survey sample focused solely on a single occupation within 25 U.S Midwest restaurants, which may restrict the generalizability of the findings Building on the research by Liao and Chuang (2004), this study investigates the key factors affecting frontline service employees in the retail banking sector.
Numerous studies have demonstrated that personality traits significantly influence individual work performance across various fields such as restaurants, hotels, banks, and hospitals To deepen this understanding, Costa and McCrae (1994) developed the Big Five model, which assesses five core personality traits—agreeableness, conscientiousness, extroversion, neuroticism, and openness—that predict behavior without overlap Research by Liao and Chuang (2004) and Barrick and Mount (1993) indicates that four of these traits—conscientiousness, neuroticism, extraversion, and agreeableness—are consistently linked to job performance, especially in roles involving social interactions typical of service industries Conscientiousness, characterized by dependability, responsibility, carefulness, and perseverance (Rhoades and Eisenberger, 2002), positively correlates with employee performance Additionally, extraversion describes energetic, confident, friendly, and adventurous individuals who are open to new experiences, as noted by Barrick, Stewart, and Piotrowski (2002).
Agreeableness is a personality trait that reflects an individual's positive attitude towards others and their willingness to get along socially In contrast, neuroticism describes a tendency to experience emotional instability, including hostility, anxiety, depression, and vulnerability These traits significantly influence how people interact with their environment and handle emotional challenges Understanding these traits helps in predicting social behavior and emotional well-being.