Customer relationship management at vietnam prosperity joint stock commercial bank chương dương branch

EVALUATING THE EFFECTIVENESS OF CUSTOMER RELATIONSHIP CHAPTER 3: SOLUTIONS TO IMPROVE THE RETAIL BANKING CUSTOMER RELATIONSHIP MANAGEMENT AT VPBANK - CHƯƠNG DƯƠNG BRANCH60 3.1.. Second,

Student name Dương Thùy Linh

DECLARATION

I understand Banking Academy‟s current ethics guidelines about plagiarism and I declare that this graduation thesis under the guidance of Ms Vu Thi Kim

RETAIL BANKING AT VIETNAM PROSPERITY JOINT STOCK COMMERCIAL BANK - CHƯƠNG DƯƠNG BRANCH” is my own work,

which has not been previously included in any thesis or dissertation submitted to this or any other institutions for a degree, diploma degree or professional qualifications All of these data and results stated, all are truthful and derived from the internship unit's actual circumstances

If any fraud is detected, I take full responsibility for the content of my thesis

Ha Noi, May 2022

Student

Duong Thuy Linh

Last but not least, I really appreciate family and friends for always supporting me on my side and motivating me throughout my studies and graduation

Due to limited knowledge, in the process of completing my graduation thesis,

it is hard to avoid any shortcomings I look forward to receiving suggestions from the teachers as well as the Bank, in order to improve myself and serve practical work in the future

Thank you sincerely

CHAPTER 1: THEORETICAL BASIS ON CUSTOMER RELATIONSHIP

1.1 OVERVIEW OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM) 6

CHAPTER 2: THE CURRENT SITUATION OF CUSTOMER RELATIONSHIP

MANAGEMENT ACTIVITIES AT VP BANK - CHƯƠNG DƯƠNG BRANCH 27 2.1 OVERVIEW OF VIETNAM PROSPERITY COMMERCIAL BANK – CHƯƠNG

2.1.1.The establishment and development of VPBank Chương Dương 27

2.1.3 Development Strategy and Core Value of VPBank Chương Dương 282.1.4 Business products and services of Retail Banking VPBank Chương Dương: 292.1.5 Business performance of VPBank Chương Dương during 2019-2021 30

2.2 CHARACTERISTICS OF VPBANK CHƯƠNG DƯƠNG AFFECTING

2.3 ASSESSMENT OF THE CURRENT SITUATION CUSTOMER RELATIONSHIP

2.3.4 Build interaction programs with target customers 47

2.3.6 Evaluate Customer satisfaction of Vietnam Prosperity Commercial Joint Stock Bank –

2.4 EVALUATING THE EFFECTIVENESS OF CUSTOMER RELATIONSHIP

CHAPTER 3: SOLUTIONS TO IMPROVE THE RETAIL BANKING CUSTOMER RELATIONSHIP MANAGEMENT AT VPBANK - CHƯƠNG DƯƠNG BRANCH60 3.1 FOUNDATION FOR PROPOSED SOLUTION IMPROVING CUSTOMER RELATIONSHIP MANAGEMENT AT RETAIL BANKING VPBANK -

3.1.1 Development trends of Vietnam Prosperity Joint Stock Commercial Bank 603.1.2 Business goals of Vietnam Prosperity Joint Stock Commercial Bank 60

3.2.2 Completing customer database at VPBank Chương Dương branch 633.2.3 Customer segmentation and target customer selection 643.2.4 Customer relationship programs and customer interaction 64

LIST OF ABBREVIATIONS

CRM Customer Relationship Management

VPBank Vietnam Prosperity Joint stock commercial bank

SMS Short Message Service

VIP Very Important Person

CIF Customer information file

SBV State Bank of Vietnam

CES Customer Effort Score

LIST OF TABLES AND FIGURES

page

Table 1.1 Five levels of relationship between bank and customers 11

Table 2.1 Business performance of VPBank Chương Dương

Table 2.3 Profit of VPBank Chương Dương branch 2019-2021 33

Table 2.4 Percentage of customers transacting with VPBank

Chương Dương from 2019 to 2021

37

Table 2.5 VPBank Diamond priority classification 45

Table 2.6 Structure of target customers of Retail Banking VPBank

page

Figure 2.1 Contribution of Deposit at VPBank Chương Dương

Figure 2.6 Retail banking channels used on CRM system 40

Figure 2.7 Structure of customer information sources 41

Figure 2.9 Level of concern about privileges of VPBank

Diamond Class

45

Figure 2.10 Interaction platform with customers via Facebook 48

Figure 2.11 Structure of media marketing channels of VPBank

answered by customers

50

Figure 2.12 Response about: “When you arrive at the counter,

you are called by your name”

51

Figure 2.13 Response of customers: "Customers are taken care

of and asked by about their health, work, personal life "

52

Figure 2.14 Average Customer satisfaction score at VPBank 54

Chương Dương

Figure 2.15 Waiting time of customers transacting at VPBank

Chương Dương

54

Figure 2.16 Time customers use bank product and services 55

Figure 2.17 Growth of number of Retail banking customers

during 2019 – 2021

56

INTRODUCTION

1 Rationale

In today's integration era, businesses are aware that no one other than

customers is the one who brings them profits Therefore, the expansion of business products and services to meet the needs and expectations as well as maintain

customer loyalty is being focused on more than ever Building a Customer

relationship management system with the aim of creating relationships with

potential customer groups and maintaining sustainable relationships with existing customer groups as well as not only adding value to customers but also increasing profits for the enterprise, especially in the banking sector Effective Customer Relationship Management (CRM), therefore, is considered as an organizational core competence in a highly competitive business environment

The development in information and communication technologies has shifted the digital delivery of products and services particularly affected the Retail

Banking industry, given its sheer magnitude and importance Banks have realized that managing customer relationships management (CRM) is a very important factor for their success Implementations of CRM to banking are still below these expectations as well as the number of unsuccessful projects are still relatively high and banks routinely miss chances to deepen loyalty and expand sales

In recent years, Customer Relationship Management has received exceedingly attention and has been researched to apply to banks in order to reduce costs,

increase profits and improve business efficiency and competitiveness Besides the opinions that the effectiveness of Customer Relationship Management activities will help banks gain new potential customers as well as maintaining the loyalty of existing customers, there are views that deny the need to create this system So what is Customer Relationship Management and is it really effective for

Vietnamese commercial banks or more specifically, the situation of implementing Customer Relationship Management activities at Vietnam Prosperity Joint Stock Commercial Bank recently Realizing the urgency, importance and high

applicability in practice from clarifying the above issue, the researcher decided to

choose the topic Customer relationship management at Vietnam Prosperity Joint

Stock Commercial Bank - Chương Dương branch to understand the practice of

applying the customer relationship management process as well as make

recommendations for Vietnam Prosperity Joint Stock Commercial Bank, Chương Dương branch

2 Literature review

Customer relationship management activities have been built and developed

by many businesses and banking industries in many countries around the world

In Vietnam, many commercial banks have focused on research and investment

in customer relationship management activities The banking industry is

increasingly competitive, requiring careful investment in customer management activities to make a difference, increase competition in the market, thereby attracting customers

2.1 Abroad Studies:

According to Peppers and Roger(2004) Managing Customer Relationships:

A Strategic Framework, they have shown that CRM is a management decision –making process with the ultimate goal of improving customer value in order to develop good relationships with them through customisation pace

Companies that implement CRM can make better relationships with their

customers, improve customers‟ loyalty, increased revenue and reduced cost (Blery

manner in which they are implemented Thus if banks want to improve the loyalty

of their customers, they must improve the CRM practices of their banks

Customer Relationship Management Of Fayerman (2002); Marketing

Management Philip Kotler (2003), also mentions and introduces customer research methods, customer relationships but has not yet concentrated on exploiting, chiefly

on marketing strategies such as pricing strategy, product line strategy, distribution system, communication, However, this work does not comprehensively

analyse customer relationship management and does not provide details about contents for implementing customer relationship management

According to previous information and authors, customer relationship

management is currently seen as technology and by others as philosophy Some authors believe that relationships should lead into economical profit; others

believe relationships should lead into customer satisfaction and loyalty This result should be supported by the three main parts of the CRM, and it is operational, collaborative and analytical There are two main questions concerning previous information How could be currently defined CRM? What would be the areas that company should concentrate on to achieve that best-possible relationship with customers?

2.2 Domestic studies

Master thesis topic “Quan tri quan he khach hang tai ngan hang TMCP Đầu tư

và phát triển việt nam – chi nhanh Hạ Long” by Từ Minh Hường presented an brief look of bank customers and customer relationship management in the

banking industry The author analyzed customer relationship management

conditions in capital mobilization activities and analyzed the assessment of CRM

in Joint stock Commercial Bank for Investment and Development of Viet Nam –

Hạ Long Branch Based on existing causes, the thesis has proposed some

solutions to improve customer relationship management at BIDV Ha Long to build a effective CRM system, including establishing a marketing function, overcoming perception views, completing a CRM information system and building a business culture In addition, on the basis of the IDIC model, the

author has designed tools to influence target customers, select target customers However, by this complicated model, the measurements of the results of CRM program implementation only concentrates on internal factors, not deep down external factors

PhD Nguyễn Tiến Đông (2014), “Quản trị quan hệ khách hàng – Thực trạng

và giải pháp cho các ngân hàng thương mại Việt Nam”, Tạp chí Thị trường tài chính tiền tệ, số 16 (409), 08/2014, p 16-19 gives a point of view on CRM "is a set of strategic activities aimed at selecting, establishing, maintaining and

developing good and retaining long-lasting relationships between the company and its customers on the basis of adapting processes that create the benefit of both the two” and specify the benefits CRM brings to commercial banks From analyzing the current situation of CRM implementation in commercial banks in Vietnam, the author has come up with a number of solutions to implement CRM for Vietnamese commercial banks

Thesis of Master of Business Administration with the topic “Quản trị quan hệ khách hàng cá nhân tại Ngân hàng HDBank Chi nhánh Đà Nẵng” by Dong Thi Kieu Linh synthesized and provided a CRM approach, determined the current status of CRM activities at HDBank Da Nang branch, proposed a CRM solution for banking services at HDBank Da Nang branch However, because of the

shortage of software development knowledge,the components of human resources, finance and implementation time of the CRM system has not been estimated

accurately

Thereby, it can be seen that the topic of CRM has been mentioned and studied quite a lot But there is not any for the topic of CRM at VPBank Chương Dương branch; there has been no research work so far Therefore, I chose this topic

because of the guarantee of no duplicate

3 Research purpose

In general, the aim of this study is to evaluate the effectiveness of CRM

implementation failure for customer service workers in commercial banks

Firstly, systematize concepts, knowledge and theoretical issues related to

customer relationship management, emphasizes the importance of CRM for the bank's business and the process of building a customer relationship management model at commercial banks

Second, analyze and evaluate the current situation of customer relationship

management at Vietnam Prosperity Joint Stock Commercial Bank, Chương Dương branch and the results of the customer relationship management system at here has currently satisfied customers or not

Based on theories and the current situation, propose solutions to improve customer relationship management at the bank, give recommendations to improve the customer relationship management system at the bank

4 Scope of the research

Research object: The study focuses on the theoretical and practical basis of

customer relationship management at Retail Banking department of Vietnam Prosperity Joint Stock Commercial Bank, Chương Dương branch

Research scope: The article focuses on researching issues in the field of

customer relationship management at Retail Banking department of Vietnam Prosperity Joint Stock Commercial Bank, Chương Dương branch in the period of 2019-2021

6 Structure of the thesis

Chapter 1: Theoretical basis on customer relationship management of

commercial banks

Chapter 2: The current situation of customer relationship management

activities at vp bank - Chương Dương branch

Chapter 3: Solutions to improve the retail banking customer relationship

management at VPBank - Chương Dương branch

CHAPTER 1: THEORETICAL BASIS ON CUSTOMER

RELATIONSHIP MANAGEMENT OF COMMERCIAL BANKS

1.1 OVERVIEW OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

1.1.1 Definition

In general, CRM is perceived differently among companies and experts so there is no exact CRM definition Some authors consider CRM as technology, some view it as a data mining process, others define it as a business strategy

Firth (2006) and Lager (2008) contemplate CRM for technology, a tool that

companies could use to improve their sales effectively (Tan, Yen, Fang, 2002) This is a common perspective that CRM is simply an application technology tool storing customer information collected from many different sources based on algorithm analysis to give an overall picture of customers and product consuming allocation They allow businesses to learn more about their target audiences and how to best cater for their needs, thus retaining customers and driving sales

growth CRM software offers brands the possibility of a unified and detailed look

at the situation of the individual customer: behaviors, preferences, activities,

support request tickets… all information that builds accurate profiles, stored in one

place and easily accessible, available to be used in increasingly personalized and effective communications

Others describe CRM as a data management process, which leads to higher

company profitability and better relationships with customers (Berson, 2000; Johnston and Clark, 2008) The concepts, procedures that an organization follows when communicating with its consumers are referred to as CRM CRM systems compile data from a range of different communication channels, including a

company's website, telephone, email, live chat, marketing materials and more recently, social media This complete connection covers direct contact with past, present or potential customers, such as sales and service-related operations,

forecasting, and the analysis of consumer patterns and behaviors, from the

perspective of the company

The third point of view, Customer relationship management (CRM) is also

considered as a business strategy in which an organization administers its

interactions with customers, typically using data analysis to study large amounts of information to form a list of potential and long-term customers to come up with customer management strategies In addition, businesses can handle customer problems and problems quickly and efficiently According to Anderson &

Kerr(2001), Customer relationship management is a comprehensive strategy and process for achieving, maintaining and collaborating with customers It includes the combination of marketing - Sales - Service customers to achieve effective results from analyzing customer features Buttle (2004) defined CRM as the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers, at a profit It is

grounded on high quality customer data and enabled by IT Fayerman (2002) describes CRM as an enterprise-wide business strategy designed to optimize

revenue and customer satisfaction by organizing the organization around customer segments

1.1.2 Goal of CRM:

Each business has different perceptions and purposes when approaching and implementing CRM activities, but in general, the core goal of CRM is to help businesses understand customer behavior in order to improve customer

acquisition and retention and support strong, productive, and loyal relationships with customers through informed and superior customer experiences at every stage

of the customer journey

This is the basis for businesses to achieve specific goals:

- Improving products and services brings satisfaction to customers by creating optimal value, meeting their needs and desires Manage customer portfolio, basic information such as address, phone, email, customer contact person helps sales staff find information to serve customers better and sell products quickly than

- Make the sales and marketing processes less complicated, customer friendly Helps businesses have a strategic vision to build a customer-centric business culture to be able to compete, survive and integrate with the economic world

- Attract new potential customers and create long-term solid trust with old customers to enhance customer loyalty to retain existing customers

- Reduce advertising costs, expand markets, bring higher profits for

businesses

1.1.3 CRM Operation Process

The customer relationship management (CRM) process refers to the steps and decisions businesses make to manage and improve their relationships with leads, prospects, and customers CRM software is a useful tool in this process as it

streamlines operations and customer interactions, making them more efficient and effective The cycle includes 4 main points as below:

Figure 1.1 CRM Operation Process

source : https://www.engagebay.com/blog/crm-process/

1.1.3.1 Marketing

In this CRM implementation step, you‟d be designing your marketing campaigns, collecting leads and customer data, and segmenting your leads into groups for targeted outreach Planning strategies, investment budgets for customer relationships, strategic customer groups, and unprofitable customer groups

This is perhaps the most important step in the CRM procedure for business

success With the right CRM software, company will be able to deal with customer

service more efficiently than ever before For one, a CRM software can help retain

customers and improve customer loyalty

1.2 CUSTOMER RELATIONSHIP MANAGEMENT IN COMMERCIAL BANKS

1.2.1 Commercial bank:

Bank is a financial intermediary institution, which plays a crucial role in the economy In the modern market economy, financial institutions such as securities trading companies, commission houses, and insurance companies are trying to offer banking services On the contrary, banks are also diversifying products through the provision of a great deal of new services, including land brokerage, credit brokerage, insurance activities, and the investment in mutual funds That led to the formation of diversifying concepts of commercial bank As stated

in Law on Credit Institution (2010), the fourth article: “Commercial bank means

a type of bank which may conduct all banking operations and other business activities under this Law for profit” Accordingly, commercial bank is a type of bank or credit institution in which “Bank means a type of credit institution which may conduct all banking operations under this Law Based on their

characteristics and operation objectives, banks include commercial banks, policy banks, and cooperative banks”

This thesis will be focusing on the Retail banking, also known as consumer banking, offers financial services for individuals and households, specifically a person or a group of people who are currently, or having intention to use banking services for personal or family consumption The retail market segment is a very important customer segment for commercial banks

1.2.2 Commercial bank customer features :

Retail banking customers (Individual customers) which accounts for the major percentage of Bank customers has some characteristics as follows:

- The variety in age, gender, income, cultural perspectives, hobbies:

Customers that make up a retail bank‟s user base can vary widely by numerous factors including age, gender, income, lifestyle, etc

- Customer needs and preferences are increasing and changing fast: The level

of loyalty of individual customers is not high Retail market includes a large number of customers with quickly shifting demands

- Customers are strongly influenced by cultural, social, personal and

psychological factors: Cultural factors have a profound influence on

customer behavior and are the foundation of customer consciousness and behavior

- Large number of customers but each customer spending is not enormous: Due to the small transaction size, individual customers are often less able to negotiate interest rates and fees with banks Serving a large number of individual customers helps the bank diversify risks by being less dependent on specific small group of customers

1.2.3 CRM in Commercial Bank:

Relationships between the bank and customers can be seen differently

compared with relationships between customers and other types of company Banking products can only be created only when it is requested by customers Banks cannot produce products, then store them and sell them like normal

products The difference between banking products is not much, many banks pay the same interest rate for a term of savings products; bank accounts have the same payment and transfer features Therefore, commercials banks have a more detail CRM process compared with other type of business This appropriate process when implementing effectively will help the bank's products stand out from others Table 1.1 Five levels of relationship between bank and customers

basic Banks sell their products but then no longer interact with

customers Bank staff are more likely to only sell the product and service once, and the customer is not completely

satisfied with the money spent to buy the product

reactive Banks sell their products and encourage customers to give

feedback about anything that needs fixing With this sales method, customers can be more satisfied with their money spent when buying products thanks to being able to complain after buying with the bank Moreover, the seller also has a great chance to sell more than 2 products when the buyer feels satisfied with his purchase

accountable Bank staff call the customer after using the bank's services to

check whether his product meets the customer's needs or not, the customer has no complaints The seller also wants to receive feedback from customers to improve their products With this level, the buyer really has an initial sympathy for the seller because of his initiative, enthusiasm and

responsibility for his sale Along with that, the seller's sales opportunities are significantly improved because they have won some of the customer's trust

proactive Bank officers regularly call to maintain communication with

customers in order to receive comments to improve products, and at the same time inform customers about other new products With this level, the seller has really been proactive with his customer relationship when regularly interacting with customers The customer and the banker became close and it seemed that the seller had won the complete trust and could hardly be swayed by a ny similar product Along with that, the seller may end up selling not one but more cross-sell products That is a great benefit that every bank really wants

to achieve for its customer base partnership Regularly and continuously with customers, find ways to

increase value for customers With this relationship, it is not only the interaction between the bank and the customer , but the relationship with a strategic partner Businesses,

especially banks, are always interested in taking care, even sacrificing a little of their interests to ensure the interests of customers This is a sustainable relationship and completely wins the trust and consumption of customers

Source: Marketing Ngan Hang book

1.2.3.1 Customer Relationship Management Process

a) Collecting customer information :

Collecting customer information about individual customers participating in

transactions with the commercial bank which includes:

+ Basic information : name, address, ID number and legal information

+ Information about demographic characteristics : age, gender, relationship status, education level, income, occupation

+ Financial information : credit history and financial products used in the past All information above is collected from the first transaction with the bank to build

a Customer database and stored differently at different departments in the bank It could be stored in many ways: traditionally on paper and files or modernly on computer technology systems that any bank has

b) Build customer database:

To implement the process of Customer Relationship Management, building a database is a fundamental step A database is a collection of basic customer

information divided into interrelated criteria From this database, authorized

departments can easily access customer information in the shortest time and lowest cost This is also the basis for analyzing and evaluating the characteristics and values of customers in order to classify customers and provide products to meet customer‟s demand properly

Rencently, almost all commercial banks use one or more customer database

management software that helps to transfer and systemize customer databases through branches and bank offices

c) Grouping customers operation

With the same product type, different customer segments may have

different specific wants Based on the technology and capabilities of the analysis team, in order to maximize the value of data,

Step 1: preliminary assessment to capture basic customer information

based on: customer behavioral characteristics, customer relationships,

customer financial capacity,

Understanding customers from the beginning can partly know customer conditions, identify basic needs and approach customers in the most

appropriate way

Step 2, classify customers according to the criteria set by the bank, classify

customers to make management more convenient The bank can easily

identify the basic services that meet the needs of this customer group,

thereby providing the right products to customers in a timely manner

d) Selecting target customers

With today's complex and fiercely competitive business environment, identifying and effectively serving the bank's most valuable customers is essential, therefore it

is necessary to use techniques to classify customers

Because commercial banks provide products and services and operate in a very small market with many competitors, the bank wants to target as many customers as possible However, each bank will have their own policies and strategies for the foremost valuable and potential customers

e) Build interaction programs with target customers

Customer interaction is an indispensable activity in any commercial bank,

especially in the era when technology 4.0 is developing and is expected to grow stronger in the near future Customer interaction will be the key to opening the door to introduce the brand to new customers and maintain relationships with old customers Nowadays, improving customer relationships and customer

interactions can be done more easily in many ways

Tools aimed at target customers which could be through Direct email (Email) , Telemarketing Ennew and Waite (2007) said that the choice of media depends

on the target customers of the bank, the large-scale market banks will choose mass media such as advertising on television, the internet; small-scale market, banks will choose media such as specialized magazines, The bank can design different programs and events for customers such as: Customer Support

Program, Customer Loyalty Program, Reward Program, Personalized Needs Program, Relationship Building Program public relations

f) Personalized Customer Experience

Differentiation is the design of a series of meaningful differences so that customers can differentiate the bank's image and brand from its competitors Creating special experiences for a span of customers with different features can be very costly Customer personalization can be understood as turning mass products and services

of many sizes and types into a special product for a certain type of customer and related to the feedback and individual needs of the customer customer The goal of this is to build a higher level of customer satisfaction with the bank Personalization requires careful calculation and preparation In fact, it is not possible to completely personalize each customer, but it is possible to create different versions of many

parts that make up a product or service For example designing sponsorship and incentive programs for specific segments

e) Evaluate customer satisfaction

Finally, the indispensable step is to evaluate the level of completion to consider the aspects achieved and the remaining limitations to learn from With CRM, the goal is to help businesses maintain and develop customer systems, it is necessary

to consider how the bank has achieved when applying CRM, one of which is to evaluate customer satisfaction Some methods can be assessed as follows: (i) Through questionnaire, (ii) Through survey, (iii) Via email, (iv) Through

customer feedback, (v) Through customer contact

1.2.3.2 The importance of CRM:

Bank need to improve the effectiveness of Customer Relationship

Management activities because operating an effective CRM program, banks can:

Firstly, provide customers with better services, in line with customer demands

promptly Maximum value is obtained when banks merge both types of data to better understand the wants and needs of their customer segments, allowing them

to offer the right product or service at the right time

Second, giving faster responses to customer feedback and inquiries, which

improves the efficiency of contact centers Having a responsive customer service, help to improve the performance of the bank especially to improve the level of customers satisfaction,

Third, making bank products more noticeable and improving the efficiency of

cross-selling of bank products, helps to increase sales

Fourth, discover new customers, who have potential needs to use the bank's

products and services

Fifth, concretize business strategy and customer service strategy through

customer segmentation in order to maintain customer loyalty

1.2.3.3 The Benefits of CRM for Business Banking

● Better differentiate customer experiences

Companies that create differentiated customer experiences create a

competitive advantage over their competitors Customer experience is forecasted

to be the key factor to build brand differentiation for businesses instead of price and product

● Positive word of mouth effect

Studies show that customers tend to share a good experience with an average

of 9 other people but will share a bad experience with 16 people

● Increase business efficiency

Customers with a good experience with a business are 140% more likely to spend 140% more than customers with a bad experience The rate of customers ready to purchase premium product offerings will be 3.6 to 4.5 times higher in line with good customer experience

● Lower Acquisition Costs

Customer retention costs to serve old customers with a good experience is 33% lower than cost to find new customers According to Forbes magazine,

customers with a good experience with a business are 2.7 times more likely to return than clients with bad experiences

1.2.4 Criteria evaluating efficiency of CRM in banking

Different from the usual evaluation criteria based on specific specifications, with CRM the evaluation parameters are based on the bank's customer satisfaction and customer loyalty Key Considerations for Measuring includes customer satisfaction scores, retention rates, and number of products per customer

a) Features

+ Number of customers at the branch

The implementation of CRM aims to develop more potential customers and increase the proportion of target customers of the bank When implementing a good CRM, the bank will find more customers to sell its products and services, thereby

improving the bank's profits and reputation So the number of customers and the ratio of potential customers to total customers is an important factor to evaluate the effectiveness of a CRM system

+ Response time processing customer information :

In CRM, the time to process customer information is very important, because it is the time interacting with customers to ensure their satisfaction This period includes the time to access the devices to get the information, the time to process the

information until the decision is made, and time solving customer's feedback from the relevant departments

+ Customer's time with the bank:

It is the total amount of time that the customer has used different product packages

of the bank such as credit products, deposit products, card products, It shows the customer's attachment and close relationship with the bank It measures the

effectiveness of customer relationship management at the bank itself

For example evaluation of the customer's deposit product time with the bank: The time to use the customer's bank deposit product is one of the important factors

to evaluate the value of the customer It also shows the value of the customer to the bank as the longer the deposit period, the more the value of the customer

increases

+ Customer value :

The value of a customer is not merely the revenue from that customer but also the time of cooperation, the customer's position in the bank, the customer's influence on other customers Therefore, the group of potential customers and the large group of

customers play an important role because this is the customer group that determines the success of the entire business

The relationship between a customer's perception of value and both customer satisfaction and customer loyalty has long been studied in different sectors of the service industry (see for instance, Cronin et al., 2000; Choi et al., 2004; Gallarza and Saura, 2006; Chen, 2008; Chen and Tsai, 2008; Howat and Assaker, 2013; El-Adly and Eid, 2016)

+ Customer satisfaction :

Any business always aims to satisfy customers Likewise, CRM work aims to satisfy and meet the needs of customers in the most timely manner Customer satisfaction plays an important role in the success of the business, it increases customer loyalty as well as will be a free advertising channel for the bank

Customer satisfaction can be assessed through criteria such as: the number of cross-sell products to customers, the rate of recommendations, complaints against the business, the rate of customers giving positive reviews to the bank, the rate of customers who have used the product and feel satisfied out of the total number of customers of the business

Commercial banks must know how to assess customer satisfaction in order to see effectiveness in Customer Relationship Management activities According to

Forbes, 86% Customers will pay more, use more for which they get better

customer service, and take better care

b) Customer satisfaction metrics:

Customer satisfaction measurement tools can help banks collect valuable

customer feedback, to make the changes and improve customer base, all to offer them a better experience and more pleasant customer journey

- Net Promoter Score (NPS):

NPS surveys feature one question that asks consumers how likely they are to

recommend your products, services, or brand to other people

Figure 1.2 NPS satisfaction measurement

source: www.retently.com

“How likely are you to recommend our company to a friend or colleague?” Respondents normally answer using a 0-10 scale, with 10 being “Very Likely” and

0 being “Very Unlikely.” The 0-10 scale makes it easier for you to segment

customers according to their responses:

● 9-10 – Promoters (clients who love your company and will actively promote)

● 7-8 – Passives (customers who like your company but don‟t love it yet)

● 0-6 – Detractors (clients who are unhappy with your company)

- Customer Effort Score (CES)

A good CES definition outlines it as a metric that‟s used to measure customer

satisfaction levels by focusing on the efforts customers make to interact with your business‟ services and products

The idea is for the survey to help you find out if customers have a hard time

performing certain actions when interacting with your brand, and take the necessary actions according to the survey data to streamline processes

Figure 1.3 CES satisfaction measurement

source: www.retently.com

1.2.5 Factors affecting on customer relationship management in bank

1.2.5.1 External factors

a) Economic forces in the Macro Environment

The first external factor having an impact on customer relationship

management is the Economic environment Commercial banks, like all businesses

in the economy, are affected by the general activities of the economy Banking products are closely related to economic variables, such as economic growth, income rates, investment indicators, inflation, unemployment, industry growth rates, investment policy, etc The economic environment strongly affects the

customer‟s demand and influences their habit of using bank services and products These changes in the economy can lead to a change in the scale of the business, which also changes the procedure of the CRM operation

b) Socio-cultural in the Macro Environment

Commercial banking activities are greatly influenced by the psychology and social habits of consumers Socio-cultural influences affect the propensity to

consume, save, and invest as well as customer's preferences for banking services

To implement CRM, banks need to consider factors in the socio-cultural

environment in the area where the bank operates in order to have an appropriate strategy Since then, different regions have to implement CRM processes of

different modules and quality, to match the cultural standards and ethical values of each customer group

c) Technological forces in the Macro Environment

In recent years, with the characteristics of operating on modern information technology platforms, banks have thoroughly invested in enhancing technology systems Today, changes in information technology have had a strong impact on banking operations Technology environment is one of the very important factors affecting CRM activities Technology factors help businesses expand their

accessibility, develop and maintain long-term relationships with customers At that time, the technology factor makes an important contribution to CRM activities

because it is the place to synthesize and store information about customers

d) Competitive environment:

The final one is the Customer relationship management strategy of

competitors from other banks Competition, both national and international, is increasing in virtually every industry The key features and therefore the

implications of this trend are outlined with specific relevance to the banking and financial services industry Strategic orientation for development of banking

services: an efficient bank is one that encompasses a clear strategy and specific goals The event orientation of banking services must closely follow the market demand of every operating area and maximize the resources and competitive advantages of every bank and achieve the bank's goals

e) Customer’s features

The next external agent comes from the customers of banks Each

person's personality will influence his or her buying behavior Personality is the psychological characteristics that distinguish an individual or a group of people Extraversion or introversion, risk-loving or safe, easy to adapt or difficult to

change all affect customers' tendency to choose banks, product choices and loyalty to banks

Nowadays, the needs of customers are more complicated and they have higher expectations Businesses can not choose which customers they will serve, and Banks are not an exception, they can not control and change their customer

behaviors However customer characteristics can be analyzed and grouped into effective segments for the best customer satisfaction

1.2.5.2 Internal factors:

a Personnel quality

The human factor is always the core value of every organization because

bankers are the main group generating income for the bank Human resources are assessed including the management qualifications of the managers and the specialization level of the staff The excellent management level ensures that the banking operations are systematic and convenient High specialization makes the work of interacting with customers easier, makes a good impression and contributes to the overall business of the company The bank must maintain customer loyalty not only to its external customers but also to its internal

customers who are qualified employees of the bank

Investing in human resources, attracting high-quality human resources is not only worthy of the labor costs that the bank spends but also brings more profits to the bank

b Bank's policy and business strategy

The effectiveness of CRM implementation depends on the policy and vision of each bank That is when the bank determines its position in the market, orients customer segments, establishes customer goals, sets a measurement to monitor the

performance of the CRM strategy Implementing a comprehensive strategy requires unity in the entire company team, from the Board of Directors to employees The needs and conditions of the departments and divisions are different for CRM, to ensure that the requirements of each department are met while ensuring that the CRM is consistent throughout the system is not a simple problem Therefore, banks

must actively specialize in departments, especially separating the Retail banking into two separate departments, which are non-credit and credit departments If the bank's CRM policy is really focused and properly invested, it will bring

corresponding results in the bank's customer relationship management in the long run

c Bank’s Reputation

Bank reputation helps to raise customer‟s awareness of the reputation of the bank's products and services Especially in the banking sector, the products that banks provide are extremely special, money Therefore, the brand value and reputation of the bank are extremely important Brand value will create trust in customers' transaction choices for the bank, creating a barrier to compete with other banks Therefore, the bank's products with high brand value and good reputation will be prioritized by customers in choosing when there is a need This creates an impetus in building relationships with customers

e Technical facilities

Technical and technological facilities of the bank Bank's technology affects the expansion of services, improvement of service quality and service delivery to customers Banks need to take shortcuts to catch up with modern banking

technologies, this will create opportunities for banks to develop a variety of banking services and control the system well

Software applications used in CRM activities help to approach customers systematically, scientifically and effectively, store customer databases such as account information, needs, contact, in order to improve customer service

1.3 EXPERIENCE FROM OTHER BANKS:

Many banks and financial institutions around the world have successfully implemented customer relationship management systems Hence, learning from previous models could save time and costs adjusting to the most effective

customer relationship management system

Firstly, the implementation of a customer relationship management system

must be adjusted to suit the conditions of each bank, not rigidly applying the same model and the same strategy to all banks

Secondly, when applying CRM in bank systems, it should be carefully

implemented step by step The rush in conducting customer relationship

management can lead to failures for both the organization and frustration for customers On the organizational side, it is important to focus on training

employees because they are the ones who directly accomplish it

Thirdly, CRM strategy should be unanimity from all levels of leadership,

senior managers to implementation staff The task of implementing the strategy belongs to all components in the organization, so the implementation must be done synchronously Managers and employees must create unity and understanding through meetings with the participation of departments By doing so, managers can know the difficulties and problems that employees face, and then adjust the implementation accordingly

Fourthly, All strategies set out must put the customer first, build a clear

roadmap, apply appropriate technology and regularly check and evaluate the

system Banks should not focus on technology and strategy and forget about

customers which are the first factor that organizations need to focus on when

implementing this system Only then will Vietnamese commercial banks be able to build an efficient system and bring results to the bank

Fifthly, Build a Customer management cycle which places identifying,

categorizing, targeting, and interacting with customers in a continuous stream of information bases, to create deeper customer relationships The cycle must focus

on the following aspects: right person, right product, right price, right distribution channel, right message, and right cost

CHAPTER 1 SUMMARY:

In the first chapter, the thesis includes theories of Customer Relationship Management and related terms and concept of Commercial bank CRM in banks focuses on marketing, sales and service processes and producing products according to customer needs to serve customers in the best way.Banks do not just stop at selling products, but also need to convey the value of the bank, build and maintain good relationships with customers

Then, retail banking customers and criterias used to evaluate the CRM

process commercial banks are defined, categorized in a commercial bank

environment By the end of the chapter, factors contributing to CRM

effectiveness are informed

CHAPTER 2: THE CURRENT SITUATION OF CUSTOMER

RELATIONSHIP MANAGEMENT ACTIVITIES AT VP BANK -

CHƯƠNG DƯƠNG BRANCH

2.1 OVERVIEW OF VIETNAM PROSPERITY COMMERCIAL BANK – CHƯƠNG DƯƠNG BRANCH:

2.1.1.The establishment and development of VPBank Chương

Dương

Vietnam Prosperity Joint Stock Commercial Bank (Abbreviated name: VPBank) was established in 1993, known as Joint Stock Commercial Bank for Non-State Enterprises of Vietnam After 30 years of operation, VPBank has grown its

network to 233 transaction points with nearly 27,000 employees

In 2012, VPBank moved its headquarters to 89 Lang Ha The building has a prime location, has 29 floors with a usable area of about 13,775 m2, meeting the space demand for staff at the current VPBank's Head Office as well as the growth orientation of VPBank

With continuous efforts, VPBank's brand has become increasingly strong and has been confirmed through many prestigious domestic and international awards In

2017, consecutively receiving 20 prestigious awards, VPBank successfully reached the finish line and completed the 5-year plan (2012 - 2017) VPBank is in the Top 3 Commercial Joint Stock Banks honored by the Vietnam Report and voted as the Happiest Place to Work In 2018, receiving 12 consecutive awards for products, services, brands, VPBank fully deserves the title voted by the Vietnam Report - Top 10 largest private enterprises in Vietnam

In 2019, The Asian Banker Magazine awarded VPBank the đBest Bank for SMEsđ

in Vietnam Valued at US$354 million by Brand Finance, VPBank brand ranks 361st, the first and only Vietnamese private bank honored in the “Top 500 banks with the highest global brand value” VPBank was voted by HR Asia (HR Asia) as one of the “Best Places to Work in Asia” alongside multinational corporations such

as Nestle, Heineken, Deloitte, and based on that According to the criteria of

honored to be in the Top 10 prestigious Vietnamese commercial banks in 2019, Top

10 prestigious private joint-stock commercial banks in 2019

Chương Dương Transaction Office was approved by-law document 638/NHNN -

HAN7 ( 26/10/2004) State Bank of Vietnam (SBV) In 2005, SBV approved

VPBank to upgrade the Chương Dương transaction office to Chương Dương

branch Currently, the branch has moved to the 1st floor and 5th floor, Plaschem

building, 562 Nguyen Van Cu street, Long Bien district, Hanoi VPBank Chương Dương branch is considered to be the center of operation in the Long Bien area, expected to completely satisfy the financial needs for businesses and residents in

this area

After more than 18 years, VP Bank Chương Dương branch has affirmed its position and contributed a significant part to the success of the whole bank, in

2021 VPBank is listed in the top 250 most valuable banking brands globally

according to the ranking of Brand Finance - the world's leading brand valuation consulting company

2.1.3 Development Strategy and Core Value of VPBank Chương Dương

As one of the earliest-established Joint-stock Commercial banks in Vietnam, VPBank has achieved steady development throughout its history VPBank has set

an ambitious target of becoming the most consumer- friendly technology- driven bank and among Vietnam‟s top 3 most valuable banks by 2022

The objective of VPBank Chương Dương is to become a top-ranking retail bank among joint stock commercial banks in Hanoi and in the North area, in terms of business scale, market share and service quality On that basis, VPBank Chương Dương shall make the highest profits for its shareholders, create stable jobs and career development opportunities for employees, and make considerable contributions to the State Budget and to the general development of the economy and society as well

2.1.4 Business products and services of Retail Banking VPBank Chương Dương:

VPBank Chương Dương operates mainly within the fields of finance and banking, performs business activities according to the License granted by the State Bank and other activities in line with provisions of applicable laws

VPBank provides various products based on the needs of different types of customers, including:

- Saving products:

Regular savings, Easy Savings and Savings of Luck and Prosperity for

customers who don't use cash regularly and wish to receive the best return on the deposit

Easy Savings@Kids: For parents who desire to place a long-term deposit account for their children

Savings with early interest payment, Savings with periodically paid interest: For the customers who desire to receive interest payment early for spending during the period

During the COVID-19 quarantine, VPbank developed Online Saving, which can easily be approached online through VPBank NEO Customers using Online Saving will benefit from receiving a higher interest rate than registering in the transaction counter Online Saving involves all kinds of deposit products above in one digital banking platform

- Card services:

VPBank is well-known for the diversity of card service

+ credit card: there are five types: privileged, co-brand, reward,

cashback,withdrawal and travel

The outstanding cards such as Shopee platinum credit card, Lady credit card,

+ debit card: the most common debit cards are

*Domestic debit: AutoLink Debit Card

Especially VPBank is developing Virtual VPBank International Debit card, used without a physical card

- Loan products:

+ Unsecured Loan: (UPL) Unsecured personal consumer loan, Preferential

loan for teachers, Unsecured loan for customers having secured loan, Loan for household business owners, Loan for studying abroad

+ Secured Loan: Consumer loan, Home loan, Auto loan, Home repair loan,

Business loan

- Personal services:

Salary payment service, Union Western Union service, Currency exchange service, Counting service, Foreign currency verification service, Interbank money transfer service via Internet Banking, Deposit and withdrawal service for securities account

at VPBank

2.1.5 Business performance of VPBank Chương Dương during 2019-2021

Table 2.1 Business performance of VPBank Chương Dương branch (2019-2021)