A minor research on current situation and recommendations for the development of individual customer services in ocean bank – hanoi branch

CHAPTER 2: CURRENT SITUATION OF THE DEVELOPMENT OF INDIVIDUAL CUSTOMER SERVICE IN OCEAN BANK - HANOI BRANCH .... Like any other banks, Ocean Bank – Hanoi Branch are conducting numerous s

ACKNOWLEDGEMENT

First and foremost, my deepest gratitude goes to my supervisor – MA Tran Thu Hoai for her relentless encouragement and continual support Her tireless enthusiasm and patience in assisting me throughout the research process have always been graciously appreciated from the beginning to the end This dissertation would not have been possible without her insightful advice and guidance

Ms Do Thu Phuong also deserves my utmost appreciation Her invaluable contributions and suggestions to research are highly valued, particularly during the qualitative phase of the study I am so greatly indebted to her for providing

me extremely important and necessary information to accomplish this paper I would also like to acknowledge the thoughtful support and guidance of Mrs Pham Dinh Yen – the executive director

Last but not least, I would like to express my heartfelt appreciations to my parents, my sister as well as Academy of Finance and its administrators who have all provider me with substantive support and encouragement throughout the investigation of customer service at Ocean bank I would have been impossible for me to have completed this work without them

ABSTRACT

The graduation paper presents filtered data on Ocean bank’s annual reports and compatible information in academic books Through collecting and synthesizing data and raw materials, the paper conducts an investigation on the situation of customer service in retail banking system Subsequently, there is a more deeply analysis implemented in order to build the foundation of solutions

in chapter 3 The analysis concentrates on the current situation of the tree main sectors – savings, credit and card service In this way, the bank’s performance can be evaluated in accordance with a set of both quality and quantity criteria Hence, the paper indicates the strong and the weak points of the bank’s organization to have a comprehensive view of Ocean bank’s individual customer service The most important sector is focused on the recommendations for stimulating personal banking in Ocean bank including product, customer strategy, risk management, human resource development and some of proposals

to the SVB

LIST OF ABBREVIATIONS

LIST OF FIGURES & TABLES

1 Table 2.1 Profit result of Ocean bank – Hanoi

Branch

26

2 Figure 1.1 Source of mobilization 29

3 Table 2.2 Fund raising from resident 29

4 Table 2.3 The data for total capital and total credit

in Ocean bank (HB)

32

5 Table 2.4 Development of card operations 35

REFERENCES

 Sources in English:

1 Andres Kuusik (2007), Affecting customer loyalty, University of Tartu, 9-11

2 Bilal Afsar, Zia Ur Rehman, Jaweria Andleeb Qureshi and Asad Shahjehan

(2010), Determinants of customer loyalty in the banking sector, Department of

Management Sciences, Hazara University, Pakistan, 1041-1043

3 Beatriz Sanz Saiz and Pierre Pilorge (2010), Understanding customer

behavior in retail banking, Ernst & Young

4 Effie Xin, Lawrence Luo and Sky So (2010), Market risk management, Ernst

& Young

 Internet sources:

5 Hiệp hội ngân hàng Việt Nam (2011), Phát triển dịch vụ ngân hàng bán lẻ,

retrieved from http://vnba.org.vn/

6 Thanh niên news (2013), Bank bad debts remain serious challenge for Vietnam: ADB chief, retrieved from http://thanhniennews.com/

7 Ocean bank official website (2013), Overview of Ocean bank, retrieved from

http://oceanbank.vn/

 Vietnamese sources:

8 Báo cáo thường niên của Ocean bank (2010, 2011, 2012)

9 Tạp chí Ocean times

TABLE OF CONTENTS

ACKNOWLEDGEMENT i

ABSTRACT ii

LIST OF ABBREVIATIONS iii

LIST OF FIGURES & TABLES iv

INTRODUCTION 1

CHAPTER 1: LITERATURE REVIEW 5

1.1 Overview of a commercial bank 5

1.1.1 Definition of a commercial bank 5

1.1.2 Functions of a commercial bank 5

1.1.2.1 Primary functions 5

1.1.2.2 Secondary functions 10

1.2 Classification of services in a commercial bank 12

1.3 Individual customer service in a commercial bank 13

1.3.1 Definitions of customer service in a commercial bank 13

1.3.2 Individual customer services in a commercial bank 14

1.3.2.1 Savings service (Savings account) 14

1.3.2.2 Personal credit service 15

1.3.2.3 Payment service 15

1.3.2.4 Account service 16

1.4 Overview of developing individual customer service in a commercial bank 17

1.4.1 The importance of good customer service 17

1.4.2 Evaluation criteria for ability of building customer base 17

1.4.3 Factors influencing on remaining customer loyalty toward a bank 19

CHAPTER 2: CURRENT SITUATION OF THE DEVELOPMENT OF

INDIVIDUAL CUSTOMER SERVICE IN OCEAN BANK - HANOI

BRANCH 22

2.1 An overview of Ocean Bank – Hanoi Branch 22

2.1.1 An overview of Ocean Bank 22

2.1.2 An overview of Ocean Bank – Hanoi Branch 23

2.1.2.1 History of Ocean Bank – Hanoi Branch 23

2.1.2.2 Functions of Ocean Bank – Hanoi Branch 24

2.1.2.3 Organization of Ocean Bank Hanoi Branch 24

2.1.2.4 Performance of Ocean Bank – Hanoi Branch 25

2.2 Current situation of the development of individual customer service in Ocean Bank 27

2.2.1 Current situation of savings mobilization activities 27

2.2.1.1 Type of ordinary savings rendered by Ocean bank 27

2.2.1.2 Structure of mobilizing 28

2.2.1.3 Current situation in 2011 29

2.2.2 Current situation of personal credit 30

2.2.2.1 Personal credit product 30

2.2.2.2 Current situation in 2011 31

2.2.3 Current situation of card service 34

2.2.3.1 Types of card services 34

2.2.3.2 Current situation in 2011 35

2.3 Evaluation of current situation of individual customer service in Ocean Bank 37

2.3.1 Achievements 37

2.3.1.1 Quantity 38

2.3.1.2 Quality 39

2.3.2 Weakness and Causes 40

CHAPTER 3: RECOMMENDATIONS FOR DEVELOPING INDIVIDUAL CUSTOMER SERVICE IN OCEAN BANK – HANOI BRANCH 43

3.1 Developing orientation of individual customer service in Ocean Bank – Hanoi Branch 43

3.1.1 Developing orientation of retail banking in Vietnam 43

3.1.2 Developing orientation of individual customer service in Ocean Bank 45

3.2 Recommendations for further enhancement of individual customer services in Ocean bank 47

3.2.1 Product strategy 47

3.2.2 Customer strategy 49

3.2.2.1 Existing customer remaining 50

3.2.2.2 New customer developing 51

3.2.3 Risk management 52

3.2.3.1 Credit risk 52

3.2.3.2 Market risk 53

3.2.3.3 Operational risk 54

3.2.4 Human resource development (HRD) 56

3.2.5 Recommendation for the SBV 57

CONSLUSION 58

REFERENCES v

INTRODUCTION

1 RATIONALE OF THE STUDY

In line with the development of Vietnam’s economy, banking system on the whole has been widening vertically and horizontally Its powerful influence

on financial system has been making it one of the core parties of the economy contributing to the national growth In which, commercial banks are emerging

as a new pillar of banking system in the 21st century

The evolvement of commercial banks, in the context of international integration of Vietnam, needs creativeness in management style and sensitiveness in keeping up with the world’s situation An opening economy has been bringing opportunities and difficulties to the whole banking system due to

an increasing number of internal and external “competitors” – financial intermediaries and institutions This requires commercial banks to be more active in order to accelerate added-value and expand the coverage of banking system through raising regulation capital Throughout two decades of development, Ocean commercial joint-stock bank is becoming stronger with the regulation capital of in and around 5,000 billion VND, offering various utility services, especially, E-banking (internet banking, home banking, e-loans), and having a strategic partnership with Petro Vietnam

Like any other banks, Ocean Bank – Hanoi Branch are conducting numerous strategies and plans in which individual customer services have been taken into consideration as an inevitable laws of the market economy for the

Hanoi Branch have reached some certain advances; however, there is a need to

have a deep understanding of strength and weakness of the services and then to

give out valuable recommendations to the board of director

Recognition of the topic of relevance, I have decided to conduct a minor

research on current situation of individual customer services in Ocean Bank –

Hanoi Branch to have an overview as well as a comprehensive look into the

growth of the services Subsequently, I would like to present some

recommendations to enhance the services and operating efficiency

2 AIMS OF THE STUDY

The specific aims of the research are:

- To present the background of banking system in general and

commercial bank in particular

- Next, to list common banking services and then a detailed look into

individual customer service in Ocean Bank – Hanoi Branch

- Afterward, to assess the current situation of the development of

individual customer service in Ocean Bank – Hanoi Branch in a certain

period of time

- Ultimately, to submit some recommendations to improve efficiency and

effectiveness of individual customer service in Ocean Bank – Hanoi

Branch

It is expected that this minor research might be helpful to the board of

directors in developing strategic plans, exploring new market, and branch

expansion

3 METHOD OF THE STUDY

In order to perform this research, I firstly intend to use the method of collecting, synthesizing materials and books to form theoretical background Subsequently, I analyze collected raw materials to have an overview of the situation, achievements, and constraints Simultaneously, I observe employee and customer’s attitude to evaluate influences By doing so, I can propose compatible recommendations to enhance the services

In the process of writing this paper, I also base myself on the knowledge

I have learnt from my teachers, my supervisors and from other references (Internet, magazines, and book)

4 SCOPE OF THE STUDY

Due to some certain capacity constraints, the paper will be limited as the

title suggests: “A minor research on current situation and recommendations for the development of individual customer services in Ocean Bank – Hanoi Branch”, to touch upon some following issues:

- The background of the whole banking system as well as commercial bank

- Evaluation of the development status of individual customer services in Ocean Bank (Hanoi Branch)

- The compatible recommendations for improving and branch expansion

5 ORGANIZATION OF THE STUDY

The study is divided into three sections:

The first section is the introduction dealing with the rationale, aims, methods,

scope, organization and significance of the study

The second section is the crucial section of the thesis with three chapters:

Chapter 1 is the investigation of variety of individual customer services

in Ocean Bank This chapter will cover the different type of individual customer services, the influences of external and internal factors on development

Chapter 2 mentions to overview of Ocean Bank (Hanoi Branch) in

recent years, the current situation of individual customer services, and this chapter would include assessment of achievements, weakness and causes

Chapter 3 refers to overview of developing orientation of the bank in

the following years, and then gives recommendations for economic plan, marketing plan, and technological application

The last section is the conclusion that summarizes the content of the thesis,

gives a list of sources of reference information and reference books

CHAPTER 1: LITERATURE REVIEW 1.1 Overview of a commercial bank

1.1.1 Definition of a commercial bank

Commercial banks play a key role in the economy both at national and global level The importance of commercial banks include the fact that they serve as a trusted and safe place where the funds of people and businesses can

be kept on their behalf, reducing the necessity to keep large sums of money on the private or business premises, etc Hereby, commercial bank’s definition extracted from Wikipedia is given below:

“A commercial bank is a profit-seeking business firm, dealing in money and credit It is a financial institution dealing in money in the sense that it accepts deposits of money from the public to keep them in its custody for safety

So also, it deals in credit, i.e., it creates credit by making advances out of the funds received as deposits to needy people”

1.1.2 Functions of a commercial bank

and in case, the customer is required to leave a minimum balance undrawn with the bank These deposits are kept by businessmen and industrialists who receive and make large payments through banks The bank collects certain incidental charges on the customer for the services rendered by it

Saving deposits

In addition to current savings, saving deposits is one of the most prominent types of deposits preferred by individual customer group It is used mainly for professional men and middle class people to help them deposit their small savings Money can be deposited at any time but the maximum cannot go beyond the certain limit There is a restriction on the amount being withdrawn

at a particular time or a short-time Interest is allowed on the credit balance of this account The rate of interest is greater than that for current deposits and less than that for fixed deposits

Fixed deposits

While saving deposits have a fairly flexible interest rate, fixed deposits are reverse These are also known as time deposits and cannot be withdrawn before the expiry date that the amount of money is deposited, otherwise customers have to give a prior notice for their withdrawals In the case of emergency, depositor pays a slightly higher rate of interest for the bank to borrow money The rate of interest paid for these deposits is usually higher for longer period Fixed deposits are still preferred by depositors regardless of its inflexibility because of their safety and interest rate

 Advancing loans

Besides capital raising field, making loans are among the most profitable activities in bank Lending is made to all types of persons, particular to businessmen and entrepreneurs Loans are also made against personal security, gold and silver, stocks of goods and other assets Some of the most common ways of lending are:

Overdraft facilities

Overdraft facility is a formal arrangement with a bank that allows the depositor in a current account to draw on funds in excess of the amount in his account (on deposit) up to a previously agreed limit The additional amount of money that is borrowed from the bank will be charged by the bank This type of financing is most commonly used by businesses as a way of making their working capital more flexible, though it can also be available to individuals

Cash credit

With many of the advantages of a standard line of credit, cash credit is the issuance of a short term cash loan to a business Cash credit works in a manner that is very similar to that of a line of credit The difference is that it establishes

a cash account with the lender institution Under this account, the bank gives loans to the borrowers against certain security The entire loans is not given at a particular time, instead the amount is credited into the borrower’s account in the bank and only given in case of emergency Besides, the bank can also give specified loan to a person, a firm against some collateral securities

Discounting bills of exchange

Purchasing and discounting bills of exchange is another short-term

which they can be discounted by the bank when the holders are in need of money The present price of the bills will be given to the holder after deducting its commission It is considered as a good investment for a bank because it provides a very liquid asset The discounted bills can be rediscounted with the central bank by commercial banks

Money at call

Many different types of financial instruments can be “called” or declared payable immediately by the lender A financial institution as commercial bank can grant loan for a very short period, generally not exceeding 7 days to the borrowers, dealers or brokers in stock exchange markets for some collateral securities like equity shares, stock, etc., offered by them After that, the issuer can decide to force the holder to redeem such advances after a short time, meaning that “money is called”

Term loans

A loan from a bank that has a specified repayment schedule and a floating interest rate gives to traders, industrialists, agriculturists against some collateral securities Term loans are generally provided as working capital funds at once

to the borrowers for acquiring income producing assets (machinery, equipment, and inventory) that generate the cash flows for repayment of the loan Maturity period of term loans usually lasts from 1 to 10 years

Consumer credit

Consumer credit is basically the amount of credit used by consumers to purchase non-investment goods or services that are consumed and whose value depreciates quickly This credit is given to households in a limited amount to

buy some consumer goods and meet some personal needs like payment of school fees, electrical bills, wedding fees, purchasing of automobiles, recreational vehicles, boat, house, etc

 Creating credit

The commercial banks are the second most importance sources of money supply exclude the SBV and the money supplied by the commercial banks is called “credit money” This is an unique function of the banks that not only provides funds for traders and businessmen but also acts as manufacturer of money Bank deposits are regarded as money because it can be used to purchase goods or services and settle debts A bank can give a loan to its customers through crediting the account of the borrower and do not have to receive cash Then, the borrower can withdraw the amount whenever he wants by cheque These help reduce the volume of money in circulation, simultaneously, curb the

inflation

 Promoting the use of cheques

A cheque is a document that orders a payment of money from a bank account It is a cheap medium of exchange rendered by commercial banks The cheque is considered much more convenient and safer to settle debts rather than the use of cash

 Financing internal and foreign trade

The bank finances internal and foreign trade through discounting of exchange bills Sometimes, the bank gives short-term loans to trader on the security of commercial papers These greatly facilitate the movement of internal

and external trade

 Remitting funds

Commercial banks, on account of their network of branches throughout the country, also provide facilities to remit funds from one place to another place for their customers by issuing bank drafts, mail transfer or telegraphic transfers

on nominal commission charges In comparison with postal money or other instruments, the bank draft is a much cheaper mode of transferring money

1.1.2.2 Secondary functions

 Agency services

Banks also perform certain agency functions for and on behalf of their customers These services have a wide range of value and are mentioned below:

Collecting and making payment of credit instrument

Banks collect and pay various instruments like cheques, bills of exchange, promissory notes, etc, on behalf of their customer

Dealing with securities and dividends on shares

Commercial banks purchase and sell common securities like stocks, shares, bonds, debentures Subsequently, they collect dividend and interest on shares and debentures of their customers and credit them to their account

Acting as correspondent

Banks are representatives or correspondents for their customer for some

time to get passports or travel’s ticket

Consulting income-tax

Bank sometimes may recruit income tax experts to prepare income tax return and help their customers get refund of income tax

Executing standing order

Various periodic payments can be made by banks that are entrusted by their customers

 General utility services

In addition to agency services, the modern banks provide many newly developed utility services that help the community enjoy modern life standards and are given below:

Underwriting securities

Banks gather crucial information relating to finance, commerce, and banking then have valuable reports, journals on economic and financial matters Hereby, they underwrite the shares and debentures owned by the government, public and private companies for the first IPO

1.2 Classification of services in a commercial bank

The services that commercial banks offer have changed greatly and become verified since the 20th century because of deregulation, the expansion of information technology, and innovations in the type of services offered However, basically, customer group is divided into three groups

 Services for Corporation

Banking services for large corporations or firms are designed to deal with major financial transactions, cash management, and other banking services custom-tailored for large firms

Main services for corporation are credit service provided for expanding and enhancing manufacturing and business activities, savings service, and payment service including domestic payment and international payment (Letter

of credit for importing and exporting, , collection of importing and exporting, money transferring)

 Services for Individuals

Personal banking encompasses the range of products and services offered

by a bank to individuals Included are checking and saving accounts, loans and mortgages, safe deposit boxes, certificates of deposit, money orders, traveler’s cheque and bank draft Nowadays, the diversification of personal services has been growing through applying technological improvement

Generally, there are four main categories: personal credit service that is

provided for the purpose of individual consuming (shopping for lady, house and

car purchasing) and exclude some regulations of individual income, account

service, savings service (Savings account), and payment service which includes

cheque, domestic and oversea payment

 E-banking and card service

E-banking is a newly developed service that takes advantages of high technology It plays a great role in transforming banking business into e-business through utilizing e-channels E-banking is likely to extend the market, lower transaction cost or process more financial transactions Currently, commercial banks focus on developing the services through internet, mobile, thereby, banking services have become more familiar with the public

Besides, card service has been boosted in order to modernize human life through daily financial transaction without cash Some activities applied card service are payroll payment, bill paying, remittance of money, etc Moreover, other types of card service are also developed strongly like credit card, debit card, master card, etc

1.3 Individual customer service in a commercial bank

1.3.1 Definitions of customer service in a commercial bank

Turban et al (2002) stated that “Customer service is a series of activities designed to enhance the level of customer satisfaction-that is, the feeling that a product or service has met the customer expectation” The perception of such

interactions will be dependent on employees “who can adjust themselves to the personality of the guest” according to Micah Solomon Similarly, Julia Penny

(2013) shows a very interesting definition of customer service, that is,

“Customer service is the degree to which a product or service fails to meet,

meets or exceeds customer’s expectations It defines the customer’s perception

of the interaction with the company”

1.3.2 Individual customer services in a commercial bank

1.3.2.1 Savings service (Savings account)

The most common type of bank account and probably the first account that customers will ever have (after a checking account), is savings account It is opened in banks by salaried people or by the people who have idle money (it is also available for students, senior citizens, pensioners…) Saving account is designed to promote savings therefore, the main features of savings account can

be showed by its name Firstly, normally, there is no restriction on the number and amount of deposits making it a flexible and preferable account Secondly,

withdrawals are allowed either by cheque or slip of respective bank, however, it includes some certain restrictions Thirdly, customers will be satisfied because saving account has no maximum period of holding, hereby, savings will be kept

and generate accumulated interest until it is withdrawn by the holders Finally,

in the context of development of hi-tech, e-banking is born as a new and prominent channel of distribution that is available to pay daily (routine) expenses for clients through savings account

Savings accounts have various advantages in which allow customers to keep their money in a safe place while it earns a small amount of interest each month; therefore, it encourages savings habit among salary earners and others who have fixed income In addition, it enables the depositors to do online shopping and keeps records of the transactions carried, hereby, they can control their own financial situation Nonetheless, these accounts usually require either

a low minimum balance, or require no minimum balance at all depending on the bank and type of account

1.3.2.2 Personal credit service

Credit products are provided by commercial banks for individuals to do some personal consuming For individuals, personal credit service helps people

to satisfy their needs of small spending (shopping, bill paying) and big spending (housing, car, land purchasing) but do not need to wait for having sufficient money

For bank, when money is loaned out, there must be reasonable expectation

of repayment of the loan, plus interest, thus loans constitutes the most profitable asset group to bank through a high rate of interest Because of requirement of repayment capacity of individuals, there are various questions given out and evaluating process happened to confirm financial status of the individuals Credit contract provides fully information about interest, terms, payment facility and other rules to assure mutually beneficial arrangement

Furthermore, bank also offers a modern payment facility - “credit card” against people who have the certain amount of fixed salary to show their status symbol Client’s credit limit is a maximum amount they can charge on the card including purchases, balance transfer, cash advances, finance charges, and fees When clients go over their credit limit, creditor may charge a fee - an over-the-limit fee

1.3.2.3 Payment service

Payment system encompasses a set of instruments and means generally

services are offered and operated by bank through deliver channels (bank tellers, ATMs, EDCs, computers, mobile phones, and others) resulting in creating an interbank funds transfer system that boosts the circulation of money and goods between economic agents using an accepted medium of exchange A modern payment system typically has a range of specialized subsystems developed to serve particular sets of customers

Presently, because clients are always expecting their needs to be satisfied promptly, banks have been modernizing payment service daily through applying IT, developing many new instruments such as mobile payment, online payment, and card payment Moreover, domestic and oversea remittance service, western union service, and cheque service which are common services in banks can be used and registered easily to execute small transactions or merely to transfer money

1.3.2.4 Account service

The term “Account service” relates to a new kind of service that banks offer for the purpose of helping clients to manage their finance efficiently Its aims are time-saving and paper-saving Because it is “a new-born service”, account service is not really popular in Vietnam’s banking system Some available utility accounts offered by Ocean Bank are auto-saving account or

“Thach Sanh” overdraft account

1.4 Overview of developing individual customer service in a commercial

bank

1.4.1 The importance of good customer service

In Mr Mukherjee’s speech - Minister of finance of New Delhi, he said

“Good customer service is the heart of banking service delivery Banking is predominantly a customer-oriented business and good customer service is the key to bank’s growth and stability” That is, in fact, there is a famous business slogan that: “The customer is always right” The underlying truth behind this

statement is recognizing that customers are the life blood for any business including banks Understanding the importance of good customer service is essential for a healthy business in creating new customers, keeping loyal customers, and developing referrals for future customers

Customer service quality has been viewed as a significant issue in customer retention Since banking services are generally characterized with undifferentiated products, it is imperative for banks to strive for improved service quality if they want to distinguish themselves from the competition Improvement in quality of service is related to expansion of market share In the current marketing literature, much attention on service quality as related to customer’s attitude toward services is focused on the relationship between customer expectations of a service and the perceptions of the quality

1.4.2 Evaluation criteria for ability of building customer base

Like any other businesses, banks also need to build trust, set up customer network, offer their services and products and then make profit; therefore, a

Bank’s clients are people who determine bank’s profitability and viability Keeping them happy is a vital strategy for success

 Rapport (Customer network)

Good customer service depends largely on the ability to build relationship with customers Setting up the relationship secures memorable and positive experience for customers which play an important role in forming a bank’s style Customer service staff training which is taken into account as a basic foundation is organized periodically to raise constantly employee’s acknowledgement The most important thing is to let customers see caring and then give trust to banks thereby create a bond

 Professionalism

Professional working style expresses in accuracy, timeliness Employees must be proficient in dealing with customer’s requirements promptly and patiently When clients sense that staffs are professional, it means that people who are going to meet their needs and make them feel comfortable will be reliable Being professional also means dressing smartly, being polite what can impress clients at the very first time

 Communication

Ability to communicate with customer will be an advantage to persuade them Good communication skills go a long way in the customer service field With communication, bank can listen to what customers are saying or asking and wind up two steps ahead of them When customers feel like they are heard,

cared and understood, they are impressed

1.4.3 Factors influencing on remaining customer loyalty toward a bank

There are several major factors that play key roles in influencing the loyalty and commitment of customers: Satisfaction, trustworthiness, image of brand, switching cost and other factors

 Satisfaction

The impact of satisfaction on loyalty has been the most considered factor There is a direct connection between them: satisfied customers become loyal and dissatisfied customers move to another vendor The level of satisfaction is high when a customer gives minimum price and gets maximum usage and profit When the satisfaction is low, customers have the option to exit (e.g going to a competitor) or express their complaints If the problem cannot be addressed as soon as possible, the bank can lose customers However, in fact, many experts state that 60-80% of customers who defect to a competitor said they were satisfied or very satisfied on the survey just prior to their defection It means that satisfaction is extremely necessary not only at the time using the service or product but also after purchasing (after-sales service)

 Image of Brand

This is one of the most complex factors It affects loyalty at least in two

ways Firstly, customer may use preferences to show his own image That may

occur both in conscious and subconscious level It is evident that people define themselves by possessions they have, manage or create Therefore, the need for building the image of a professional bank involving in designing working place, designing an impressive working uniform If the ultimate goal of bank is to establish strong connection with customers, so delivery of content (Bank’s

working style or bank’s message) through “appearance” is essential to help customers get amazing experience for the very first time

Secondly, according to social identity theory, people tend to classify

themselves into social categories causing the evaluations of objectives and values in various groups in comparison with the customer’s objectives and values Clients will prefer partners who share similar objectives and values, therefore, brand image of a bank need build in accordance with its specific and certain customers

 Trustworthiness

This is a factor that has certain impact on the establishment of loyalty Nobody expects a long-term relationship with a partner that cannot be trusted Trustworthiness is one criterion for measuring the value of the partner Brand trust leads to brand loyalty because trust creates long-term exchange relationships that are highly valued People tend to prefer popular and familiar brands or partners, therefore, it is necessary to protect and remain trustworthiness for customer network building

 Switching cost

It is defined as a barrier that makes difficult or costly for customers to change providers or suppliers Switching cost can be considered as the technical, financial or psychological factors which make it difficult or expensive for a customer to change brand For this reason, this tool can deter customers from demanding a rival bank’s brand When the costs of switching brand are high for the clients, there is a major possibility that the clients will remain loyal or keep using services or products due to the risk of changing

Conclusion

Customers today are not only interested in the products they are being offered but all the additional elements of service they receive from the greeting they receive when they enter a retail outlet, to the refund and help that they receive when they have a complaint about faulty product that they have paid for Therefore, customer service have been enhancing gradually the quality and the quantity to satisfy customer’s increasing demands and requirements To initiate solutions for the development of the service, chapter 2 will conduct a minor research on the current situation of individual customer in Ocean bank

CHAPTER 2: CURRENT SITUATION OF THE DEVELOPMENT OF INDIVIDUAL CUSTOMER SERVICE IN OCEAN BANK - HANOI

BRANCH 2.1 An overview of Ocean Bank – Hanoi Branch

2.1.1 An overview of Ocean Bank

Ocean Bank was formally Hai Hung Rural Commercial Joint-Stock Bank which was established in 1993 under the Decision No 254/QD – NH on 12thMarch, 1993, license No.0048/QD – NH on December 30th, 1993 issued by the Governor of the State Bank of Vietnam In 2007, Ocean Bank marked its first year of operation in the model of an urban commercial joint – stock bank under the Decision No.104/QD – NHNN on January 19th, 2007 Previously, the charter capital of Ocean Bank was VND 300 million, it is now raised up to VND 4,000 billion and in 2012 Ocean Bank’s charter capital is VND 5,000 billion The commercial bank has raised the capital charter to VND 5,000 billion in the early of 2013 In January, 2008, the bank issued promissory notes with the total value of VND 2,000 billion and USD 10 million

Following receiving support from four majors shareholders: Vietnam Oil and Gas Group (Petro Vietnam), Ocean Group Joint Stock Company, VNT Services & Trading Limited Company, Ocean bank has experienced strong and sustainable growth, becoming the major bank for the oil and gas industry and for many key economic sectors in Vietnam With proactive and profound investment in IT systems, Ocean bank aims toward the goal of being placed among the Top five leading banks in Vietnam that have the largest number of

customers using electronic banking services and the highest proportion of sales through e-banking channels

Ocean bank is honored to be the recipient of many prestigious awards such

as Strong Brand of Vietnam; ranked 177 in the top 500 largest enterprises of Vietnam; Vietnam Golden Star Award, ranked in the top 100 Banks of Asia Pacific’s Strongest Balance Sheet Award and ranked in the top 500 of Asia Pacific Largest Banks by the Asia Banker Journal (the leading Journal in the field of banking and financial services in Asia Pacific)

2.1.2 An overview of Ocean Bank – Hanoi Branch

2.1.2.1 History of Ocean Bank – Hanoi Branch

Ocean Bank (1 Dao Duy Anh) which was established in 2007 had been a subordinate of the Ocean Joint Stock Commercial Bank – Hanoi Branch before separating to operate as an independent unit On 15th, October, 2010, General director officially signed the Decision No 1864/2010/QD-TGD and No.1865/2010/QD-TGD according to that Dao Duy Anh transaction office has become a new branch – level 1 Nevertheless, during the process of operating since being spitted up to now the branch has been known as Hanoi Branch and has not had an official name In the end of 2010 – the early of 2011, Ocean Bank – Hanoi Branch was transformed into a new model of operation in accordance with strategic orientation of Board of directors

In upcoming years, exception for business plans, the bank plans to classify customer group, segment market, highly focuses on personal customer and SMEs Ocean bank’s motto is to turning the bank into a friendly and reliable

2.1.2.2 Functions of Ocean Bank – Hanoi Branch

The branches of Ocean bank have been formed in accordance with a term strategy of the bank to develop a coherent, effective and convenient business network in order to provide complete services and products and to bring highest benefits to various customer groups in each region Hanoi Branch

long-is acting as a predecessor being responsible for wide and strong network development with newly-setup transaction offices Ocean bank – Hanoi Branch offers various services and product including personal banking services (payment account service, remittance service, guarantee service, Forex dealing etc.,), corporate banking services (going in hand with and support businesses, giving effective financial solutions etc.,) and E-banking

2.1.2.3 Organization of Ocean Bank Hanoi Branch

Ocean bank – Hanoi Branch is being an independent unit since 2007

directly under Ocean bank Head office Presently, the bank is managed by the executive director (Mr Pham Dinh Yen), who are in charge of controlling

different departments and enhancing the performance of the bank Ocean bank has five main sections: Corporate customer department, Personal customer department, Administration department, Accounting department and Treasury department

Accounting section includes two departments of Internal accounting and banking accounting

Personal customer section is responsible for credit management and fund mobilization

Corporate customer section controls credit and mobilization for corporations and international payment

Treasury section covers cash flow in and out, money transferring and money management

Administration section comprises back office activities, administration activities

In addition, there are 5 transaction offices that are under Ocean bank – Hanoi Branch are located in Truong Dinh, Hoang Mai, Le Duan, Linh Dam and Giai Phong Transaction of payment, money transferring, card that are ordered

at Ocean bank – Hanoi Branch (1 Dao Duy Anh) will be moved to Head office

of Ocean Bank and card service center respectively

2.1.2.4 Performance of Ocean Bank – Hanoi Branch

General performance of Ocean Bank – Hanoi Branch

Being one of the major branches of Ocean bank system, Ocean bank – Hanoi Branch is making a great effort to affirm Ocean bank’s position in general and its own capacity in particular Post-tax profit has been amplifying generally since its establishment in 2007 and during the process of independent operation from year 2010 It is clearly evident that in comparison to other branches of Ocean bank system, Hanoi Branch’s profitability was fairly high in

2008 accounting for one-fifth of the North system’s profit In the following years, although its contributions to total profit had downward tendency, profit has been swelled steadily and reached in and around VND 10 billion and more than VND 11 billion for year 2009 and year 2010 respectively

However, in the end of 2010, due to many complicated fluctuations in the world economy, especially, European public debt crisis, the devaluation of the

US dollar, banks had to implement the cutting off of public investment, tightening the credit growth etc., under the Resolution No.11 issued by the SBV causing the shrinkage of profit VND 11.5 billion in profit being recorded in the context of the post - crisis was a “modest” number In 2011, profit after tax underwent notably by VND 10 billion and nearly VND 500 billion for Ocean bank – Hanoi Branch and Ocean bank system respectively Nonetheless, with a great effort and the enthusiasm of the entire staff as well as trust and support of all customers, in 2012, Ocean bank – Hanoi Branch has contributed to successful business result of the whole system (published in media) when Ocean Bank increased 3 level in two ranking of top 500 Vietnamese largest enterprise and top 500 Vietnamese largest private enterprises by reaching profit after tax of almost VND 12 billion (excited in internal computer system)

Table 2.1: Profit result of Ocean bank – Hanoi Branch

(Currency unit: VND billion)

Ocean bank

(Hanoi Branch)

Percentage 23.3% (Appx.) 5% 2.2% (Appx.) 2.17%

( Source: Annual report 2008/2009/2010/2011, Balance sheet)