Luận văn customer satisfaction for internet banking services at the bank for investment and development of vietnam bidv

h % Lunghwa Universityof Scienceand Technology Thesis for a Master’s Degree Customer satisfaction for Internet banking services at the Bank for Investment and Development of Vietnam BI

h % Lunghwa Universityof Scienceand Technology

Thesis for a Master’s Degree

Customer satisfaction for Internet banking

services at the Bank for Investment and Development of Vietnam (BIDV)

Researcher: Nguyen Phuong Thao

Supervisor: Nguyen Van Dinh

December 2018

Lunghwa University of Science and Technology Approval Certificate of Master's Degree Examination Board

This is to certify that the Master Degree Examinations Board has

approved the thesis Customer satisfaction for Internet banking services at

the Bank for Investment and Development of Vietnam (BIDV)published by

Mr / Ms.Nguyen Phuong Thao in the Master Program of Graduate School

of Department of Business Administration

Master’s Degree Examination Board

Board Members !

Advisors : en Van Dinh

Chair : Cho, James

Date : _2018 / 12/12

ABSTRACT

Thesis Title: Customer satistaction for Internet banking service at the Bank for

Investment and Development of Viemam (BIDV)

Pages! 102 University : Lunghwa University of Science and Technology

Graduate School : Department of Business Administration

Date : December 12th, 2018 Degree : Master

Researcher: NguyenPhuong Thao Advisor : Nguyen Van Dinh

reovive much allertion for! the managers before, BIDV would casily lose its current

market to business rivals who are better in satisfying the customer demand

Tlaving recognized these aspects, ojectives of this research study were formmlated

as follows:

- Identify dimensions and criteria of customer satisthetion for IB service base on

customer expectation and perception

= Measure the differcmt belween customer expectation and perception lo find ont the customer satisfaction for BIDV IB service

- Propose some recommendations to improve the customer satisfaction for [B

service al BIDY

Based on Hterahure foundation of IB service, customer satisfaction, Expectation Disconfirmation model, qualitative analysis of primary and secondary data were used to answer these questions Secondary data were collected mostly ftom the bank annual

reports, internal rcports, documents and brochures Primary data were collzctcd by in

for 113 service and concretizing into 30 criteria Lach criteria is rated from 1 to 5 which 1

is lowes! and 5 arc highcst with two kinds of assessments; expectation (from nol highly cxpected to very highly expected) and for perception (from total disagiced to strongly agreed) If perception equals expectation, this criteria satisfies customers, if perception

is less [han expectation, this criteria dissalisfies cuslomers

After analyzing data by excel application software, the author has come to some key findings as following

- The overall sat

faction of customer for TB vice al BIDV

3.29 pount on a scale of'5 point, However, base on the comparison between expectation and perception for each dimension (disconfirmation), there is no dimension fully

satisfies customeds because ail dimensions get negative disconfirmation or perception lower than mm Customers dissatisfy most -witl the vaiety of BIDV IB serviceat -1.14 point.for the lack of money transfer, onlitie'deposit fimetion and weak

bill payment fanetion” “Cauidlners are oi the trend to satisfy with BIDV ID service for Cu

attractive promotion progr “the aqpurncy of foes calalidon, collection and the simplicity of registration form

= The rank of most ing Jance dimension chosen by customers is listed in the following order: The 1* 15 Vatlety of services, the 2” is Seoutity, the 3” is Reliability, the 4" is Efficiency, the 5" is Fees and Charges, the 6" is Problem handling, the 7? is

Promotion and extra benefits and the least important fctor is ‘Tangible

Ruse on the thesis findings, the author suggested some below recomendations 10 improve customer satisfaction for IB service in the coming years as:

- Diversify the variety of LB service

- Enhance sccurily for IB customers

- Develop the information technology

- Improve staff quality

Improve customer care service

- Enhance marketing activities

ACKNOWLEDGEMENT

1 would like to express my sincere thank Asoc Prof, Dr Nguyen Van Dinh and Assistant Prof, Cho, James: ny supervisors, and corporate officers of Business at Joint Stock Commercial Bank for Investment and Development of Vietmaun devoted to guide and help me complete this thesis

Thank yout Author Nguyen Phuong Thao

3 THEORETICAL BACKGROUND AND OVERVIEW OF INTERNET BANKING

SERVICE AT TIE BANK FOR INVESTMENT AND DEVELOPMENT OF VIRETNAM6

3.1.2 Internet banking cFcommercialbarl

3.1.3 Type of Interne! banking service

3.22 Model to analyze cuslumer satisfuclion for iB service - Expectation

3.2.3 Factors allecling customer salisfaction for 1B service 15

3.24 Dimensions and criteria to measure customer satisfaction tor TR service

35 Internet banking service af the bank for investment and development of

Victnam in the period 2015-2017

3.5.1 Types of Internet hanking service ar BIDY

\ 3.5.2 Developing Internet banking sevice at BIDY

4.1 Evaluation on custonlaatifacton for BIDV IB service

4.1.1 Customer satistaction for Tafgabie | :

| vat

4.1.3 Customer satisfaction for Security

4.14 Customer satisfaction for Reliability

4.1.5 Customer satisfaction for Eflieieney

4.1.6 Customer satisfaction for Fees and Charges

4.1.7 Customer satisfaction for Promotion and Extra Benefts

4.1.8 Customer satisfaction for Variety of strvices

4.1.9 Overall satisfaction for BINV Internet banking service

4.1.10 Priority issues to improve customer satisfaction for IB service

4.2 Achievements and drawbacks vf Enternel banking service ai the bank for

investment and development of Vietnam in satisfying customers 56

4.2.1 AchieVemetg c.ccccoeieoirree

5.1 Potentials and future perspectives of Internet banking service in Vietnam 59

5.1.1 Business environment and the bank strategy 59 5.1.2 BIDV orientations and objectives for developing IB service .80

5.2.2 Enihancinge security for Internet banking, customers 63 5.2.3 Updating information technology for ïB service 64

$.2.5 Improve customer carg „87

REFERENCES

APPENDICES

vi

LIST OF TABLES

‘Table 1 Primary data collection

Table 2 Dimensions c-servicc quility

Table 3 Major performance indicators in 2015-2017

Table 1 BIDV retail banking performance 2015-2017

Table 5 Intemet banking performance 2015 - 2017

‘Table 6 Mean score of Tangible dimension

Table 7 Mzan score of Problem handling dimension

Table 8 Mean score of Security dimension

Table 9 Mean score of Reliability dimension

‘Table 10, Mean score of Efficiency dimension

Table 11 Mcan score of Fees and Charges dimension

Table 12 Mean score of Promotion and Extra Benelts dimension

‘Table 13 Mean score of Variety of services dimension ï :

Table 14 Most impo nti of Dimensions

Table 15, Prionity rank of diqpepsions

LIST OF FIGURES

Figure 1 Research Process

Figure 2 The Expeclation Diseanfirmation Model

Figure 3, Interface of BIDV Online service

Figure 4 The high level IT application model

Figure 5, Customer satisfaction for Tangible dimension

Figtưe 6 Custemer satisfaction for Problem handling dimension

Figure 7 Customer salisfaction for Security dimension

Figure 8, Customer satisfaction for Reliability dimension

Figure 9, Customer satistaction for Efficiency dimension

Figure 10 Customer satisfaction for Fees and Charges dimension

Figure 11 Customer satisfaction for Protnotion and Extra benefits dimension

Figure 12 Custorper satisfaction for Variety of Servies tÍtiréision

Figure 13 Most important percentage of Dimension

Figure 14, Inlcrfhec BỮ Bo Iiemel barking syslem

viii

Automated Teller Machine

Bank for Investment and Development of Vietram

Broadcasts Short Mcssage Service

Capital Adequacy Ratio

Customer Relationship Management

Internet banking

Information Technology Management Information System Non-performing loans

Point of sale Research and Development eau on Assets

XeurnonBinly

State Bank JY:

Short Message Service:

Small and me ham-sizd entedprises

Security Sockel Layer

Vietnam Commercial Bank

World Bank

1, INTRODUCTION

1.1 Rationale

In the ficrce competitive business cnvironment today, customer is the key factor deciding the existence of a bank Customer satisfaction becomes more and more concerned issue in the field of business management The hank altracting attention, making customer satistied and loyal will win and develop

In the advent of the information era, information technology has developed rapidly and has become significant for every business, especially the banking industry Upgrading tcchnology, diversifying utiliti

cs, improving (he quality of products and services are survival conditions if Vietnam banks want to compete with not only domestic banks but also foreign banks and farther to integrate with the world economy

To satisfy the customers’ increasing demand, BIDV curcently changes its traditional banking services to develop modem banking services by becoming increasingly to rely

on E-banking,

E-banking in gencral and IB in particular is modem channels for customers to make banking transactions and it becomes one of the competitive advantages for many banks choosing individual customers as target customer Realize this trend, with the vision to

This fact derived from the low level of customer satisfaction for BIDV IB serviec

Moreover, at this time, BIDV is going to launch the new IB system to all customers

thus, if is imporlant lo a the customer satisfaction for current TB service Lo incr

the compatitive position with other barks

‘Therefore, £ choose the subject: “Customer satisfaction for internet banking service ut the Bank for Investment and Development of Vietnam (BIDV)" for wy thesis with the hope of contributing to the development of IB service in particular and the bank in general

1.2 Research ubjectives

- Studying theotitieal bacground of customer satisfaction and for customer satisfaction LB service; identifying dimensions and criteria of customer satisfaction for 1B service base on customer expectation and perception

+ Analysing current siiuation of customer satisfaction for TR service at BIDY, Measwing differences between customer expectation and perception fo find out the

customer satisfaction for BID IB service and causes of thoses

1.3 Rescarch questions

+ What are dimensions and criteria of customer satisfaction for TB service?

- Tow do customers salisfy with current IB service at BIDV?

- What should BIDV implement to improve customer satisfaction for IB service?

Infernal reports of BIDV performance and TB service al BIDV within 3 years from

2015 to 2017 (number of customers, revenues ) Besides, regulations, brochures,

official documents of BIDV were also used to give out overview about BLDV and 10:

servi

Intemet, newspapers, other financial magazines and former research studics related

to banking and IB services These data let the author know what is the situation of

BIDV TR service on current Vielmmmn TP market and potcntial development of TB

services,

b Primary data

Primary data were collected in May and June of 2018

Process and method to colicct primary data is following,

Table 1 Primary data collection

Indepth [- Head of Retail [Interview at thex [1 What does customer Interview | Rariking Development | office expoct about TB servicos?

- 2 managers ftom satisfy with the IB serviceat

Division of BIDV Cau 3 What is BID aricntation

Individual Customer Service Division of

Branch and BIDV Ha

Noi Branch Survey ~ 150 customers using | - Using online 1 What does customer

IB serviceat Hanoi area

wore choosen Tandomly fiom BIDV data base 137valid questionnaires inwhich

professional product

- Up load the questionnaire by using intuitive wizard interface of this web

- Sending the link of questionnaire to customers via email expect about IB services?

2 How docs customer

perceive about BIDV IB services?

3 Low do customers satisfy with TR scrviecal BIDV in general?

4 Which — dimension customers rank the most

important?

5 Customer feedbacks to

improve BLDV LB services Source: Author Hea

2.3 Data analysis

With information collecting fiom survey, I uscd the Mean in Central Tendency Measure and Excel application to calculate customer expectation, perception and disconfirmation for each criteria and dimension ‘rhe satisfaction level was found based

on disconfirmation score

2.4 Scope of research

This thesis was carricd out under some assumptions and scope as follows:

- Research Objects: This thesis focuses on customer satisfaction for current IB

serviceprovided by BIDV to Individnal cnstomers only

Geographical scope: The research was conducted in Tanoi

- Timing scope: Secondary data was collected in 3 the years 2015-2017 and

primary data was carried out on June-July 2018

Chapter 2 Theoritical background and literature review

Chapter 3— Overview on BLDV and iB service at BIDV

Chapter 4— Findings on custorncr satisfaction [tr BIDVIB s

view

Chapter 5 Recommendations to improve customer satisfaction for BIDV IB service.

3 THEORETICAL BACKGROUND ANDOVERVITEW OFINTERNET BANKING

SERVICE AT THE BANK FOR INVESTMENT AND

DEVELOPMENT OF VIETNAM

3.1 Overview of Internet banking at commercial Bank

3.4.1 Commereial banks and their services

According to the Law on Credit Organizations:

+ Commercial banks arc credit organizations which are entitled to conduct all banking activities and other related business activities for the pwpose of profit in accordance with the Law on Credit Organizations and other provisions of law (Decree

No 59/2009 / ND-CP of the Government about the organization and operation of commercial banks)

- Commercial banks provide these services:

| Receiving deposits,

+ Credit;

+ Payment service via account

3.12 Internet banking of commercialbank

E-banking is one of the new and modem services provided by domestic commercial banks It can offer the concept of E-banking services based on the following

- "A service is any act or performanee thal onc partly can offer ta another thal is

essentially intangible and does sot result in ownership of anything, Its production may

or may not be tied to a physical produet." (Kotler, 1987)

Krom the above concepts we can understand: i-banking is a banking service provided to customers via electronic means, where customers de not need ta come directly to the bank counter but still pertorm transactions and captue financial information

Currenlly, the operation of the bank exists in owe fons, The first is the fonm of online banking, which is bascd only on the Internet environment, providing 100% service through the network environment ‘The second form is a combination of a traditional conmnsrcial banking system and the traditional electronicisation of services,

ie the distribution of old service products on new distribution channels E-banking services in Vietnam are mainly developed in the second form

3.1.3 Type of Internct banking service

‘Thote arc many kinds of classify 1B sơrvicc such as:

a Base on the complicated levet of services

- Non-financial services: At the basic levelbanks use this service to itroduce products, services to customer and other information such as branch network, Automated

Teller Machine(A1'M), Point of sale (POS) location ’'his system is not linked to bank

database, therefore, risk to bank is very low At higher level of this service, customers can inquiry balance account, history of Iransaction, email bul they cannot make financial transaction such as iimd transfer or bill payment For this kind of service, customer can connect directly to database of the bank, therefore, the risk will be higher

- Financial services“Tius service allows customers to make financial transactions such as fund transfer, bill payment (clectricity, water, electronic ), buying or selfing stocks At this level, service will connect directly to database of bank, therefore risk level is highest and bank needs to have strict risk management policy through using authentication methods,

b, Base on types of customers

- Services for individual customers:

Account infonmation; Customers can collect account information including balance, transaction history and account statement, deposit information including total

amount, type of deposit, term, issued date, maturity date and interest rate, loan

information including loan ammount, type of loan, date of disbursement as well as crodil

card information Customer can download and print out these data.

Domesti¢ and international fund transfer: Customers can transfer money from their own accounls Lo ofher acceptable accounts immediately or in a fulars dale, TB system also supports customer to make an automatically fiand transfer orders, Customer can check transfar process through SMS or email

Bill payment: This function allows custorner to pay bill, support them to register, check the list of bills, sct up standing instruction or schedule bill payment in future date

Open and close account, deposit: customers can make a deposit, open an account

online as well as withdraw deposi

Credit card management; This function allows customers to manage and make

transactions related to credit card

Other service requests: Customer

cheque book, statement or bank draft

n apply for a loan, credit, card, debit card,

- Services for corporate customers: Similar to individual customer, 1B system

allows corporate customer to inquiry account, loan, deposit information, fund transfer,

bill payment, ercdit card management and other service requests However, there arc

some additional services for this type of customers which are trade finance and salary

to quouc and wait for being scrved

b, Ekctronic Authentication

Verifying the identities of customers and authorizing 1B activities are integral part

of IB financial scrvices, Sine traditional paper-based and in-person identity

authentication methods reduce the speed and efficiency of electronic transactions, banks should adopt altzrnative authentication methods, including passwords and personal identification numbers (PINs), Digital certificates using a public key inffastructure (PKD), Microchip-based devices such as smart cards or other types of tokens, Database comparisons (c,

These authentication methods vary in the level of sccurity and rcliability they provide and in the cost and complexity of their underlying infrastructure ‘Ihe choice of

„ Ñaud-scrccring applications), and Biomslric identificrs

electronic banking as opposed to traditional banking Furthermore, customers who rely

on LB service may have greater intolerance for a system that is unreliable or one that

does not provide accurate and current information, Clearly, the longevity of IB service depends on its accuracy, reliability and accountability, The risks relating to IB service are categories to define them more specifically in order to develop risk mitigation strategy The opsn and close network of TB service increases the complexity and is subjected tơ scurity and reputational risk,

d, Availability every time and everywhere

The preeminence of IB service is the availability every lime and everywhere The limitation of traditional banking is that customer only ean carry out banking transactions within the working time However, with [B service, customers of commercial banks can

do banking transactions in case the banks close ‘That means they can transact with

banks every time or 24/7, Furthermore, with TR scrvies, cuslomers van do banking transactions through electronic portals, so they can conduct banking transactions everywhere, for example when they stay at home or office

3.1.5 Benefits of IB service

a Bank benefits

Product diversification: When mentioning banking services, people think about traditional services firstly such as loan, lending, deposit and other wholesales services 'thus, there is a little difference of these services among banks Currently, most banks develop not only traditional banking services but also modern ones such as card sorvices

and IB especially which help banks to create high difference with other banks 1B that developed bascd on advanced and moder tectmology is a good solntion for banks to diversity their product portfolio and to attract more and more customer as well

Attracting high value customers-iB service often attract high profit customers with higher avcrage income and cducatiomal levels, which help lo inereasc the size of revcrue streams, Most of them are regularly using online channels in terms of a varicty

of purposes and no need for regular personal contacts with the bank branch network, which is considered an expensive chammel for bank to run, Some Tesgarchers suggest that the addition of the internet delivery channel to an existing porttolio of service delivery channels resuit in extra revermes which mainly come ffom the increase in non-

inlercst income from service charges deposil/current aecounl

Cost reduction; The main economic argument of IB service so far has been the reduction of overhead costs of other charmels such as branches, which require expensive buildings and a staff presence It also seems that the cost per IB service transaction often dcereasc more rapidly than that of traditional bank once a critical mass of customer is archived, The general consensus is that the fixed costs of IB service are much higher than variable costs, so the larger customer base of the bank, the lower costs per transaction would be Whilst this implics that cost per transaction for smaller banks would in most cases be greater than that of larger banks, even in small banks it is seen like the cost per transaction will be helow (het of other banking channels

Increasing reveraves:Revenue increasing as a results of offering ¢-channel is often reported, because increases in the mamber of customers, to be the retention of existing customers, and cross selling opportunities L‘lectronic bill payment is also on rapid rise

cs OC IB service

which suggests that clectronic bill payrucnt and olher related capabiliti

have a real impact on retail banking practices and rapidly expanded revenues streams

Quick expansion: ‘Traditionally, when a bank wanted to expand geographically it had lo open new branehes, thereby incuraing high slart up and maintenance costs IB have made this unnecessary in many circumstances Now banks with traditional

customer base in one part of the country, can attract more customers from other parts, az

most of financial transactions do not require physical prescnee near customer living places

Enhanced image 1B service help to improve the image of organization as customer focused inmovalive organization This was cspevially truo in carly days whon only the

10

most innovative organizations were implementing this channel Despite its currently

common availability, an attractive banking website wilh a large portfolia of innovative products stil enhances a bank image This image has been also considered as the effectiveness at e-marketing and attracting young/ professional base

b Customer benefits

Choice und convenience for varstomers: 4 “customer first” approach is critical for success in IB service Customers hold the key to success and companies have to find out whal different customers want and provide it by using the best available technology In modern business enviroment, customers want greater choices, They want the traditional range of banking services, argument by the convenience of onkine

capabilities and a stronger foens by banks on developing personal rofalionships with customers IB service backed up by data mining technologies can help to further understand customer needs and customize produsts/services according to those needs Offering extra service delivery channels mean wider choice and convenienes for customers, which itsclf is an improvement in customer scrvice, IB service can be available 24 hows a day throughout the year, and a widespread availability of the inlernet, even on mobile phones This means that customer ean conduct their financial tasks virtually anywhere and anytime

Speed and time saving: ‘The response of the transaction is very fast, therefore, customers can actually wail until the Tas! minute befere concluding a find transfer For instance, they can transfer money electronically ftom their bank accounts or receive money in their bank accounts within seconds, On the other hand, customer can save time from travelling to brick and mortar bank branches for conducting banking

transactions Furthermore, other key banking activities van bs uscd praductively for other pursuits, For example, they can reschedule their firure payments ftom their bank account while they are far away ffom bank branches

Fund management: Customers can download their history of different aecounts and

do a “what-if” analysis on their own PC before affecting any transaction on the web This wilf lead fo better finds management

payments, reduce huge amount of cash in circulation and reduce cost of printing, issuing and cirenlating money IB service pave the way for SBVs to fulfill their tasks in managing cash, non-cash payment and umproving the effectiveness of national monetary Given ifs functions, LB service create a dynamic finance market by increasing specd of capital usc and production; improving economic activilics and expanding

relationship with domestic and foreign partners,

Security is absolutely paramount in the omline channel Banks need to develop systems that combine sophisticated security mechanisms — muttiple passwords and virtual keyboards — with simple logon procedures, Scoure sitcs arc ideal sales channels because they offer a unique opportunity to tailor product alerts and offers to the individual However, because not everyone is comfortable with technology, banks should be able to provide live technical support as well as answers to product queries Given the importance of the internet to time-poor customers, banks must develop websites targeted solely af the mass affluent af they are to fally exploit this segment

Aevording to a recent rescarch done by Poox Allen Hamilton, the most valued Global Attributes of online channels are:

- Robust security measures

-_ 8imple and quick logon

-_ Site availability

+ All services on same site

~ Clear and intuitive layout

- Comprehensive informatioN

12

3.2 Customer satisfaction for Internet banking service

3.2.1 Concept of customer satisfaction

In any business, customers arc the most important aspect of a successful company

and the customers need to be looked after and managed properly To make customers satisfy is one of the most important missions of all business entities in the development today because of ts alfecl on consumer purchase intentions mổ cuslorner loyalty

The texm “customer satisfaction” appeared in America in the mid 70s of 20" century, aiter that it is interested by most of countries in the world ‘he Linglish word

“satisfaction” stems from Latin, from the words “salis” (enough) and “facere” (to

make) Many scholars have analyzed the term trom different angels There are many

definitions of customer satisfaction and some definitions broadly known are:

Customer satisfaction genarally means customer reaction to the state of fidfillment

and customer judgment of tse fulfilled state (“Satisfaction A Behavioral Perspective on

the Consumer” - Oliver, 1997)

Satisfaction is a person feeling of pleasure or disappointment resulting from

comparing a product perceived performunce fer outcome; in relation to lus or her expectations (“Marketing Management” -Kotler, 2000)

The customer evaluation of a praduet or service in terms of whether that product or

service has met their needs and expectations (“Services Marketing: Integrating

Customer Focus Across the Firm” - Bitner and Zeithaml, 2003)

Customer satisfaction is an overall post purchase evaluation (Expectations Performance Custorncr Satisfaction - Formell, 1992)

Customer satisfaction result from the interaction of levels of expectation about anticipated performance and evaluations of percerived performance (“The Theory

of Stochastic Processes” - Miller, 1977)

“rhough being different, these definitions above contain four common elements:

The performance of the product or service as perceived by the customer

‘The expectation of the performance which the consumer has

The perceived costs or sacrifices involved in making the purchase and using the

product/ service

The time al which the salisfaetion with the product!

13

“Phua, customer satisfaction is a psychological feeling after the customer needs are mel, Customer salisfiction is formed on the basic of espsoial cxporisnees accurmutaled when shopping and use of products and services After purchasing and using products and services, customers have comparisons between expectations and reality, thereby

they have evaluating (he satisfaction or dissatis[uetion,

3.2.2 Model to analyze customer satisfaction for 1B service - Expectation

faction formation for many

‘years It provides the theoretical basis for understanding the formation of customer satisfaction and the assessment of service quality

Figure 2 The Expectation Disconfirmation Model

The four tain constructs in the model are expectations, perceived performance, disconfirrnation and satisfaction

Expectations: Expectations serve as the comparison standard in the model what consumers use to evaluate performance and form a disconfirmation judgment

Expectations have a central role in influencing salisfaetion wilh services, and these in

is necessary to design an appropriate service

+ Previous experience: many will have tmd service cncounters before Their previous experience will in part influence their fiture expectations of the service, This can include their past experience of the service in question, but also of other services — for IB service, expectations will be influenced by capericnec of similar waditional services,

+ Word of mouth communications: expectations will be shaped by communications from sources other than the service provider ilsel€ This can include Ranily, friends and colleagues, but more widely the media and other organizations, such as audit agencies,

Perceived performance: Customer perception is fotally subjective and is based on the customer interaction with (he product or

6 Disconfirmation: occurs in three stages: 1) positive disconiizmatin where perceived performance exceeds expectations, 2) confirmation, where perceived performance meets expectations, and 3) negative disconfirmation, where perceived porformanes falls below expectations

Satisfaction is caused by confirmation or positive disconfirmation of consumer expectations, and dissatisfaction is caused by negative disconfirmatin of consumer expectations

3.3.3 Factors affecting customer satisfaction for 1B service

a Objective factors

~ Political and legal fucior: Stable political situation will keep calm customer and make LB service to develop stably Unstable political factor will have the great effort on Tuan behavior The bark does nol concert on the widen investment of scate, and of course, the consumption will not believe to use banking service, including IB service and this will cause the low level of customer satisfaction Banking business is a risky ficld supervised by Icgul systems A legal cnvironment, which is pertet, professional and effective shall be a firm base for IB development, by confirming benefits to all the parties sneh as issuers, users, merchants

Evonomic factor: Basically, cconomic eycle and government cconomic policies have directly or indireetly efieoted on the quality of banking services If there are few banks launching 1B service to customer, they will have little choice ‘Ihis will lead to low expectations of customers and Ihorefore, they will be satisficd casier In conlrssl,

15

when the market has many competitors, customers will have more choice and their expectations will be higher, Therefore, it will nuke banks more difficull to satisfy their

customers

On the other hand, GDP inflation rate, development and investment policies,

cconomnie stable, the cxport and import rate have also affected on the satisfaction for banking scrviec For example, when the coonoruy is on the developing process, GDP increases, investment policy is opened, customer will be more tolerant in their consumption This will tsad lo higher satisfied level oÍ customers

Customer, caltural and social habit Customers are considered as the decisive

factor to the development of IB service Customers are different in term of age, sexual,

cducation, income Tove and geagraphic arcs Given that clectronie banking is becoming one of the main determinants of how banks interact with customers, banks must ensure that customers are satisfied and willing to use the services again in the future The extent to which customers accept IB service depends on various factors as follow; Customer habit of using cash, Customer awareness about the IB and its benefits; Availability of access to compaters and Internet, customer computer literacy and IT skills; Customer willingness to use IB service depends on convenience and security

Consumption behaviors and habits are affected by cultural factor such as awareness, knowledge, cultural level, living style, money keeping habit For instance, the Viemamese have the habit of using cash Therefore, iimproving IB service 1a make customer satisfy is a difficult issue

Technological factor: Technology has the power to improve the service that banks offer to their customer he development of software, intemst creates modern service with diversified utilities As more customers participate in the information revalution, banks need to be able to deliver to their customers the information and service that they desire at a time, place and in a manner which is acceptable to them, design suitable products and services lo satisfy the increwsing expectations of cuslomers as well as increase the bank competitiveness

suggest that there is a positively relationship between e-banking service quality and overall satisfaction

Price: For all services including IB , price plays a decisive role in customer

satisfaction It is apparent ftom the review that one of the factors customers use to

determine satisfaction I:vel is the benefils received from @ product or service in comparison with what is spent

Complaint management: Customers who register complaints, will do business again with the company if their conmplainls are resolved Tf the customer feels thal the complaint was resolved promptly Customers who have complained to a company and had their complaints satisfactorily resolved tel an average of five people about the good

trealment they received

In routine interactions with IB service, consumers seem not to be concerned about the availability of online customer service representatives or the compensation policy However, when customers conitont problems and questions, such factor would be used

in cvaluating customer satisfaction This will help to inspirc customers’ satisfaction as well as their confidence in using IB service

Utilities of servi

TR is a modem channel which is applied new technology, therefore, customers desire a large range of services to be provided through this channel similar to traditional banking services ftom inquiry information to payment services Banks will a diversified list of services will attract, many customers and be easier ta make customer more satistied with thew IB service

3.2.4 Dimensions and criteria to measure customer satisfaction far TR service

To measure customer satisfaction it is important to understand what are customers? expectations on IB service As mentioned in article 2.2.3, service quality is important input to cuslomer satisfaction At present, there has nol yel got any standard and professional dimensions to measure customer satisfaction for IB service, therefere, to identify dimensions and criteria of customer expectation for IB at BDV 1 analyzed

some service quality models and carried out interviews with 5 BIDV managers lo find

out the dimensions customers expect on IB service,

a, Krom service quality models

In SERVQUAL model, a 22-ilew

ale with a set of service quality dimensions to quantify a customer’s assessment of a company’s service quality Five key dimensions

of service quality — reliability, responsiveness, assurance, empathy and tangibles — have boon identified and formn the foundation on which a fol of other studi

quality have been built

- Yangible: ‘The appearance of physical facilities, equipment, personnel and

on service

conummunication materials, All factors above are langible evidence of care and attention

to detail that are exhibited by scrvice provider

- Reliability; ‘The ability to perform the promised service both dependably and accurately Reliable service performance means (hal the service is accomplish in time, inthe same manner and without emors every time

- Responsiveness: ‘The willingness to help customers and provider prompt service

Ia sorvice failure occurs, the ability ta reaver quickly and with professionalism cant

create very positive perception of quality

- Assurance: the knowledge and courtesy of employees as well as their ability as convey trust and confidences The assurance dimension includes the following features

competence to perform the servica, politeness and respect to the customers, zfbctivc

communication with the customers and the general attitnde

- Empathy: The provision of caring, individualized attention to customers Frmpathy includes following features: approach ability, scnsitivity, and cffort to understand the customer need,

Towever, SERVQUAL lus been subject to cerlain criticisms, including vagueness

in the definition of expectations, its dubious appheability in some industries, Atter extensive literature review, Zeithaml, Pamsuaman and Malhowa (2000, 2002)

developed the e-SERVQUAL measure of electronic service quality to study how

of e-serviee

eh for

~ Rfficteney refers ta the ability of the customers to gel to the Web site

information and log out with minimal effort

18

- Fulfillment involves the accuracy of service promiscs, having products in stock and delivering the products in the promised time

- Reliabihty is associated with the technical functioning of the site, particularly the extent to which it is available and functioning properly

- Privacy is related to assurance that shopping behavior data are not shared and that credit card information is secure

- Responsiveness refers to the ability of e-talers to provide appropriate information to customers when needed

~ Compensation involves receiving money back and retuming shipping and handling costs

~ Contact is associated with the ability of customers lo lalk to a live sorvice agont

online

b From BIDV managers’ view

IB service’ development in Vietnam is affected by cultural and consumer habit of Vietnamese people 2s mentioned in article 3.2.3, therefore, to get more accurate dimensions to measure customer satisfaction for IB service, I deeide to carry out the in- depth interview with 5 managers ftom BIDV Head Office and Branches They are very Kind assistance to answers questions and give me much information on bank policies about IB sorviec, bank strategy as well as tell me suggestions that help me complete the list of dimension to measure customer satisfaction for LB service, Realizing the fact that customer satisfaction is the key to bring sucess, most managers asked understand that similar to other produels and services provided in the merkel, the mosl importance objectives of IB service at BIDV is the satisthetion of customer: “the services provided

by the banks are aimed at satisfying the customer demands” ‘The more customers salisfy with the service, the stronger allachment customers wilt bave with the bank which results to customer loyalty,

Director of Retail Banking Development Department expressed that the compliments, recognization and satisfaction of the existing customers will communicate

to other people who need banking services and then these one will come to the promoted banks According to her opinion, there are some dimensions customers expect

for IT} service The first dimension is Fariety of service Tiesides inquiry fimetion, customers require IB service to provide financial functions including money transfer,

1g

bill payment, deposit and more complicated fimctions like investment or financial advisory laols The szcond is Sectity TB service niced to apply new technology ta protect financial security and customer information This will make customer fel secure when using the services ‘The third is Reliabifizy with quick and accurate update

in Wransaction and information Moreover, service nccds lo operate accuraey, The forth

is Problem Handling, For this dimension, the most important is the attituds of supporting staff ‘They are require to be ftiendly as well as have knowledge and ability

to help customers in all situations and give advice to them in shart time The fifth is Fees and Charges Vietnamese customers always compare the costs and benefits between all kinds of services especially banking services, Services with lots of fimetions

and provided af low price or even free will altracl customers and win in the competition The last dimension is Efficiency which ensures the service to be used anytime and anywhere - the convenient advantage of the services

This manager also mentioned that at present, BIDV has not had specific dimensions or criteria and professional system to mecasurc customer satisfaction for all services including IB service The bank mainly evaluated customer satisfaction based on sensibility normally, for example, the growth of ns:rs and tumover, the number of cirors, the complaints of customers However, the bank has just tricd to satisfy customer with the best effort from staff Sinee the middle of 2010, BIDV has enhanced training program of 10 transaction principles for sIalT worked with customers directly This is a professional style and the effort of BIDV in order to unprove customer satisfaction in the whole system Besides, the bank also focused on the quality of IB service through minimizing of transaction srrors and controlling risks in business performne: of the banks, In addition, because customers always conecntralc on financial charge and banking fees, therefore, BIDV pays much attention to this sensitive Ginancial information

Manager of Individual Customer Service Division of Hanoi Branch considered Security, Fees and Charges, Promotion and extra benefits and Variety of services as decisive dimensions of customer expsclation for TH service In term of Security, customers want their financial information and operation received a strong protection fiom bank to avoid the wrong purpose usage, For Fees and Charges, customers naed fees are calculated and collected accuracy Moreover, they require this information to be informed public and transparant Promotion and extra benefits such as discount

30

programs, advertising message or wishes in special events are value added to attract customers using TR service Customers usually do not satisfy wilh ths banking services which they do not receive any promotion or receive extra benefits fom the bank, This kind of marketing activities expresses the care of the bank fo their customer and is a uscftl (ool to increase customer satisfaction He also expressed thal variety of serviecs

is the key dimension customer expect from IB service

Menager of Individual Relationship Division of Cau Giay Branch thought that Problem Handling, Reliability, Rfficiency and 7 design are important dimensions customers expect for IB service For Problem Handling, he explained that in modem banking channel like IB service the transaction risk fransfsrs to customers, therefore,

they need a very clase and rapid support from the bank This requiras the availabitity of staif to support customers through telephone 24/7, In term of Reliability, bank

reputation is considered as an element affecting their satisfaction Customers usually

expressed their high expectation toward bank with long developing history like BIDV in cvery banking scrviecs, For Efficicney, customer require the service line to operate well and stably, Relating to IB design, customers expect that the Web is designed ftiendly, easy to use with mutti language including Finglish and Vietnamese, the SMS structure is simple and easy to remember with attractive using manual documents

Mention to the dimensions of customers’ expectation for [8 service, Manager of

Individual Customer Service Division of Ta Thanh Branch tisled the following dimensions Fees and charges, Efficiency, Promotion and Exira Benefits For Fees and Charges, customers expect relatively competitive fees of IB service with some attractive promotions and discount programs launched in nationwide Unlike traditional banking,

focs and charges of TR service are calculated antomaticatly Therefore, the accuracy and transparency in price mechanism will effect to customer satisfaction, Relating to Lfficiency, customers want the registration procedures to be simple and convenient Moreover, the user needs lo be ercated and informed quickly to them, The case and speed of accessing and using IB service is also a vital criteria affecting customer satisfaction, In term af promotion and extra benefits, customers expect these activities wore launched and maintained frequently to enhance them using IB service

Manager of Individual Relationship Division of The First Transaction Branch listed the dimensions customers expect including Variety of services, Fees and Charges, Problem Handling and Tangible Varicly of sarvices is the most important dimension

a

because the more service bank can provide to customer, the more customer can save

time without coming Lo transaction points This in Lum will inercasc the satisfaction of

customer for the service, Relating to Problem Handling, customers expect their

complaints to be solved quickly Vor l'ees and Charges, the accuracy and transparency

in fees and charges xnecbanisrn will sfTbet to cuslomer satisfielion In tens of Tangible,

she noted that customers require the user guidanee documents and registrations for IB

service to be simple and easy to understand

Trom dimensions in SERVQUAL, ¢-SERVQUAL model and dimensions mentioned by BIDV managers, I suggested eight below dimensions measure customer

satisfaction for [8 service at BIDV ‘They are ‘Iangtble, Problem handling, Security,

Reliability, Kificiency, ees and charges, Promotion and extra benefits and Variety

of service The following table will show 8 dimensions with 30 criteria to measwe

customer satisfaction for 1B service

Table 2 Dimensions ¢-service quality

Tangible” (i) Web design is fiiendly, easy to use and nnilti anguage for | SERVQUAL

customer

(2) SMS structure is simpl: and casy to remember

°@ Marketing documents (leaf using manual ) is ‘attractive

and enough information

© @ Registration form is simple, easy to understand

Probiem ~~ (5) Aiways having staif to support customer through telephone Author

handling (6) Staif‘are friendly, have knowledge and ability SERVQUAL

(7) Bank solve customer complaint quickly ị T(Ñ) Bank give adviee †o customers in short me e-SERVQUAL

¡ (9) Bank compensate for errors derived from bank side

Security" (40) Customer information is not used for wrong purpose PSERVQUAL

© (i) Bank applied new technology to protect financial security | SERVQUAT

and customer information

T12) Customers feel secure when using bank IB service

Reliability (13) information of transaction was updated accuracy and sent SERVQUAL

(14) Scivice operates accuracy

22

T17) Servics hne operates well and stably

¡ 8) Registration procedtres are simple and coriarnerrt

T97 set ïs ereated and informed qnickiy to customer

(20) Service fees and charges are competitiveness PBIDV concept FG) Fees are calculated and collected acewacy

¡ 22) T'ees and charges are informed public and transparent

(23) Promotion programms are attractive and bring benefits to | BIDV concept customers

((@a) Service” of “sending “advertising message bring useful

© @9) Deposit and Withdrawal Gniine

© (@@) Find information’ exchange tate, interest, ATM location

Source: Author design From 8 dimensions of customer satisfaction, the questions will be scored using

Likert scale fom 2 to 5 levels The difference between perceptions and expectations

will result to disconfirmation (Disconfirmation = Perception — Expectation) A negative

score indicales an unsatisfaclory resull for (he clients The talance between perception

and expectation (confirmation) shows that the ces offered by the bank have

3.3 Literature review

When rescarching the subject of “Customer satisfaction for Internct banking

service at the Bank for Investment and Development of Vietnam (BLDV)", 1 have

consulted a mimber of theses on this subject ‘These themes have their own research

methodology and find good solutions, A review of provious sludics telalsd to the

problem under investigation:

Nguyên Thí Loan (2013), “Measuring Customer satisfaction for internet banking Services al DongA Banik" - Master thesi

of University of Eeonumics Ho Chi Minh City The study was conducted to identify the components that affect the quality of Internet banking services in Hast Asia Bank according to the model of l-SERVQUAL

service quilily and measure the impact of quality services to the satisfaction of customers using Internet banking services in DongA Bank The study was conducted for individual customers using Internet banking services ‘This research has brought some practical implications for bank administrators, especially DongA Tank The study helped DongA Bank to draw a picture of the quality of Internet banking services, and the remaining elements from which the proposed solutions would help DongA Bank cxcculives improve and raise dhe higher qualily of Tnternel banking for individual customers increases the satistaetion of customers using the service to ultimately retain existing customers attract more new customers, increase revenue and profit

Phan Van Hung (2013), "Individual customer sulisfaction for Tulcrnet banking Serviecs al Joint Slock Commercial Bank for Forcign Trade of Viena - Ho Chi Mink City Branch", Master thesis of University of Economics Ho Chi Minh City This research aims to identify the factors influencing the personal satisfaction of customers using Internet banking services Joint Stock Commercial Bank for Forcign Trade of Vietnam - Ho Chi Minh City Branch (Vietcombank — HCM Branch) and measure the influence factor on loyally of customers when using this service The research subjects

of the project are individuals aged 18 and above living in Ho Chi Minh City and using the Internet banking service of Vietcombank — HCM Branch ‘The scope of the study is individual customers who open accounts and use Internet banking services at Victeotnbunk — HCM Branch The results show that price, reliability faelors slrongly impact on customer satisfaction Another important result of the subject is that satisfaction is proportional to loyalty, that is, the greater the satisfaction, the greater the loyally Tn addilion, it can be explained that banks do not pay cnough atlention to old

+

customers but only focus on developing new customers, so the satisfaction of this group

of customers đeœroasos with time, leading to reduced loyally,

Nguyen Hoang Ha (2016), “Research on Customer Satisfaction for Internet banking Services of Vietnam Join Stock Commercial Bank for Industry and ‘Trade — GiaLai Branch, Master thesis of Da Nang Universily The rescarch objective of the project is to systcmatize the basis of Intemet banking and customer satisfaction, study

the current business situation and Internet banking services of Vietnam Jom Stock

Commercial Bank for Industry and Trade — Giabai Branch (Vielinbark - Gia Lai Branch) The research objective of the project is to systematize the basis of Internet

banking and customer satisfaction, study the current business situation and intemet

banking scrvices of Victinbank - Gia Tai Branch, Understand the factors influencing customer satisfaction with Internet banking service of Vietinbank - Gia Lai Branch,

Finally, Offer advanced sofutions to improve customer satisfaction for Internet banking

services at Vietinbank - Gia Lai Branch The subject of research is the Internet banking service system at Victinbank - Gia Lai Branch Ths scope of the study is the data analyzed in this study which is the data trom September 2015 to March 2016 The research provides some nsefiul conclusions: Firstly, the most desirable customer is the level of responsiveness of the Bank, Sccond, the factors that influence customer

satisfaction include Efficiency and Reliability It is important to note that customer

satisfaction is the resul, of mmmy factors Therefore, the work to the satisfaction of customers need to make regular and long-teim As the business environment is constantly changing, the application of the research results needs to be flexibly handled and adjusted accordingly i'tom the survey of customer satisfaction on the quality of

Interne! barking services al Viclinbank - Gia Lai Branch, Ihe study has presented the status and assessment of customer satisfaction to be released Proposing solutions to improve the quality of internet banking services for Vietinbank - Gia Lai Branch

Euch of the dissertations has different methods of analysis, rescarch subjects and research, but they provide the basic concepts of Internet banking service and customer satisfaction for this service From there, the author offers practical solutions for bank: administrators to inercase scrvice quality and inoreasc customer satisfaction for Internet banking service,

25

3.4 Overview of Bank for Investment and Development of Vietnam

3.4.1 Bank profile

Bank for Investment and Development of Vietnam (BIDV) - one of the 4 biggest

State-owned banks in Vietnam was established under Decision No 177/TTg dated

26April, 1957 by the Prime Minister According to the United Nations Development

Program report on the 100 largest enterprises in Vietnam, BIDV stood at the 4" position

after Agribank, VNPT and PetroVietnam BIDV is the first to be established among

four largest State-owned Commercial Banks in Vietnam and it is a special State-owned

enterprise organized as a State General Corporation

International transaction name: Bank for Investment and Development of Vietnam

Abbreviated name: BIDV

Address 35 Hang Voi, Hoan Kiem Dist., Hanoi, Vietnam

Tel: (844).22205544

Fax: (844).22200399

Website: www.bidv.com.vn

Slogan: Share opportunities, share success

BIDV has always accomplished its tasks as assigned by the Government since its

establishment In parallel with other State-owned Commercial Banks, BIDV has been

regarded as a main agency to execute national monetary policy BIDV has ensured full

compliance with relevant laws and regulations, and fulfilled its obligations to national budget

BIDV major areas of business include domestic and international fund mobilization

to finance and co-finance projects especially fimdamental projects for socio-economic

development; trade finance; lending to every economic sectors; joint-ventures,

guarantee services; financial leasing and other banking services, namely, securities

services; foreign exchange; domestic and international payment With its experience

investing in key projects, BIDV plays the leading role in development investment and

project financing in Vietnam

In the context of international integration and due to new requirements of nation

economic development, BIDV will get opportunity for expanding field of activity and

customers’ base but have to face to the pressure of more competition from domestic and

foreign banks to exist and develop This puts BIDV in challenge of incessantly

improving the service quality, satisfying existing and potential demands of customers

- Subsidiaries: BLDV Leasing Company (No.1 and No.2) (BLC), BIDV Securities Company (BSC), RIDV Insurance Company (BIC), BIDV Asscl Management Company (BAMC), BIDV International Limited Company in Hong Kong (BIDVD

- Commercial Banks: 180 Branches/Iransaction Center with 798 transaction offices

- Administrative and Operation Units: BIDV Tuaining Center (BTC), BIDV Information Technology Centers (BITC) and Presentative Office in Southern, Central of Vietnam, Cambodia, Myanmar and Czech Republic

- Joint ventures: VID Public Bark (VPB), Lao - Viet Bank (LVB), Vietnam - Russia Bank (VRB), BIDV ‘Tower joint-stock Company and BIDV-Viemnamn Partners Tnvestnenl Management Company (BYIM)

In the year 2008, BIDV successfully implemented the project of organizational restrueturing following recommendations in Head Office and branches, including the restructuring of banking operation towards customer-orientation ‘The bank operation is tanaged by the general director and supervised by the Board of directors as dispaycd in Appendix A

3.4.3 The Bank performance in the period 2015-2017

Major business indicators

‘The business performance of BIDV has been carried out closely in line with the target and motto of Quality — Sustainable Growth — Effectiveness — Safety This is aimed at the focus guidance and implementation of various pratical measures and solntions which are appropriate to the factual business, the timely, flexible and drastic action plans and programs for the corporate governance and operation over (he head

2

quarter to the subsidiaries of BIDV Therefore, in three years from 2015 to 2017, good

6 | Afier-tax proñUNe† operating ineome (9) + 37% 30%

Source: BIDV Anmeal Reports 2015, 2016, 2017

The total assets of BIDY have accelerated year after year with high and reasonable growth scale, ‘his has helped BIDV maintain its position and share on the monstary and financial market and efficiently contributed to the implementation of the

asset with the 36% increase in 2017 while the speed of total asset only increased 19%,

During the recent years, BIDY has been making all cfforts to onhance its financial capacity and doing its business transparently and publicly: Capital Adequacy Ratio

(CAR) in 2015, 2016 and 2017 were 9.01%, 9% and 10.1% respectively ‘he NPL rate was striclly controlled and slaved al 2.10% on 31/12/2010 At the same time, BIDV

actively had its credit-worthiness of borrowers ranked according to the international standards by Moody Corporation and the bank reached the nation celling level

In term of profit, the niet operating income in 2016 increnscd 24% against the previous year, compared with the increase of 39% in 2017, This mainly derived from

the fact that BiDV had tried its best to diversify its income structure as well as adjust

28

the structure towards the trends of increasing the percentage of non-interest income

Thanks to the income structure adjustment, BIDV has stop by become

corresponding to the trend of modem banks in which the investment into high risk

credit industry is reduced while non-credit sector is paid more attention since it is highly sustainable and uch less risky This has also reflected the right vision and orientation

of BIDV during recent years

Retail Banking performance 2015 — 2017

RIDV started lo provide banking services to individual customers as early as 1995,

when BIDV become a truly commercial bank However, the level of interest in retail

banking development activities of BLDV is still limited Only in recent years, BIDV

bogan to be interested in this fistd, which cloarly soparatsđ rotail banking activitiss with

the appropriate organizational structure and clear objectives

Recently, retail banking in BID has also achieved certain results ‘fotal nmmber of individual customers by the end of 2017 is more than 10 million people By 2017

banking network increasingly expanded to 1000 outlets nationwide, ATM network ranked second in terms of number of ATM with market share around 11.2% Net fee

retum of retail service was VN'1D2686 billion, accounted for 31% in total net fee return

of the whole bank

Table 4 BIDY retail banking performance 2015-2017

(Billion VND) [Amount | Ớ@ | Amount | @) | Amount | @) 1_| Fund Mobilization 345,000| 38% | 434,000 | 26% | 510,000 | 18%

Source: Reports on BIDV retail banking performance in 2015, 2016, 2017

As for mobilization capital from inhabitanls, the average growth rate of 27% in the

period fiom 2015 to 2017 and the proportion in the total mobilized capital of the bank

increases from 48% in 2015 to 55% in 2017

2