(Tiểu luận) topic commercial banks in the context of digitaltransformation in the economy

People will be able to invest in a widerange of ibond bonds depending on personal needs.If investors need money but do not want to sell bonds, they can alsopledge iBond bonds to borrow a

BANKING ACADEMY OF VIETNAM

-

-GROUP ASSIGNMENT FINANCE - MONEY (FIN86A)

TOPIC: COMMERCIAL BANKS IN THE CONTEXT OF DIGITAL

TRANSFORMATION IN THE ECONOMY

GROUP: 07

LECTURER: Thân Thị Vi Linh

STUDENT:

Vũ Thị Hoài Ngọc (Leader) – 22A7510055

Đào Thị Thúy Mây – 22A7510144

Trần Thị Diệu Thanh – 22A7510162

Nguyễn Trần Kim Ngọc – 22A7510148

Nguyễn Thị Phương Thúy – 22A7510051

Nguyễn Thị Oanh – 22A7510169

Vũ Thị Huyền Vy – 22A7510147

Đoàn Thị Hải Yến – 22A7510056

OVERVIEW OF COMMERCIAL BANKS 2

1 Definition commercial banks 3

2 Classification of commercial banks 3

II ACTIVITIES OF COMMERCIAL BANKS 3

III ANALYSIS COMMERCIAL BANKS IN THE CONTEXT OF DIGITAL TRANSFORMATION 4

1 Introduction of Techcombank 4

2 Digital Transformation 5

3 Introduction and Classification iBond 7

3.1 What is iBond? 8

3.2 Types of iBond bond 8

4 Advantages of iBond 9

4.1 The leading reputable distributor in the market 9

4.2 The outstanding features of Techcombank's ibond bonds 9

5 Disadvantages of iBond 10

5.1.Investment returns are low compared to the bond market 10

5.2.Variety of Bonds 11

5.3 Risks related to the iBond 11

VI PRINCIPLE OF OPERATION OF IBOND 12

1 How to open iBonds stock account 12

Three ways to open a securities investment account at Techcombank Securities 12 2 How to use iBond 15

2.1.For corporate bond products iBondPro and iBondPrix – Sustainable accumulation 15

2.2 For corporate bond products iBondPrix – Flexible investment 16

3 Bond Trading Process - iBond 17

CONCLUSION 21

REFERENCES 22

OVERVIEW OF COMMERCIAL BANKS

1 Definition commercial banks

The term commercial bank refers to a financial institution thataccepts deposits, offers checking account services, makes variousloans, and offers basic financial products like certificates of deposit(CDs) and savings accounts to individuals and small businesses

Commercial banks make money by providing and earning interestfrom loans such as mortgages, auto loans, business loans, andpersonal loans Customer deposits provide banks with the capital tomake these loans

2 Classification of commercial banks

Commercial banks fall into three main types: public sector banks,private sector banks and foreign banks

 Public sector banks are banks that have been nationalized

by a country’s government The major stakeholder is thegovernment In most cases, these banks operate under thecountry’s central bank

 Private banks are banks whose major share capital lies with

individuals and private businesses As such, they are limited liabilitycompanies

 Foreign banks are banks with headquarters in a foreign

country and branches in different parts of the world Foreign banksplay a great role in helping support the economic standing of thatcountry, apart from serving the financial needs of its people

II ACTIVITIES OF COMMERCIAL BANKS

Commercial banks provide basic banking services and products to thegeneral public, both individual consumers and small to mid-sized

businesses These services include checking and savings accounts, loans and mortgages, basic investment services such as CDs,

as well as other services such as safe deposit boxes.

Banks make money from service charges and fees These fees

vary based on the products, ranging from account fees (monthlymaintenance charges, minimum balance fees, overdraft fees, non-sufficient funds (NSF) charges), safe deposit box fees, and late fees.Many loan products also contain fees in addition to interest charges

Banks also earn money from interest they earn by lending out money to other clients The funds they lend comes from customer deposits However, the interest rate paid by the bank on

the money they borrow is less than the rate charged on the moneythey lend For instance, a bank may offer savings account customers

an annual interest rate of 0.25%, while charging mortgage clients4.75% in interest annually

Commercial banks have traditionally been located in buildings wherecustomers come to use teller window services and automated tellermachines (ATMs) to do their routine banking With the rise in internet

technology, most banks now allow their customers to do most of the same services online that they could do in person including transfers, deposits, and bill payments.

III ANALYSIS COMMERCIAL BANKS IN THE CONTEXT OF DIGITAL TRANSFORMATION

1 Introduction of Techcombank

In various disciplines and sectors of the economy, most countriesthroughout the world, including Vietnam, are undergoing digitaltransformations The finance sector, in particular, is one of the mostrapidly evolving as a result of digital transformation Commercialbanks' operations are particularly affected by this change, hence it'scrucial to assess the influence of digital transformation on bankingactivities

Among the most reputable commercial banks in Vietnam, our groupchose Techcombank to examine its activities in the context of digitaltransformation in the banking sector

Techcombank – Vietnam Technological and Commercial Joint StockBank (transaction code: TCB) was established on September 27, 1993

At that time, Vietnam implemented many reforms and showedspectacular economic changes, notably GDP growth that doubled inthe last decade Techcombank's head office is located at 191 Ba TrieuStreet, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi It is consideredthe first joint stock bank of Vietnam in the context of the economychanging to market economy mode with the initial charter capital of 20billion VND Until now, Techcombank has become the leading largebank in terms of charter capital With 1 head office, 2 representativeoffices and more than 300 transaction points in 45 provinces and citiesacross the country, Techcombank not only meets the needs of ordinarybanking transactions but also ensures the financial safety needs ofVietnamese people Techcombank has been awarded financial andbanking awards by many Vietnamese and international organizationsand is considered one of the leading prestigious banks in Vietnam In

2018, among the 9 largest commercial joint stock banks in the country,Techcombank was the leading bank in terms of non-interest revenue

ratio, cost to revenue, public profit per account, and average operatingincome per staff Before that, in 2006,they initially launchedTechcombank Visa international payment card and began offeringinsurance products through a partnership with Bao Viet Insurance In

2007, Techcombank deploys online banking (internet banking) andregisters a public company with the Securities and ExchangeCommision In 2008, they launched Techcombank Visa Credit and thenissued Techcombank – Vietnam Airlines – Visa co-branded cards in

2012 Until 2014, they launched F@st Mobile mobile bankingapplication with money transfer service via social networkTechcombank became the first bank to introduce this innovativeservice to customers, marking a new turning point in money transferand receipt as well as complete payment of online transactions on theVietnamese market

2 Digital Transformation

Digital transformation in banking is a cultural, organizational, andoperational change through technologies (Christopher A Williams,2018)

Statistics from the State Bank of Vietnam (SBV) show that 95% ofVietnam’s banks have been mapping out building a digitaltransformation strategy, and 39% have implemented the strategy orintegrated digital transformation into their business and ITdevelopment orientation

Digital transformation helps banks save costs and streamlineoperational processes to help promote electronic payments, anopportunity to promote the development of digital banking in Vietnam

In addition, digital transformation also brings customers new values,saves time and costs, is convenient, can be done anytime, anywhere,quickly and efficiently.

Techcombank is the first bank in Vietnam to pioneer in online andelectronic banking services Consistently pursuing the goal ofimproving technology to better address customers' needs, in recentyears, Techcombank has stood out with many breakthrough steps.These can be mentioned as the new generation ATM system thatintegrates all utilities for 24/7 service or the F@st i-bank - F@st Mobileplatform that is constantly being upgraded and updated with manynew features for customers to enjoy Customers experience moreconvenience and safety every day

Techcombank also launched iTCBLife - a digital tool applying artificialintelligence to support professional insurance advice to help customerseasily access and learn about Techcombank's product information andmake the most profitable choices

With outstanding solutions and services in the direction of digitization,Techcombank has achieved outstanding marks in the general picture ofthe financial industry in the first half of 2021, especially the high ratio

of CASA (term deposit) The industry's lowest bad debt ratio is 0.4%

Thanks to the strategy of continuous and stable investment intechnology to optimize the system of smart solutions, after the firstfew months of the year, Techcombank not only promoted the insuranceservices segment - an impressive increase of 80.5% - but The bank'sloan-to-deposit ratio also reached 79.2%

OTHK Tài chính tiền tệ

Tài chính

79

BT TCTT - Bài tập TCTT

In addition, Techcombank was also recognized from prestigiousinternational financial institutions, reaching the 4th position in the list

of "Banks with the largest automatic order matching transactionvolume in Vietnam's foreign exchange market in 2018 2020"according to the ranking of the prestigious international organizationRefinitiv (under the London Stock Exchange Group) Techcombank wasalso honored by Asian Banker in the position of "Vietnam's mosttrusted retail bank" and ranked 6th in this ranking of the Asia-Pacificregion in 2021

3 Introduction and Classification iBond

Until the beginning of 2020, the peak period of the COVID-19 epidemic

in Vietnam, the Government has applied a directive on socialdistancing, all Vietnamese people need to strictly follow and limit goingout as much as possible when not needed Therefore, investors whowant to open a securities account will face difficulties because theconfirmation procedure when opening an account must go directly tothe investment bank's transaction counter In order to ensure customerthroughput in the investment process, TCBS - Techcom Securities hasemerged as a "phenomenon" in Vietnam because it is the firstsecurities company to launch a 100 percent online account openingservice With the online eKYC customer identification method, theprocedure only takes 5 minutes, customers can open an account 24/7anytime, anywhere, in Vietnam or any country in the world Because ofthese, we would like to introduce “iBond” which is a product of TCBS -Techcom Securities of Techcombank

3.1 What is iBond?

iBond is a bond product of leading enterprises in Vietnam, speciallydesigned by Techcom Securities (TCBS) for individual customers whowant to diversify their investment portfolio, receive stable interestrates and base flexible liquidity structure

3.2 Types of iBond bond

Currently, there are 3 types of ibond bonds on the market, offeringmany options for customers such as:

 Sustainable accumulation investment

This product is very suitable for investors who buy bonds and holdthem until maturity This is the highest yielding bond of all theproducts But in return, the liquidity is low and you have to find a buyeryourself if you want to sell the bond This transaction can only be done

at Tecombank's transaction counters

 iBond Pro – Planned Plan

The form of this iBond Pro product is quite similar to bank savings It issuitable for short-term investors who are looking for a stable source ofincome according to the plan and preserve capital by investing in

corporate bonds with attractive and fixed returns with maturities lessthan 1 year Choose this product, you will be brokered by Techcombankbond distributor on time.

 iBond Prix – Flexible Investment

iBond Prix products can be bought and sold very easily through thebond trading market built by TCBs The floor focuses a lot of investorsbecause Techcombank's iBond bonds have up to 80% of the currentbond brokerage market share This strategy aims to maximize incomeand capital growth over the medium to long term (3 years or more) byinvesting in a spread of yielding assets to reduce volatility andpreserve capital

4 Advantages of iBond

Why are TCBS in general and iBond in particular chosen by manyinvestors? Let's take a look at the advantages of iBond bonds from thekey aspects before investing

4.1 The leading reputable distributor in the market

Techcom Securities - TCBS is the top 1 securities company in themarket in terms of bond distribution Bond distribution channels arequite diverse, especially Techcombank's transaction point system andonline distribution system Therefore, investors can access to buy andsell bonds very easily

IBond products allow individual investors to invest in corporate bonds,contributing to the effective mobilization of capital sources forproduction and business investment However, when used as collateralfor loans at Techcombank, this product acts as an intermediary tool tofinance money from Techcombank to businesses that issued thosebonds before

4.2 The outstanding features of Techcombank's ibond bonds Secure: If you're looking for an investment channel that offers steady

interest rates and relatively little risk, then iBond bonds may be a goodchoice to increase overall earnings for your portfolio Current bonds areissued by trusted corporations, which we have already expertised.iBond includes bonds issued by businesses with high credit ratings andevaluated and trusted by TCBS

High profit: Profit on bond is higher than bank savings, which is

returned 6 months or once a year to support customers cash flow anddouble their benefit based on the profit

Liquidity of ibond

Additionally, TCBS has structured bonds into packages with differentlevels of liquidity so that investors can flexibly invest according to theircash flow terms TCBS emphasized that apart from safety and highyields, iBond could be used as collateral for loans at Techcombankwhen customers need money but do not want to sell bonds yet iBond bonds are traded on the secondary market, allowing investors toreceive their principal before maturity When buying iBond bonds,customers can choose our liquidity package (Pro, Plus) whenpurchasing iBond, or using iConnect to easily sell their bond, yet stillmaintain the investment benefit People will be able to invest in a widerange of ibond bonds depending on personal needs

If investors need money but do not want to sell bonds, they can alsopledge iBond bonds to borrow at Techcombank

Stable interest rates

Compared to bonds and other fixed-income securities of the sameterm, iBond corporate bonds can offer higher interest rates The

interest rate of iBond bonds is paid every year or every half year,helping customers have stable cash flow and take advantage of thedual interest rate on the amount of recurring interest received.

Therefore, this is also a limitation for investors who prefer to take morerisks to get higher returns

5.2.Variety of Bonds

Currently, Techcom Securities mainly focuses on corporate bonds ofVingroup, Masan Group (MSN), Techcombank, and Sungroup, so therewill be few options for investors, especially risk-loving investors

5.3 Risks related to the iBond

The iBond program includes: iBond Prix, iBond Plus, iBond Pro360,iBond Pro180, iBond Pro90 Depending on Techcom Securities’s policyfrom time to time, the number and specific content of the programmay be changed, decided by Techcom Securities and announced fromtime to time Risks associated with the iBond program include:

 Changes to the content of brokerage programs

 Brokerage programs include: iBond Plus, iBond Pro360, iBondPro180, iBond Pro90