improving internet banking service quality at vietcombank ba dinh

Causes of gaps on internet banking service quality at Vietcombank BaDinh...xix CHAPTER 5: RECOMMENDATIONS TO IMPROVE THE QUALITY OF VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE...xx 5.

First and foremost, I would like to express my gratitude to my supervisorPhD Phan Thuc Anh, who directed me through the path I should take as regards tothis dissertation and had valuable on my research study

Secondly, I would like to thank all of the MBA professors from BusinessSchool, National Economic University Thanks to Program Directors, Coordinators

of the program as well as class teachers who did try their best to provide mevaluable and precious knowledge

Thirdly, the author also do appreciate the kindness from all my friends and allclassmates at EMBA 9A who gave me the help and shares to encourage methroughout the dissertation

My sincere thanks are also addressed to Head of Management at VCBBD fortheir assistance in this research I am very thankful to the cooperation of my friendsand colleagues who let me interview and gave me very useful information

Last but not least, the author would like to express my appreciation to mydear parents, my brothers and my sister in law who gave me enthusiastic supportand shared housework with me during my study of MBA course at BS – NEU

Author

Nguyen Huu The

TABLE OF CONTENTS

ACKNOWLEDGEMENTS i

TABLE OF CONTENTS ii

ACKNOWLEDGEMENTS xvi

ABBREVIATIONS xvii

LIST OF TABLES xvii

LIST OF FINGURES xvii

EXECUTIVE SUMMARY xvii

CHAPTER 1: INTRODUCTION xvii

1.1 RATIONALE xvii

1.2 RESEARCH OBJECTIVES xvii

1.3 RESEARCH QUESTIONS xvii

1.4 RESEARCH METHODOLOGY xvii

1.4.1.Research process xvii

1.4.2 Data collection xvii

1.4.3 Data Analysis xvii

1.5 RESEARCH SCOPE xvii

1.6 THESIS STRUCTURE xvii

CHAPTER 2: THEORETICAL BACKGROUND ON QUALITY OF INTERNET BANKING SERVICE AT COMMERCIAL BANK xvii

2.1 COMMERCIAL BANKS AND BANKING SERVICES xvii

2.1.1 Commercial banks xvii

2.1.2 Banking services xvii

2.2 INTERNET BANKING IN COMMERCIAL BANK xviii

2.3 INTERNET BANKING SERVICE QUALITY IN COMMERCIAL BANK xviii

2.2.1 Nature of internet banking service xviii

2.2.2 Internet Banking service in commercial bank xviii

2.2.3 Model applied for Internet Banking service quality xviii

2.2.4 Dimensions to measure internet banking service quality xviii

2.4 FACTORS AFFECTING INTERNET BANKING SERVICE QUALITY xviii

CHAPTER 3: OVERVIEW OF VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE xviii

3.1 OVERVIEW ON VIETCOMBANK BA DINH xviii

3.1.1 VIETCOMBANK BA DINH'S introduction xviii

3.1.2 VIETCOMBANK BA DINH’S business performance 2009 – 2012 xviii

3.2 VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE IN THE PERIOD 2009 – 2012 xviii

3.2.1 Types of internet banking service at VIETCOMBANK BA DINH xix

3.2.2 Performance of internet banking service at VIETCOMBANK BA DINH xix

CHAPTER 4: FINDINGS ON VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE QUALITY xix

4.1 EVALUATION ON VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE QUALITY xix

4.1.1 Safety dimension under customer’s view xix

4.1.2 Responding time dimension under customer’s view xix

4.1.3 Staff dimension under customer’s view xix

4.1.4 Issues relating to finance dimension under customer’s view xix

4.1.5 Tangible dimension under customer’s view xix

4.1.6.Variety of service under customer’s view xix

4.2 GAPS OF VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE QUALITY xix

4.2.1 Summarize of findings on the gaps between customer’s expectation and perception xix

4.2.2 Causes of gaps on internet banking service quality at Vietcombank Ba

Dinh xix

CHAPTER 5: RECOMMENDATIONS TO IMPROVE THE QUALITY OF VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE xx

5.1 VIETCOMBANK BA DINH ’S ORIENTATION ON INTERNET BANKING SERVICE DEVELOPMENT UP TO 2020 xx

5.2 RECOMMENDATIONS TO IMPROVE THE QUALITY OF VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE xx

5.2.1 Improving staff quality xx

5.2.2 Improving management competence and completing internet banking business performance organizational model xx

5.2.3 Developing infrastructure and investing modern technology xx

5.2.4 Diversifying variety of internet banking service xx

5.2.5 Enhancing customer care service xx

5.2.6 Improving competitiveness by service fees and charges xx

5.3 CONDITIONS TO APPLY THESE RECOMMENDATIONS xx

5.3.1 Supports from the State of Vietnam xxi

5.3.2 Suggestions to the State Bank of Vietnam xxi

CONCLUSION xxi

LIST OF REFERENCES xxi

APPENDICES xxi

ACKNOWLEDGEMENTS xxi

First and foremost, I would like to express my gratitude to my supervisor PhD Phan Thuc Anh, who directed me through the path I should take as regards to this dissertation and had valuable on my research study xxi

Secondly, I would like to thank all of the MBA professors from Business School, National Economic University Thanks to Program Directors, Coordinators of the program as well as class teachers who did try their best to provide us me valuable and precious knowledge xxi

Thirdly, the author also do appreciate the kindness from all my friends and all classmates at EMBA 9A who gave me the help and shares to encourage me

throughout the dissertation xxi

My sincere thanks are also addressed to Head of Management at VCBBD for their assistance in this research I am very thankful to the cooperation of my friends and colleagues who let me interview and gave me very useful information xxi

Last but not least, the author would like to express my appreciation to my dear parents, my brothers and my sister in law who gave me enthusiastic support and shared housework with me during my study of MBA course at BS – NEU .xxi

Author xxii

Nguyen Huu The xxii

ABBREVIATIONS xxii

LIST OF TABLES xxiv

LIST OF FINGURES xxvi

EXECUTIVE SUMMARY xxviii

- Enhancing customer care service 1

CHAPTER 1: INTRODUCTION 2

1.1 RationaleRATIONALE 2

1.2 Research objectivesRESEARCH OBJECTIVES 3

1.3 Research questions 3

1.4 Research methodology 4

1.4.1.Research process 4

1.4.2 Data collection 5

1.4.3 Data Analysis 7

1.5 Research scopeESEARCH SCOPE 8

1.6 Thesis structureTHESIS STRUCTURE 8

CHAPTER 2 : THEORETICAL BACKGROUND ON QUALITY OF

INTERNET BANKING SERVICE AT COMMERCIAL BANK 10

2.1 Commercial banks and banking services2.1 COMMERCIAL BANKS AND BANKING SERVICES 10

2.1.1 Commercial banks 10

2.1.2 Banking services 11

2.2 Internet Banking service in Commercial bank 16

NTERNET BANKING SERVICE IN COMMERCIAL BANK 16

2.2.1 Definition of internet banking service 16

2.2.2 Type of internet banking service 16

2.2.3 Benefits of internet banking service in commercial bank 18

2.3 Internet banking service quality in commercial bankNTERNET BANKING SERVICE QUALITY IN COMMERCIAL BANK 20

2.3.1 Service quality 20

2.3.2 Model applied for Internet Banking service quality 21

CHAPTER 3 : OVERVIEW OF VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE 30

3.1 Overview on vietcombank Ba DinhOVERVIEW ON VIETCOMBANK BA DINH 30

3.1.1 VCBBD introduction 30

3.1.2 Vietcombank Ba Dinh Branch’s business performance 2009 – 2012 33

3.2 Vcbbd’s internet banking service in the period 2009 – 2012VCBBD’S INTERNET BANKING SERVICE IN THE PERIOD 2009 – 2012 37

3.2.1 Types of internet banking service at VCBBD 38

3.2.2 Developing internet banking service at VCBBD 41

CHAPTER 4 : FINDINGS ON VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE QUALITY 45

4.1 Evaluation on vietcombank Ba Dinh’s internet banking service qualityEVALUATION ON VIETCOMBANK BA DINH’S INTERNET

BANKING SERVICE QUALITY 45

4.1.1 Tangibles dimension under customer’s view 47

4.1.2 Responsiveness dimension under customer’s view 50

4.1.3 Reliability dimension under customer’s view 52

4.12.34 Staff Assurance dimension under customer’s view 60

4.1.5 Empathy dimension under customer’s view 63

4.12.64 Issues relating to financeFinancial aspect dimension under customer’s view 65

4.1.7Source: Author’s Survey 69

In term of “Web design is friendly, easy to use and multi language for customer”, 8.5% customers evaluate 2 mark, 3 mark with 15% and 4 mark for 26% customers, wonderful having 50.5% customers think high level(5 mark), mean average is 4.04 mark, meanwhile customer’s expectation is 4.93mark, the gap is 0.89 The web of Direct Banking has designed to be friendly to user with the choice of language including Vietnamese and English Therefore, it’s so convenient for all kind of customers 69

The second “VCBBD is up to date technology and latest equipment” 15% customers evaluated 2 mark, 30% customers think 3 mark , following 43.5% customers for 4 mark, but only 12.5% give 5 mark Thus we see that the distance is further large on feel and expect, it proves that the VCBBD technology still not to meet customer, thus to better compete, VCBBD will also need to up to date modern technology to limit errors happen 69 With “VCBBD with multiple channel customer contact center (customer service, online)” The customer’s perception with percentage as follows, 4.5% for 2 mark, 13.5 % for 3 mark and 4 mark with 20.5 % customers, high level(5 mark) having 61.5 % customers But customer’s expectation is 4.44 mark The gap is 0.05

VCBBD is the customer service center for 24/24 hours and 7 days / a week to

answers all questions and complaints or advice 69

With “Registration form is simple, easy to understand” , attribute, have 22.5% customers evaluated 2 mark, 28 % customers evaluated 3 mark, and 32.5% customers think 4 mark, only 17% customers give 5 mark This is the reason why the gap between customer expectation and perception is 1.56 The registration form of Internet banking service is so complicated which requires customer fill many information like: Name, Date of Birth, Number of ID Card, Address, Telephone number, etc VCBBD need to simplify the procedure of sign up internet banking service and can upload the registration form to the bank’s official website: www.vietcombank.com.vn 70

70

Figure 4.5: Gap (P-E) of Tangible dimension 71

Source: Author’s survey 71

4.2.6.Variety of service under customer’s view 71

4.23 EVALUATING ON FINDING Gaps of vcbbd’s internet banking service qualityAPS OF VCBBD’S INTERNET BANKING SERVICE QUALITY 75

6 Demensions 76

Perception 76

Expectation 76

Gap (P-E) 76

SAFETY DIMENSION 76

4.57 76

4.82 76

- 0.25 76

RESPONDING TIME DIMENSION 76

3.84 76

5.0 76

- 1.16 76

STAFF DIMENSION 76

3.63 76

4.99 76

- 1.36 76

ISSUES RELAITNG TO FINANCE DIMENSION 76

4.58 76

4.99 76

- 0.41 76

TANGIBLE DIMENSION 76

3.85 76

4.74 76

- 0.89 76

VARIRTY OF SERVICES DIMENSION 76

4.24 76

4.9 76

- 0.66 76

4.23.1 Summarizery of finding the gap between customer’s expectation and perception 76

4.32.32 Causes of gaps on internet banking service quality at VCBBD 82

CHAPTER 5 : RECOMMENDATIONS TO IMPROVE THE QUALITY OF VCBBD’S INTERNET BANKING SERVICE 85

5.1 Vcbbd’s orientation on internet banking service development up to 2020VCBBD’S ORIENTATION ON INTERNET BANKING SERVICE DEVELOPMENT UP TO 2020 85

5.2 Recommendations to improve the quality of vcbbd’s internet banking serviceRECOMMENDATIONS TO IMPROVE THE QUALITY OF VCBBD’S INTERNET BANKING SERVICE 87

5.2.1 Improving staff quality 87

5.2.2 Improving transaction channels between the bank and customers 88

5.2.3 Developing infrastructure and investing in modern technology 88

5.2.4 Diversifying variety of internet banking service 90

5.2.5 Enhancing customer care service 90

5.3 Conditions to apply the recommendationsONDITIONS TO APPLY THESE RECOMMENDATIONS 91

5.3.1 Supports from the State bank of Vietnam 91

5.3.2 Suggestions to the State Bank of VietnamSupports from the Headquarter93 CONCLUSION 96

LIST OF REFERENCES 97

APPENDICES 99

APPENDIX A: QUESTIONS FOR THE IN DEPTH INTERVIEW 99

APPENDIX B: QUESTIONNAIRE 100

RESEARCH QUESTIONS 3

What are dimensions for measuring quality of internet banking service at VCBBD? 3

1.4.1.Research process 4

RESEARCH METHODOLOGY 4

1.4.1.Research process 4

1.4.2 Data collection 5

1.4.3 Data Analysis 7

2.1.1 Commercial banks 10

2.1.1.1 Definition of Commercial banks 10

2.1.1.2 The role of Commercial banks in the economy 10

2.1.2 Banking services 11

2.1.2.1 Definition of banking services 11

2.1.2.2 Characteristics of banking services 12

2.1.2.3 Type of banking services 13

2.2.1 Definition of internet banking service 16

2.2.2 Type of internet banking service 16

2.2.3 Benefits of internet banking service in commercial bank 18

2.3.1 Service quality 20

2.3.2 Model applied for Internet Banking service quality 21

2.3.3 Dimensions to measure internet banking service quality 26

3.1.1 VCBBD introduction 30

3.1.2 Vietcombank Ba Dinh Branch’s business performance 2009 – 2012 33

3.2.1 Types of internet banking service at VCBBD 38

1 Inquiry 38

2 Transfer 38

3 Card management 39

4 Fixed Deposit 40

5 Service registration 40

3.2.2 Developing internet banking service at VCBBD 41

* Dimensions to measure internet banking service quality at VCBBD 45

4.1.1 Tangibles dimension under customer’s view 47

4.1.2 Responsiveness dimension under customer’s view 50

4.1.3 Reliability dimension under customer’s view 52

The likelihood is that, compare the gap between the perception and expectation of “Reliability” dimension, we can observe that the VCBBD dominates the highest gap in the feature of Secure information storage as a result of customers' belief They hold an idea that VCBBD has won the customers' peace of mind about the products they use, but they sometimes make a sense of confusion when using internet banking, especially in terms of cyber crimes which are, nowadays, increasing more and more significantly Therefore, VCBBD itself needs to enhance their security information system so as to gain the trust of customers 55

4.2.1 Safety dimension under customer’s view 55

The first dimension to measure internet banking service quality is the Safety (or reliability) of the service Customers always consider if their financial status and their information are secure and guarantee They also want to know how exact the transaction is and how secure the information storage “Safety” dimension

has 4 attributes in the Table 4.1 55

Table 4.1: Mean Score of Safety dimension 55

4.12.34 Staff Assurance dimension under customer’s view 60

4.1.5 Empathy dimension under customer’s view 63

4.12.64 Issues relating to financeFinancial aspect dimension under customer’s view 65

4.1.7Source: Author’s Survey 69

In term of “Web design is friendly, easy to use and multi language for customer”, 8.5% customers evaluate 2 mark, 3 mark with 15% and 4 mark for 26% customers, wonderful having 50.5% customers think high level(5 mark), mean average is 4.04 mark, meanwhile customer’s expectation is 4.93mark, the gap is 0.89 The web of Direct Banking has designed to be friendly to user with the choice of language including Vietnamese and English Therefore, it’s so convenient for all kind of customers 69

The second “VCBBD is up to date technology and latest equipment” 15% customers evaluated 2 mark, 30% customers think 3 mark , following 43.5% customers for 4 mark, but only 12.5% give 5 mark Thus we see that the distance is further large on feel and expect, it proves that the VCBBD technology still not to meet customer, thus to better compete, VCBBD will also need to up to date modern technology to limit errors happen 69 With “VCBBD with multiple channel customer contact center (customer service, online)” The customer’s perception with percentage as follows, 4.5% for 2 mark, 13.5 % for 3 mark and 4 mark with 20.5 % customers, high level(5 mark) having 61.5 % customers But customer’s expectation is 4.44 mark The gap is 0.05

VCBBD is the customer service center for 24/24 hours and 7 days / a week to

answers all questions and complaints or advice 69

With “Registration form is simple, easy to understand” , attribute, have 22.5% customers evaluated 2 mark, 28 % customers evaluated 3 mark, and 32.5% customers think 4 mark, only 17% customers give 5 mark This is the reason why the gap between customer expectation and perception is 1.56 The registration form of Internet banking service is so complicated which requires customer fill many information like: Name, Date of Birth, Number of ID Card, Address, Telephone number, etc VCBBD need to simplify the procedure of sign up internet banking service and can upload the registration form to the bank’s official website: www.vietcombank.com.vn 70

70

Figure 4.5: Gap (P-E) of Tangible dimension 71

Source: Author’s survey 71

4.2.6.Variety of service under customer’s view 71

7 Demensions 75

Perception 75

Expectation 75

Gap (P-E) 75

TANGIBLES DIMENSION 75

3.89 75

4.77 75

- 0.88 75

RESPONSIVENESS DIMENSION 75

3.84 75

5.0 75

- 1.16 75

RELIABILITY DIMENSION 75

4.51 75

- 0.31 75

ASSURANCE DIMENSION 75

3.59 75

5.0 75

- 1.49 75

EMPATHY DIMENSION 75

3.80 75

5.0 75

- 1.20 75

FINANCIAL ASPECT DIMENSION 75

4.58 75

4.98 75

- 0.40 75

VARIETY OF SERVICES DIMENSION 75

4.25 75

4.9 75

- 0.65 75

AVERAGE 75

4.07 75

4.92 75

0.85 75

4.23.1 Summarizery of finding the gap between customer’s expectation and perception 76

4.32.32 Causes of gaps on internet banking service quality at VCBBD 82

5.2.1 Improving staff quality 87

5.2.2 Improving transaction channels between the bank and customers 88

- Channels which help customers to exchange their opinions and send their questions/ information to the bank should be strengthened and extended The

bank should receive customers’ requirements via mail, phone or other channels and restrict the circumstances that make customers to be present in person at the

bank’s transaction offices 88

- The bank should focus on developing the Contact Center in the direction to be a modern and friendly Division to provide services 24 hours/day and 7 days/week, which helps to gain customers’ peace of mind 88

5.2.3 Developing infrastructure and investing in modern technology 88

5.2.4 Diversifying variety of internet banking service 90

5.2.5 Enhancing customer care service 90

5.3.1 Supports from the State bank of Vietnam 91 5.3.2 Suggestions to the State Bank of VietnamSupports from the Headquarter93

ACKNOWLEDGEMENTS

ABBREVIATIONS LIST OF TABLES LIST OF FINGURES EXECUTIVE SUMMARY CHAPTER 1: INTRODUCTION

1.1 RATIONALE 1.2 RESEARCH OBJECTIVES 1.3 RESEARCH QUESTIONS 1.4 RESEARCH METHODOLOGY 1.4.1.Research process 1.4.2 Data collection 1.4.3 Data Analysis 1.5 RESEARCH SCOPE 1.6 THESIS STRUCTURE CHAPTER 2: THEORETICAL BACKGROUND ON

QUALITY OF INTERNET BANKING SERVICE AT

COMMERCIAL BANK 2.1 COMMERCIAL BANKS AND BANKING SERVICES

2.1.1 Commercial banks 2.1.2 Banking services

2.2 INTERNET BANKING IN COMMERCIAL BANK

2.3 INTERNET BANKING SERVICE QUALITY IN

COMMERCIAL BANK 2.2.1 Nature of internet banking service

2.2.2 Internet Banking service in commercial bank 2.2.3 Model applied for Internet Banking service quality 2.2.4 Dimensions to measure internet banking service

quality 2.4 FACTORS AFFECTING INTERNET BANKING

SERVICE QUALITY CHAPTER 3: OVERVIEW OF VIETCOMBANK BA DINH’S

INTERNET BANKING SERVICE 3.1 OVERVIEW ON VIETCOMBANK BA DINH

3.1.1 VIETCOMBANK BA DINH'S introduction 3.1.2 VIETCOMBANK BA DINH’S business

performance 2009 – 2012 3.2 VIETCOMBANK BA DINH’S INTERNET BANKING

SERVICE IN THE PERIOD 2009 – 2012

3.2.1 Types of internet banking service at

VIETCOMBANK BA DINH 3.2.2 Performance of internet banking service at

VIETCOMBANK BA DINH CHAPTER 4: FINDINGS ON VIETCOMBANK BA DINH’S

INTERNET BANKING SERVICE QUALITY

4.1 EVALUATION ON VIETCOMBANK BA DINH’S INTERNET BANKING SERVICE QUALITY

4.1.1 Safety dimension under customer’s view

4.1.2 Responding time dimension under customer’s view

4.1.3 Staff dimension under customer’s view

4.1.4 Issues relating to finance dimension under

customer’s view 4.1.5 Tangible dimension under customer’s view

4.1.6.Variety of service under customer’s view

4.2 GAPS OF VIETCOMBANK BA DINH’S INTERNET

BANKING SERVICE QUALITY 4.2.1 Summarize of findings on the gaps between

customer’s expectation and perception 4.2.2 Causes of gaps on internet banking service quality at

Vietcombank Ba Dinh

CHAPTER 5: RECOMMENDATIONS TO IMPROVE THE QUALITY OF VIETCOMBANK BA DINH’S INTERNET

BANKING SERVICE 5.1 VIETCOMBANK BA DINH ’S ORIENTATION ON INTERNET BANKING SERVICE DEVELOPMENT UP TO

2020 5.2 RECOMMENDATIONS TO IMPROVE THE QUALITY

OF VIETCOMBANK BA DINH’S INTERNET BANKING

SERVICE 5.2.1 Improving staff quality 5.2.2 Improving management competence and completing internet banking business performance organizational

model 5.2.3 Developing infrastructure and investing modern

technology 5.2.4 Diversifying variety of internet banking service

5.2.5 Enhancing customer care service

5.2.6 Improving competitiveness by service fees and

charges 5.3 CONDITIONS TO APPLY THESE

RECOMMENDATIONS

5.3.1 Supports from the State of Vietnam

5.3.2 Suggestions to the State Bank of Vietnam

CONCLUSION LIST OF REFERENCES

APPENDICES ACKNOWLEDGEMENTS

First and foremost, I would like to express my gratitude to my supervisor PhD Phan Thuc Anh, who directed me through the path I should take as regards to this dissertation and had valuable on my research study.

Secondly, I would like to thank all of the MBA professors from Business School, National Economic University Thanks to Program Directors, Coordinators of the program as well as class teachers who did try their best to provide us me valuable and precious knowledge.

Thirdly, the author also do appreciate the kindness from all my friends and all classmates at EMBA 9A who gave me the help and shares to encourage

me throughout the dissertation.

My sincere thanks are also addressed to Head of Management at VCBBD for their assistance in this research I am very thankful to the cooperation of my friends and colleagues who let me interview and gave me very useful information.

Last but not least, the author would like to express my appreciation to

my dear parents, my brothers and my sister in law who gave me enthusiastic support and shared housework with me during my study of MBA course at BS – NEU.

Author

Nguyen Huu The

ABBREVIATIONS

ALCO Assets Liabilities Management Committee

ATM Automatic teller machine

BOFB Branches of foreign banks

FC Financial corporations

JSCB Joint stock banks

JVB Joint venture commercial banks

VCB Vietcombank (Join stock commercial Bank for foreign trade

of Viet Nam)VCBBD Vietcombank Ba Dinh ~ Vietcombank Ba Dinh Branch

SET Secure Electronic Transaction

SMEs Small and Medium Enterprises

SOCB State owned commercial banks

LIST OF TABLES

Table 3.1 : Profit before tax of Vietcombank Ba Dinh Branch .35Table 3.2: The relation between interest and non-interest income .35Table 3.3: The accumulated number of individual customers and individual

customers using Internet bakning service through years 41Table 3.4: The internal transfer and invoice payment on internet banking over years 4 12Table 4.0.Dimensions and attributes of internet banking service quality 43Table 4.1 Mean score of Tangibles dimension 4 5Table 4.2: Mean score of Responsiveness dimension 4 7Table 4.3: Mean Score of Reliability dimension 49Table 4.4: Mean score of Assurance dimension 5 1Table 4.5: Mean score of Empathy dimension 5 3Table 4.6 Mean score of Financial aspect dimension 5 4Table 4.7 Mean score of Variety of services dimension 56

Table 4.8 Mean score of 7 dimensions 57Table 32.1 : Profit before tax of Vietcombank Ba Dinh Branch 34Table 3.38: The accumulated number of individual customers and individualcustomers using Internet bankning service through years 41Table 3.49: The internal transfer and invoice payment on internet banking overyears 43Table 4.013.11.Dimensions and attributes of internet banking service quality 45Table 4.1 Mean score of Tangibles dimension 48Table 4.2: Mean score of Responsiveness dimension 50Table 4.3: Mean Score of Reliability dimension 53Table 4.43: Mean score of AssuranceStaff dimension 60Table 4.5: Mean score of Empathy dimension 64Table 4.64 Mean score of issues relating to fFinanceial aspect dimension 66Table 4.76 Mean score of Variety of services dimension 71Table 4.8 Mean score of 7 dimensions 75

LIST OF FINGURES

Figure 1.1: Research Process 12Figure 2.1: Model of service quality gap 27Figure 2.2: The gap between customer’s expectation and perception 28Figure 3.1: The structure of Vietcombank Ba Dinh Branch 34Figure 3.2: The relation between total fund and fund mobilized 36Figure 3.3: The relation between mobilized fund and utilized fund 37Figure 4.1: The gap between customer’s expectation and perception 58Figure 4.2: Level of Service quality Gap 59Figure 1.1: Research Process 5Figure 2.1: Model of service quality gap 24Figure 2.2: The gap between custoemer’s exprectation and perception 25Figure 3.1: The structure of Vietcombank Ba Dinh Branch 33 Figure 3.2: The relation between total fund and fund mobilized 36

Figure 3.3: The relation between mobilized fund and utilized fund 37Figure 4.17: The gap between customer’s expectation and perception 78Figure 4.28: Level of Service quality Gap 81

EXECUTIVE SUMMARY

The banking services provided by Vietnamese Commercial Bank have to facewith many challenges from the foreign banks and other financial institutions Manycommercial banks in Vietnam found a new trend to develop which is internetbanking service Internet banking service, with its extra-function and value,becomes the key of survival and success The banks should not only concentrate todiversify banking products and services but only focus on the quality of bankingservices because the service quality becomes the most important factor forcustomers’ decision and customer loyalty This thesis is written based on the ideathat Vietcombank Ba Dinh is facing problem of losing competitive advantage inbanking services in Vietnam due to low service quality of Internet Banking service.Therefore, the bank itself is trying its best to overcome this situation by spending

energy to improve internet banking service which is a business area that did notalways receive much attention from the managers before

The objectives of this research are formulated as follows:

- Identify dimenstions to evaluate internet banking service quality atVietcombank Ba Dinh

- Analyze current quality level of internet banking service at Vietcombank

Ba Dinh to find out the gap between customers’ expectation and customers’perception

- Propose some recommendations and solutions to improve quality ofinternet banking service at Vietcombank Ba Dinh

This thesis has used secondary data gathered from internet websites, libraries,newspaper, other financial magazines, formers research related to banking servicesand primary data collected by in depth interview of 4 managers of Vietcombank BaDinh who have experience in internet banking service and survey 100 customers inVietcombank Ba Dinh Branch

The research has analyzed 7 dimensions of service quality: Tangibles,Responsiveness, Reliability, Assurance, Empathy, Financial aspect and Variety ofserviceTangibles, safety, staff, responding time, issues relating to finance andvariety of service With the analysis, the thesis has found out the gaps betweencustomer’s expectation and perception on internet bankingcurrent level of servicequality are found in these following in which there are three dimensions: thatcustomers considerably satisfied with VCBBD’s internet banking service: Safety,Issues relating to finance and Tangible Although T With Tangiblesdimension, isnot high scorethe gap is 0.88 (3.85/5; Responsiveness dimension, the gap is 1.16/5mark) but the customers hope (4.74 mark);, Reliability, Assurance, Empathy,Financial aspect and meanwhile Variety of services are 0.31/5, 1.49/5, 1.2/5, 0.4/5,0.65/5, respectively

Reasons for this are:

- The staff quality

- Inconvenience about transaction channels between the bank and customers

- Lack of the care of infrastructure and investing in modern technology

- Types of internet banking service are not diversified

- The customers do not get the care enough from the bank

Basis for the above reasons is to minimize the gap to the possible lowestpoint in order to meet the expectation of the clients

Issues relating to finance, the average mean is (4.58 mark) but customersexpected is (4.99 mark), and Safety has a smallest gap with customer’s perception

is (4.57 mark) and customer’s expectation is (4.82 mark) Responding time andstaff having mean average is low to be compared to others dimension The staffdimension is considered the biggest gap (-1.36) and the Responding timedimension is the second gap (-1.16) So that, VCBBD should focus on Respondingtime and staff to improve the quality of internet banking service

Based on the gaps causes of VCBBD’s quality of internet banking service,the thesis propose some the below recommendations have been mentioned toimprove the quality of VCBBD’s internet banking service in the years to come:

- Improving staff quality

- Improving transaction channels between the bank and customers

- Developing infrastructure and investing in modern technology

- Diversifying variety of internet banking service

- Enhancing customer care

- Enhancing customer care service

CHAPTER 1: INTRODUCTION

1.1 R ationale RATIONALE

In the context of integration and globalization with the speeding development

of science and technology, especially information technology has impacted

on all aspects of life and social economic, altering traditional business method to thenew business method that is E – commerce E – Commerce has led to the revolution

in internet banking sector which is the appearance of internet banking servicesespecially internet banking bringing many benefits not only for banks andcustomers but also for the entire economy

Nowadays, customers’ requirements are becoming higher and higher Theynot only want to use full package of service but also want to use service with higherquality, more comfortable, easy to use, higher speed of settlement, and highersecurity Besides that, the competition is pushing all banks to develop and improvethemselves Therefore, development of internet banking service is inevitable, andVietcombank Ba Dinh (VCBBD) is no exception to this trend VCBBD is onebranch of the most well - known commercial join stock banks in Vietnam After 09years, VCBBD has built its own brand name and trade name, with good reputationand become the most modern professional transaction in Vietnam

To survive and develop in the strong competition, VCBBD has been trying toapply modern technologies on business activities in order to complete traditionalservices as well as focus development of modern internet banking service.Following the trend of internet banking service, VCBBD is implementing and offercustomer with many services of internet banking such as: internet money transfer,invoice settlement, pay tax online, check the bank account…Internet bankingservice event becomes a strategic product of VCBBD to earn moreprofit, maintaincurrent customer and attract potential customers Internet banking service, with itsextra-function and value, becomes the key of survival and success

VCBBD always focuses on improving internet banking service to satisfycustomer’s requirements All managers of all departments are committed to deploy

performance in that direction High quality service has become a key factor tosucceed in winning the global competition so VCBBD considered service quality as

a core competitive strategy However, the Department of Service Quality has hadunprecedented performance to evaluate the Internet Banking service quality, andVCBBD has not measured the level of customer satisfaction on Internet Bankingservice Therefore, VCBBD’s leaders do not know exactly the quality level ofInternet Banking service Morover, there is a symptom showing that the Internetbanking service quality at VCBBD is not good enough as customers complain about

it Thus, it is important for the Bank branch to concentrate on this area The thesis

topic: "Improving Internet Banking service quality at Vietcombank Ba Dinh"

was selected as a response to this situation.

There are many researchers who have mentioned about service quality ofbanking services such as card service, international payment service, etc, whichcome from National Economics University or articles in newspapers andmagazines However, this is the first time the topic “Improving Internet Bankingservice quality” is developed at VCBBD

The objectives of this research study are as follows:

•Identify dimensions to measure internet banking service quality at VCBBD

•Analyze current quality of internet banking service at VCBBD to find outthe gap between customers’ expectation and customers’ perception and the causes

•What are customer’s expectations of the quality of internet banking service

Questionnaires

Secondary Data (annual

report, website, statistic

Customer Survey

Manager’s view on quality of internet banking services

Customer’s view on quality of internet banking services

Recommendations

Figure 1.1: Research Process

Source: Author’s Design

1.4.2 Data collection

a Secondary data collection

Secondary data was gathered from many sources as follows:

- Website: www.vietcombank.com.vn: show the information ofVietcombank such as: Organization structure, Network System; Service Fee;Products and Services, etc.

- VCBBD’s Reports:

+ Annual Financial Report: Secondary data is the data within three years(2009 – 2012) about: Total assets, Liabilities and Stockholders’ Equity, IncomeStatement, Capital mobilizing process, Credit document turnaround time, etc

+ Other specific internal reports like statistic report of Internet bankingoperation department: Total Internet Banking service transaction figure like:Banking transfer transaction, Internal transfer transaction, Billing Payment, etc

- Newspapers and former research studies related to internet bankingservices: The development situation of Internet Banking services at Vietnamesebanks and foreign banks in Vietnam to compare service quality amongVietcombank service and those banks

All information gathered from secondary data to find out the service qualitydimensions

b Primary data collection

Primary data was collected in the 2012

 The first approach to collect the primary data is in – depth interview Iinterviewed four people who are managers i in the sector: Director and deputydirector Head of Vietcombank Ba Dinh branch and Manager and deputy managerinternet banking operation Departments,Head of Service quality ， Head of Internetbanking development Department and Deputy Director of VCBBD, Head ofOperation Division The purpose of this approach are gaining experience inmanaging internet banking services development, exploring the requirements fordeveloping internet banking services, showing the main factors impacting oninternet banking services and finding out the internal problems in internet bankingservices and their opinions to solve the problems

 The second approach to collect the primary data is Customer survey Iused the convenient sampling to collect the sample and base on thecurrent customer list of Ba Dinh branch I made customer survey witharound 100 current clients The questionnaires were sent to customers’email address and the research team contacted each of them to ask themfor feedbacks The questionnaires also were distributed at transactions

at VCBBD and the teller collected them Through the customer survey,

I analysed the customers’ opinions in VCBBD’s internet bankingservice quality and determine the factors influencing their evaluationand the level of influences of those factors with internet bankingservice quality

I apply the model “Dimensions and Attributes of internet bankingservice quality” to measure the quality of internet banking service at VCBBD (thereare some criteria related to the overall system of Vietcombank, thus I would like toapply those ones homogeneously between Vietcombank and Vietcombank BaDinhbranch) with 7 dimensions: Tangibles, Responsiveness, Reliability, Assurance,Empathy, Financial aspect and Variety of service (The five fist dimensions weretaken from Parasuraman and the last two dimensions were self-developed) From 7dimensions of service quality, the question will be scored from 1 to 5 levels Theresult of the two sections (or the gap between perceptions and expectations) arecompared to reach a gap for each of the questions, the final score is generated bythe difference between them (Gap = Perception – expectation) A negative scoreindicates an unsatisfactory result for the client A positive score shows the servicethat the firm offering is better than expected service

The information of primary data was collected in order to find out the gapbetween customers’ perception and customers’ expectation Based on thisinformation, we drawn out some recommendations for leaders in terms of internetbanking service at VCBBD

1.4.3 Data Analysis

The study employed both qualitative and quantitative approaches.Descriptive sStatisticsal Package for the Social Sciences (SPSS) using Excel is thetool for processing quantitative data obtained from survey The results of the studywere used to analyze the customer opinions and factors influencing their judgmentswith the service quality of internet banking service The depth interviews data wereused to evaluate the management of internet banking service quality at VCBBD.The combination of two methods has brought comprehensive and concrete findings.

1.5 R esearch scope ESEARCH SCOPE

The scope of study is as follows:

- Content: The study focuses on VCBBD’s internet banking service quality,focusing specifically on the gap beetween customer's perception and expectation

- Place: Vietcombank Ba Dinh Branch in Hanoi city

- Secondary data were collected for the year 2009 – 2012

- Primary data were collected in 2012

- Recommendation are made for the next 5 years

Chapter 5: Recommendations to improve the quality of Vietcombank

Ba Dinh’s internet banking service

CHAPTER 2 : THEORETICAL BACKGROUND ON QUALITY OF INTERNET BANKING SERVICE AT COMMERCIAL BANK

2.1 Commercial banks and banking services2.1 COMMERCIAL BANKS AND BANKING SERVICES

2.1.1 Commercial banks

2.1.1.1 Definition of Commercial banks

Commercial banks are institutions which accept deposits, make businessloans, and offer related Service in order to make a profit They also allow for avariety of deposit accounts, such as checking, saving According to the law of Bank

1990, commercial bank is a financial institution licensed to deal with money thatprimarily accepting deposit to make loans and provide financial service directly toconsumers

The commercial banks in Vietnam now include: State-owned commercialbanks; Joint – stock Commercial banks; Joint – venture commercial banks; foreignbanks, Branches of Foreign banks, Representative Office of Foreign banks At themoment, there are 05 state owned commercial banks (SOCB), 05 Joint venturecommercial banks (JVB), 39 Joint stock banks (JSCB), 06 foreign banks (FB), 42Branches of foreign banks (BOFB), 17 financial corporations (FC), 13 leasingcompanies(LC) and 998 credit funds

2.1.1.2 The role of Commercial banks in the economy

Commercial banks play an important role in facilitating the economicgrowth On a macroeconomic level, they represent the primary conduit of CentralBank monetary policy Bank deposit represent the most liquid form of money such