Developing mobile banking service at BIDV – South Hanoi agency

PROFESSIONAL BACHELOR OF BAKING AND FINANCECOURSE 2012-2015 Bank for Investment and Development of Vietnam – South Hanoi agency 1281 Giai Phong Road – Hoang Mai District – Hanoi City FI

PROFESSIONAL BACHELOR OF BAKING AND FINANCE

COURSE 2012-2015

Bank for Investment and Development of Vietnam – South Hanoi agency

1281 Giai Phong Road – Hoang Mai District – Hanoi City

FINAL REPORT

Developing mobile banking service at BIDV – South Hanoi agency

Name: Nguyen Viet Duc

Class: NTA7

University tutor : Mr Nguyen Hoang

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Mr.La Tien Dung

Developing mobile banking service at BIDV – South Hanoi agency

I owe sincere and earnest thankfulness to Mr Chung and Mr namguides and advise inhelping me to complete this internship report

In particular, I am truly indebted and thankful Mr Chung who have directly guided andgiven me advices during my internship Without their assistance, I would not able to completethis internship report successfully

Finally, I am obliged to many of my family who supported me unlimitedly during myeducation and internship

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Table of contents

ACKNOWLEDGMENTS ii

List of tables v

List of figures v

INTRODUCTION 1

I – Introducing to BIDV 2

1.1 Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) 2

1.1.1 Bank profile 2

1.1.2 History 2

1.1.3 Main activities 3

1.1.4 Key indicators 3

1.1.5 Business reputation of BIDV 4

1.2 BIDV Southern Hanoi Agency 4

1.2.1 Overview 4

1.2.2 Customer Service Center at BIDV - South Hanoi Agency 6

1.2.3 Background of the internship 6

II My internship at BIDV – South Hanoi agency 9

2.1 Studying the mobile banking service – its advantages and inconvenient 9

2.1.1 Background 9

2.1.2 Implementation 9

2.1.3 Results obtained 9

2.1.4 Difficulties and solutions 11

2.2 Analyzing market demand about mobile banking service 12

2.2.1 Background 12

2.2.2 Implementation 12

2.2.3 Results obtained 12

2.2.4 Difficulties and solutions 13

2.3 Guiding for service inscription and for using mobile banking service at BIDV – South Hanoi agency 13

2.3.1 Background 13

2.3.2 Implementation 13

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2.3.3 Results obtained 14

2.3.4 Difficulties and solutions 14

2.4 Implementing a survey on customers’ satisfaction about BIDV’s mobile banking service 14

2.4.1 Background 14

2.4.2 Implementation 15

2.4.3 Results obtained 15

2.4.4 Difficulties and Solutions 15

2.5 Analyzing the performance of mobile banking service of BIDV – South Hanoi agency 15

2.5.1 Background 15

2.5.2 Implementation 16

2.5.3 Results obtained 16

2.5.4 Difficulties and Solutions 20

2.6 Assessing and proposing solutions for promoting mobile banking service at BIDV – South Hanoi agency 20

2.6.1 Information technology 20

2.6.2 Professionalism 20

2.6.3 Communication 21

III General internship assessment 22

3.1 Advantages and disadvantages of internship 22

3.1.1 Advantages 22

3.1.2 Disadvantages 22

3.2 Contributions 22

3.2.1 For BIDV - South Hanoi Agency 22

3.2.2 For myself 23

Conclusion 25

APPENDIX 26

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List of tables

Table 1: Banking network and employees of BIDV 4

Table 2: Business performance of BIDV - South Hanoi Agency 5

Table 3: Internship planning 7

Table 4: Main products and services of Mobile Banking 10

Table 5: The number of customers at the end year of 2014 16

Table 6: Some transaction indicators on Retail, Mobile and Corporate 18

Table 7: Customers’ Satisfaction about BIDV’s Mobile services 19

List of figures Figure 1: Total assets and loans to customers (2010 – 2014) 3

Figure 2: Profit after tax period 2010 – 2014 4

Figure 3: Organizational structure of BIDV - South Hanoi Agency 5

Figure 4: Proportion accumulated of mobile banking at BIDV – South Hanoi Agency 7

Figure 5: Registration procedure of BIDV’s Mobile services for personal customers 11

Figure 6: The proportion of smartphone users in January, 2014 12

Figure 7: Frequency having troubles when using BIDV’s Mobile Applications 19

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Commercial banks look continuously for satisfying customers with useful financialproducts and services They receive and hold deposits, pay money according to customer’sinstructions, lend money, offer investment advice, exchange foreign currencies, and so on Allservices that commercial banks provide have been beneficial for individuals, enterprises and theeconomy in general Facing to increasingly competition, one of their crucial trends is to applymodern technology to develop their products and services, bringing customers the greatestsatisfaction and convenience

Recent years saw significant improvements in electronic banking in Vietnam withInternet Banking and Mobile Banking being most popular with residents Joint StockCommercial Bank for Investment and Development of Vietnam (BIDV), one of the largest banks

in Vietnam, has supplied this service for years

During the internship at BIDV South Hanoi Agency, it is acknowledged that mobilebanking service achieved some positive results in term of customers’ satisfaction However, itsfinancial performance was not as impressive as it should have been That is the main reason that

explains my choice of the topic “Developing mobile banking service at BIDV – South Hanoi agency” for my internship report.

I – Introducing to BIDV

1.1 Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)

As a long-established bank, BIDV has funded many investment projects and keyeconomic areas of the country Joint Stock CommercialBank for Investment and Development ofVietnam (BIDV) has also built the largest enterprise customers, while confirming theimplementation of prestigous items, objectives, economic programs and social security of thecountry

1.1.1 Bank profile

Full name: Ngân hàng TMCP Đầu tư và Phát triển Việt Nam

International Transaction Name: Joint Stock Commercial Bank for Investment andDevelopment of Vietnam

Abbreviated name: BIDV

Address: BIDV Tower, 35 Hang Voi

Street, Hoan Kiem District, Hanoi City

Type: Commercial Bank

The year 1981 witnessed the birth of Bank for Investment and Construction of Vietnam,playing an important role in improving measures of supplying and managing basic investment,improving role of credits in matching with the increasing capital demands In the stage from

1981 – 1990, the contribution of the bank is much greater than before in terms of total fundingallocation, total capital for loans and fixed assets that formed in the economy

In the following 20 years, the bank operated under the name Bank for Investment andDevelopment of Vietnam with the first 10 years of the period being called “Innovation” and thelater 12 years being called “Integration”

On 27th April, 2012, BIDV was converted into Joint Stock Commercial Bank forInvestment and Development of Vietnam whose business operations were inherited from Bankfor Investment and Development of Vietnam

1.1.3 Main activities

 Bank: BIDV functions as a leading experienced bank of finance services, brokerage,

loans, modern and convenient banking products

 Insurance: BIDV provides products for non-life insurance designed to match the

overall package to customers of BIDV

 Stock: BIDV provides a wide range of brokerage services, investment and investment

consultant with the ability of quickly developing a system of agents to receive orders nationwide

 Financial investments: BIDV includes financial leasing, security trading and capital

contribution with the aim at establishing investment companies to the project; It also plays aleading role in coordinating key projects of the country

1.1.4 Key indicators

Figure 1: Total assets and loans to customers (2010 – 2014)

Source: BIDV’s annual reports 2014

The figure 1 presents that there has been a continuously increasing trend in both totalassets and loans to customers The size of BIDV almost doubled from 2010 to 2014 in term oftotal assets and the amount of money borrowed go up by 75%, from 254.192 billion VND to445.693 billion VND The percentages of loans to customers per total assets were high, showingthat BIDV were focusing on its main banking activity which is lending

The profit evolution that BIDV made during period 2010 – 2014 is shown in the figure 2.The profit after tax every year during this period was above 3.000 billion VND with a slightdecrease from 2010 to 2011 and rises in the following years

Figure 2: Profit after tax period 2010 – 2014

Source: BIDV’s annual reports 2014

Table 1 gives information about BIDV’s nationwide banking network and the substantialamount of employees BIDV has created more than 16 thousand of jobs for the country alongwith the birth of many agencies and transaction offices each year The total number of agenciesand transaction offices tended to go up while opposite trend was seen in the quantity of savingscounters

Table 1: Banking network and employees of BIDV

Source: BIDV’s annual reports 2014

1.1.5 Business reputation of BIDV

BIDV is the choice, the trust for economic organizations, the leading enterprises of bothcountries and individuals in accessing the financial and banking services BIDV has been knownand recognized as one of the largest banking brands in Vietnam and certified as a trademark inthe U.S and also rewarded annually from organizations, financial institutions at home countryand abroad

BIDV is always the pride of generations of staff and financial and banking sector in 55years with traditional professional development investment for the country

1.2 BIDV Southern Hanoi Agency

1.2.1 Overview

Full name: Bank for Investment and Development of Vietnam – South Hanoi agencyAbbreviated name: BIDV - South Hanoi Agency

Address: 1281 Giai Phong Road – Hoang Mai District – Hanoi City

Telephone: 043 861 70 42

Figure 3: Organizational structure of BIDV - South Hanoi Agency

Source: BIDV - South Hanoi Agency

BIDV South Hanoi Agency was once a second – tier agency operating under the nameBIDV Thanh Tri Agency The agency’s name was changed once again into Bank for Investmentand Construction of Vietnam Thanh Tri Agency in 1986 and in charge of funding constructionprojects in three districts: Hai Ba Trung, Dong Da and Thanh Tri On 1st November, 2005, theagency was upgraded and ranked as first – tier agency with a current name of BIDV South HanoiAgency

Table 2 presents the data of financial performance of the agency There was an upwardtrend in most items from 2012 to 2014 In detail, total fund mobilized increased from 2,038billion VND in 2012 to 3,500 billion VND in 2014 and the total loans increased about 150%after two years

Table 2: Business performance of BIDV - South Hanoi Agency

Deputy Directors

Relationship

Department

Risk Management Department

Customer Service Center

Administrative Department

General Accounting Department

International Finance and Accounting Department

Computing

Group Money – treasury Group Transaction Office I Transaction Office II Transaction Office III Transaction Office IV ATMS and POS transactions

DIRECTOR

4 Revenue from foreign currencies trading Mil USD 110 90 80

5 Profit from foreign currencies trading Mil USD 2,600 4,000 2,500

Source: BIDV - South Hanoi Agency

1.2.2 Customer Service Center at BIDV - South Hanoi Agency

During my internship at BIDV - South Hanoi Agency, I worked in Customer ServiceCenter The main functions of Customer Service Center are:

 Maintaining and developing the relationship with current target customers;identifying potential customers and planning for approaching them

 Collecting the needs and feedbacks from the customers about agency products andthen analyzing the results to issue reports to make suitable adjustments in marketingprograms to make it more customer-focused and efficient

 Selling retail banking services: Establishing selling plans for individual customers;giving advice to customers to help them choosing their best services

1.2.3 Background of the internship

Mobile banking is a quite new and promising service for which Customer Service Centertake responsibility If customers have current accounts in VND at BIDV, they can register formobile banking service which allows them to conduct banking transactions safely, accuratelyand fast using your mobile phone without going to the bank counters Specifically, customers canperform:

 Funds transfer within BIDV

 Funds transfer within Vietnam

 Bill payments: airlines tickets, insurance, prepaid recharge

 Account balance inquiry: current account, saving account, loan account, overdraftaccount.

 Credit card information inquiry

 View updated information relating to: agency and ATM address, POS, exchangerates, interest rates, overtime agencies and other useful information

Figure 4: Proportion accumulated of mobile banking at BIDV – South Hanoi Agency

Source: Annual report 2014 of BIDV – South Hanoi Agency

Although mobile banking is highly potential, the revenue from this service at the agencywas very modest It accounts for only 0,301% of income from service fees Therefore, it is worthdevoting time to study mobile banking service, investigate the current status of providing thisservice at BIDV South Hanoi Agency so that recommendations and suggestions can be given toenhance effectiveness of supplying mobile banking service The table below summarizes myworking plan during internship time

Table 3: Internship planning

Find out about BIDV and BIDV South

16/02/2015 to

05/04/2015 Gain knowledge about mobile banking service Customer Service Center –BIDV South Hanoi

Agency05/04/2015 to

14/04/2015 Carry out the duties assigned BIDV South Hanoi Agency

14/05/2015 to

now Analyze the performance of mobile banking service of BIDV – South Hanoi agency and Customer Service Center

do market research

Assess and propose solutions to boost

mobile banking service at the agency Customer Service CenterWrite the internship report

II My internship at BIDV – South Hanoi agency

2.1 Studying the mobile banking service – its advantages and inconvenient

2.1.1 Background

To achieve the goal of take measures to develop mobile banking services at BIDV South Hanoi agency, first of all I need to learn about this type of service and analysis theadvantages and disadvantages of this service

-2.1.2 Implementation

I learnt about mobile banking services by studying journals and periodicals, onlinedocuments and the documents of the Customer Care Department – at BIDV - South HanoiAgency on mobile banking services and interviewed the staffs who are in charge of this service.First of all, I read general information on this service, but simultaneously I compared thisinformation with BIDV’s documents Thanks to it, I not only had a clear understanding of theissues surrounding this service but also had a practical knowledge of products and services at thebank which I served as an intern During the self-learning process, I actively asked the staff atSouth Hanoi agency about some of the professional and specific terminologies and knowledge.During this process, I also recorded some important contents to make my learning process better

2.1.3 Results obtained

After the self-learning process, I had a basic

understanding of mobile banking in term of definition,

detail mobile banking services, benefits and risks when

someone uses this service

 Definition

Mobile Banking is a service that banks provide

account information and other information by sending

messages to customers’ phone numbers through mobile

network

In essence, Mobile Banking service is a

combination of many parties and expresses the symbiotic

relationships of service providers in the economy In

detail, this relationship includes banks holding the accounts of customers, paymentintermediaries and telecom companies managing mobile network

Users: customers who use mobile phones have accounts at the banks that offer mobilebanking services

 Main products and services of Mobile Banking

Table 4: Main products and services of Mobile Banking

Loan management

services Provide information on loan account such as interest rates, paid amount,unpaid amount, time of payment, overdue interest rates, next payment so

that borrowers have a repayment plan timely

services Allow customers to make payments of expenses that can be measuredaccurately and have monthly bills such as electricity, water, telephones,

cable television, internet, payments for goods at the place which acceptmobile payments

Source: BIDV – South Hanoi Agency

 Benefits of using Mobile Banking

 Customers can use this service quickly and easily with a variety of benefits at highsecurity and low cost

 Banks can get more revenue from service fees with low investment costs, expandservice network and meet the diverse needs of customers better, create images and enhancecompetitiveness, etc

 Telecommunication companies increase revenue, increase prestige andcompetitiveness, etc

 In term of the overall economy, mobile banking saves time and costs, allows therotating and using process of capital to be fast and efficient It is also a means of no-cashpayment Mobile Banking contributes to improving national monetary policies towardsminimizing cash in circulation People’s money is ensured to use safely and efficiently, therebyincreasing their life quality This is an important prerequisite to promote economic development

 Risks of using Mobile Banking

While Mobile Banking brings customers much convenience in easy and quicktransaction, customers can encounter some risks

 Risks of disclosing personal information in mobile phones

 Risks of criminal intrusion on mobile network connection

 Risks of viral infections or malicious software when phones connect the internet

 Other risks: When customers need to make some transactions, they must face someproblems such as phones running out of battery, losing wave, not having enough money (in case

of prepaid phone accounts) to make payment for service fees These things make customers notuse the service and cause them a lot of difficulties

Figure 5: Registration procedure of BIDV’s Mobile services for personal customers

Source: BIDV – South Hanoi Agency

Banks always try their best to ensure the security of transactions but they can’t eliminateabnormal risks absolutely It also requires the understanding and responsibilities of the userswhen using Mobile Banking

2.1.4 Difficulties and solutions

During the studying process of Mobile Banking service, I encountered some professionalterminologies and knowledge relating to information technology which I did not understand Tosolve these problems, I often asked my friends, relatives and staff at the Bank Agency (South

Hanoi) I realized that they often answered quickly and concisely because they must concentrate

on their work Therefore, I often took advantage of their lunch hour or break time toconversation Thus, the atmosphere of conservation is more relaxed and I could understand theproblem thanks to their detailed explanation

2.2 Analyzing market demand about mobile banking service

2.2.1 Background

The decision to invest or not to invest in and how to invest in a product or a servicedepends on the demand of customers for that product and service I analyzed the market demandabout mobile banking service so that our solutions proposed to South Hanoi Agency could beconvincing

2.2.2 Implementation

The method used to analyze the market demand is to estimate secondary data I collecteddata on demographics, the number of people using smartphones, bank account numbers, etc.from different reputable sources Then I processed, illustrated and analyzed the data to come to aconclusion on the market for mobile banking services

2.2.3 Results obtained

The figure 5 shows the proportion of Vietnam's population using smart phones and thepercentage of users to purchase and make payments According to the statistics, there are 20% ofpeople in Vietnam using smartphones, of which there are 10 people, there are 6 people usingsmartphones to make purchases and payments through their phone The percentage of peopleusing smartphones in early 2015 has increased to 23.25%, equivalent to more than 22 millionusers and the number of users is predicted to continue to rise

Figure 6: The proportion of smartphone users in January, 2014

Source: Statistics of WeAreSocial

Currently, 20% of the 90 million populations have had bank accounts To calculate thedemand for mobile banking services, I made some assumptions First, all the people with bankaccounts use smartphones In fact, not that 100% of people with bank accounts use smartphones,but this rate is certainly very high because people having bank accounts often are the people whohave good income and/or modern lifestyle Therefore, they will tend to use more smartphones.Secondly, smartphone users are assumed to have the same purchasing proportion as the paymentone via smartphones (equivalent to 60%) In fact, mobile banking services not only allow users

to purchase and make payments via mobile phones, but also provide a lot of conveniences andvalue-added services analyzed in the section 2.1.3 Therefore, the assumption in which thepercentage of smartphone users has the demand for mobile banking services is 60 percent isquite humble

Therefore, the demand for mobile banking services is: 90 million * 20% * 60% = 10.8million Meanwhile, according to the statistics of Smartlink Card Services Company in the mid-year of 2014, there were 3 million people using mobile banking services all over the market.Therefore, the market demand is very high This is a good opportunity for banks to developservices and increase revenues

2.2.4 Difficulties and solutions

Doing this study on the great number of consumers about demand for mobile bankingservice is very difficult Therefore, estimation based on secondary data will be better However,due to the use of data available, finding suitable data for calculation is not absolutely easy Tosolve this problem, I gave some reasonable assumptions so that the results could have the highestreliability

2.3 Guiding for service inscription and for using mobile banking service at BIDV – South Hanoi agency

2.3.1 Background

After learning about mobile banking services in general and its main contents as well asservices providing process (see Appendix) at BIDV - South Hanoi agency in particular, I had anopportunity to perform highly practical tasks They are to guide customers to register and useBIDV’s mobile banking services

2.3.2 Implementation

The first group of customers is students from University of Natural Resources andEnvironment, Hanoi This is the university which has cooperated with BIDV to make bank cardsfor students in order to collect tuition fees in the transferring form While many students likeThai were waiting in a queue to transfer tuition fees at ATMs, I introduced mobile bankingservices to them With this service, they can make easy and quick money transference withoutqueuing at ATMs I guided some students who paid attentions to this service and took ID cards