The development of e banking system of vietnam technological and commercial joint stock bank,graduation thesis

This study examines the current situation of E-Banking development in Vietnam Technological and Commercial Joint-Stock Bank by analyzing four most potential products: F@st i-bank, F@st M

BANKING ACADEMY FOREIGN LANGUAGE FACULTY

Supervisor: Mrs Nguyen Phuong Lan (MA)

Hanoi, May 2017

DECLARATION

I hereby declare that this thesis is the product of my own work and effort It has not been applied or posted for any degree or previously submitted anywhere for any commercial or personal purpose All the sources I have used have been indicated and acknowledged by means of completed references

Signature Bui Phuong Linh

ABSTRACT

The constant innovations in telecommunication technology have change the face

of banking sector Banks now target the provision of products and services through electronic channels, namely Electronic banking or E-banking Like other commercial banks in emerging economies, banking institutions in Vietnam have kept implementing E-Banking service and achieved initial outcomes This study examines the current situation of E-Banking development in Vietnam Technological and Commercial Joint-Stock Bank by analyzing four most potential products: F@st i-bank, F@st Mobile, Cards and ATM/POS in the period of 2005 – 2016 The results have pointed out serveral auspicious attainments in developing E-Banking in Vietnam However, their limitations remain worth concerning and need to be dealt with in the forthcoming time Therefore, the final objective of the thesis is to make recommendations to the bank itself so that E-Banking could be effectively exploited With great effort and devotion, it is my heartfelt

hope to get to the bottom of all research subjects in the graduation thesis: “The Development of E-Banking system in Vietnam Technological and Commercial Joint- Stock Bank”

DEDICATION

I sincerely dedicate this graduation thesis to my family, especially to my beloved mother, since she is the only reason and motivation for me to keep trying to have a happier life and she always encourages me every single day by her love

ACKNOWLEDGEMENT

First and foremost, I would like to extend my heartiest appreciation to all

my lecturers in the Banking Academy of Vietnam, who have inspired me with knowledge of English as well as soft skills and beautiful memories throughout

my four-year learning process

My special gratitude goes to my supervisor, Mrs Nguyen Phuong Lan – Lecturer of Foreign Language Faculty – Banking Academy of Vietnam She provided great and enthusiastic immeasurable support, useful guidance during all stages of the study She even helps me to fix my every small mistake at late nights Those precious comments and encouragement really helped me and gave

me motivation to complete the graduation thesis

I am heartily thankful to the Vietnam Technological and Commercial Joint-Stock Bank, especially Ms Luong Hai Yen, who carefully consulted and guided me during my internship period at the bank I would like to emphasize that all my priceless experiences with Techcombank, where I had a great opportunity to experiences banking environment, change my attitude, thoughts and behaviors to become who I am today, were very memorable and full of learning and challenges

Last but not least, I would like to express my sincerely thanks to my family and friends for their unconditional love and support Thanks to their encouragements and advices, I have more strength and patience to fulfill this important landmark

Due to time constraints and limited capacity of the researcher, there will

be inevitably a number of shortcomings in my graduation thesis Thus, in order

to improve the thesis, I am looking forward to receiving feedbacks from the lecturers

LIST OF TABLES AND FIGURES

Table 1 Total Actual Activities in 2014-2015

Table 2 Transaction results using F@st Mobile in

2015-2016 Table 3 Number of issued card and total payment value in

2005-2006 Table 4 Issuance and payment fee

Figure 1 Charter capital of Techcombank in 1995-2010

Figure 2 Total Asset in 1995-2015

Figure 3 Number of branches and customers in 1995-2015 Figure 4 Total transaction amount in 2014-2016

Figure 5 Total transaction volume in 2014-2016

Figure 6 Growth rate in September-December 2016

Figure 7 Number of payment card in March 2016

Figure 8 Number of customers basing on segments in 2016 Figure 9 Number of POS and ATM of Techcombank in 2015

Techcombank Vietnam Technological and Commercial Joint-Stock Bank

Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam

Deustch Bank Deustch Bank AG

SWIFT Society for Worldwide Interbank Financial Telecimmunication

ANZ Australia and New Zealand Banking Group Limited

KPMG Peat Marwick International and Klynveld Main Goerdeler

Smartlink Smartlink Network System Ltd.Company

PCI-DSS Payment Card Industry Data Security Standard

ADSL Asymetric digital subscriber line

TABLE OF CONTENTS

I.INTRODUCTION 1

1.1 Rationales 1

1.2 The Aim and Scope of the study 2

1.3 Research Methodology 2

1.4 Organization of the study 3

1.5 Limitation of the study 4

II THEORETICAL – BACKGROUND OF THE STUDY 5

2.1 Context for the development of Electronic banking 5

2.2 Background: 5

2.2.1 Definition and early stage of E-Banking 5

2.2.2 Types of E-Banking: 7

2.2.3 Benefits/ Roles of E-Banking 12

2.2.4 Possible problems of E-Banking 15

2.2.5 Criteria to develop E-Banking: 16

III.EMPRITICAL RESULTS 18

3.1 Basic knowledge of Technical and Commercial Bank of Vietnam 18

3.2 Establishment and development of E-Banking of Technological and Commercial Bank of Vietnam 21

3.2.1 Establishment 21

3.2.2 Products 22

A F@st i-bank: 22

B F@st Mobile: 26

C Cards: 31

D ATM and POS: 37

3.3 Achievement and Problems 40

IV.SOLUTIONS AND RECOMMENDATIONS 43

4.1 Solutions and recommendations: 43

4.2 Expectation: 45

V CONCLUSION 47

VI.REFERENCES 48

I INTRODUCTION 1.1 Rationales

Inthe worldhistory, there were severalrevolutions occurringsuch as The Socialist Revolution or The national democratic revolution,… Each revolutionled to many opinions which were both positive and negative Nevertheless, there is one revolution that people can hardly deny its benefits, which is Technology Revolution Technology is now applied and used popularly and widely in any aspect of life, even in Banking and Finance System Specifically, I do this research to find out the advantages and the impact of one typical kind of Technology used in Banking system –ElectronicBanking

In the modern21stcentury, people areused to livingin a fast, energetic and informative life.Therefore, the birth of E-Banking system isinevitable Gradually, it becomes one ofthe essential parts ofhuman'slife

When doing the research, I have found out thatE-Banking system has been launched and experienced many times in many countries.Though regarded as a potential market, E-Banking in Vietnam has not beenmatured Itisonly a new technology and has not been exploited to the maximum benefits.As a result, it is ofnecessityto access the development of E-Banking, research limitations and overcomechallenges

For all the reasons above, and in order to contribute to improving the quality of banking services in Vietnam, especially in Techcombank -one of the most successful bank in applying E-Banking into the system, the researcherchose E-Banking and its development as the topicforgraduation thesis, to find out moredetailedabout the system, the way it operates and its

willprovidereaderswithadetailed view of the current E-Banking system of the bank as well as help Techcombank and others have orientation and measures to improve electronic banking services in the new period

1.2 The Aim and Scope of the study

The purposeof this study is to investigate the features of E-Banking system and its impacts to clients It will help me to have deeper knowledgeabout the overall status of the system

Broad objective: Prepare the report on “The development of E- Banking system of Technological and Commercial Bank of Vietnam” to finish my schooling at Banking Academy and to graduate from the school

In this research, all findingsof E-Banking system atTechcombankare the answersfor thosemainfollowing questions:

• What isTechcombank?

• What are the products of E-Banking system atTechcombank?

• How does E-Banking system atTechcombankoperate?

• What are advantages and disadvantages of E-Banking system of Techcombank?

• How to improve and develop E-Banking system at Techcombank? For each question,the researcher will analyze and calculate in Chapter

II of the Thesis

That findingof all aspectsof E-Banking system is impossible Moreover, I was an intern for the Bank for one year from 2015 to 2016 Therefore, the researchermakes an enquiry about the Electronic Banking system of only Technological and Commercial Bank in Vietnamonlyfrom

2005 to 2016

1.3 Research Methodology

All the relevant information below are gathered from my working

reports,Techcombank’swebsites,the website of State Bank of Vietnam and other sources (which will be listed at the end of the thesis) Some information

is taken from my friends at the organizations The insource of this study can

be divided into two sources, Primary source and Secondary source

- Primary Data:

• The information taken from State Bank of Vietnam

• The information taken fromTechcombank’swebsite

• Face to face conversation with the officers and customers of bank

• The information gathered during the time I work asthe intern

- Secondary Data: The secondary Data of this research are collected from State Bank of Vietnam,Techcombank’sannual report and other newspapers online, which I gotan idea of how to write the thesis

Secondary Sources are collected in the following ways:

• Data gathered in the bank internal

• Data gathered from Texts: newspapers,…

• Internet sources

• General reports

• Annual reports

• Other thesis about E-Banking system

In the study,theresearcher uses thequantitative research method

1.4 Organization of the study

In order to come up with the most suitable research approaches and strategies forthe thesis, I will present them basing on these main parts

• Chapter I -The Introduction includes sub-parts: rationales, objectives,the scope of the thesis, research methodology, organization and limitation of the study

• Chapter II – Theoretical: Background of the Study – mentions the overview of Electronic Banking system: its context, definition, common types of E-Banking, its benefits,and some possible problems

• Chapter III sheds light in evaluating the real situation of E-Banking system at Vietnam Technological and Commercial Joint-Stock Bank including the bank's current products,achievements and drawbacks,and opportunities for E-Banking system

• Chapter IV provides some core solutions and recommendationsto enhance the system in Techcombank and the Vietnamese Banking system

• The conclusion then draws remarks for the whole thesis

1.5 Limitation of the study

No matter how hard I tried to find out the informationand do the thesis, there must be still some mistakes during the study

• I had to face some limitations to collect information about Banking ofTechcombank

E-• Unavailability to require published documents

• Lack of experience and efficiency to prepare the fruitful and academic thesis

II THEORETICAL – BACKGROUND OF THE

STUDY

2.1 Context for the development of Electronic banking

The banking systems since years ago have not only played an integral part

in the development of money and economic but also put the first brick into other aspects of life and society In the past two decades, banks around the world started to provide customers an application in order to help them check account balance as well as some payment orders for public services such as water or electric receipts During this time, Vietnam had just begun its period

of development after changing from 1-level to 2-level banking system with transactions which must be done face to face However, time flies and people change The world keeps modernizing day by day and never sleep, leading to more and complicated demands of people From doing transaction only in working hours, they want to check, make payment and manage an account at anytime and anywhere Besides, thanks to the technology and information industry which has improved and upgraded for every second, together with the will of global integration, people invented E-bank, so-called Electronic banking

It is considered as a breaking-through in the world with various benefits

2.2 Background:

2.2.1 Definition and early stage of E-Banking

E-Banking, which stands for Electronic Banking, has various meanings According to Business Dictionary, E-Banking is understood as "the use of computers to carry out banking transactions such as withdrawals through cash dispensers or transfer of funds at point of sale"

In other words, Oxford dictionary defines E-Banking as "A method of banking in which the customer conducts transactions electronically via the Internet."

Another source, Wikipedia, says that "E-Banking or virtual banking, is

an electronic payment system that enables customers of a bank or other financial

institutions to conduct a range of financial transactions through the financial institution's website The online banking system will typically connect to or be part of the core banking system operated by a bank and is in contrast to branch banking which was the traditional way customers accessed banking services."

Although there have been some definitions of E-Banking so far, they have some common points In general, E-Banking can be defined as a form of banking and finance commercial with the participation or support of technology and information, especially of computer and network technology This provides products and retail banking services such as doing transactions, checking account, making an electronic payment In other words, E-Banking is known as

a form of doing banking and finance transactions through electronic means By using E-banking, customers can easily and conveniently do transactions just by clicks, no signature, no direct meeting at branches and no papers printed

First of all, there are three main stages of E-Banking in the world when mentioning about the history of establishment and development

The very first stage was Brochure - Ware, which was the simplest format

of electronic banking Most of the banks in the world, including Vietnam, have built a website containing information of bank namely products, services, interests, network and branches, financial reports and annual activities,… This actually was just a marketing channel so as to introduce, advertise apart from traditional channels like newspapers or televisions However, all transactions were still done through the traditional distribution, Banks

The next was the E-commerce stage Bank used the Internet as a whole new distribution channel for their old products such as checking account information, receiving stock transactions, This format was suitable for small and medium banks

Thirdly, E-commerce was upgraded into E-business In this period, Internet and other distribution channel were connected and synchronized with front-end and back-end system Therefore, the invention of new services, as well

as the rise of customers’ demands, were inevitable Moreover, that way of

synchronizing data between Head Office and Branches helped banks to solve and serve customer’ requests more efficient

The latest format, or called E-Bank, is the ideal model of an online Bank

in an electronic economy which has its own way of business frameworks and management style Bank will take full advantage of E-Bank in order to provide customers the best and the most suitable financial solution

Vietnam on the way to integrate into the world, have learnt from other countries and brought out E-bank products The first Vietnamese Bank implementing the model was Vietcombank with Home-banking in 1994 This was also the first bank serving retail bank products with VCB system In March

1995, a system called SWIFT – Society For WorldWide Interbank Financial Telecommunications joined E-Bank In May 2002, interbank electronic payment appeared Then, other banks also applied this basic E-bank system such

as Techcombank, BIDV,… For corporate customers, there are ANZ, HSBC, DeustchBank, Citibank,… who provide E-Bank services

According to Wikipedia, telephone banking is “a service provided by

a bank or a financial institution, that enables customers to perform a range

of financial transactions over the telephone, without the need to visit a bank branch or automated teller machine” Telephone banking times are usually longer than branch opening times, and some financial institutions offer the service on a 24-hour basis Most financial institutions have restrictions on which accounts may be accessed through telephone banking, as well as a limit on the amount that can be transacted

The types of financial transaction which a customer may order through telephone banking include obtaining account balances and a list of latest

transactions, fund transfers and electronic bill payment between one customer's and another's accounts

From the bank's point of view, telephone banking minimizes the cost of handling transactions by reducing the need for customers to visit a bank branch for non-cash transactions Nevertheless, transactions involving cash or documents (such as cheques) are not able to be handled using telephone banking, and a customer needs to visit an ATM or bank branch for cash withdrawals and cash or cheque deposits

However, telephone banking in Vietnam is a little different It is a system that automatically answers when customers call bank's hotline Each number on the keyboard stands for a fixed issue for customers to choose, give some confirmation information to check their account When using telephone Banking, each client has an ID or account code The process of using Telephone Banking is usually as follows:

• Registration: Customers fill in information paper and sign a contract approving using Telephone Banking service They will be provided with an

ID or code by the bank as a security step when doing any transaction

• Doing Transaction: Customers call the hotline of the bank, enter ID or code then choose the approximate issue type basing on the number

on the keyboard With this service, customers can change or fix information before confirming transaction with the bank They can listen to customer care information, bank information, account transaction, banking statement, account balance, check data of interest rate, exchange rate, transfer money and make payment, All the statement and document related will be transferred to them when the transaction was done

b, Internet Banking:

Since the first time officially launched in Vietnam in 2004, Internet Banking service is becoming popular and has the up-growing trend in the number

of users

Wikipedia defines Internet Banking: "Online banking, also known as internet banking, e-banking or virtual banking, is an electronic payment system that enables customers of a bank or another financial institution to conduct a range

of financial transactions through the financial institution's website The online banking system will typically connect to or be part of the core banking system operated by a bank and is in contrast to branch banking which is the traditional way customers access banking services."

To have an Internet Banking account, a customer with internet access would need to register with the bank for the service, and set up a password and other credentials for customer verification The credentials for online banking is normally different from telephone or mobile banking Technically, the customer

ID is applied and can be linked to any account in the bank that the customer controls

The customer searches the bank's secure website and enters the online banking facility using the customer ID and credentials previously set up The types of financial transactions which a customer may transact through online banking are determined by the bank, but usually include obtaining account balances, a list of the recent transactions, electronic bill payments and funds transfers between two accounts Most banks also enable a customer to download copies of bank statements, which can be printed at the customer's premises (some banks charge a fee for mailing hard copies of bank statements) Some banks also allow customers to download transactions directly into the customer's accounting software The facility may also enable the customer to order statements, report loss of credit cards, advise a change of address and other routine actions

Today, the number of internet banking services goes up gradually because the product has lower overhead costs than the brick-and-mortar counterparts Even in the United States, many online banks are insured by the Federal Deposit Insurance Corporation (FDIC) and can offer the same level

of protection for the customers' funds as traditional banks

c, ATM & POS:

One of the first things that banks and financial institutions did to implement electronic funds transfer (EFT) in the public arena was to give birth for the proliferation of Automatic Teller Machines, or ATMs Traditionally, human tellers are those who do front-line contact Nevertheless, from the bank’s point of view, being able to take care the huge flow of every-day transactions created by paper checks also causes the need for an army of people to serve the customers Bank staff are people that will be there to take the check, record the transaction, and give customers a receipt or cash Moreover, many more people were stay behind the scenes to verify the transactions and actually complete the transferring process

The typical ATM can easily duplicate most of the services of a living teller such as deposits, withdrawals, and money transfers between several accounts within a short period of time More significantly, the terminals could be located outside the bank lobby, allowing 24-hour access and greater customer convenience For the banks, ATMs became mini-branches that extend their financial martket share and customer base far beyond physical buildings As a result, many ATMs are rapidly built inside major retail outlets, convenience stores, gas stations, and other high traffic locations

However, ATMs are not the final solution to the common electronic goal, because they still involved the use of paper money Yet, in a second generation machine called a Point of Sale terminal (POS), the prospect of having a truly cashless society suddenly took a breakthrough The potential of POS for achieving a totally automatic economy is enormous Instead of just having an ATM at or near each place of business, banks, and retail outlets started to set

up a network of intelligent cash registers with direct EFT links to member banks and also connected to the global network These POS terminals are different from the normal cash registers that were used in the past Most of the previous cash registers, no matter how computerized they may have been, only functioned as recorders of each transaction and repositories for the cash and checks a business received In contrast, the POS terminal would still not only be

able to handle cash and record each transaction, but it was also designed for cash purchases In this situation, it is completely connected to the global EFT network so that every transaction could be immediately recorded and debited to the appropriate customer’s account

non-The first POS terminals can handle ATM cards and credit cards as well as the newer debit cards The terminal also can accommodate payment using cash

or cheques, but they were ultimately designed to increase the level of cashless buying and selling If a person uses a credit card, the POS network would first validate that the card was still active and then report back to the terminal that the transaction could proceed If a debit card or ATM card is used, however, the consumer would have to type in their PIN after swiping the card and the network will then validate the card along with the entered number and subsequently allow the transaction—almost immediately debiting the purchaser’s account Thus, the POS terminal operated on different levels depending on how a customer wanted to complete the purchase

d, Payment Card:

According to Wikipedia: "Payment card is a device that enables its owner (the cardholder) to make a payment by electronic funds transfer.[1] The most common types of payment cards are credit cards and debit cards Payment cards are usually embossed plastic cards, 85.60 × 53.98 mm in size, which comply with the ISO/IEC 7810 ID-1 standard They usually also have an embossed card number conforming with the ISO/IEC 7812 numbering standard

Most commonly, a payment card is electronically linked to an account or accounts belonging to the cardholder These accounts may be deposit accounts or loan or credit accounts, and the card is a means of authenticating the cardholder However, stored-value cards are cards that store money on the card itself

Payment cards can be distinguished on the basis of the features of each type of card, including Credit Card and Debit Card

In terms of Credit Card, the issuer of a credit card creates a line of credit (usually called a credit limit) for the cardholder on which the cardholder can draw (in another way, temporally borrow money from his/ her bank ), either for payment to a merchant for a purchase or as a cash advance to the cardholder Most credit cards are issued by or through local banks or credit unions, but some non-bank financial institutions also offer cards directly to the public

The cardholder can choose either to repay the full outstanding balance by the payment due date or to repay a smaller amount, not less than the "minimum amount", by that date In the former case, interest is typically not charged; while

in the latter case, the cardholder will be charged with interest The rate of interest and method of calculating the charge vary between credit cards, even for different types of card issued by the same company Many credit cards can also

be used to take cash advances through ATMs, which also attract interest charges, usually calculated from the date of cash withdrawal Some merchants charge a fee for purchases by credit card, as they will be charged a fee by the card issuer

With a debit card (also known as a bank card, check card or some other description) when a cardholder makes a purchase, funds are withdrawn directly either from the cardholder's bank account or from the remaining balance on the card The use of debit cards has become widespread in many countries and has overtaken the use of cheques, and in some instances cash transactions, by volume Like credit cards, debit cards are used widely for telephone and internet purchases

Debit cards can also allow instant withdrawal of cash, acting as the ATM card, and as a cheque guarantee card Merchants can also offer

"cashback"/"cashout" facilities to customers, where a customer can withdraw cash along with their purchase Merchants usually do not charge a fee for purchases by debit card

2.2.3 Benefits/ Roles of E-Banking

• For customers

The most successful function of E-Banking was time-saving and convenient From the beginning, customers who want to do transactions must go

to Branches only in working hours, wait in chairs, fill in the forms, check personal information and sign their signature to complete a process Those were only for transferring money For some more complicated orders, this may take longer time to be done Furthermore, it would be risky if they bring a lot of money in cash rather than transferring it online Nevertheless, E-Banking is the best solution for all Nowadays, people just need Internet connection anytime anywhere and click to complete the transaction In addition, customers still can check their balance and manage financial ability themselves, which proves that the privacy is totally guaranteed For those benefits, E-Banking is now become one of the decisive factors and very important in competitiveness

Secondly, E-Banking allows Banks to easily and immediately adjust and

be adapt to market changes such as fees, interest, exchange rate,… Besides, this step helps Bank to control risks as well as brings economic benefits to Banks and customers who join and use E-Bank

Thirdly, by using E-Banking, Bank can quickly update and access to new and modernized management method which help variety services, receive higher returns, improve productivity and especially, enhance competitiveness

Moreover, that development of E-banking can help faster capital transferring and well respond to payment demand of the national economy which

is upgrading second to second This will create a fluent in and out source of money under control Then, banks can manage all transferring demand, which then controls laundering money or illegal transfer and corruption

Finally, E-Banking is a useful tool to flexibly serve many kinds of target customers having different demands with several options According to that, apart from traditional products such as credit and payment, bank can co-operate with insurance companies, stock or other financial companies,… to cross sale and create an introduce to every requirement of customers This is one method

to keep its valued and loyalty customers in professional

• For economy and society

E-banking is really an effectively economic solution Every individual or even big economic group always has to deal with cost problem Nowadays, thanks to E-Banking system, all cost related to transaction, payment, account or transportation cost are deducted remarkably This succeed will then push commercial and economical activities, services, tourism events,… which help the country to have more opportunities to integrate into world economy community With the benefit of the ability to serve all days (24 hours/ 7 days), E-Banking can attract all kinds of customers anytime despite their locations or distances with lower transaction fees

With data source updated immediately and accuracy through information network, government and country can analyze and choose solution or use adjustment tools to control money supply and money demand to maximum the monetary stability Besides, professional can analyze the balance of trade, payment and predict the economy in the future Therefore, national economy can

be remained and protected when government has provision

For the society, since the birth of E-Banking, Vietnamese people have chances to access a new technology in banking From this, people have a new vision in technology and bank Hence, people in the country can keep up with world trends and not become underdeveloped Using E-Banking also proves that

the standard life of netizens is clearly improved and obviously, it can be used to consider a national development

2.2.4 Possible problems of E-Banking

One possible risk derived from E-Banking system is security risk It begins from managing access step into system The system includes various essential documents and information, by only one missing piece, hackers or cheater can steal them, leading to legal responsibilities or loss for customers and other troubles

The second risk is design and remaining system risk Some chosen model system cannot be well designed or manufactured In the process, there are maybe some operation mistakes, postponement or slow load Moreover, many banks even rely on a third party – application supplier or independent professional to implement, operate and support other parts of E-Banking Therefore, some suppliers do not update their technology or professionals cannot predict, analyze and support all aspects in the process on-time As a result, not only bank staff cannot understand the true value of the technology, but banks also face problems in manufacturing process

In customers' aspect, when lacking of necessary solutions to confirm transaction, customers may tend to deny to confirm them Clients using private information such as account number, ID number, or card number, ) in electronic transactions are creating conditions for criminals to access their accounts The consequence is that banks may have to compensate finance loss from those problems

Risk about bank’s charisma is the next part It is the risk occurred when media have negative feedback or review about banks, which prevents bank from accessing other capital sources or customer leaving It can also happen when product or system operation is not good as expectation leading to negative replies or attitude in community One serious security hole, no matter it comes from inside or outside, will have negative effect on the bank’s reputation For E-Banking system, since all steps are made online, if customer meets trouble with

products or process, the way and time to solve or communicating network will

be hard to access right after the time they need help

Besides, legal risk is very serious Since E-Banking is a technology system and also a new system for banks in Vietnam, the rights and responsibilities of each party are not all covered Banks joining E-Banking activities have to face legal risks related to protecting customer privacy

2.2.5 Criteria to develop E-Banking:

There are four key factors that are considered to be conditions to build a strong E-Banking system, namely: Legal Barrier, Customers, Banks itself and Infrastructure

First, E-Banking is a modernized distribution channel of banks Therefore, it must under many rules and laws about finance, banking, monetary and other related laws Besides, it must be directly under the adjustment of electronic trade, electronic laws and even electronic signature in the common economy This will guarantee the legal base for electronic transaction and avoid conflicts as well as protect benefits for all parties when joining in a deal

Next, customers is also a decisive factor To make a transaction on Banking, customers not only have demand but also have enough material conditions to connect with bank as well as knowledge to use it Customer who wants to do transaction by E-Banking must have suitable devices to link with banks For instance, when using phone Banking, clients need to have telephone

E-or mobile phone Or they will have internet connection with computer so as to use Internet Banking Hence, before using this service, they will have

to be armed for themselves with necessary devices, which may cost a lot banking also requires its customers must be ones who have a certain ability or knowledge Using E-Banking, some may have to pass complicated manipulations As a consequence, for new customers who have never access to E-Banking before, it may take time to be familiar with steps because there will

E-be no specific using guides but common ones

To build a strong E-Banking system, banks have to solve many issues However, the top and prerequisite condition for a basement of system is its

finance potential, and staff’s standard In reality, the expenditure for this distribution channel is large For example, cost for installing and operating for only 1 ATM is about 700 USD per year, not including other fees such as data link or transport money to that ATM,…The more ATMs installed, the higher cost spent On the other hand, to implement E-Banking, banks must have high standard and professional staff This is considered as the golden key in modernizing bank Only high quality employees can operate a whole online system

Lastly, to apply E-Banking successfully in reality, there must be a modern and steady infrastructure, more specifically, technology infrastructure Basic technology infrastructure is the thing every bank must be qualified If the level

of information technology, technological solutions and applications,… are not strong enough, banks’ devices and means can be hardly connected to each other The system will be easily collided and collapsed when only one wheel is stuck

If the quality is not good, customers will doubt about the service of bank and even choose not to use the bank’s system Moreover, the instability in system in doing transaction can lead to many other risks for banks

III EMPRITICAL RESULTS

3.1 Basic knowledge of Technical and Commercial Bank of

Vietnam

The Technological and Commercial Bank of Vietnam, or called Techcombank, is now one of the biggest Jointstock Commercial Bank in Vietnam The bank has its own stories of establishment as well as history of development to become as successful as now At the present, The Head Office

of Techcombank is located at Vincom Tower 191 Ba Trieu Street, Hai

Ba Trung District, Hanoi

From the early beginning, Techcombank was founded on 27th September, 1993 with more than 20 billion Vietnam Dong of start-up capital Below are some great landmark of Techcombank:

Source: techcombank.com.vn

51 70 80 102 104 180 412 555

1,500 3,165 5,400 6,932

From 1994-1995: the bank raised its charter capital up to 51 billion and set up Techcombank Ho Chi Minh Branch, which was the base for the development in big cities

Two years later, its charter capital was about 70 billion and more branches are founded

In 1999, the capital of the bank was more than 80 The figure for 2001 was significantly higher with over 100 billion In this year, Techcombank had signed a contract with a supplier to provide the best banking system application Tenemos Holding NV for implementing GLOBUS so as to meet customers’ demand

In 2002, more and more branches are set up At this time, the bank has over 104 billion and was about to issue new stock Also, with the network of Head Office, 8 branches and 4 Transaction Rooms, Techcombank became the bank having the largest banking network in Hanoi

In the year of 2006, Techcombank received International Awards from The Bank of New York, CitiBank, Wachovia and was the first bank in Vietnam be rated confidence by Moody’s, one of the best Rating Confidence Company in the world In addition, charter capital increased to 1500 billion

Especially, in 2007, HSBC contributed 15% of capital into the bank as well as supported in Techcombank’s activities Besides, the bank rearranged its structure by set up Corporate Banking Services, Credit and Risk Management Division and fulfill the Personal Financial Banking Services Division Techcombank became the first bank who was recognized by Financial Insights of developing market solution technology The year of 2007 witnessed the beginning of many new products such as F@st i-bank, F@st Vietpay