Research on customer satisfaction for non credit services in joint stock comercial bank for investment and development of viet nam, hoan kiem branch

53 CHAPTER 3: PROPOSE SOLUTIONS TO IMPROVE THE CUSTOMER SATISFACTION WITH THE QUALITY OF NON CREDIT SERVICES AT BIDV - HOAN KIEM BRANCH 55 3.1 Orientation for development of non-credit s

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HÀ QUỐC DŨNG

RESEARCH ON CUSTOMER SATISFACTION FOR NON-CREDIT SERVICES IN JOINT STOCK COMERCIAL BANK FOR INVESTMENR AND DEVELOPMENT OF VIETNAM, HOAN KIEM BRANCH

NGHIÊN CỨU SỰ HÀI LÒNG CỦA KHÁCH HÀNG ĐỐI VỚI DỊCH

VỤ PHI TÍN DỤNG TẠI NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT

TRIỂN VIỆT NAM - CHI NHÁNH HOÀN KIẾM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2018

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

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HÀ QUỐC DŨNG

RESEARCH ON CUSTOMER SATISFACTION FOR NON-CREDIT SERVICES IN JOINT STOCK COMERCIAL BANK FOR INVESTMENR AND DEVELOPMENT OF VIETNAM, HOAN KIEM BRANCH

NGHIÊN CỨU SỰ HÀI LÒNG CỦA KHÁCH HÀNG ĐỐI VỚI DỊCH VỤ PHI TÍN DỤNG TẠI NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT TRIỂN

VIỆT NAM - CHI NHÁNH HOÀN KIẾM

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS PHẠM VĂN HỒNG

Hà Nội - 2018

DECLARATION

The author confirms that the research outcome in the thesis is the result of author‟s independent work during study and research period and it is not yet published

in other‟s research and article

The other‟s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration

Date …./01/2018

ACKNOWLEDGEMENT

“During the process of fulfilling this master‟s thesis, I have received many necessary assistances First of all, I would like to express my sincere thanks to Mr Hong Pham Van PhD, the supervisor of this research, who has created favorable conditions, instructed and helped enthusiastically as well as responsibly to me during the thesis Secondly, I also appreciate the teachers in Hanoi School Of Business And Management – Vietnam National University, the scientists, the authors of scientific papers helping me complete this essay

TABLE OF CONTENTS

TABLE OF CONTENTS 1

LIST OF TABLES vi

LIST OF FIGURES AND CHARTS vii

INTRODUCTION 1

1 Rationale 1

2 Overview of research situation 2

3 Objectives of the research 5

3.1 General objective 5

3.2 Specific objectives 5

4 Objects of the research 5

5 Scope of the research 6

6 Methods of the research 6

6.1 Information collection method 6

6.2 Information processing method 6

6.3 Other research methods 7

7 Structure of the research 7

CHAPTER 1: OVERVIEW OF NON-CREDIT SERVICES AND CUSTOMER SATISFACTION WITH NON-CREDIT SERVICES AT COMMERCIAL BANKS 8

1.1 Overview of non-credit services 8

1.1.1 Definition 8

1.1.2 Characteristics of non-credit services 9

1.1.3 Types of non-credit services 10

1.2 Non-credit service quality and customer satisfaction 16

1.2.1 Definition of non-credit service quality 16

1.2.2 Neccessity of improving quality of non-credit services 17

1.2.3 Definition of customer satisfaction 20

1.2.4 Relationship between quality of non-credit services and customer satisfaction 21

1.3 Some models of researches on customer satisfaction with quality 22

1.3.1 Research model of Parasuraman et al., 22

1.3.3 Research model of the author Mwatsika (2014) 24

1.3.4 Results of interviews with experts and proposed models of the thesis 24

1.4 Experiences of some banks on improving customer satisfaction with the quality of non-credit service of the banks 25

CHAPTER 2: ASSESS CUSTOMER SATISFACTION WITH QUALITY OF NON-CREDIT SERVICES AT BIDV – HOAN KIEM BRANCH 28

2.1 Introduciton of BIDV – Hoan Kiem Branch 28

2.1.1 History of foundation and development 28

2.1.2 Organization structure 28

2.1.3 Business operation results 29

2.1.4 Result of non-credit service implementation at BIDV - Hoan Kiem Branch 31

2.2 Result of survey on customer satisfaction with non-credit service at BIDV, Hoan Kiem Branch 35

2.2.1 Analyze characteristics of survey subjects 35

2.2.2 Scale test 37

2.2.3 Exploratory factor analysis 38

2.2.4 Correlation analysis 41

2.2.5 Regression analysis 42

2.2.6 Customers‟ evaluation of the services of the Branch 43

2.3 Assess the quality of non-credit services at BIDV-Hoan Kiem branch 52

2.3.1 Achieved results 52

2.3.2 Limitations and Causes 53

CHAPTER 3: PROPOSE SOLUTIONS TO IMPROVE THE CUSTOMER SATISFACTION WITH THE QUALITY OF NON CREDIT SERVICES AT BIDV - HOAN KIEM BRANCH 55 3.1 Orientation for development of non-credit services at BIDV - Hoan Kiem branch 55

3.2 Solutions to improve customer satisfaction with the quality of non-credit services at BIDV - Hoan Kiem Branch 57

3.2.1 Solutions to improve the reliability of customers 57

3.2.2 Solution on non-credit service price 57

3.2.3 Solutions to improve service capacity 58

3.2.4 Solutions to enhance empathy 59

3.2.6 Diversife solutions for Non-Credit Services 61

CONCLUSION 63

LIST OF REFERENCES 65

APPENDIX 67

Appendix 01: CUSTOMER SURVEY FORM 67

Appendix 02: The results of data analysis 70

LIST OF TABLES

Table 2.1: Represents business operation results of BIDV – Hoan Kiem Branch 29

Table 2.2: Revenue of main non-credit services of BIDV - Hoan Kiem Branch 32

Table 2.3: Struture of revenue – expense from non-credit service of BIDV Hoan Kiem 34

Table 2.4: Statistics describing the characteristics of respondents 35

Table 2.5: Results of the scale test 38

Table 2.6: Results of testing factor analysis for independent variables 38

Table 2.7: Results of testing factor analysis for dependent variables 40

Table 2.8: Correlation matrix among factors 41

Table 2.9: Results of regression analysis 42

Table 2.10: Evaluation of trust 43

Table 2.11: About price of service 45

Table 2.12: Serving capability 46

Table 2.13: Empathy 48

Table 2.14: Tangibles 49

Table 2.15: Service abundance 51

Table 2.16: Customer satisfaction 52

LIST OF FIGURES AND CHARTS

Figure 1.1 Research of Parasuraman & ctg (1988) 22

Figure 1.2 Research of the authors of Can Tho University 23

Figure 1.3 Research of Mwatsika (2014) 24

Figure 1.4: The proposed research model 25

INTRODUCTION

1 Rationale

In the process of integration into the regional and world economy as well as in the fierce competition environment of the banking industry, customer is the decisive factor in the existence of the Banks Those who win the interest and loyalty of customers will be the winner and develop well Operation towards customers is becoming one of the most important business strategies Collaborating with customers

in business, attracting new customers, consolidating current customers are becoming

an effective business tools with low cost but high business efficiency How to offer customers the best satisfaction is always the common target that almost banks try their best to achieve

Therefore, from 2006 up to now, the Commercial Banks have been in the race to continuously upgrade their services with positive activities aiming at maximizing customer satisfaction such as increasing capital, expanding business network, diversifying products and services, equipping new technologies to provide modern banking services And among above solutions, improving the quality of banking services is the most important one,which attracting much attention

Following general trend of the Industry, the Bank for Investment and Development of Vietnam - BIDV is well aware of the importance of service quality in the bank development In which, Management side of the Bank pays the most attention

to the quality of non-credit services as this is main income of almost commercial banks

in general and BIDV in particular Meanwhile, risks from non-credit servicesare lower than credit services of the bank Thus, besides raising the financial capacity, diversifying types of services, expanding the network to dominate the market, BIDV also focuses on improving the quality of non-credit services To do this well, the Bank must conduct research to find out the components building up the quality of non-credit services through customers‟ expectation and perception

That is the reason why the author decides to choose the topic: “Research Customer Satisfaction with Non-Credit Services at Bank for Investment and Development of Vietnam - Hoan Kiem Branch” as a thesis topic, so as to help the

Bankers get a better view of the quality of their non-credit services and since then find out specific strategiesfor improving the service quality, bringing maximum satisfaction

to customers

2 Overview of research situation

Currently, there are many researches on the quality of banking services and customer satisfaction with each type of service However, each type of service shall have its own characteristics and specialization Thus, it is inappropriate to apply research result of new service for the other ones of the commercial banks

The follows are some researches among many researches on non-credit services and customer satisfaction with each type of service:

+ Parasuraman & et al (1988) developed “SERVQUAL: A Multiple Item Scale for Measuring Consumer Perceptions of Service Quality” In their research, the authors developed the SERVQUAL service quality assessment model The model is five-quality gap in which service quality is function of the fifth gap This fifth gap depends on the previous gap, the 1st, 2nd,3rd and 4th gaps Therefore, to shorten the fifth gap and increase the quality of service, the service manager must try to shorten these distances This research of Parasuraman et al provides an extremely valuable insight into service quality measurement and is a premise for further researches However, the factors in the model given by the authors only measure the quality services generally and needs modifying in order to be more suitable with measuring the non-credit service quality of the bank

+ Research „„Asess customer satisfaction for service quality of payment card at VietinBank - Can Tho Branch” by the authors in Can Tho University (2014) The survey was conducted on 186 customers of Vietin Bank - Can Tho Branch The analytical methods being applied in the research were: Cronbach‟s alpha, Exploratory Factor Analysis (EFA) Binary logistic model was used to test the relation between the influence factors and customer satisfaction on the quality of payment card service at VietinBank Can Tho branch The research result showed that customer satisfaction was established on the basis of the positive correlation with the factors such as

"serving manner", "trust" and "tangible means" The reaseach has provided VietinBank

Can Tho Branch the basis to implement appropriate solutions to improve the quality of card services of the bank to meet the satisfaction of customers who use card servicesat the branches of VietinBank in the future

However, doing business on payment card service is only one of the activities being included in the non-credit services of the Bank The non-credit services not only include payment card service but also many other services such as remittance, payroll, Sec, etc

Therefore, the mode of payment card service quality cannot be applied for the research on customer satisfaction with non-credit service quality of the bank

+ Research of Do Tien Hoa (2007) in the project: “Research Enterprise Customer satisfaction with the products, services of HSBC Bank” In his research, the author based on operation status and development strategy of HSBC Bank to determine customer expectation with the Bank; built the research model to measure customer satisfaction based on studying the factors affecting customer satisfaction; assessed customer satisfaction with the products and services of the Bank; suggested some solutions to improve customer satisfaction with the products and services of the Bank Result of the research is the basis for the deployment of new products and services meeting customers‟ demand and at the same time help implement the development strategy assigned by the Management side of HSBC Bank: "All for the satisfaction of customers" However, the research subject of the author is customer satisfaction with all the service products offered by the Bank so it is inappropriate to apply the result of this research for the non-credit services

+ Research of Mwatsika (2014) on customer satisfaction with ATM card quality

at Malawi Bank in: “Customer satisfaction with ATM banking in Malawi” To conduct the research, the author interviewed the customers using QTM card at Malawi Result

of the research showed five dimensions that affect customer satisfaction with the quality service of ATM card such as: Reliability; Responsiveness; Empathy; Assurance; Tangibles However, due to the limited scale of samples (only 190 samples), the result of the research is not really reliable

+ Mai Thi Hong Nhung (2011) developed the project: “Analysis of Customer Satisfaction with non-credit services of Sai Gon Joint Stock Commercial Bank, Dong Thap Branch” In her research, the author achieved specific targets as follows:

Analysis of business activities of Sai Gon Joint Stock Commercial Bank, Dong Thap Branch

Analysis of actual business activities of Sai Gon Joint Stock Commercial Bank, Dong Thap Branch

Analysis of customer satisfaction with non-credit services of Sai Gon Joint Stock Commercial Bank, Dong Thap Branch

Beside above achieved targets, the research did not build up the quality assessment model of non-credit services Masukujjaman and Afiaakter (2010) in the project “Quality of Categorized Service and Customer Satisfaction in Banking Industry: An Empirical Study on Private Commercial Banks in Bangladesh” The research has achieved specific targets such as:

- Identify service quality, customer satisfaction with the Bank‟s services such as credit and foreign exchange services offered by private commercial banks in Bangladesh

- Distinguish the best services based on service quality of the private commercial banks

- Rank the decisive factors of service quality and customer satisfaction

- Suggest the solution to improve service quality based on the analysis result of the research

Although the research has achieved the targets set initially, the research has not called out the achievements and limits of service quality in the private commercial Banks in Bangladesh, from which it suggests the solution

+ Research of Taikoo Change et al (2013) on “Effects of Service Quality on Customer Satisfaction in Banking Industry” To conduct the research, the authors delivered questionnaires to 150 customers using non-credit services at the commercial banks After that, the group used SPSS method to process collected data and from

which, suggested the solutions to improve customer satisfaction with service quality of the banking industry

However, since the subject of the research is quite wide “customer satisfaction with service quality in banking industry” while each bank has its own specific characteristics with the same given criteria, customers can satisfy with this bank but another Therefore, the sample model developed by the group does not assure accuracy and reliability

Thus, up to now, the author has not seen a comprehensive research on customer satisfaction with service quality of non-credit services at commercial Banks in Vietnam, especially BIDV, Hoan Kiem Branch Therefore, this project shall have different points in compared with the previous researches and fill the gaps of the previous researches

3 Objectives of the research

3.1 General objective

Study customer satisfaction with non-credit service quality at BIDV - Hoan Kiem Branch in order to suggest the best solution to improve non-credit service quality for the maximum satisfaction of the customers

3.2 Specific objectives

- Systematization of theoretical background on non-credit services of the banks and research model for customer satisfaction with non-credit service quality at commercial banks

- Study customer satisfaction with non-credit service quality at BIDV - Hoan Kiem Branch, from which,offer assessment of the achievement as well as limits in service quality of the bank to suggest specific solutions

- Suggest solution and recommendation in order to improve customer satisfaction with non-credit service quality of BIDV - Hoan Kiem Branch

4 Objects of the research

Customer satisfaction with non-credit service quality of BIDV - Hoan Kiem Branch

5 Scope of the research

About space:

+ The research was conducted at BIDV - Hoan Kiem Branch

About time:

+ The research was conducted in the period from 2014-2016

About content: The research focused on actual business activities of non-credit service and surveyed customer satisfaction with non-credit services at BIDV - Hoan Kiem Branch

6 Methods of the research

6.1 Information collection method

To conduct the research, the author collected secondary and primary information Secondary information is the information directly related to actual business activities of the non-credit services of the bank, including: Business result of non-credit services, numbers of non-credit products, sales of each non-credit service product, etc The secondary information was directly collected from BIDV - Hoan Kiem branch in the period from 2014-2016

Primary information: The primary information was collected by delivering survey questionnaires, interviewing customers using non-credit service products of BIDV - Hoan Kiem brach To conduct the interview, the author got the information about customers using non-credit services at the branch and asked the customers to share the target of the survey and send customers the questionnaires via email The numbers of conducted samplesare 244

6.2 Information processing method

Since this thesis used both secondary and primary information, the collected information shall be processed according to two methods as follows:

+ With the secondary information, after collecting, the author processed data and calculate figures with Microsoft Excel file The result after being processed with Excel file shall be used to analyze the business activities of non-credit servicesat BIDV - Hoan Kiem branch

+ With the primary information, after collecting, the author processed data with SPSS 20.0 software The collected data was processed with SPSS to check the reliability Result of the processed data shall show customer satisfaction with non-credit services of BIDV - Hoan Kiem branch

6.3 Other research methods

- Analytical and synthesis methods: Based on the collected data and information, the author shall analyze, evaluate and summarize to give out scientific conclusion and proposals suitable with the theory and practice of customer satisfaction with non-credit services

- Expert method: The expert method was used to identify the factors that affect customer satisfaction with non-credit services at BIDV - Hoan Kiem branch The experts were management members of the Bank and the staffs working in the non-credit field of the Bank

7 Structure of the research

The thesis includes 3 chapters with the structure as follows:

Chapter 1: Overview of credit service and customer satisfaction with credit service at commercial bank

non-Chapter 2: Evaluate customer satisfaction with non-credit services at BIDV - Hoan Kiem branch

Chapter 3: Suggest solution to improve customer satisfaction with non-credit service quality at BIDV - Hoan Kiem Branch

CHAPTER 1: OVERVIEW OF NON-CREDIT SERVICES AND CUSTOMER SATISFACTION WITH NON-CREDIT SERVICES AT COMMERCIAL BANKS

1.1 Overview of non-credit services

1.1.1 Definition

+ Banking services

The Law on Credit Institutions of Vietnam (2010) has not yet come up with a specific concept or explanation for the concept of banking services but only the term

"banking operations" mentioned in paragraph 12, article 4: "Business, regular supply

of one or several of the following operations: receipt of deposits; credit extension; providing payment services via account" However, which one is the currency business and which one is banking services is still not clear This is one of the shortcomings of the Law on Credit Institutions of Vietnam

In his book named “Commercial bank management”, Peter S.Rose wrote: “Bank is one kind of financial organization providing a list of the most diversity financial service, especially credit, saving, payment services and operating the most financial function in compared with other business organization in the economy” “All the banks operate with

3 basic activities, which are capital mobilization, capital using activity and other activities such as payment, budget”, he explained (Peter S.Rose, 2001)

So banking services can be understood by two aspects:

Firstly, in a broad sense, banking services include all monetary, credit, payment, foreign exchange activities of the banking system This understanding is consistent with the differentiation of banking services in the financial services of WHO and the US-Vietnam FTA, as well as the classification of many developed countries

Secondly, in the narrow sense, banking services only include non-monetary business activities and banking operations according to financial intermediary function (deposits, loans mobilization) – According to that, banking services only include off-balance sheet, fee charging activities such as money transfer, foreign exchange business guarantee, international payment

+ Non-credit services

In traditional service business activities of Commercial Banks, non-credit services with payment activities are the most typical activities in which cash and non-cash payment are the most typical This is also the basis for commercial banks to raise capital through the form of depositing money into banks with increasing utility Almost other non-credit services of commercial banks aim to increase the utility of the service and efficiently use the income of customers through non-credit services day by day

Non-credit services can be generated simultaneously with the operation of credit services (capital mobilization and capital supply) of commercial banks in order to meet the demand on deposits and loans of customers as desired In addition, some non-credit services operate independently of credit operations such as recovering the consumption amount of products for customers; payment for input factors of the production process; payment of salary through accounts; transferring tax payments to customers through services such as ATM cards; Cheque; money transfer

Following factors can be used to recognize the banks using non-credit services: Firstly, when making a transaction with customers, the bank does not have to use capital (or little of capital being used if any) for the transaction

Secondly, when making a transaction with the bank, customer must pay fee to use the services provided by the bank Income of the bank is now counted under fee without interest and interest payment (interest rate) as credit services

From such analysis, the author would like to give views on non-credit services as follows: “Non-credit services are the services provided by the bank to meet customer demands on finance, monetary in order to directly or indirectly bring the bank an income equaling the fees which are identified to be collected from customers, not including credit services”

1.1.2 Characteristics of non-credit services

In addition to general characteristics of banking services (intangibility, insecurity, volatility, airworthiness), non-credit services also have following characteristics:

- Beside initial capital investment for technology facility and human resources fee, when making non-credit service transaction, commercial banks do not use or use

little of initial capital to perform its obligation right when implementing the contract This is one of the advantages that the banks should exploit to develop non-credit services

- The non-credit services might bring high profit to the commercial banks since the transaction fee is usually low while the bank just mainly make use of its available technology facility

- The non-credit services of commercial banks are classified into relatively safe business areas with low risk Thus, expanding non-credit services will help commercial banks limit risks such as interest rate risk, especially credit risk

- The non-credit services of commercial banks are highly supportive and interlinked The services are always required to come together, the existence and development of this service is associated with the others Therefore, the bank's non-credit services require uniform development

- The non-credit services are extremely diverse dand constantly developed Currently, there are many types of non-credit services in the world With each type of service, the banks give diversity supply method accordingly

- There are many types of non-credit services being started and developed with the support of information technology Customers do not need to go to the bank but they can carry out transactions through modern channels such as E-Banking, Home Banking, etc at home

1.1.3 Types of non-credit services

1.1.3.1 Traditional non-credit products

+ Payment service

Payment service plays an important role in the operation of commercial banks, creating good condition for the development of many other banking services and is a basis for the non-cash payment in the economy Looking at the payment system of a bank, one can assess the level and operation scale of that bank There are the following types of payment services:

* Domestic remittance payment:

Remittance payment is a banking service in which a bank transfers money to another bank per request of individuals, organization or banks by withdrawing money from customer‟s account according to request crediting to the beneficiary of the account holder After completion of payment services for customers, the bank collects

a certain fee In order to perform payment requests of customers, the banks use cash payment methods and instruments

non-Payment methods include: Intra-bank payment; non-Payment between branches within the same system; Interbank and Treasury interventions within the region and country

Non-cash payment instruments include: Cheque; Payment authorization; Collection orders; Payment card

* International remittance payment

International payment is the payment of monetary obligations and requirements arising from economic, financial and credit relations among international economic organizations, firms and among individuals of the various countries to end a cycle of activities in the field of foreign economics by money transfers or clearing accounts Unlike domestic payment within a country, international payment is usually associated with the conversion of the currency of the country to the currency of another country Main methods of international remittance include: Telegraphic Transfer; Collection of payment; Letter of Credit; Open account; Payment via overseas accounts

The major international payment instruments are: Bill of Exchange; Money order; Cheque

* International remittance payment:

International remittance is payment of monetary obligations and request arising from economic, financial, credit relations among the international ecomnomic organizations, firms, individuals of the different countries to complete an operation cycle in the field of foreign trade through money transfer or clear accounts Unlike domestic payment, international payment is usually associated with currency exchange between this country and another one

There are main international remittance payment methods as follows: Telegraphic transfer; Payment for collection; Letter of Credit; Open account; Payment for oversea account, etc…

Main instruments of international payment are bill of exchange; promissory notes; cheque

+ Other traditional non-credit services

* Conservation and consignment services

The bank stores stocks, investment fund certificates, insurance contracts, property certificates, testaments and other valuables These can be stored in an "open" mean with an attached receipt detailing what is stored or is in "closed" mode, which means being stored in closed boxes or sealed envelopes

* Management and trust services

To conduct this service, the bank shall follow customer mandate such as making investment trust, being executor in certain cases or managing property and making payment for the beneficiaries at the appropriate time

1.1.3.2 Traditional non-credit products

Supply modern payment modes

- ATM, Cash card

ATM cards are issued on the basis of a bank deposit, which is used to withdraw cash at ATMs

Cash cards are plastic cards with a certain amount of money on the card, which shall be deducted directly on the card when buying goods or services

- Cheque Cards are usually issued for customers whose current account is at least

18 years old to withdraw cash at banks and to secure payment for goods and services Domestic Cheque cards are only available for domestic withdrawals When using this card at another bank, the customers must pay an additional fee provided that the banks must communicate with each other

- Debit Card is issued by a bank for customers to pay for goods and services Card users must have a current account or deposit account and must have a balance at the bank issuing the card Customers can use the card for payment of goods and

services at any place where bank card reader of that bank is available without going directly to the bank When using the card for payment, the cardholder's account will be immediately debited and the accounts of the sellers of the goods or services will be credited through the automatic computer Debit cards have some brands such as VISA, Master Card, ACB, Success (VBARD), Connect 24 (VCB), Multi Card (Dong A Bank)

- Credit Card are considered as bank cards as they are usually issued by the banks The bank will set a certain credit limit for each cardholder and cardholder can only use within that limit until the payment due date to the banks The basis of using credit cards is to issue a bank loan Credit card have some brands such as VISA, Master Card

- Travel and Entertainment Card – T&E Card: Users of this card do not have to pay interest but they must complete the payment within a month Cardholders are mainly business travelers or highincome earners and the places accepting this kind of card is very few This card includes American Express Card and Dinner Club To stimulate and create competition, when using this card, cardholders are usually offered some other free services

- Automatic Tellers Machine: At banks, point-of-sale, densely populated places, the banks often place automated teller machines, which are directly connected to the payment centers Customers can use ATM cards (magnetic card or smart card) issued

by the bank to withdraw money at ATMs without going directly to the banks When having need to withdraw cash, the customers insert the cards into the ATM and press the PIN on the keyboard Via information stored on the magnetic strip or electronic chip, the computers can "look up" the account of the customers and inform the cardholder about allowed withdrawing amount and balance in the customers‟ accounts

or operate a payment order provided that the payee bank information is fully inputted ATMs have passed through many generations From operating simple function as money withdrawals, now the ATMs of new generation operate as a mini bank with various functions such as withdrawals, payment, etc… Therefore, placing new generation ATMs outside the head office of a bank is actually for network expanding

Mobile Banking

Customers can stay at home and send the banks their requests such as balance information checking, money transfers, making payment for other account card holders, checking information related to exchange rate, fees for services, transaction statement, customers‟ loans and customers loans near due date… These requests are made via mobile network and modem equipment To use this service, customers must

be provided an assess code and use it for their request fulfillment At the same time, the banks set up voice recognition equipment, encrypted equipment and record customers‟ requests for assurance of transaction safe and accuracy

PC-BASED BANKING

Customers use PC to make transactions with the banks via the network connected directly with the banks To prevent unauthorized use, each account holder must have a name, password to log in the program, ensuring safe and security Customer requirements will be completely processed automatically with the data saved on the bank's server Customers and the banks are connected through the three-layer security which is closely integrated In addition, system data basis and customers‟ requests are algorithmically coded before being transferred to the bank to enhance safe of the system This service includes:

- Update balance

- List in details the payment orders

- Allow transfer of funds between different bank accounts

- Allow payment with other account holders

INTERNET BANKING

By using PC, modem, telephone line and registering their addresses on banks PC, customers can use this service Advantage of this service is that the bank can serve customers‟ requests every 24 hours per day, 7 days per week without the limit of customers‟ place Conditions for this service using are:

- Available developed information technology infrastructure Internet banking is

an indispensable part of digitization and information technology development, especially electronic computer engineering IT infrastructure includes the coverage of

the internet, standards of the enterprises, whole country and match of those standards with international standards Application engineering and application equipment should be applied for not only each enterprise but also the whole country That system should be applied for every individual through internet

- Competent staffs owning good management skills, being able to operate the system following international standards; good information technology specialists who regularly update new information and be able to design excellent application software contributing to build a more and more completed, accurate and safety network

- Adequate economic and legal environment Internet banking can only be processed once its legality is accepted through the legal approval of the electronic transaction, electronic signatures, digital signatures, telegraphic payment, etc… In addition, only when the economy – society has been developed to a certain level, can the demand and capability of using internet banking be generated

Consultancy service

With this service, the bank can meet the demand of individuals, enterprises and organizations on financial and management consultancy The bank specialists shall consult their customers issues about financial planning and management such as building business manufacturing solution, expense calculating, costing, basic investment assessment, income forecast and asset management, business strategy consultant…

Brokerage, securities issuance agents, securities preservation and management services When the securities market comes into operation, securities companies of commercial banks will provide securities underwriting services; Securities companies shall act as a brokerage house for securities trading, investment and reservation consultancy, securities management to collect fees, commissions Even when the securities market has not come into operation, the securities company under the commercial bank can still act as an agent to issue anonymous shares to joint stock companies

Insurance services

The banks provide insurance services to all customers through their subsidiaries or through their insurance brokers There are some insurance services in use as follows: life insurance, credit insurance, public liability insurance, health insurance, etc…

Guarantee service

Guarantee is the indirect guarantee with the participation of three parties, in which the third party (guarantee party) agrees to take responsibility of the loans for the second party (its customer) If the second party cannot pay the loans for the third party, the bank guarantee then means that the bank shall accept to implement the obligations instead of its customer in case the customer does not implement its obligation with the partner The bank providing guarantee service under following means: guarantee for the customer lending capital from another bank, letter credit guarantee, bid guarantee, contract performance guarantee, product quality assurance guarantee, payment completion guarantee

Commercial paper and valuable paper discounting service

Commercial paper and valuable paper discounting is the operation of commercial banks in which the banks shall receive and make advance payment of valuable papers before due date for the beneficiary an amount following paper records after deducting discounted interest, commission and other fees

Actually, discounting is an operation in which the bank pays for a short time bond under that bond‟s lower price, from which the companies, units and individuals (beneficiaries) can have needed amount for payment or business demand

With the banks, discounting operation allows the bank to improve its capital using efficiency, bringing interest from commission discounts and other fees

Overnight asset management

Making use of good infrastructure with solid store ensuring security requirements, the banks perform overnight asset management The overnight asset might be cash, valuables, valuable papers, etc…

1.2 Non-credit service quality and customer satisfaction

1.2.1 Definition of non-credit service quality

Since there have been no accurate definition of non-credit service quality, the author shall build this definition basing on approaching service quality, specifically as follows:

Zeithaml (1987) explained: Quality of service is customers‟ appreciation for the general superiority of an entity It is a kind of attitudes and consequences from a comparison between what is expected and what we receive

Lewis and Boom said: Service is measurement of how well a service meets customers‟ demands Creation of a good service means that customers‟ expectation is consistently met

Parasuraman.V.A Zeithaml and L.L Berry ( Parasuraman et al According to Nguyen Dinh Tho et al., 2003) defined quality of service as expected gap about customer service product and their impression and feeling after using that product Parasuman (1191) explained that the best way to forecast customers feeling, it is to recognize and sympathy with their expectation It is neccessary to develop a system and after that, we can have a good strategy for an effective service This can be considered as the most general definition, fully including meaning of service and it is also the most accurate when considering quality of service basing on customers‟ point

of view, considering customers as centric view

For some other theories, Lehinen & Lehinen (1982) said that quality of service must be assessed based on two aspects: (1) process of providing service (2) result of service Gromroos (1984) also suggested two fields of service, which are (1) technical quality and (2) function quality Technical quality relates to what is served and function quality shows how we are served (Nguyen Dinh Tho et al., 2003)

From above definition of service, the author can generalize about non-credit service quality of banks as follows:

Non-credit service quality of a bank is that a bank continously makes quality of the non-credit services offered by meeting customers‟ demands and expectations or a bank satisfies its customers with what they receive from the offerred service through application of modern technology, improving qualification of bank‟s staffs Therefore, improving quality of non-credit services means the maximum satisfation of customers‟ demand and expectation with these services

1.2.2 Neccessity of improving quality of non-credit services

* With society and economy

Firstly, good quality of non-credit services shall facilitate the integration into the international economy and connection of financial services: General trend of banking industry nowadays is that multi fuction banks with global branches multilize cross-border services Currently, there are various types of services In order to intergrate with common banking system of the world, each bank must self develop its services Banks which are incapable of improving various types of services can cooperate with each others to support and try to optimize services for the customers

Secondly, Good quality of non-credit services will accelerate the process of money circulation, saving social costs That individuals open accounts and use payment services of the better bank, shall help to accelerate circulation of currency in the economy, raise the circle of currency, capital flows, or speed up of currency circulation

Thirdly, non-credit services of commercial banks provide a large source of foreign exchange (express money transfer service), contribute to the increase in national foreign exchange reserves, improve the balance of payments and significantly contribute to the industrialization and modernization of the country

Fourthly, good quality of non-credit services creates good condition to promote manufacturing, good circulation and development of services Through non-credit services, busniess card holders can make transaction of goods, services, ensuring smooth process of reproduction and good circulation At the same time, providing utility services helps expand the rage of approach and consumption of individuals and businesses, contributes to the promotion of the production and distribution of goods Fithly, Non-credit services facilitate the development of other service sectors As non-credit services are widely related to various industries, fields of production and daily life, the development of this service shall facilitate the development of other services For example, import-export industry shall be limited if the payment service through the bank is not smoothly operated Besides, the development of payment service requires advanced information technology also Other industries such as tourism, post and telecommunications, aviation will develop accordingly

* With the banks

Firstly, with good non-service quality, the bank can attract many customers, from which expanding the market and improve its position Customer is the decisive factor for the success of each bank so expanding customer is common goal of every bank Once quality of non-credit is improve, the bank shall attract new customers, keep current customers and from which improving its position in the market

Secondly, good quality of service creates good condition for the bank to increase income and profit Also, good quality of service will boost service income, help the bank stablize the profit Through this activity, the bank can collect fees of money transfers, cheque payment, securities, card service, account management, internet banking and other fees Income from these kinds of fee contribue a remarkable part into the income and profit of the bank

Thirdly, good non-service quality helps expand the scale and network, increase the bank‟s position in the market The changes of banks in the past time have shown that non-credit services have motivated the banks to develop the distribution panels and expand network The media sales channels such as branches, transaction offices have been more and more developed along with the increasing of the modern channels like ATM, POS, KIOS network,etc Network of some banks is not only in the range

of a country but also develop well in other countries such as America, England The development of the network helps improve image and brand name of the banks in customers‟ mind

* With customers

Good quality of non-credit services will satisfy customers and help them have the trust and decide to buy goods quickly Besides, good quality of service also save some factors as follows:

The first factor is cost saving Quality of service is associated with technology factor The transaction of the bank is more and more automated, operation of the bank

is more and more standard As a result, free staffs are reduced, effectiveness per unit of time increases and fees for redundant jobs without bringing business profit are totally cut Besides, new machines and equipments, modern technology also help to reduce expenses of the banks All above factors have well contributed to the expense reduction

of the banks, from which the customers are satisfied with good services under the lowest price

The second factor is time saving Quick and accurate service transactions save time for customer when making transactions This helps bring benefits to both individual and enterprise customers Nowadays, in modern society, saving time is very important to customers since they do not have to spend time on waiting for the service

* International remittance payment:

International remittance is payment of monetary obligations and requests arising from economic, financial, credit relations among the international ecomnomic organizations, firms, individuals of the different countries to complete an operation cycle in the field of foreign trade through money transfer or clear accounts Unlike domestic payment, international payment is usually associated with currency exchange between this country and another one

There are main international remittance payment methods as follows: Telegraphic transfer; Payment for collection; Letter of Credit; Open account; Payment for oversea account, etc…

Main instruments of international payment are bill of exchange; Promissory notes; Cheque

1.2.3 Definition of customer satisfaction

There are many different difinitions of customer satisfaction as well as debates about this Many researchers believe that customer satisfaction is the difference between customers‟ expectation and what they actual feel after using the service According to Formell (1995), satisfaction or despair after consumption is defined as customer perception between their expectation before consumption and actual feeling after consumption

Hoyer and MacInnis (2001) argue that satisfaction can go with feelings of acceptance, happiness, help, excitement and joy

According to Hansemark and Albinsson (2004), customer satisfaction is customer‟s overall attitude towards a service provider, or an emotional response to the

difference between what the customer anticipates and what they actually receive, for the fulfillment of certain needs, goals or desires

According to Zeithaml & Bitner (2000), customer satisfaction is the customer's assessment of a product or service that meets their needs and expectations

Kotler (2000) defined satisfaction as a feeling of satisfaction or despair of a person as a result of actual comparison of the product (or result) in a relation with their expectation

Customer satisfaction is that the customers base on their understanding with a product or service to establish subjective assessment or judgment That is a kind of physiological feeling after customers‟ demand is fully met Customer satisfaction is established on the basis of the experience got from purchasing or using of a product or service After purchasing and using a product, customer shall compare between the reality and expectation, from which they will have satisfaction or despair

Thus, customer satisfaction is the comparison between actual benefits perceived and expectations If the actual benefits are not as expected, the customer will be disappointed If the actual benefit meets expectations then the customer will be satisfied If the actual benefit is higher than the customer's expectation, it will result in

a higher satisfaction or satisfaction much more than expected

1.2.4 Relationship between quality of non-credit services and customer satisfaction

The existence of all major business is decided by customers "The customer is the king" Customers are those who determine sales based on their level of satisfaction with the quality of the product or service they use Therefore, the motto of the suppliers of products and services, including commercial banks, is to satisfy the expectations of customers As a result, customers are likely to continue purchasing and using the products or services

Commercial banks generally believe that the quality of banking services in general and the quality of non-credit services in particular and customer satisfaction are consistent However, many other studies suggest that these are two different concepts but closely interrelated The quality of banking services as well as the quality

of non-credit services is the most influent factor on customer satisfaction If

commercial banks provide customers with good quality of non-credit products and services that meet their needs, commercial banks will somehow satisfy their customers

Therefore, to improve customer satisfaction, commercial banks must improve quality of banking service or merely quality of non-credit service Quality of non-credit services- only focuses on service factors but it is the important source, which is created first and then decides customer satisfaction Therefore, we can measure customer satisfaction through measurement of non-credit service quality of commercial banks and vice versa

1.3 Some models of researches on customer satisfaction with quality

1.3.1 Research model of Parasuraman et al.,

The Servqual model (Parasuraman, 1988) is the most commonly used service quality model in marketing research According to Parasuraman, service quality cannot

be generally determined but depends on the customer's perceptions of the service and the perception is considered basing on lots of dimensions The Servqual model is based on the perception that perceived quality of service as a comparison between customer expectations and their actual perception

The Servqual model considers two key aspects of service quality as the outcome and process of the service that are studied through twenty-two scales of five criteria: Reliability, responsiveness, tangibles, assurance, and empathy

Figure 1.1 Research of Parasuraman & ctg (1988)

Customer Satisfaction

Reliability

Empathy

Responsiveness Assurance Tangibles

1.3.2 Research model on customer of the authors of Can Tho University

According to the researchers, when an enterprise increases by 5% of loyal customers, their profit will increase by 25-85%, or on average, one customer who dissatisfies will tell nine other people about this annoyance and one person who satisfies will tell five other about their good perception towards products and services

of the enterprise Therefore, when one enterprise does not satisfy their customer, they will loose not only this customer but also potential ones The banking sector is like that the improvement of customer satisfaction will enable the banks: To mobilize alot of highly liquid capital; Increase profit for the banks; Increase the competitiveness of the banks in comperison with the rivals; Improve prestige and build brand for the banks; Due to the importance of customer satisfaction, the authors design research model with the factors as follows:

Figure 1.2 Research of the authors of Can Tho University

This model is proposed by the authors based on the model of Servqual of Parasuraman (1988) However, according to the authors, service abundance is also a factor affecting customer satisfaction The more various products and services are provided by the banks, the more they meet the increasing needs of customers Therefore, the authors add the factor “service abundance” to the research model

n Reliability

1.3.3 Research model of the author Mwatsika (2014)

In order to develop the research model, Mwatsika (2014) has depended on the relation between service quality and customer satisfaction Accordingly, customers only satisfy with the services provided by the banks when these services ensure good quality On the other hand, when assessing service quality, the author depends on the components of Parasuraman‟s scale (1988) with five factors: Tangibles, Reliability, empathy, Responsiveness assurance Since then, the model of Mwatsika is designed

as follows:

Figure 1.3 Research of Mwatsika (2014)

1.3.4 Results of interviews with experts and proposed models of the thesis

After studing the previous researches on customer satisfaction with the quality of the banking service in general and quality of non-credit services in particular, the authors realize that previous research model have mostly been designed on the basic of the service quality model of Parasuraman (1988)

Therefore, to make difference from the previous researches as well as to create new points in this thesis but ensure the inheritance, the authors will collect all components of the previous models and replace the factor assurance by service price Because, the assurance is the willingness to help, the assurance to the needs of customers is also the ability of bank staffsin resolving complaints, requirements (Pham Thi Khanh Trang, 2013).Therefore, according to the authors, the assurance is also a

Tangibles

Service quality

factor that reflects the ability of the bank staffs that can be involved in the responsiveness factor

On the other hand, customers are required to pay transaction fee in order that the banks will provide services for the customers It is called non-credit service The income of the banks in providing non-credit services mainly depends on the service price but not the interest like credit service Therfore, the banks will offer resonable fees to not only get the highest profit but also make sure to compete with other banks

in ensuring customer satisfaction From that, it can be reliazed that service price is indispensable component when carring out the research on customer satisfaction with the quality of non-credit services

Based on above reasons, the author proposes the research model as follows:

Figure 1.4: The proposed research model

1.4 Experiences of some banks on improving customer satisfaction with the quality of non-credit service of the banks

Service price Responsiveness

Empathy Tangibles

service abundance

Customer satisfactio

n Reliability

investment management services for customers, online consulting services,online payment and tax declaration services, tax payment via internet banking for customers, with suitable and competitive fees This is high light of Agribank in comperison with other services of other banks

Agribank also officially commits to the confidentiality of customer information and transaction history of customers

In addition, Agribank also pays attention to qualification of insurance services, especially long-term insurance services These contracts provide Agribank with stable fees and long-term capital This very strong source of financial has created good condition for Agribank to improve its non-credit services in compared with the competitors

* Vietcombank’s experiences

Along with its strong financial strength, VIETCOMBANK builds up an aggressive marketing strategy to do business VIETCOMBANK always knows how to make use of all oportunities to exploit old groups of customers and develop new customers while other banks have not really focused on this issue Thus, VIETCOMBANK proactively finds its cutomers without being in inactive situation as other competitors in the market

Besides, VIETCOMBANK also focuses on improving quality of retail services in the trend of more and more demands for investment and financial options.This helps VIETCOMBANK diversify its services so that customers can have more choices VIETCOMBANK also offers new services such as payment via mobile banking or currency exchange service for individual customers, maintaining the operation of ATM system 24/7 to help VIETCOMBANK become trustworthy bank with customers

There is a new point that VIETCOMBANK always be serious in investment of both finance and content when builing its business strategy This helps VIETCOMBANK always be one of the leading banks in the area of effective business and be appreciated with the quality of their services

Experience lessons for BIDV – Hoan Kiem Branch in improving quality of non-credit quality

From the experiences of improving quality of non-credit services of some commercial banks in our coutry, these are lessons for improving quality of non-credit services of BIDV – Hoan Kiem Branch:

- BIDV- Hoan Kiem Branch needs to pay attention to quality of modern IT network throughout the province to provide customers with convenient and efficient financial services

- Improving quality of non-credit services must be the harmony of three basic elements which are: users (customers), service provider (banks) and environmental factor

- Expanding the cooperation with domestic and foreign banks Although improving quality of non-credit services mainly bases on the bank‟s internal strength, expanding cooperation with domestic and foreign banks shall help the bank to learn experience of improving quality of services

- Besides diversifying non-credit services, the bank should pay attention to quality of these services In addition to traditional non-credit services, BIDV – Hoan Kiem Branch also needs to focus on quality of modern non-credit services

- In addition to improving quality of services, BIDV – Hoan Kiem Branch should also have appropriate marketing strategies for high efficiency This is also good way to promote the new image of the bank to customers, especially potential customers

CHAPTER 2: ASSESS CUSTOMER SATISFACTION WITH QUALITY OF

NON-CREDIT SERVICES AT BIDV – HOAN KIEM BRANCH

2.1 Introduciton of BIDV – Hoan Kiem Branch

2.1.1 History of foundation and development

BIDV – Hoan Kiem Branch has been founded since July 1st, 2010 with some specilized sections separated from BIDV – No 1 Transaction Branch, which is based

at BIDV Tower - 194 Tran Quang Khai Street, Hoan Kiem, Hanoi (headquarters) Over the past seven years, from a young branch, BIDV Hoan Kiem has become one of the 20 major branches of BIDV system with total assets in 2016 reaching nearly

11 thousands and 7 hundreds billion dongs, contributing hundreds of billion dongs of actual profit to common achievement of BIDV

2.1.2 Organization structure

Currently, BIDV Hoan Kien has total 143 staffs, which are divided into following sections:

(i) Management: 01 Director and 04 Deputy Directors

(ii) Customer management Sections

+ Wholesale section: include 3 departments of business customer management: 1,2,3

+ Retail section: include 2 departments of individual customer management: 1,2

(iii) Risk management section: include Department of risk management

(iv) Operation Section includes

+ Department of Credit management;

+ Department of business customer transaction;

+ Department of individual customer transaction;

+ Department of service and storage budget management

(v) Internal management sector includes

+ Department of Organization and Administration;

+ Department of Financial planning

(vi) Subsidiaries include 5 transaction departments

+ Hang Voi Department of transaction

+ Hang Giay Department of transaction

+ Hang Chieu Department of transaction

+ Thuoc Bac Department of transaction

+ Hnag Dau Department of transaction

2.1.3 Business operation results

The following table represents business operation results of BIDV – Hoan Kiem Branch during the period from 2014 to 2016 The result is clearly reflected through target groups, including target of scale, target of effectiveness and target of structure, quality

Table 2.1: Represents business operation results of BIDV – Hoan Kiem Branch

Unit: Billion dongs

4 Credit outstanding balance at the end

4 Net service (Not include foreign

Target of scale: In general, the indicator shows that scale of the bank tended to

increase in the period from 2014 to 2016 However, the increase in the targets was not the same In particular, total asset in 2014 was 7,056 billion dongs Until 2015, this figure increased to 8,702 billion dongs and 11,688 billion dongs in 2016 It can be seen that total asset remarkably increased, the bank has been expanding the scale day by day and boosting credit activities for effective using of asset Capital mobilization at the end of the period sharply increased In 2014, capital mobilization was 6,208 billion dongs, until 2015 it increased to 8,211 billion dongs and achieved 10,425 billion dongs

in 2016 In the fierce competition circumstance in the field of currency financial currently, the bank has developed suitable strategy of capital mobilization in order to attract capital source in the economy for its activity Average capital mobilization also gradually increased from 5,695 billion dongs to 9,056 billion dongs Credit outstanding balance in the end of the period in 2014 was 3,972 billion dongs and increased to 4,903 billion dongs in 2015 Until 2016, this figure was 5,383 billion dongs At the same time, average credit outstanding balance increased from 3,283 billion dongs in 2014 to 4,369 billion dongs in 2015 and 4,870 billion dongs in 2016 The increasein credit outstanding balance shows that the bank has been paying much attention to expanding and diversifying categories of loan in order to attract customers

Target of effectiveness:

Profit before tax was not stable In 2014, profit before tax was 164.26 billion dongs In 2015, it increased to 227.13 billion dongs and dramatically reduced to 136.35 billion dongs which is much lower than 2014 year Revenue – expenditure gap

in 2014 was 196.88 billion dongs Until 2015, this gap was 234.73 billion dongs and reduced to143.87 in 2016 This result reflects unstable capability of generating profit

of the bank The bank should manage to maintain revenue growth and reduce operation expenses in the next years Net service revenue (not include foreign exchange business) in 2014 was 62.95 billion dongs and increased to 79.12 billion dongs However, until 2016, this revenue reduced to 56.26 billion dongs Net revenue from retail activity in 2014 achieved 86.24 billion dongs and increased to 9.26 billion dongs in 2015 and 8.01 billion dongs in 2016 It can be seen that net revenue from

retail activity and net service accounts for majority revenue of the bank‟s total revenue Besides, these two income sources have been reduced and unstable through the years, leading the reduction of profit before tax The bank should focus more on marketing programs and diversify retail activities and net service in order to attract customers In addition, it is necessary for the bank to promote the exploitation of potential from card services in order to balance the structure of income sources and prevent the risk

Target of structure, quality:

Bad debt ratio has been lower and slightly reduced in recent years In 2014, bad debt ratio was 1.00% In 2015, this ratio increased to 1.18% and reduced to 0.92% in

2016 Debt ratio in group 2 tended to sharply reduce from 1.6% in 2014 to 0.42% in

2016 This result also well reflects the policy of eliminating bad debt and high provisioning from many years ago and bringing the level of bad debt to the normal level, starting a period of stability and growth of BIDV, Hoan Kiem Branch Medium, long-term credit outstanding balance tented to gradually increase from 1,785 billion dongs in 2014 to 1,969 billion dongs in 2015 and 2,223 billion dongs in 2016 High increase in medium, long-term credit outstanding balance shows that the bank has been expanding and developing capital lending, improving its prestige and attracting customers However, TDH/TDN outstanding debt ratio tended to reduce Specifically, this ratio in 2014 was 44.9% and reduced to 41.3% in 2016 Scale of medium, long-term credit accounts was less than short-term credit and tended to reduce This shows that the bank with scale of medium, long-term credit has not met demand of customers

as well as the economy

2.1.4 Result of non-credit service implementation at BIDV - Hoan Kiem Branch

Non-credit services have been implemented quite diversified, focused on main activities such as Commercial Letter of Credit and Guarantee Services; Domestic and international payment services; treasury services; card service; trust agent and other non-credit services such as insurance, foreign exchange services and real estate brokerage and investment services