Luận văn evaluating service quality and individual customer satisfaction with retail banking service in vietinbank hanoi branch

UNIVERSITE DE NANTES Cohort 2015 - 2017 MASTER’S THESIS EVALUATING SERVICE QUALITY AND INDIVIDUAL CUSTOMER SATISFACTION WITH RETAIL BANKING SERVICE IN VIETINBANK - HANOI BRANCH Auth

UNIVERSITE DE NANTES

Cohort 2015 - 2017

MASTER’S THESIS

EVALUATING SERVICE QUALITY AND INDIVIDUAL CUSTOMER

SATISFACTION WITH RETAIL BANKING SERVICE

IN VIETINBANK - HANOI BRANCH

Author: Nguyen Quang Hung

Supervisor: Dr Dao Tung

Hanoi, June 2017

ACKNOWLKDGMENT

First of ali, I would like to send my sincere thanks to the lecturers, especially to my supcrvisor Dr Dao Tung for their devoted attention, lessons and guidance, which have equipped me with key knowledge and essential skills throughout the course More importantly, everything I have learned here would undoubtedly help me tremendously in my work in the future

1 would also like to thank International School - Vietnam National University, Nantes

University for useful supports curing studying and researching to complete this paper This couse has equipped and improved and udlded a lol of knowledge about the different arcas,

In addition, the course also helps me to have a relationship, have the opportunity to share information and learn from other students in the program

I am pleascd to gratitude leaders and cmployces of the The Victinbank — Hanoi Branch for their enthusiastic support and creating favorable conditions for me to have more useful information to complete thesis

In my thesis will not avoid the shortcomings I look forward to receiving comments from lectures and studants so that I can add to complete this paper

Sincere thanks

Author

Nguyen Quang Hung,

VietinBank Vietham Commercial Banik for Industry joint stock and Trade

SERQUAL Servico Quality

SME Small and tnedium entorpr

uc Intemational Linance Corporation

VNBA Vietnam Banking Association

AABA Asian Barkers’ Association

SWIFT Interbank Financial Telecomumunication Association

EWS Farly Warning Systom

M&A Mergers and Acquisitions

VIF Vatiance inflation factor

NPT nonperforming Ioan

wro World Trade Organization

LIST OF GRAPHS, FIGURES AND TABLES Table 2.1 Encoded data

Table 2.2 Cronbach alpha values and internal consistency

‘Table 3.1 Vietintank’s growth in total assets, shareholders’ equity and charter

capital Table 3.2 Vietinbank’s growth in profits in the period ftom 2012 to 2016

Table 3.3 Vietinbank’s growth rate and mobilized capital structure in the period

of 2012-2016 Table 3.4 The growth rate and loan structure of Vietinbank in the period of

2012-2016 Table 3.5 Back payment and indicator of loan balances by quality

Table 3.6 Payment service activities period of 2012-2016

‘Table 3.7 Vietinbank’s market share of payment cards in the period 2012-2016

‘Table 3.8 Vietinbank’s POS market share in the period 2012-2016

Table 3.9 Vietinbank’s guarantee service tumover in the period 2012-2016

Table 3.10 Data description

Table 3.11 Gender distribution among 123 partivipants

Table 3.12 Reliability of scale

‘Table 3.13 Exploratory factor analysis for service quality scale

Table 3.14 Reliability statistics and factor analysis for service quality scale — 24

time 'Table 3.15 Exploratory factor analysis of customer satisfaction scale

‘rable 3.16 Correlations

Table 3.17 Collinearity Statistios

Table 3.18 Regression analysis summary

Table 3.19 Regression analysis the second time

Table 3.20 Hypotheses tested results

Table 3.21 Perception on rela) banking service qualily at Victinbank-Hanoi

branch Figure 3.1 Vietinbank’s market share of mobilization capital period of 2012-2016 Figure 3.2 Vietinbank’s market share af gross loan in Vietnamese barking

industry in the period of 2012-2016 Pigure 3.3 Age distribution among 123 participants

Figure 3.4 Kind of services used by 123 participants

Figure 3.5 Research model Version 2

Figure 3.6 Regression Standardized Residual

Figwe 3.7 Research model result

th

4 Contributions of the research

5 Structure of the thesis

CITAPTER 1 - TITEORETICAT FRAMEWORK

1.1 Conceptual framework on retail banking servic

1.1.1 Concepts of retail banking

1.1.2 Retail banking features

1.1.3 The rote of retail banking

1.1.4 Products and service categories of retail banking

1.2, Retail banking service quality

1.2.3.2 Relationship between service quality and custorner satisfactiơn 13

1.3 The factors influencing an retail ranking service quality

1.4, The necessary to improve the retail banking services quality

1.5 Research model and hypotheses

1.52 Hypothe

CHAPTER 2 - RESEARCH CONTEXT AND METHODOLOGY

2.1 Overview of Vietnam Juint Steck Commercial Bank for Industry and Trade

2.3.3 Analyzing data plan

2.3.3.1 Crombach’s alpha coefficient analysis

CHAPTER 3 - ANALYSIS OF SITUATION OF RETAIL BANKING SERVICE QUALITY IN VIEFINBANK—HANOL BRANCH AND SURVEY RESULTS 4 32 3.1 VielinRank’s business results in period from 2012-206

3.1.1 The growth in total assets, shareholders’ equity and charter capitdL 32

3.2 The reality of retall banking services development in Vietinbank in the period from

3.2.1 The development reality of Vietinbank’s capital mobilization service in the

3.2.2 The reality of loaning and investinent services activias 3ố

3.2.3 The reality of payment service activities - 40 3.2.4 The reality af card service activities and POS - at 3.2.5 The reality of Guarantee sèrVi68 ceieiereseesoeeaeooe.đ3

3.2.6 The reality of internet banking service activities - - 45 3.3 Evaluating the quality of retail banking services in Vietinbank — Hanoi branch In

3.4.2 Reliability analysis and scale sec sneseeireeeirrrrevaeuĐT 3.4.2.1 Reliability analsis sceieerirrrrrrerrirrreeroeuST

v

3.5 Exploratory factor analy

3.5.1 Exploratory factor analysis of retail banking service quality soale 55

3 5.2 Exploratory faotor analysis of customer satisfaction scale - 58

3.6 Regresston analysi

3.6.2 Rescarch model and hypotheses tested result

CHAPTER 4 - FINDINGS AND DISCUSSIO!

4.1 Assessment of perceived retail banking service quality af V!

4.3.1 Improve RUSPONSIVENESS and RELI-ASS components 67

4.3.3 Improve other components of retail banking serviee quality 6

ABSTRACT

In retail banking, quality of service plays a vital role in the context of sustained business survival and growth, The relationship between a bank and its customers imust be a permanent and lasting one, which needs to be maintained with good quality services, An

attempl has been made lo ascertain the level of salisfaction of customers with regards to retail banking services in Vietinbank-Hanoi branch, This study assesses customer satisfaction of service quality and determines whether services provided by the selected private banks are acceptable to Vietinbank-Ilanoi branch’s customers based on various

‘Vietinbank-Hanoi branch,

Data used in making analysis was collected trom conducting survey at Vietinbank- Hanoi branch Based on 123 valid responses from customers, the study indentified three

componcris RELI-ASS (teliatsility combinod with assurance), RESPONSIVENESS, and

EMPATHY which explain customers’ evaluation of perceived service quality at Vietinbank-Llanoi branch The results indicate that Vietinbank-llanoi branch’s service quallily is as

sed with a fairly high level in customers’ perception Furthermore, the relationship between these service quality components and custorner satisfaction is also investigated through regression analysis As the result showed, these three components of service quality hive positive relationship with customer satisfaction in which RESPONSIVENESS has thc most significant impact on customer satisfaction level, In addition, based on these findings, the thesis also gives some suggestions for Vietinbank-

Tlanoi branch to further improve sarvice quality and customer satisfaction level

Key words: Retail banking service, products, reality, customer satisfaction, effective

vii

INTRODUCTION

1 Problem identification

International integration has opened up development opportunities and also brought many challenges lo Vietam's banking service providers due lo fierce competition with foreign bankers, who are not only strong in financial strength but also have extensive experience in developing modem banking services Competitive pressure on banking service provision and the rapid development of information technology have led retail bankmg providers intensively come close to groups of individual customers, stall and medium enterprises, With a population of 90 million people approximately and their incomes increasingly, Vietnam is a potential market for commercial banks as non-cash payment targct is focused Thacfore, a retail banking development strategy of Vietnam Commercial Bank for Industry joint stock and Trade (Vietinbank)- Hanoi branch will focus

on individual customers with diversified and professional retail products which convenient

to the needs and capabilities of different, objects/customer segments Tis objective is to build

a secure, high-quality and secure retail banking system based on enhanced international economic infegration and expanding retail banking services market accordance with the comunitmerts of bilatcral and multilateral Al the same time il also applies advanced banking technology and develops appropiiately its distiibution network to provide retail banking products and services sufficiently, conveniently and at the right time for all types of customers

The consumer trend always changes according to their life's need so it requires Vietinbank [anoi branch must have new development strategies and solutions as an oriented multi-functional retail bank To meet customers’ increasingly demand for banking services, as well as run a ficree competition race among bankers, Victinbank - Hanoi branch is trying to expand its network, diversify retail products, improve services quality and enhance the customer service style to achieve saoner ils goals namely becoming a leading multifunctional retail financial group, developing a retail banking system on par

2 Research olijectives anc questions

3.1 Research objectives

The paper focuses on researching and analyzing to systematize and clarify retail banking activities, retail banking service quality The stady also looked at the relationship between individual customer satisfaction and scrvice quality by applying SERQUAL model

to analyze collected data of survey It evaluated the reality of the retail banking business activities in Vietinbank — Hanoi branch and their customer satisfaction on this service qullily Thoreby, the paper proposed some solutions lo improve the relail banking services quality at VietinBank - Hanoi branch in the future as well as individual customer

satisfaction

2.2, Research questions

In this study, the author will find oul the answers lo following three questions:

i, How are the relationship between the retail banking service quality and customer

branch and factors offeet on the Tolail banking sorvica quality in VictinBank-Hanoi branch

So I also based on resuit of individual customer satisthetion survey to access the quality of these retail banking services Hrom those collected data and analysis results will formed the basies for determining and sclocting the later solution for Vietinibank -Hanoi branch

3.2, Research scope

‘The study mentioned the factors unpact individual custamer satisfaction on the retail banking service qnality of VietinBank-Hanci branch and the relationship between the retail banking service quality and customer satisfaction Therefors, il is not only slapped al testing the theories regarding retail banking service quality and the models used to measure customer satisfaction but further, it is the way for me to apply the knowledge, skills and my experiences into the construction of the stratsgy for a specific enterprise, from that contribute the uscful point in business activitics of Victinbank — Hanoi branch where Ì am

working for In this paper, I will focus on research the information and figures related to the reality of the retail banking business activities of Vietinbank — Hanoi branch in the period

Primary data collection and analysis: collected data would be processed by sofware SPSS version 21.0 with methods such as reliability test cronbach alpha, exploratory factor analysis, one-way anova and multiple linear regression analysis The author found out

solutions lo achizve the rescarch objectives,

4, Contributions of the research

Within the boundary of this thesis, the author pointed out the significant comlation between the retail banking service quality and customer satisfaction as well as the specific factors immpaot customer satisfaction on the retail banking scrvice qualily of VielinBank- Hanoi branch,

Base on evaluated results the reality of the retail banking business activities in

‘Vietinbank — Tani branch and their customer satisfaction on this service quality, the author proposed some solutions to improve the retail banking services quality at VictinBank - Hanoi branch in the future as well as customer satisfaction Those solutions constituted enihancing the Vietinbank’s prestige and brand al domestic and abroad markels, diversifying service’s functions, selective develop retail service products as the strength of VietinBank- Henoi branch, strengthening marketing and effectiveness of distribution channels, investing

in technology development, security enhancement and modem distribution network

5 Structure of the thesis

Regardless of the introduction, conclusion, reference and appendices the thesis has four major parts as following

Chapter L: Vheoretical Framework

Chapler 2: Rasearch Methodology and overview of Vietinbank - Hanoi cily branch

Chapter 3: Analysis the reality of retail banking business activities in Vietinbank

Hanoi branch and survey result

Chapter 4: Findings and Discusion

CHAPTER 1 - THEORETICAL FRAMEWORK

This chapter will provide theoretical framework for the research It includes

fundamental concepts, characteristics and role of retail banking servicc as well as the main

types of products ‘he SERQUAL service quality model and its criteria for assessing the

retail banking service quality will be presented (oo Furthermore, the factors affecting retail

banking services as well as research model and its hypotheses is also mentioned in there

1.4 Conceptual framework on retail banking service

LLL Concepts of retail banking

In an open cconomy, the number of individual customers usc banking serviecs has

increased rapidly, especially retail banking service because they are simple, easy to operate

and frequent with an outstanding financial services group such as deposit, account, loans and credil card opening cle The concept of “Relal Banking” depends on the different

perspectives and research approaches Reynold E.Byers and Phillip J.Lederer (2001) defined

that a retail market is a completely new look at financial markets, whereby the majority of Individual customers will have access ip banking products and szrvices (Ital ercafe a potential,

diverse and dynamic market The term Retail Banking means to provide products and services

to consumers in small quantities Therefore it is possible to understand retailing as a distribution setivity thal includes diffrent avlivitics such as searching, promoting,

rescarehing, testing, discovcring and developing modern distribution channels Retail serviecs

constitute three main areas: market, distribution channels, service and service response

The economists al the Asiar Institute of Technology showed that retail banking is a

delivery of banking products and services to individual consumers and small and mediun

enterprises (SME) through a branch network Customers may be access directly to banking products and scrvices by Islecurnmunication electronic media and information technology,

According to the WTO study, retail banking is a typical banking service type where individual

customers can go fo branches/transaction offices of banks to cary out transaction such as: savings, checking account, mortgage, loan, credit card service, debit card and other services

Dictionary of banking and informatics detcmnined retail banking is a providing activity

products for individual customers with services such as savings, card services, money transfer

to study abroad, remittances, e-banking, personal consumption loans, production and business Thus, retail banking can be fully understood as "retail banking is a banking scrvicc

provided to individuals, SME clients through branch network or customer may directly access

to banking products through telecommunication electronic media”

14.2 Retail hunting features

Retail banking is serving an extremely large number of customers who are individuals, housctolds and SME and it provide diversified produels However transaction valuc af cach product is not high so the risk level is relatively low Retail banking services require building

up multiple distribution channels to provide products and services for consumer in a wide range They operate largcly base on modem information technotogy and professional staffS to expand, improve their product quality and bring these products to each customer Most of the served objects ars individual customers so relail barking services are typically focused on the simple, casy-lo-implement services comprise dspusil, payment, loan and card services Their business developing mainly depended on the bank’s brand and good service quality which are important factors to develop retail banking services, Due to a large number of customers and widely dispersed, the transaction points are hardly concentrated Morcover, bankers often expand their network and invest costly investment in their online transactions which push average operating cost up ‘Iheit management methods and product marketing forms are also more diverse, more complex duc to the nelwork of customers spread

1.1.3 The role of retail banking

For the economy: retail barking service has changed directly from a cash economy to a non-cash economy, improved state management efficiency and redueed social costs of

Payton, and cash flow Ta addition, through totail banking, the cash low is onlamosd and more efficient It utilized and explored the potential capital resources to eontibute to promoting production, business and consumption, improving people lives

For banks: retail banking services plays an important role in diversifying products, expanding markets, crhancing competitivencss and creating main medium and tong term capital for banks It changes the bank's income structure, minimizes risks in banking operations, contributes to diversify banking operations and strengthens national finance

For customers, retail banking scrvices bring convenicnec, safcty, economy and efficiency to customers in the process of payment and using their income source, In fact, retail banking service has provided barks a stable income source and dispersed risks thal create a solid fenmdalion for bank oporations, As a result, commercial barks have considered rolvil banking as ene of core activities to build up, consolidate and develop a steady customer base, thereby expanding their other business operations Vietnam commercial banks have been developing and improving tha roisil banking quality acvording to the incvilable trend, accordant with the general trend of banks in the region and the world

114 Products and service categories of retail honking

Capital mobilization service mobilize capital for lending and investment is one of essential functions of commercial banks They uscd measures and tools lo mobilize capital from individual customers and SME clients such as demand deposits, time deposits, issue valuable papers (promissory notes, bank bonds ect) and other deposit forms Individual customers and SME have got small idic capital, however if this capital source crcates fiom @ large number of customers it will become a potential and abundant capital source for commercial banks, Currently, in addition to battitional deposit producls, commercial banks have diversified many flexible savings products in terms and interest rales in order lo improve the services quality to meet all customers’ needs

Retail Credit service: it provides short-term, medium and long-term loans to individuals

and small businesses consist of study-abroad loans, rcal estate loans, consuming loans,

secutitias business loans, business loans, overdratts, valuable paper mortgages ete The loan

proportion to individual customers, SMU clients is getting bigger in the bank’s total

oulsianding loans and contributes to increased revenue and profit for them These toan services for individual customers, SME promise a great potential macket and grow continuously Nevertheless, small, scattered loans push management cost up Furthermore, these horrowers are sensitive to interest Tales, Lermns and procedures so commercial banks are often pressured by compatitive factors and customer’s profiteer ability

Payment services: they ate considered as a professional segment which brings high Profit margin, Cormmon paymont tools cneompass chacks, cneashment, standing orders,

commercial paper and credit transfer ete, The banks on behalf’ of customers do payment for goods and services through clearing and transferring via electronic payment network of the internal banking system or axtsmal barking system, domestic ar overseas remittance Payroll

serviees through personal accounts, payinent for cloctricity, Icephons and waler bills by card services are developing strongly and generate significant revenne for commercial banks, Transfer, receiving remittances services are increasingly expanding and developing Many commercial banks have connected and cooperated as the reccive-transfer money agents and

remittance disbursement of some intemational financial organizations such as Western Union,

Money Gram gle

Card Services: bank cards are a multi-function personal financial product that brings many benafits to customers and issued by the bank It can be used to withdraw/send money, provide credit, pay bills or transfer money Moreover it is also used for many non-financial servives such as information query secount Today therz ara different types a dsbil cards bul

populaily two types of debit cards types (domestic and intemational) and credit card, Debit card uses the available balance on the individual account while credit cards’ outstanding feature "buy first, pay later" based on a bank's issued credit limit Card services significantly

contribule to commercial banks in mobiliving capital, cofleeting services fees and enhancing the bank’s image in the public Card service products are associated with the applying technology and cormect ability among commercial banks in exploiting the market and utilizing the information technology infrastructure

E-banking services, in the integrated context of financial-banking market, Vietnam is gradually opening up ils doors te foreign hanks so domestic barks need to find differentials for their produets and services both in form and content Modern technology banking services such as SMS banking, e-banking, mobile banking ete are prefeed by customers They do not need to go to the bank neither spend too much time to carry out necessary transactions as

transfer, chocking account, bill payment, deposit transaction as well as loan The

arc really convenient services help them come closer the modern life Applying e-banking sarvices in commercial banks’ business operations is a competitive advantage and one of the important factors lo determine the suet

v Phone banking 1s a service type that customers can use their phone call to certain bank machines that provids services to do transactions or check account statements,

listen to rates information and interest rates

v Mobile banking is a bank service type that customers can do their transaction by smart phone They can check account balan , list transactions, raccive bakimec notives, exchange rates, automatic interest rates via SMS banking, pay bills of

electricity, water, telephone, internet etc

Tome banking is the service type where transactions can be made at home through a connceted computer system to the bank's computer system, including moncy

transfer, credit, debit, exchange rate, interest rate etc

¥ Inlemet banking is the barking service that customers interact with the bank by intemet, Customers can search information about bank’s products or services or access parsonal account information, balance, deposit, loan

Other services in addition to above services, other services for individual customers also include standing/encashment orders, study-abroad money transfer, keeping rare property,

rental safes etc Services for SME clients include intemational payment, foreign exchange,

and gurunice

1.2, Retail banking service quality

1.2.1, Concepts of service, bank service and service quality

Services ara one of the two key components af doonorrios - tho other being goods - and they are consumed at the point of sale, A service is a product that consists of any activity, benefit or satisfaction that one party can offer to another for sale Services are essentially intangible and do not result in the ownership of anything Scrvives? prodnetion may or may not be tied to a physical product (Kotler et al., 2005)

Bank is a financial intermediary which performs the intermediary fimetion between two

or more parlies in a certain financial activities, In other word, bank supporls the charmel flow

of capital between lenders and borrowers under the indirect method Banking services are the various ways in which a bank can help a customer such as operating accounts, making transfers, paying standing orders and selling currency CinvestorWords com)

The American Society fox Quality pave the definition of quality as “the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or imptiod needs” (ay el al., 2009) Wo ean define quality products as goods and scrvices thal are reliable in the sense that they do the job they were designed for and do it well, which increases perceived value, but they are also differentiated by various attributes that customers perceive to have a higher value (Charle et al, 2004) Service quality can be defined as the difference between customer cxpectations of service and parccived service, If expectations arc greater than performance, then perceived quality is less than satisfactory and hence customer dissatisfaction occurs (Parasoraman st af, 1985, Arash Shahin) In another way, service quality can be defined as the ability of a scrvice to perform its functions including the overall durability, reliability, precision, ease of operation and repair, and other valued attributes (Kotler et al, 2005)

should be In this thesis, banking service quality may be defined as the ability to saisfy the castomer’s requirements and needs ‘This ability includes everything that customers think they will be received from those services like accurate process, affordable price, on-time delivery, allilude of staffs, zlc

1.2.2 Major aspects of service quality and measuring

“There are several major aspects of service quality (Jay et al., 2009):

First is the tangible component of many services ‘That can be understood as how well the sorvice is designed and produced make 4 difference For cxample, this might bo how accurate, clear, and complete your account at the bank etc

Second important aspect of service quahty is the service process There are 10

dclerminanis of service qualily which relate to the service proccss: langilile, reliability,

responsiveness, competence, access, courtesy, communication, credibility, security, and

understanding/knowing customers, An operation manager can design processes that have these altribulss lo cnsure their service quality

Third, the customers’ cxpeetations are the standard against which the service is judged Customers’ perceptions of service quality result fiom a comparison of thet before-service expectahons with their actual-service experience, In other words, service quality is judged on the basis of whether it meets expectations Thus, company completely should not promise more than they can deliver

The final aspect of service quality is the “excaptions” There is a standard quality level

at which the regular service is delivered, such as the bank teller’s handling of a transaction, Lowever, there are “exceptions” or “problems” initiated by the customers or by less-than- optimal operating conditions (for example, the computers cannot work) ‘This implies that the quality control system inust recognize and have a scl of allemative plans for Izss-than-optimal operating conditions Designing the product, managing the service process, matching customers’ expectations to the products and preparing for the exceptions are keys to quality sorviecs (Jay ct al., 2009), Mcasuring quality in scrvice scctor is more difficult than measuring quality of manufactured sector because quality evaluations are not made solely on the oulcome of a service: hey also involve evaluations of the process of service delivery There are many service quality research models on the world nowadays Among them, SERVQUAL (Parasurarnan et al., 1985, 1988) and SERVPERF (Cronin & Taylor, 1992) seam fo be more

popular SERVQUAL scale is the gap model for assessing customer perceptions of service

quality in scrvice and retailing organization, The gaps refer to differenees between customer

“expectations” - (E) and “perceptions” - (P) about service quality The gaps revealed by the executive interviews are shown in Kigure 1.1 (Parasuraman et al., 1985, Arash Shahin)

Service Quality Model

Figure 11: Service quality model (Parasuraman et al., 1985)

- Gap i The gap between customers? expectations and management percsptions of

those expectations, This gap is a result of the lack of marketing research orientation, inadequate upward commuication and too many layers of management,

+ Gap 2: The gap between management perceptions of consumer expsctations and the firm’ s service quality specifications This gap is @ result of inadequate commitment to service quality, a perception of unfeasibility, inadequate task standardization and an absence of goal

setling

- Gap 3; The gap between service quality specifications and actual service delivery

‘This gap is a result of role ambiguity and coniiict, poor employee-job fit and poor

teclnology-job fit, in appropriate supervisory control systems, lack of perceived control and lack of teamwork

- Gap 4: ‘The gap between actual service delivery and extemal communtications about

Service quality depends on the size of gap 3 which, in tum, depends on gap 1, gap 2, pap 3, and gap 4, We can describe this relation in the following faction:

Gap 5 = f (Gap 1, Gap 2, Gap 3, Gap 4) SERVQUAL was originally measured ơn 1Ô componcnis of service quality

- Access: invalves approachability and ease of contact

+ Courlesy: involves potileness, respect, consideration, and friendliness of contact personnel (including receptionists, teleplione operators, etc )

- Communication: means keeping customers informed in language they can undorstand and listen fo thơm TL may moan thái thơ cornpany has to adjust its language for different consumers increasing the level of sophistication with a well-educated customer and speaking simply and plainly with novice

+ Credibility: involves trustworthiness, believability, and honesty It involves having

the customer’s intercsts at heart

- Security: is the freedom from danger, risk, or doubt

+ Understandingfenowing the customers: involves making the effort to nndsrstand customers’ needs,

- _ Tangibles: inehude the physioal evidence of the service

This scale covers almost all aspects of service, but it shows the complexity of measurement ‘Therefore, by the early nineties, the authors had refined the model to measure five underlying dimensions termed ‘Tangible, Reliability, Responsiveness Assurance, and Fmpathy (Fogarly et al., 2000) SERVQUAL seule has been criticized on various cơnocptunl and operational grounds Cronin and Taylor (1992) were amongst the researchers who leveled maximum attack on the SERVQUAL scale They questioned the conceptual basis of the SERVQUAL scale and found it confussing with scrvice satisfaction Therefore, they opined that “expectation” - (E) component of SERVQUAL be discarded and instead “performance” - (P) component alone be used They proposed the SERVPERF scale Besides, Cronin and Taylor (1992) provided empizical evidence across four industries namely banks, pest control, dry cleaning, and fast food to corroborate the superiotity of their “performance — only” instrument (Sanjay et al., 2004) Methodologieally, the SERVPER scale represents marked improvement over the SERVQUAL scale by reducing 50% the number of items to be measured,

123 Service quality and customer satisfaction

1.2.3.1 Concepts of customer satisfaction

The definition of customer satisfaction has been widely debated as organizations increasingly attempt to measure it Customer satisfaction can be experienced in a variety of

ment thal is

situations and conmecied to both goods and services IL is highly personal ass

greatly affected by customer expectations (Center for the study of social policy, 2007) Philip Kotler defined customer satistaction is the extent to which a product’s peroeived pertormance

matches a buyer’s expectations If the product performance falls short of expectations, the

buyer is dissatisficd If performance matches or exceeds expectations, the buyer is satisfied or

delighted (Kotler et al., 2005) Customer satisfaction is an important theoretical as well as

practical issue for the marketers and consumer researchers Customer satisfaction can be

considered as the csscnec of success in today’s highly competitive world of busincss

(Vanniarajan et al, 2007) In this research, customer satisfaction can be understood as

psychological stale of customers when service they teceived matches or exceeds what they expected

1.2.3.2 Relationship henween service quality and customer satisfaction

There is a distinction between service quality and customer satisfaction: perceived service quality is a global judgment or attitude relating to the superiority of the service,

whereas cusloruer satisfaction is related (o a specific transaction (Parasuramnan el al., 1988)

However, many researchers have stressed the positive relationship between service quality and customer satisfaction (Hmari et al., 2010) Brady and Robertson (2001) conducted research about fast food restaurants in America and Latin America ‘The results indicated that

there wus a jin relationship between servioe

quality and customer satisfaction Sureshchandar et al (2002) found that service quality and customer satistaction were highly related In addition, Ruyter et al (1997) tested the health care service and attempted to dctermine the xclationship between service quality and customer satisfaction The results suggested that service quality should be treated as an antecedent of customer satisfaction From thase researches, il can be concluded that service quality and customer satisfaction have

a relationship in which service quality is an antecedent as well as an important factor

impacting on customer satisfaction

1.3 The factars influence on retail hanking service quality

"There are some factors affected on retail banking services quality consist of information tedmology infastructure, Gnancial capacity, maagement abilily and effective human resources strategy, distribution channels, customer policy, product service and marketing policy

Information lechnology infrastructure

Ina scienee and technology era, high demand for services and banking services quality require providers develop and apply technology in their business ‘lechnological factors become the “foundation for commercial banks lo devclap banking servicos Dovoluping and applying new technologies allow bankers to provide the best products and services to meet the increasing needs of customers, Furthermore, they would create and develop new distinctive- unique products which highly show off their creative ability as well as creating product brand and reputation Infonmation technology also contibules lo improve service quality thal always associated with ensure factors convenience for both customers and banks Specifically, it has supported commercial banks to implement business procedures logically and scientific, For example, @ onc-gatc transaction model has saved a lot of time for customers when they do transactions with banks Moreover, modem technology supports commercial banks improve their operation and business efficiency due to the service teverms growth, cosl savings and reduee tisk by diversifying operations business

Financial capacity

Financial capacity plays a vital role in banking operation Only when the financial capacity is strong cnough, the bank has cnough moncy to cquip the necessary asscts or their business including a modern information technology system

14

+ Management ability and effective human resources strategy

“The development of service system must be connected with the management capacity

of each bank to ensure its operations are stable develop, secure, sustainable and self-

controlled To do those, bank adrinistrators and

also have professional knowledge of banking operations and skills to analyze and evaluate the possible tisks of each service, development trend of each professional type to take appropriate

tives are nơi only comply the taw bul

prospective measures Similarly, they must have professional staffs because human factor is always considered as the most important of all success, In order to approach new lschmologies, banks mmst have a training plan to their staffs and well prepare manpower before launching new services

+ Customer poey

It represents marketing strategies at the customer level or customer segment based on

decisions lo allocate bank’s available resources The ultimate goal is providing services to satisfy the increasing demands of their customers thereby achieving the bank's profit maximizing Satisfying customer needs, improving customer perception, and building customer Inyally are things banks need to do Therefore, the developing an appropriais customer policy and competitiveness enough is necessary to maintain and develop customer relationships Customer policy helps the providers select right customers to serve and create a traditional custom em thereby enhancing the banks competitive position im the market

Through customer policy, the bank may be devise operational measures follow its oriented development For customers, customer policy gives them the trust, convenience, accuracy, save time which would bring the highest satisfaction for customers

In order to develop whole sale/retail banking services, improving, service quality and marketing policy are the key steps that determine development strategy and orientation of this kind of service

1.4 The necessary to improve the retail banking scrvices quality

Firstly, in business scctors, banking business is considered as a sensitive business arca

and the most competitive Because monetary is a special business subject, sensitive to all

socio-economic fluctuations that can lead to large fluctuations in monetary value and via In addition, retail banking products arc highly competitive because they ars div

fied, casy lo copy and difticult to keep copy right therefore, competition is a vital issue for banks, They can do it by improving their service quality to raise competitiveness 30 the higher the sorvice quality, the greater the competitive advantage

Secondly, provided banking services meet customer needs If the service quality is

more perfect customers will commit longer-term and accept service Vurthermore, the

customers’ compliments, acceptance, satisfaction with scrvice quality will spread lo others customers who need scrvices and come to the bank,

‘Thirdly, at present more and more new commercial banks so the number of service products on the market increase, Customers are increasingly more rigorous demand for provided quality of products and services they will compare, evaluate and decide to transact with banks with good service quality or even if the bank's products and services quality is less aliractive and docs not meet the requiroments, they can switch lo a better quality bank

Finally, a multi-function banking development requires bankers provide the variety retail products with high quality, comprehensive on modem banking technology platform Similarly, improving retail banking services quality is not only in increasing product utility and scrviees but also in the service qualily, care service style, always considered "customer

is god “and best serve all customers’ requirements and bring high economic efficiency tor the bank

1.5 Rescarch model and hypotheses

1 Research model

SERVQUAL model and SEREPERE model are two popular quality models 1n the

“Measuring service quality using SERVQUAL model: A case study of e-zetailing in Iran” by Seyed Hossein Siadat (2008), “Measuring information science system service quality with SERVQUAL: Users” perceptions of relative importance of the five SERVPERT dimensions” by Uoltis Landrum et al (2009) In

“Measuring service quality of banks: Seale development and validation” by Osman et al (2005), “SERVPERE analysis in retail banking” by Vanniarajan et al (2007), “Service quality in e-banking: Comparison hetween S¿RVQUAL model and GRONROOS model"

by New

satisfaction in commercial banks working in Jordan” by Anber Abraheem Shlash Mohammad and Shireen Yaseen Mohammad Alhamadani (20111)

This xescarch will usc the SERQUAL scale to measure perocived performance of

Thi Phuong Tram (2008), “Service quality perspeotives and customer

banking service, Five components of service quality are tangible, reliability, responsiveness, assurance, and empathy They represent the perceived performance on compenenis of

service quality can be expressed in the following equation:

sQ= Ye Ey)

Where SQ=perceivad and expectert service quality of individual

k Number of attributes‘items Pij =perception of individual “i” to performance of service on item “”

Fij = cxpsclation of individual “1” lo performance of scrviee on item “”

In addition, the research also analyzes the relationship between service quality and customer satisfaction ‘This relationship is modeled as following:

‘There are several hypotheses for this research model as following:

- Hib: Reliability component and customer satisfaction have a positive relationship Thal means the higher/lower customer evalaals reliability factor, the higherlower level of

customer satisfaction

- H2; Responsiveness component and customer satisfaction have a positive

relationship ‘That means the higher/lower customer evaluate responsiveness factor, the

higher/lower level of customer satisfaction

- H3: Tangible component and customer satisfaction have a positive relationship

‘That means the higher/lower customer evaluate tangible tactor, the highen/lower level of

customer satisfaction

- H4: Assurance component and customer satisfaction have a positive relationship

That means the higher/lower customer evaluate assurance factor, the higher‘lower level of

customer satisfaction,

- H5: Empathy component and customer satisfaction have a positive relationship

That means the higher/lower customer evaluate empathy factor, the higher/lower level of

customer satisfaction

In short, the fimdemental concepls aboul rolail banking, sory

quatity, customer satisfaction and the relationship between customer satistaction and the retail banking service quality, research models and hypotheses are provided in this chapter will help the author to select an appropriate re:

‘eh method that wil be presented in the next chapter

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CHAPTER 2 - RESEARCH CONTEXT AND METHODOLOGY

This chapter has described the context where the research is conducted In addition, it

will also provide detail rescarch method from preparing for collecting data to analyzing data

2.4 Overview of Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)

s* The cstablisirment and development Vietnbank was established in 1988 after being scparated from Slate Bank of Vicinam Being one of the four largest Statc-owned commercial banks of Vietnam In nearly 30 years of development, Vietinbank has aflirmed its position as a leading commercial bank, holding a vital role in Vietnam’s monetary

market It is also the first state-owned commercial bank has strategic forcign sharcheldcr

who is IKC intemational finance corporation that belong to Intemational Monetary Kund and Bank of ‘Tokyo-Mitsubisht UFJ Currently, Vietinbank is the second largest bank in terms of total asscls accounted for 15% domncstie market share Tt is the best qualily commercial bank in Vietnam By the end of 2016, total assets of Vietinbank reached 948.699 billion dong, chartered capital came up to 37.234 billion dong, shareholders’ equity gaincd 60,399 billion dong, Together with develapmicnt process, Victinbank set clcar vision, mmission, and core values and business philosophy for themselves (Vietinbank’s website)

¥ Vision: ‘'o be the largest bank of total assets value and the leading in operational

effectiveness in banking systera in Viclram in 2017 Striving toward the goal af becoming a regional banking and financial group of international standard

¥ Mission; To be a financial leader in Vietnam that offers a full spectrum of

international standard bariking services and financial sclutions to individuals and

corporate clients

¥ Core values:

© Customer Orientation: “Serving our customers is at the heart of our business and

we are committed to constantly explore better ways to deliver advanced services

and a differeniiated cxpericnec to mect cach and every finaneial uced of our

clients”

+ Towards Excellence: “With intemal strength and resources, VietinBank management and staff are committed to reform towards perfection”

© Dynamic, creative, professional & modem: “We understand that our continued

success as a financial services organization is dependent on the innovative,

dedicated services we provide, We always put our relationships with the clients and partners first in everything we do”

© Integrity, Honesty & Transparency: “We have solid foundation of openness and accountability We ensure each and every transaction is transparent and available for public viewing”

© Respect: “Fair dealing is basis of our business, we treat every individual with respect and dignity”

© Brand protection and development “VietinBank staff and management are proud to be responsible for the reputation of our brand name and always carry it with honour and dignity”

© Sustainable development and social responsibility: “Our motivation is driven by constant reform and creativity with clear objectives of strong growth, prudent business & sustainable development, Il is an honour lo give VielinBank staff the

opportunities to participate in various volunteer programmes and to allow them

to reach out further to the community and take responsibility for the society and fellow citizens”

¥ Business philosophy:

Safe, effective and sustainable

© Loyal, dedicated, passionate & commitlsd, wise and principled

¢ The prosperity of VietinBank customers is our ultimate success

& ‘the activities of Vietinbank comprise these following business lines

+ Fund Mobilivation in the form of Term Deposits for Retail and Corporate clicuts

- Intemet Banking and

- Other innovative financial and investment services and solutions licensed by the

State Bank of Vietnam

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“+ The strength of Vietinbank is reflected in the following aspects

> It has got the second largest network in Vietnamese banking system (after Agribank) spreading all over country Its branch network comprised of llead Office located at 108

Tran Hung Dao Strect, Hoan Kicm Disiriel, Hanoi, 155 lacal branches in 63 and

provinees aeross the country; 02 foreign branches in Germany and 01 Subsidiary in Laos PDR; 02 Representative Offices in Ho Chi Minh City and Da Nang; 01 Representative Office in Myanmar In addition to the cxtensive network, VictinBank has established correspondent relationship with over 1,000 financial institutions of more than 90 countries and territories worldwide Vieliribark alsa has got 6 subsidiaries, associaled companies include VietinBank Fund Management Company Ltd; VietinBank Insurance and abbreviation, VietinBank Leasing Company Ltd, VietinBank Securities Joint Stock Company, VietinBank Gold and Jewelry ‘Irade Company and VietinBank Debt Mumagement and Assot Exploitation Company Lud

> Being a founding member of financial and credit institutions; Saigon Bank; Indovinabank (the first joint venture bank in Vistnam) Vietnam international leasing company - VILC (the first infemational finance leasing company in Vican), Asia -

‘VietinBank Joint venture insurance company,

> Being an official member of Vietnam Banking Association (VNBA), Asian Tankers’ Association (AABAY, Sout sl Asia Bank Association, SWIFT Interbank Financial Telecommunication Association, Issuing and paying visa card, international master card; Vietnam Chamber of Commerce and Industry, Association of financial institutions APEC loans for SME; Vietnam SMF Association

> Awards and accolades: VietinBank was named in Forbes Global 2000 for the fifth consecutive year, It ranked 1,808th in 2016, an improvement of 94 spots since last year VietinRank was the only local financial instilution to be recognized ia the world’s Lop 400 banking brands with a brand value of US $ 249 million and A + brand sating by Brand Finance VietinBank was also recognized in Brand Finance's 10 most valuable trademarks and the strongest growing trademark in Viemam For the fourth consecutive year, VictinBark was honored to accept the National Brand Award This prestigious award, initiated by the Prime Minister, was presented by the National ‘Trade Promotion Agency - Ministry of Industry and Trads, National Brand Council and Secretariat, of the National Brand Award VietinBank was honored to be in the list of 10 stiongest trademarks in Vietnam for the 12th consecutive year This award recognizes local companies with ontstanding results in their business performance, service quality, tax contribution, in

21

innovative solutions and technology to protect the environment as well as in ensuring the tights of employees ‘his award also hanors VietinBank for active participation in social activities, Vietinbank is proud of their tailored digital banking solutions that provide our customers with a simple, fast and si

devices Our three innovative digital products including VietinBank iPay Mobile App,

‘VietinBank eFAST Mobils App and Early Warning System (EWS) for credit risks proudly

received the 2016 Khuc Star Award for outstanding digital solutions

are AC

ty key banking sorvices on their digital

2.2, About Vietinbank - Hanoi branch, NO 6 Ngo Quyen street, Hanoi

Beginning to expand network activities covering Hanoi and other North provinces,

‘VietinBank officially opened and operated Llanoi branch at No.6, Ngo Quyen, Lioan Kiem Districl, Hanoi in 2010 The building was desi

according to new model which helped raise the effectiveness of the bank’s activities In addition, this location is considered as the heart of loan Kiem District which is one of the

Like all other VietinBank’s branches, Hanoi branch performs all bank services within

the permitted activities of Vietnam Joint Stock Commercial Bank for industry and trade In

addition, Llano branch is located from the first floor to seven floor of the VINAHOODI building wherc many other business aelivitics of the bank occur every day Therefore, customers can not only assess services which they received, but also observe and assess service quality in a more overall view

Offered Services:

Card services: ‘the card services are various from the debit card Partner (G-card, C- card, S-card, Pink-cavd, the 12 zodiac animats card) lo Ihe international payment credit cards such as Visa, Master Cerium, Visa Platinum

Oversea Remittance services: With the advantages of being a leading commercial bank in Vietnam, maintaining the relationship with more than 1000 correspondent banks and remitimnes companies worldwide as well as possessing modern (schnology system and

22

nationwide network of 157 branches, over 1000 transaction offices, Vietinbank-Hanoi branch provides the remittance service from foreign countries to Vietnam in two ways:

‘Transfer through the bank systems: Use the SWIFT system, Vietinbank can receive payment

ages from all banks worldwide

Speed Remittance Service through Westem Union: Vietinbank cooperates with

‘Western Union in provide the customers with the speed remittance service worldwide

Infemet banking services; using the Victinbank Ipay service, the customer can carry out the transaction with Vietinbank on their account via intemet and mobile which is ensure

by two security layers using the transaction confinnation OTP (One Time

Password), Vietinbank Ipay meets customers’ requirements with three major options information query (request for the banking information or account information, financial transaction (giro, online saving, normal pay or pay for the credit card), send the loan applivation online, In addition, other banking scrvices arc also provided for individual customers namely SMS Banking, Mono

Account services: accounts opened with Vietinbank will be managed safely, precisely

and securely while caring allractive interes! rates

‘The accounts for individual include:

- Payment deposit account;

- Saving deposit account withaul term;

- Deposit account in term and the deposit products:saving, bond, certificate of deposit,

+ Other deposit account

Wire transtering: Vietinbank provides the wire transfering domestic as well as

oversea

Domestic VND wiro tw r services: implement all logal transferring orders (transfening to relatives and domestic friends, or pay the bank interest, pay for the services and goods ) for the customers (alll status in the society mcluding the foreigner commng to

‘Viemam) to every province on nationwide according to the transferring orders Customers could order to transfer cash or use payment instrament

Overseas wire transfer services: ‘Thank to the network with more than 800 agency banks worldwide, Vielinbank can meel requirement for the transferring demand of the customer to any where for different purposes such as studying, treating, paying salary, payment for the import contract, as well as supporting the customers in receiving the money safely, precisely and securely

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Foreign currency trading: the foreign cwrency trading products in Vietinbank include

+ Could mortage the savings, bonds, time bills

- Automatically receive due interest into the original amount and calculate the due

interest for the nex term

- To be able to transfer ownership of savings; to bequeathed, authorize another person on their behalf to receive and send to other people

+ Altractive interest rates, flexible in cach poriad, cach type of savings

Loans; Vietinbank is willing to offer the loans for the financial purposes of individual

as follows:

+ Study aboard

+ Bank guarantee

- Car loans

- Loans to buy houses in honsing projects

- _ Loans to staits working aboard

- Loans fo business in the market

- Loans for Vietinbarik Staff

+ Consumption loans guaranteed by the saving account,

+ Advances for the sale of secuntties

- _ Normal consumption loan

+ Nommal business loan

- Loans to buy houses including land use rights

- _ Loans for house construction and repair

Secutities: Vietinbank, represented by the Vietinbank $C, provides with the security services as follows

- Brokerage:

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- Agency, issuance guarantee;

- Securities investment consultancy, corporate financing advisory, listing, equitization advisory, consulting for enterprise transformation, consulting mergers

“Servics gnality in c-banking: Comparison hetwoon SERVQUAT adel and GRONROOS model” by Nguyen Thi Phuong Tram (2008), Besides, measurement scale in this research was adjusted in order to be suitable for services in VietinBank - Hanoi branch

neither agree nor disagree, 4 = somewhat agree, 5 = strongly agree Customers gave points

for 24 following opinions

© Reliability

- Employces conduct proftssional transactions, accurately, and quickly

- ‘The bank performs services exactly as what they promised,

+ The bank keeps secrels of customer information and transactions

- The bank always keeps credibility to customers and considers customers” interests

at frst

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© Responsiveness

+ Bruployces always scrve fairly with all custorners,

- Fast service and timely

- _ Employees are willing to help you

+ The Tank applies Mexible pricing policies, compelinve interest rales and reasonable transaction fees

© Tangible

- The bank has got effective marketing, communication services products, impressive and always improved

- Transaction office location convenient, spacious parking

- Service products are diverse and appropriate

+ The hank has got beantifid space, modem equipment and machinery, fall facilities (chairs, books, newspapers, drinking water etc.)

- The bank’s website has got full information, clear and eye-catching products and services

+ Fruployces wear uniform, polite and impressive

® Assurance:

- _ Customer fecl safe when you make transactions with the bank

- Employees have got professional knowledge to perform transactions

+ Einployees behave conrlzously, politely, considerate, willing to guide, consult and answer questions efficiently

- Employees” behaviour creates confidence for the customer

© Empathy,

- _ Having individual customer care

customer care afler the safc reliable

- Bank's promotions,

- Employees always pay attention to customers’ needs

- Employees provide full and easy-to-understand customer procedures

* Customer satistaction:

- You are very satisfied with quality of services at Viebinllank:

+ Inthe future, you will continue to use Viclin Bank

2.3.2, Sampling and collecting data

According to a staff in Hanoi branch, there are about 200 customers coming to there every working day Most customers are young people who came to open bank account or card, Many others come to give savings or reprosent for their company to make payment

26

transactions This study has 24 variables in totals According to Hair et al, (1998), cited in

Ngnyen ‘hi Phuong ‘ram (2008), the sample size should be at least 5 respondents per 1

observed variable In arder to collect at least 5 respondents per 1 observed variable, the study need to calleat al the taininnam sample sive of 119 respondents To get this sample size, 150 questionnaires were given to customers

Method to collect data was conducting surveys with customers who come to make transactions in VictinBank-Hanoi branch, NOG, Ngo Quycn, Hoan Kiem, Hanoi Questionnaires were provided to customers who have free time and be ready to answer

sinvey questions 11 look each customer about 10 to 15 enitmutes to answer (he questionnaire

Survey process was carried out fom April 15th 2017 to April 24th 2017

2.3.3 Analyzing data plan

At first, data will be input and screened to identify missing samples After rejecting all invalid samples, data will be encoded as in the following table:

Table 2.1: Encoded data

Employees conduct professional transactions, accurately

1 | RELIABILITY I and quickly

Tho bank ahways koops credibility lo customers and

considers customers’ interests at first

6 | RESPONSIVENESS 2 | Past service and timely

7 | RESPONSIVENESS 3 | Employees are willing to help you

The Bank applies flexible pricing policies, competitive

interest rates and reasonable transaction fees

TANGIBLE

8 | RESPONSIVENESS 4

The bank has got effective marketing, communication

9 | TANGIBLE 1 services products, impressive and always improved

10 | TANGIBLE 2 ‘Transaction office location convenient, spacious parking

NO | Label Explanation

11 | TANGIBLE 3 Service products are diverse and appropriate

‘The bank has got beautifil space, modem equipment and

13 | (TANGIBLE 4 machinery, fill facilities (chairs, books, newspapers,

drinking; water ete.)

13 | rANGIBLEES The bank’s website has got fill information, clear and

eye-catching products and services

14 | VANGIBLE 6 Lmployees wear uniform, polite and impressive

ASSURANCE

15 | ASSURANCE 1 Oilenor fcls safe when you take transactions with the

16 Í ASSURANCR2 Limployees have got professional knowledge to parfosm,

transactions

- Emgloyees behave courteously, politely, considerate,

17 | ASSURANCE 3 willing to guide, consult and answer questions efficiently

1g | ASSURANCE 4 Employees’ behaviour creates confidence for the

customer

EMPATHY

19 | EMPATITY 1 Tlaving individual customer care

20 | EMPATHY 2 Bantk’s promotions, customer cate after the sale reliable

21 | EMPATHY 3 Employees always pay attention to customers’ needs

ao | empatuy 4 Employees provide full and easy-to-understand customer

procedures

CUSTOMER SATISFACTION

You are very satisfied with quality of services at

2 23 | SATISFACTIONI , | acntpan-Flanoi branch

34 Ì SATISEACHION 2 | I the future, you will continne to use Viefinbank-Hanoi branch.’s services

(Designed by the author) The data collected will be cleaned and processed by software SPSS 21.0 Some methods of processing data used in this study are as following

2.33.1 Cronhach's alpha coeffictent analysis

Cronbach’s alpha is a common measure of internal consistency (reliability) of a test or scale Internal consistency describes the extent to which all the items im a test measure the

same concept or construct and hence it is connected to the inner-retatedness of the items

28

within the test (Tavakol et dL, 2011) Cronbach’s alpha is most commonly used when researcher has multiple Likert question in a survey or questionnaire that form a scale and the researcher wishes to determine whether the scale is reliable (Laerd statistics}

The value of alpha (0) may be belwes

Table 2.2: Cronbach alpha values and internal consistency (George & Mallery, 2003)

Cronbach’s alpha Tnternal consistency

a> 09 Excellent 09>w >08 Good 08>ø >0.7 Acceptable 07>0206 Questionable 06>0>05 Poor

‘As the table shows, an acceptable reliability score should be 0.7 or higher However, lower thresholds are sometimes used in the literature (Reynaldo et al, 1999) In this research, scales which have Cronbach’s alpha cocfficient greals

Than oF equal to 0.6 will be

accepted Besides assessing the reliability of scales, Cronbach’s alpha analysis also helps to

check whether any item is not consistence with the rest of the scale through item-total

conclations Tlern-lotal correlation perfonns the correlation of one variable with others in

the same soale; the higher correlation value, the better correlation between that item and the

others Variables which have greater than 0.3 item-total correlations will be accepted; the

others which have smaller than 0.3 item-tofal corclations will be climinated from analysis data

2.3.3.2 Exploratory factor analysis

29

At first, it is necessary to test the sampling adequacy of tactor analysis vase on Kaiser- Meyer-Olkin (KMQ) Measure In case of KMO has value between 0.5 and 1.0 and Sig is smaller than 0 5, factor analysis is mote appropriate factor analysis In case of KMO has

An important part in exploratory factor analysis is interpreting factor matrixes ‘This

research will usc varimmax rotation process to produce multiple gronp factors Factor loadings which indicate correlations between the variables and the factors are required to have greater than 0.5 values Then, a factor can be interpreted in terms of the variables that have high load ort

“The regression model in this research is:

Y =b0 + bI XI + b2 X2 +bk Xk+

Where

- Y¥—Scores on the customer satisfaction towards Vietinbank-Hanai branch + Xl, X2, , Xk = Scores on the attitude towards the quality components (tangible, reliability, responsiveness, assurance, cmpathy)

- bl,b2, -_ bữ =animtereepl

„ bk = Regression co-efficient of independent variables

- € anerrorterm

At first, it is necessary to test assumptions for regression analysis ‘Lhe principal assumption is that there is a linearity of the relationship between dependent and independent

30

variables This research investigates the model with more than one independent variables, the correlation among independent variables (emulti-collinearity) should he checked Variance inflation factor (VIL?) is used to measure the multi-collineatity in this regression

31

CHAPTER 3 - ANALYSIS OF SITUATION

OF RETAILBANKING SERVICE QUALITY IN VIETINBANK - HANOT BRANCH AND SURVEY RESULT

‘This chapter gave description the reality of retail banking service quality in

‘Vietinbank — IIanoi branch in the period from 2012 to 2016, data collected and then show analysis results fiom software SPSS 21.0

3.1 VietinBank’s business results in period from 2012-2016

3.1L The growth in total assets, shareholders! equity and charter cupital

According to ViclinBank’s financial resulls was ciled in annual repor! in 2016 The Bank’s total assets as of 31 December 2016 reached VND 949 trillion, an increase of 22% compared to that of 2015, achieved 107% of objective set at the 2016 General Meeting of Sharcholders, Profit before tax was reported at VND 8,569 billion; total funding up by 22% while outstanding loans rose 18% compared te the year before NPL ratio was kept at 0.9% Profilabilily ratios including ROA and ROT ratios were 1.0% and 11.8% respactively

Tabhic 3.1 ViclinBank’s grawth in lolat asscis, sharcholders’ cquity and charlor

Source: The Vietinbank’s annual reports from 2012-2016

The figures in Table 3.1 showed that in the five yoars from 2012-2016, Victinbank’s total assets have increased by VND445,169 billion Before equitization in 2009, Vietinbank

is a 100% state-owned commercial bank, so its equity was formed by chartered capital and scléreplonishes capital from the profits left in the business opcration process Equity capital improved significantly fiom VND 33,625 billion in 2012 to VND 60,399 billion in 2016 while chartered capital also increased VND1 1,016 billion in the same period

32