Hanoi, May 2018 THE STATE BANK OF VIET NAM BANKING ACADEMY Foreign Language Faculty GRADUATION THESIS THE DEVELOPMENT OF ELECTRONIC BANKING AT TIEN PHONG COMMERCIAL JOINT STOCK BANK
INTRODUCTION
Rationale
The internet, one of humanity's most significant inventions of the twentieth century, has profoundly influenced socio-economic development E-commerce has revolutionized the trading of goods and services across various economic sectors Additionally, electronic banking has gained momentum, with a notable increase in banks offering these services since 2004.
To thrive in the evolving banking landscape, TienPhongBank has intensified its efforts to modernize, enhancing both traditional offerings and electronic banking services This focus aims to boost competitiveness, facilitate integration, and foster growth This research paper will explore the current state of electronic banking at TienPhongBank, highlighting its advantages for both customers and the bank, while also addressing the challenges and limitations faced during implementation.
Research objectives
This thesis evaluates the feasibility and applicability of electronic banking for both individual and corporate consumers, focusing on TPBank Linh Dam's advancements in this area It aims to review the bank's development history, mission, and business plan, helping readers understand the evolution of electronic banking and its current relevance Additionally, the thesis analyzes the current conditions of electronic banking services at TPBank Linh Dam and assesses the benefits and drawbacks of electronic banking to propose suitable solutions.
Scope of the study
This thesis evaluates the performance and development of electronic banking services at Tien Phong Commercial Joint Stock Bank's Linh Dam branch, utilizing information and statistics from the bank covering the period from 2014 onwards.
Methodology of the study
1.4.1 The method of data collection
This research explores the development of electronic banking at TPBank Linh Dam and examines strategies to enhance service quality for customers Utilizing both primary and secondary data collection methods, the study draws on reliable sources, including TPBank's reports, website, and interviews, to gather pertinent information.
1.4.2 The method of data analysis
Horizontal analysis is a fundamental analysis technique used to compare a bank's financial ratios or line items over specific time periods As noted by Bragg (2017), this method involves evaluating historical financial data across multiple reporting periods to identify any significant fluctuations The primary goal is to detect any unusually high or low figures compared to previous periods, which may warrant further investigation Typically, this analysis organizes data by period, allowing for the representation of each subsequent period's figures as a percentage of the baseline year's amount, with the baseline set at 100%.
Vertical analysis, as defined by Bragg (2017), involves presenting each item in a financial statement as a percentage, allowing for proportional analysis Mahmud (2013) highlights that a key benefit of vertical analysis is its ability to facilitate easy comparisons of financial reports across banks, as well as to clearly illustrate relative annual changes within a single bank.
Vertical analysis is primarily utilized to assess the relative proportions of account balances within a single time period, allowing for a clear understanding of financial statistics Additionally, it serves as an effective tool for timeline analysis, enabling the examination of changes in account balances over time, particularly when comparing data across a five-year span.
Trend analysis, a key component of technical analysis, aims to forecast a bank's financial future by examining historical data This process involves evaluating current trends to anticipate future movements and is recognized as a form of comparative analysis It seeks to determine the sustainability of existing market trends, such as growth in specific sectors, and explores the potential for trends in one market area to influence developments in another.
Trend analysis serves as an early warning system for potential improvements or declines in a bank's financial health, according to Mahmud (2013) By examining a comprehensive range of financial data from quarterly reports, this analysis helps identify strengths and weaknesses Successful banks typically maintain strong ratios across all areas, and any signs of weakness can lead to significant stock sell-offs Key ratios, such as inventory turnover for the retail sector and Days Sales Outstanding (DSO), are particularly scrutinized for their importance to specific industries.
This research aims to provide answers to the following questions:
- What are the current development situations of Electronic banking at TPBank?
- Does Electronic banking bring any benefit to the bank as well as to their customers?
- What are customers’ concerns when using Electronic banking at TPBank?
Organization of the study
The thesis has been divided into four main parts as follows:
Chapter 3: Electronic banking development at Tien Phong Commercial Joint Stock
Previous studies
Electronic banking encompasses a range of services that allow clients to access information and perform retail banking tasks via computers or mobile devices, including deposits, loans, account management, and electronic bill payments (Jayshree, 2013; Basel Committee on Banking Supervision, 2003) This technology not only benefits banks by providing a strategic advantage and enhancing market share, but it also reduces the costs associated with traditional banking methods (Jenet, 2011) For customers, electronic banking offers faster, more convenient, and reliable services (Kumar & Reinartz, 2006) Despite these advantages, some customers remain hesitant to adopt electronic banking due to concerns about security and a lack of familiarity with the technology (Tran, 2017).
THEORETICAL BACKGROUND
Overview of Electronic banking
The definition of electronic banking used in this study is adopted from Electronic banking
Electronic banking, or electronic fund transfer (EFT), allows customers to conduct transactions using computers and electronic technology This service enables various transactions, including ATM withdrawals with a personal identification number (PIN) and automatic payments for monthly bills like auto loans and mortgages Additionally, customers can use check cards for purchases at points-of-sale and smart cards with prepaid amounts as cash alternatives Electronic banking also facilitates personal financial management by integrating income data and enabling basic financial analysis One significant advantage is the speed of bill payments, as accounts are automatically credited or debited, helping customers stay organized and on track.
2.1.2.1 The diverse and rich Electronic banking service
Electronic banking, as highlighted by Nouman (2011), is a key component of e-commerce that offers a wide range of services to a large audience It serves as a traditional distribution channel with a diverse product portfolio designed to meet customer needs and mitigate risks Over the past decade, advancements in databases, information systems, and technology have enhanced banking services, ranging from basic functions like account inquiries to sophisticated offerings such as online payments and letters of credit (Wu et al., 2006) Electronic banking now provides a comprehensive array of products and services comparable to those found in physical branches, resulting in high customer satisfaction and positive feedback.
2.1.2.2 The self-serviced Electronic banking
According to Mols (1999), electronic banking serves as an innovative distribution channel that significantly reduces waiting times and enhances spatial convenience compared to traditional banking, all while maintaining a lower cost structure Unlike traditional methods, where customers must visit bank branches and interact with tellers for services like account openings and money transfers, electronic banking allows users to conduct transactions easily through ATMs or mobile devices This shift not only benefits customers by streamlining their banking experience but also helps banks minimize staffing needs and improve service quality Furthermore, electronic banking enhances data collection and management, enabling banks to better assess potential creditors and evaluate borrower creditworthiness through standardized processes such as credit scoring (Ziqi and Michael, 2003, p 248).
2.1.2.3 The accurate and instant service
According to Phuong (2013), electronic banking streamlines customer requests by utilizing a server system to verify personal and account codes, ensuring the identification of legitimate bank customers Upon successful verification, the system swiftly executes the customer's order through an automated process, significantly reducing the time and complexity associated with traditional paperwork.
The Automated Teller Machine (ATM), also known as a Cash Machine or Money Machine, is the most popular form of electronic banking, having been introduced over 50 years ago While the invention of the ATM has been contested by two Scottish men, it has since evolved into an essential electronic distribution channel for the banking industry This unattended machine, located in public spaces, connects to a data processing system and allows bank customers to perform cash withdrawals and access various banking services.
Modern ATMs identify customers through a plastic card containing their account number, which is verified by entering a personal identification number (PIN) Once the PIN is successfully entered, customers can proceed with transactions However, if the PIN is incorrectly entered five times consecutively, some ATMs may retain or deactivate the card as a security measure to prevent unauthorized access.
ATMs provide customers of financial institutions with a secure way to access their bank accounts, allowing them to make cash withdrawals and check balances without needing assistance from bank tellers Beyond these basic functions, banks, in partnership with various organizations, promote the use of banking services for everyday expenses For instance, companies and schools can deposit employee payments directly into bank accounts, enabling recipients to conveniently withdraw cash from ATMs rather than interacting with bank tellers.
The rapid increase in internet users in Vietnam presents a significant opportunity for internet-based services, particularly in the banking and financial sectors As internet penetration rises, banks can leverage this growth to enhance their electronic banking services and expand their market reach Statistics indicate that Vietnam's internet user base grew from 53.86 million in 2017 to an expected 59.48 million by 2022, highlighting the potential for financial institutions to capitalize on this trend.
According to Vodová (2011), internet banking is an electronic payment system that allows bank customers to perform various financial transactions via their personal computers Users can easily check their account balances, transfer funds between accounts, and pay bills online This system connects personal computers directly to a bank's host computer through a network service provider, enabling automatic processing of customer service requests without the need for intervention from customer service representatives.
The system effectively differentiates between customer service requests that can be automatically fulfilled and those that necessitate human intervention According to Masarik (1998), the process begins with inputting a banking request from a remote computer's menu and sending it to a host computer via a network Upon receiving the request, the host computer compares it against a database of request types, each of which is tagged to indicate whether it is handled by customer service staff or an automated system.
According to Nguyen and Le (2018), virtual banks operate with lower overhead costs compared to traditional brick-and-mortar banks In Vietnam, certain internet banking services provide customers with a level of protection for their funds that is comparable to that offered by conventional banks.
Telephone banking is a convenient fixed-line service offered by banks, allowing customers to conduct various financial transactions over the phone without needing cash or documents This service eliminates the necessity of visiting a bank branch or ATM According to Yadav (2016), telephone banking hours often exceed traditional branch hours, with some banks providing 24-hour access to this service.
Customers can perform various financial transactions through telephone banking, such as checking account balances, viewing recent transactions, making electronic bill payments, and transferring funds between their accounts However, it is important to note that telephone banking cannot facilitate cash transactions or handle documents, which require customers to visit a bank branch or ATM.
Telephone banking offers banks a cost-effective solution by minimizing customer visits for non-cash withdrawals and deposit transactions However, since the early 2000s, the popularity of telephone banking has declined as customers increasingly prefer internet banking, a trend that has further diminished with the rise of mobile banking in the 2010s.
Mobile banking allows users to conduct financial transactions using smartphones or other mobile devices, enabling tasks like bill payments, account balance monitoring, and money transfers This service, offered by banks through dedicated apps, provides 24/7 access to banking functions However, some banks may impose limits on the number of accounts accessible and the transaction amounts.
Mobile banking typically operates across all major mobile providers in Vietnam through one of three ways: SMS banking, mobile web, and application developed for iPhone,
Developing Electronic banking services in commercial banks
2.2.1 Conditions for Electronic banking implementation
Electronic banking services have a huge impact not only on banking but also on customers and socio-economic development Therefore, using the Electronic banking service requires the following basic conditions:
To ensure effective electronic banking, it is essential to establish a robust legal framework that adheres to regulatory standards As a contemporary banking distribution method, electronic banking must comply with financial regulations and applicable laws, including the Law on E-transactions.
Since 2005, electronic banking has been governed by E-commerce regulations, which oversee electronic transactions and signatures specifically within the financial and banking sectors This regulatory framework aims to ensure the legality of electronic transactions, mitigate potential disputes, and safeguard the interests of all parties involved.
To effectively engage in electronic banking transactions, customers must possess adequate qualifications and access to necessary technology This includes having devices such as telephones or computers with internet connectivity, which can entail significant costs Consequently, those lacking these resources may face challenges when attempting to conduct transactions Additionally, electronic banking requires a certain level of digital literacy, making it less accessible for novices While banks provide basic guidance through electronic interfaces, it often falls short of the comprehensive support available at physical branches As a result, the primary demographic for electronic banking tends to be educated, higher-income individuals, rather than those from rural or less affluent backgrounds.
To successfully establish a comprehensive electronic banking channel, banks must meet essential conditions related to financial resources, skilled personnel, and customer satisfaction The initial investment for such services is substantial, with ATM installation and operational costs reaching approximately $70,000 annually, excluding data transmission fees, and an estimated $4,450 per machine per year for fund transfers A robust technical infrastructure is crucial for implementing electronic banking services; inadequate IT capabilities can lead to connectivity issues, ultimately disappointing customers and harming the bank's reputation Furthermore, a highly qualified workforce is vital for modernizing banking operations, as skilled professionals drive successful implementation The success of electronic banking is also heavily influenced by customer needs; as highlighted by Taap et al (2011), understanding customer perspectives is critical in a competitive landscape Therefore, banks must conduct thorough research to identify the specific needs of different customer segments, enabling them to refine their distribution systems and maximize the potential of electronic banking products.
2.2.2 Criteria to assess the development of Electronic banking services
The primary criteria for evaluating the advancement of electronic banking services are their simplicity and speed According to the SAS Institute AB (2000), internet banking has significantly enhanced convenience and efficiency in financial transactions As technology evolves, banks must adopt modern software and applications to ensure customers can access services quickly and conveniently Electronic banking transactions are considerably faster than traditional methods, with ATM transactions typically completed in just seconds This efficiency not only saves time and money for clients but also minimizes paperwork and counter procedures Additionally, customers enjoy greater flexibility in conducting transactions, even beyond regular office hours, leading to substantial benefits.
Customer satisfaction is a crucial element for banks, reflecting how well they meet customer expectations after delivering their services It encompasses the perceived value of services, influenced by the service supply chain, staff qualifications, competitor actions, and exceptional customer service To fulfill customer demands and foster loyalty, banks must prioritize effective customer care.
The accuracy of electronic banking transactions is crucial, as even a minor error or system failure can disrupt operations, damaging both the bank's reputation and income (Swaminathan and Ananth, 2010) To enhance customer confidence in the quality and precision of their services, banks should provide detailed documentation outlining the service's evolution, clear narratives, and testimonials from satisfied customers Additionally, banks must ensure a reliable service process and offer effective solutions to address any errors that may arise for customers.
The security of electronic banking services is a primary concern for customers, as it directly impacts the safety of their funds and payment transactions Numerous banking studies have highlighted the critical role of security and privacy in the acceptance of internet banking, identifying them as significant barriers to its adoption Customers evaluate these factors based on their experiences and expectations regarding service quality Consequently, banks must understand customer psychology, recognizing their fears about the risks to their account balances, and prioritize safety and security while delivering the best products and services.
2.2.2.2.1 The increase in the number of customers using Electronic banking
This indicator assesses the growth of electronic banking customers, reflecting the bank's focus on market development and customer acquisition A higher growth rate signifies better performance for the bank This metric is determined by comparing the number of customers year over year.
The increase in the number of customers = the number of customers this year - the number of customers in the previous year
2.2.2.2.2 The increase in revenue from Electronic banking products and services
This criterion assesses the effectiveness of electronic banking services by analyzing service revenue trends over the years The performance of electronic banking products is deemed effective when this revenue growth rate is high This indicator is determined by comparing the annual revenue generated by the services.
Revenue growth = Revenue from Electronic banking services this year - Revenue from Electronic banking services in the previous year
2.2.2.2.3 Income from Electronic banking services
This indicator is calculated as follows:
Income = Revenue from Electronic banking services - Expenses for Electronic banking activities
This indicator measures the annual total revenue generated from Electronic banking services offered to customers It helps identify the bank's income sources, allowing for an assessment of their significance, stability, and future growth potential This criterion reflects the effectiveness of the bank's services and serves as a foundation for managers and investors to make informed decisions based on current realities.
2.2.2.2.4 Market share of Electronic banking services
This indicator reflects the bank's electronic banking products in relation to the total market offerings To effectively compete and increase market share, the bank must implement strategic pricing and promotional programs that appeal to customers.
2.2.2.2.5 Transaction costs of Electronic banking services compared with other banks
This indicator reflects the funds available for customers to utilize banking services It also assesses transaction costs in comparison to other banks, highlighting the benefits of the services offered by this bank over its competitors.
ELECTRONIC BANKING DEVELOPMENT AT TIEN PHONG
General background of Tien Phong Bank
3.1.1 History of Tien Phong Bank
Established on May 5, 2008, Tien Phong Commercial Joint Stock Bank (TPBank) leverages advanced technology and financial strength from its strategic shareholders, which include prominent companies such as DOJI Gold and Gems Group, FPT Corporation, MobiFone, Vinare, and Singapore's SBI Ven Holding Pte Ltd.
TPBank is dedicated to providing innovative banking and finance solutions tailored for the young and dynamic demographic Leveraging cutting-edge technology and expert management, TPBank is at the forefront of modern banking trends, with the goal of becoming Vietnam's leading digital bank.
TPBank has received notable recognition for its efforts, including Certificates of Merit from the Prime Minister and the Governor of the State Bank of Vietnam Additionally, it was ranked among the Top 10 Most Prestigious Commercial Banks in Vietnam for 2016 by Vietnam Report In acknowledgment of these significant achievements, Moody’s upgraded TPBank’s credit rating to B2, marking it as the highest rating among commercial banks in the country.
TPBank, guided by the slogan "A deeper understanding," prioritizes customer needs to enhance service quality By fostering a strong understanding and partnership with customers, TPBank aims to develop tailored products and services that deliver maximum value This commitment not only focuses on customer satisfaction but also serves as a foundation for the bank's sustainable growth.
3.1.2 The mission, vision, and core values
TPBank Linh Dam aims to be a leading branch within the TPBank system by offering innovative financial products and services that enhance the prosperity of Vietnam's banking network Committed to delivering exceptional and modern banking solutions, TPBank Linh Dam focuses on maximizing value for shareholders while fostering a professional and welcoming work environment that promotes career growth and employee benefits Additionally, the branch strives to be a pioneer in community development initiatives.
TPBank offers a comprehensive range of financial products and services powered by a modern and efficient technological infrastructure Committed to transparency, security, and sustainability, TPBank focuses on maximizing shareholder benefits while ensuring a high standard of living for its employees and fostering their creativity and career growth Additionally, TPBank is dedicated to social responsibility and actively engages in community initiatives aimed at enhancing human welfare and national prosperity.
TPBank's brand is built on five core values that serve as a strong foundation for earning customer loyalty and shareholder trust, both essential for achieving its current and future strategic goals.
Firstly, integrity and honesty are the most important professional ethics to each bank staff because this factor mainly reflects service quality of the bank
Innovation stands as the second core value, encouraging every individual to embrace creativity in both thought and action This commitment to innovation aims to deliver exceptional solutions that enhance the value provided to both the Bank and its customers.
Progressiveness is a vital goal for TPBank, as it emphasizes the importance of personal development and team potential The bank is committed to fostering an environment where every individual can enhance their skills and strive for excellence.
The fourth value is synergy Solidarity, cooperation, commitment and sharing at work, high realization of each individual’s values lie in TPBank’s values
TPBank emphasizes persistence as a fundamental core value essential for its operational success The bank believes in the importance of being consistent and courageous to navigate challenges and achieve significant accomplishments.
Mr Nguyen Thanh Trung has been appointed as the General Director of TPBank Linh Dam, bringing over a decade of executive experience in the banking and finance sector His significant contributions to the restructuring and growth of TPBank have positioned it among the top healthy and effective banks in Vietnam Under his leadership, Mr Trung has received numerous accolades and recognition for his achievements.
The Credit Department at Tien Phong Bank is a dedicated team that engages directly with both businesses and individuals, managing credit operations in line with current regulations This department plays a crucial role in advertising, marketing, and promoting banking products, ensuring customers receive tailored financial solutions.
Administration department products and services to businesses
The Client Service Department at Tien Phong Bank is dedicated to delivering a comprehensive range of products to customers, overseeing the entire process from initial contact to guidance and documentation Additionally, this department plays a crucial role in executing marketing strategies aimed at expanding market share, while also developing and monitoring monthly and annual business plans to ensure successful implementation.
The Administration Department at TienPhongBank is responsible for organizing training for personnel at the branch, ensuring compliance with established policies and regulations This department plays a crucial role in managing office operations that support business activities and maintaining security within the branch.
Research methodology
The first research subject in this thesis was TPBank’s annual reports in the period between
The research for this thesis utilized interviews with the bank's staff and clients as primary sources, ensuring the collection of reliable and accurate information Additionally, data were gathered through direct visits and observations at the bank between 2014 and 2017.
To meet the information requirements of the research project, a suitable methodology was chosen, along with effective tools for data collection and analysis (Ramchander, 2004) Data was sourced from both primary and secondary channels, with secondary sources comprising TPBank’s annual reports and primary sources involving interviews.
A study was conducted involving 20 TPBank customers aged 20 to 30 to assess their frequency of Internet banking usage and concerns regarding electronic banking services The interviews took place at TPBank Linh Dam over five mornings starting April 18th, 2018, with each session lasting approximately two minutes, as participants often provided indirect responses The structured format of the interviews aimed to gather comprehensive insights into customer experiences with TPBank's electronic banking.
The initial inquiry focused on whether respondents have utilized any Electronic banking products at TPBank, with the intention of assessing their experiences with TPBank's Electronic banking services.
To prevent confusion between Electronic banking and Internet banking, the questions "Which Electronic banking service do you use?" and "Do you have an Internet banking account?" were combined This approach ensures a clearer understanding among customers, allowing for the comprehensive collection of relevant information regarding the specific Electronic banking services utilized.
The third question aimed to identify the specific Internet banking transactions that customers frequently utilize This inquiry seeks to analyze the frequency of Internet banking usage among customers, which will be explored in detail within this thesis.
Customers were surveyed with the question, “Do TPBank’s Electronic Banking services meet your needs?” This inquiry aimed to gather valuable feedback and assessments regarding the effectiveness of the Electronic Banking services offered by TPBank.
The interviews focused on identifying the primary concerns customers have when using Electronic Banking at TPBank This inquiry aimed to uncover the existing issues that impact customer psychology, enabling the development of potential solutions to enhance service quality.
On April 20th, 2018, a two-minute interview was conducted with a bank teller at TPBank's Linh Dam transaction office to gather data on the current development of Livebank The interview aimed to explore key insights related to the bank's innovative services.
In response to the question about whether Livebank is a developing application at TPBank, insights into the current status of Livebank were provided, shedding light on its progress and relevance within the bank's offerings.
The second question was “How much percent of TPBank’s transactions are implemented out of office hours?” The aim of this question was to collect data of frequency of using
Livebank because some kinds of transactions such as term deposit are only carried out by Livebank at off-office hours
The inquiry into whether Livebank offers greater advantages to customers compared to traditional transactions focuses on evaluating its benefits in terms of transaction speed and service quality.
When asked whether Livebank is the most secure application in the electronic banking system, the focus was on assessing its security level, a primary concern for customers.
The final inquiry addressed the strategies employed by TPBank to promote customer engagement with its services This question aims to highlight the critical factors influencing the development of Livebank, thereby facilitating the proposal of effective solutions for its growth in this thesis.
3.3 Empirical findings and analysis on existing Electronic banking services at
3.3.1 The growth of Electronic banking transactions
TienPhong Bank's Internet Banking offers a convenient financial transaction platform for individuals and businesses, empowering customers to manage their finances effectively On December 6, 2016, TPBank launched its innovative digital banking solutions, TPBank eBank v8.0 and eToken, which feature significant enhancements aimed at improving user experience through increased speed, security, and a user-friendly interface Additionally, in 2016, TPBank eBank and TPBank eBank Biz underwent two upgrades, reflecting the bank's commitment to enhancing customer satisfaction and the quality of its products and services.
Figure 1: Frequency of Using Internet Banking in 2017
The stacked bar chart gives information about the percentage of Internet banking transactions usages in recent years
Both retail and corporate banking primarily rely on account queries for information and balance checks, with 96% of individuals and 79% of businesses utilizing internet banking for this function, significantly contributing to overall transaction volumes.
ORIENTATIONS AND SOLUTIONS
Orientations to develop Electronic banking services
According to Bontis et al (2000), operational orientation is a crucial foundation for enhancing business performance Additionally, Cravens and Piercy (2003) define marketing orientation as a philosophy aimed at delivering customer value A market orientation strategy emphasizes the importance of providing value to customers while enabling swift responses to competitive challenges.
In recent years, the Government has recognized the significance of e-commerce and electronic banking, implementing specific decisions to enhance these sectors Notably, on July 27, 2012, the Government approved a development plan aimed at advancing Vietnam's telecommunications and Internet infrastructure by 2020 This plan includes creating a legal framework, building public infrastructure, and developing human resources to support international payment applications in e-commerce.
In addition, the Government also highlights the aim of organizing activities to raise awareness of online payment and the active participation of businesses in payment activities in e-commerce
Under the current conditions, in order to develop Electronic banking in TienPhongBank Linh Dam, there are some necessary steps needed to implement in operation of Electronic banking products
TPBank Linh Dam should focus on enhancing its core banking system to strengthen traditional services such as account management, currency trading, payment solutions, and credit services These foundational activities are crucial for achieving the bank's goals and paving the way for the development of electronic banking services In the current landscape, it is essential for TPBank to expand its electronic banking offerings in accordance with legal regulations and economic conditions Furthermore, the bank must prioritize delivering high-quality service standards in its core offerings to maintain a competitive edge and enhance customer perceptions and satisfaction.
TienPhongBank Linh Dam should improve the quality of its electronic banking channels, such as Internet and Mobile banking, by focusing on enhancing convenience, security, and effective risk management Additionally, it is crucial to establish comprehensive policies regarding security, confidentiality, and risk prevention in electronic banking operations.
Solutions for Electronic banking development at TPBank Linh Dam…
Electronic banking has rapidly evolved, significantly altering traditional banking practices (González et al., 2008) From 2014 to 2017, electronic banking services emerged as a prominent topic in Banking Vietnam forums, highlighting their importance in the financial sector However, TPBank's electronic banking services currently face limitations, primarily offering only basic information queries and payment activities This underperformance can be attributed to factors such as insufficient market demand, a persistent reliance on cash transactions, and challenges related to IT infrastructure and state regulations.
To thrive in a competitive environment, Tien Phong Commercial Bank must enhance service quality, as customers prefer banks that offer organized, professional, and innovative services (Uppal, 2008, p.64) Diversifying services is essential to meet customer needs and improve service delivery The customer experience plays a crucial role in determining service quality, particularly in the context of electronic banking, which simplifies the comparison of services and products among banks This increased transparency fosters competition and enables banks to penetrate new markets, thereby expanding their geographical reach.
To ensure the safety of electronic banking, banks must implement robust security measures to prevent both external and internal threats Security encompasses the customer's perception of online transaction safety, including secure payment methods and the protection of confidential information from attacks Privacy concerns arise from how personal data is collected and utilized Key security methods include encryption, which encodes data to prevent unauthorized access, and firewalls, which control external access to internal systems Firewalls, when properly designed and implemented, effectively safeguard data confidentiality and integrity, though they require significant investment and expertise A comprehensive security strategy should involve enterprise-wide requirements, clear operational procedures, separation of duties, and the employment of trusted personnel to manage firewall configurations.
TPBank has introduced mobile banking as an innovative and profitable service; however, customers face challenges such as handset operability, security concerns, and network availability The bank also encounters issues like network coverage, system integration, and regulatory compliance A study by Njenga (2011) highlights that a successful mobile banking market requires improved network coverage, quality connections, and lower costs To address these challenges and enhance the quality of its mobile banking services, TPBank should strengthen its collaboration with the telecommunications sector.
Choosing the right target audience for mobile banking is crucial, as it requires customers to possess advanced skills and devices According to McGee (2009), the likelihood of consumers using mobile devices for banking is influenced by the sophistication of the device; smartphone users are more inclined to engage in mobile banking compared to those with basic cell phones Additionally, the personal characteristics of mobile banking users significantly affect their adoption decisions By understanding customer perceptions of mobile banking services, providers can effectively strategize their marketing efforts.
TPBank prioritizes the security of mobile banking, recognizing the risks associated with wireless technology that can lead to information theft To combat data intrusion and losses, service providers must implement robust encryption technologies The inherent mobility of mobile devices and the challenges of wireless communications complicate customer authentication, raising security concerns for both banks and their clients According to Venable Telecommunications and Financial Services (2008), the widespread adoption of mobile banking presents significant monetary and reputational risks, necessitating that mobile banking providers ensure security measures are proportional to the size of the financial institution and the complexity of their services.
4.2.3 Solutions for Automated Teller Machine
Greene (2009) identifies two main categories of payment fraud at ATMs: first-party fraud, where account holders misuse their privileges or obtain them through deceit, and third-party fraud, often involving identity theft where one person exploits another's account As ATM-related crimes escalate into a nationwide concern impacting both customers and banks, effective risk management and security controls are essential Banks must implement robust security measures to protect customers and mitigate vulnerabilities, as these practices are crucial for preventing fraud and ensuring a safe mobile banking environment, while also addressing potential civil litigation risks.
To enhance accessibility for cardholders, ATMs are strategically located in both on-site locations, such as bank branches, and off-site locations like shopping malls, universities, colleges, and gas stations These convenient ATM placements not only benefit customers by providing easy access to cash but also attract more clients to the bank As the usage of ATMs increases, banks can significantly boost their revenue through transaction fees.
LiveBank is an innovative application designed to meet the needs of a rapidly digitalizing society by offering virtual bank branches that utilize intuitive "remote advisor" technology This approach not only reduces banking costs and shortens customer service times but also significantly boosts the volume of applications Additionally, LiveBank enhances service quality by extending operational hours and implementing biometric verification for increased security However, TPBank must address certain limitations to fully optimize the LiveBank model.
Livebank is an innovative service that incorporates advanced technology to enhance customer experience To effectively compete with larger commercial banks, TPBank must consistently introduce attractive offers for users of this product For example, TPBank provides preferential interest rates on Livebank that consistently exceed those of other banking options.
TPBank should prioritize effective marketing strategies for LiveBank to significantly boost customer acquisition By investing millions in promoting LiveBank, particularly through social media and events, the bank can enhance its visibility Additionally, leveraging current customers as brand advocates is a highly effective method for generating new leads and expanding the customer base.
Electronic banking has evolved globally, but in Vietnam, it is still in its early stages, particularly for TienPhongBank To effectively implement electronic banking services without disrupting current operations, the bank must develop a strategic approach Key factors such as electronic banking information, security risks, service quality, and customer benefits significantly influence customer trust and usage frequency Consequently, TienPhongBank aims to enhance customer acceptance of electronic banking by addressing these factors In the near future, electronic banking services are poised to become a vital competitive advantage for TienPhongBank, offering distinct benefits over traditional banking services.
To enhance its Electronic banking services, TPBank requires significant support and investment from the Government, economic organizations, and importantly, its customers The modernization of these services, along with the integration of new technologies, is essential for delivering convenient and effective banking solutions These efforts are crucial for TPBank to establish itself as a leading commercial bank in Vietnam.
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1 Have you currently used any Electronic banking products at TPBank?
2 Which Electronic banking service do you use? Do you have Internet banking account?
3 What kind of Internet banking transactions that you often use?
4 Do TPBank’s Electronic banking services satisfy your demand?
5 What is the factor that you concern the most when using Electronic banking at TPBank?
II Interview questions for the bank’s staff
1 Being a TPBank’s staff, do you think Livebank is a developing application at TPBank?
2 How much percent of TPBank’s transactions are implemented out of office hours?
3 Does Livebank bring more benefits to customers than traditional transactions?
4 Is Livebank the most secured application in Electronic banking system?
5 Which strategies have TPBank applied to encourage customers using this service?
1 Table 2: Electronic Banking Charges between Vietnamse Commercial Banks was set up from the data designed by Kenh14.vn.