Improving the retail banking services in bank for investment and development of viet nam – thai ha branch

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --- TRỊNH VIỆT HOÀ IMPROVING THE RETAIL BANKING SERVICES IN BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – THAI HA BRANCH PHÁT T

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

-

TRỊNH VIỆT HOÀ

IMPROVING THE RETAIL BANKING SERVICES

IN BANK FOR INVESTMENT AND DEVELOPMENT

OF VIET NAM – THAI HA BRANCH

PHÁT TRIỂN DỊCH VỤ NGÂN HÀNG BÁN LẺ TẠI NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT TRIỂN

VIỆT NAM – CHI NHÁNH THÁI HÀ

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

Hà Nội - 2017

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

-

TRỊNH VIỆT HOÀ

IMPROVING THE RETAIL BANKING SERVICES

IN BANK FOR INVESTMENT AND DEVELOPMENT

OF VIET NAM – THAI HA BRANCH

PHÁT TRIỂN DỊCH VỤ NGÂN HÀNG BÁN LẺ TẠI NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT TRIỂN

VIỆT NAM – CHI NHÁNH THÁI HÀ

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 NGUYỄN THỊ KIM OANH

Hà Nội - 2017

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DECLARATION ON HONOUR

I confirm that I have written the present thesis independently and without making use of any sources or references other than those explicitly stated in the bibliography

Passages extracted literally or as regards content from the sources and references listed in the bibliography are identified in the thesis as a citation or a paraphrase

This master thesis has not been previously published and has thus neither been made accessible to other interested parties nor submitted to another examination authority

Date………

Author

Trinh Viet Hoa

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ACKNOWLEDGMENT

To finish the dissertation "Improving the retail banking services in Bank for Investment and Development of Vietnam - Thai Ha Branch ", I would like to thank all the teachers for teaching and helping I studied in Viet Nam National University,

Ha Noi School of Business and Management

I would like to express my sincere thanks to the dedicated help of instructor

Dr Nguyen Thi Kim Oanh, Board of Directors of Deposit Insurance Viet nam – Ha noi Branch

I would like to thank my friends, colleagues, relatives and family who have always been with me, encouraged and helped me during my study and research

Although we have tried our best to study the topic, due to limited time, knowledge and practical experience is still limited, so I can not avoid the lack of research, I hope to receive the comments of teachers, friends, colleagues to complete the thesis

I sincerely thank!

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TABLE OF CONTENT

DECLARATION ON HONOUR i

ACKNOWLEDGMENT ii

OVERVIEW ix

TABLE OF CONTENT iii

ABBREVIATIONS vi

LIST OF FIGURES vii

LIST OF TABLES viii

CHAPTER 1: INTRODUCTION TO THESIS 1

1.1 The urgency of the thesis 1

1.2 Purpose of thesis 2

1.3 Subjects and scopes of study 2

1.4 New contributions of the thesis 3

1.5 Structure of the thesis 4

CHAPTER 2: BASIC ISSUES ON IMPROVING RETAIL BANKING SERVICES AT COMMERCIAL BANK 5

2.1 Literature review 5

2.2 Retail banking activities of commercial banks 7

2.2.1 The over view of Commercial Bank 7

2.2.2 The Concept of Retail Banking Services 8

2.2.3 Characteristics of retail banking 9

2.2.4 Retail banking products 11

2.3 Improve retail banking 16

2.3.1 Theory of improvement of retail banking 16

2.3.2 The role of retail banking service improvement 17

2.3.3 Criteria for assessing retail banking improvement 19

2.3.4 Factors affecting the improvement of retail banking 23

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2.4 Experience in retail banking improvement in some banks around the world

and experience in Vietnam 30

2.4.1 Experience improving retail banking in some banks around the world 30

2.4.2 Lessons learned for Vietnamese commercial banks 32

Conclusion Chapter 2 33

CHAPTER 3 RESEARCH METHODOLOGY AND IMPROVEMENT OF SURVEY INSTRUMENT 34

3.1 Research methodology 34

3.1.1 Type of research and data analysis methodology 34

3.1.2 Research data 35

3.1.3 Sampling and data collection 36

3.1.4 Research models 37

3.2 Develop questionnaire 38

CHAPTER 4 SITUATION OF IMPROVING RETAIL BANKING SERVICE IN BIDV – THAI HA BRANCH 40

4.1 Overview of business activities of BIDV Thai Ha branch 41

4.1.1 The process of formation and development 41

4.1.2 Organizational model 41

4.1.3 Evaluating results of business activities of BIDV, Thai Ha branch 42

4.2 The status of retail banking services of BIDV - Thai Ha Branch 45

4.2.1 The status of retail banking services and retail banking services turnover at BIDV Thai Ha branch 46

4.2.2 Current price / charge situation in capital mobilization, lending and retail services 58

4.2.3 Current status of facilities and equipment for RETAIL BANKING activities 59

4.2.4 Current status of human resources for RETAIL BANKING activities 60 4.2.5 The current state of information technology infrastructure for retail banking61 4.3 Achievements and limitations of retail banking service of BIDV – Thai Ha branch 63

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4.3.1 Achievements 63

4.3.2 Limitations 64

4.4 Reason 66

4.4.1 Subjective reasons 66

4.4.2 Objective reasons 69

Conclusion Chapter 4 71

CHAPTER 5: SOLUTIONS TO IMPROVE RETAIL BANKING SERVICES IN BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM, THAI HA BRANCH 72

5.1 Trends in improving retail banking services in Vietnam 72

5.2 Orientation of retail banking improvement at BIDV, Thai Ha branch to 2020 73

5.2.1 General direction 73

5.2.2 Orientation of improving retail banking 74

5.3 Solutions to retail banking improvement at BIDV, Thai Ha Branch 74

5.3.1 Solutions group on retail banking services packages 74

5.3.2 Group of personnel solutions 75

5.3.3 Technology Solutions Group 76

5.3.4 Customer service solutions 77

5.4 Requests 78

5.4.1 Recommend to Vietnam Development Commercial Joint Stock Bank 78 5.4.2 Recommendations to the State Bank and other ministries 81

CONCLUSIONS 83

BIBLIOGRAPHY 84

APPENDIX 86

IFRS International Financial Reporting Standards

VAMC Vietnamese Asset Management Company

VAS Vietnamese Accounting Standards

WTO World Trade Organization

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LIST OF FIGURES

Figure 3.1 The quantitative research process (Author, 2017) 35

Figure 3.2 Research framework 37

Figure 4.1 Organization structure framework of BIDV – Thai Ha branch 42

Figure 4.2 Service package of BIDV Thai Ha 46

Figure 4.3 BIDV's capital mobilization situation, Thai Ha branch from 2015 to 2016 47

Figure 4.4 Situation of BIDV's term deposit mobilization, Thai Ha branch from 2015 to 2016 48

Figure 4.5 Credit structure 49

Figure 4.6 Implementation Status Of Retail Outstanding Loan over the times 49

Figure 4.7 Outstanding loans of BIDV – Thai Ha Branch compared to the whole system 50

Figure 4.8 The structure of incomes from operations (not including business operation expenses) 52

Figure 4.9 Income and expenditure structure of BIDV – Thai Ha Branch compared to BIDV system 53

Figure 4.10 Foreign Exchange Profits of BIDV, Thai Ha Branch 54

Figure 4.11 Price of BIDV- Thai Ha branch in comparison to other competitors 58

Figure 4.12 Status of facilities and equipment for retailing bank 60

Figure 4.13 Infrastructure of equipment supplying services 61

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LIST OF TABLES

Table 4.1 Financial Report of BIDV - Thai Ha Branch 43

Table 4.2 Descriptive Statistics 45

Table 4.3 Retail sales of BIDV Thai Ha increased over the years 50

Table 4.4 Net income from card services, POS 54

Table 4.5 Some results on international credit card products 56

Table 4.6 Result of BSMS service of BIDV Thai Ha branch 57

Table 4.7 Results of BIDV's domestic payment service fee, Thai Ha branch from 2015 to 2016 58

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OVERVIEW

Studying the challenges facing Vietnam's banking and finance industry, experts have concluded that one of the two challenges facing the banking industry is the fierce competition in service quality In addition, in the development strategy of Vietnamese banks in the coming years, the diversification of products and services and the improvement of quality of products and services is a vital issue, in parallel with the provision of credit to the economy The Bank will survive and develop sustainably

Vietnam Commercial Joint Stock Bank for Investment and Development (BIDV) is a commercial bank established in 1957 in the form of a state commercial bank, and since April 2016 BIDV officially became a joint stock commercial bank The state holds 95% of the shares with a dense network and a large market In fact, from its inception to 2000, BIDV has been mainly serving capital construction projects and projects in the economy, but from 2000-2016, BIDV entered the integration period, in parallel with the credit growth BIDV has also actively shifted its customer structure to reduce the proportion of outstanding loans and develop credit service products However, BIDV is too focused on developing credit and investment, while investment in modern banking products and services accounts for

a modest share

BIDV, Thai Ha branch was established in May 2015 with the traditional activities of credit, capital mobilization and services In the business strategy of the past 3 years, BIDV's goal is to become a leading bank providing banking products and services in Vietnam and will constantly improve the quality of products, develop banking services Based on the above reasons, the authors selected the topic: "Improving the Retail banking services in Bank for Investment and Development of Viet Nam - Thai Ha Branch" to increase income from banking services and enhancing competitiveness and reducing risks for Thai Ha Branch and contributing positively to the joint venture business as well as contributing to the state budget and creating jobs for local laborers

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CHAPTER 1: INTRODUCTION TO THESIS

1.1 The urgency of the thesis

Along with the socio-economic development, the activities of commercial banks are increasingly developed and reached certain achievements in many aspects such as technology modernization, supplying of new products and services, risk managements, customer-oriented restructuring Accordingly, retail activities account for a large proportion in commercial banks and bring about many benefits

On the socio-economic perspective, retail activity contributes to improving people's living standards, reducing social costs, and improving civilization in payment Considering the financial and management aspects of banks, retail operations reduce risks, creating stable sources of income for banks This is a fast-growing trend of commercial banks in the world in recent years

In Vietnam, under the pressure of: competition from other credit and credit institutions, foreign banks, increasing in understanding and demand of the bank, and the development of information technological advances and retail activities of commercial banks in recent years have made remarkable progress; however, there are many shortcomings such as: lack of synchronism in the development of retail banking activities Service products are traditional, poor in category, utility is not high Service quality is low The level of technology application in service development is limited Distribution channels are not diversified and ineffective Marketing sales are passive due to lack of full customers’ information system There is no set of indicators to assess retail performance as well as effective risk management The effectiveness of retail banking on the social and economic aspects is quite modest

non-Meanwhile, with the potential market of nearly 100 million people, foreign banks, non-banks, non-banks, and non-financial institutions are acting aggressively

to gain market share in this field The Bank for Investment and Development of Vietnam (BIDV) have the same vision In recent years, in addition to providing traditional products to corporate clients, the Bank for Investment and Development

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of Vietnam There are strong directions in the development path that retail banking products are considered as a long-term business strategy and conditions for sustainable development in their operations

However, the development of retail banking products at BIDV has not changed dramatically; the retail banking products and services have not yet reached the customers, and the retail market share is not high in business activities Together with the trend of BIDV, Thai Ha branch - new branch in BIDV system, with the former branch of Mekong Delta Bank House (MHB Ha Tay) was merged into BIDV in May 2015 Government policy

Since its founding, Thai Ha has focused on retail development However, new retail banking activities are still inadequate Therefore, the improvement of synchronous and creative solutions to develop the retail banking products at the branch will contribute to fulfilling BIDV's goal

Based on the above reasons, with the desire to find out solutions in a consistent, effective and practical way to develop retail activities of BIDV - Thai Ha Branch, I chose the problem: Retail banking at the Bank for Investment and Development of Vietnam - Thai Ha Branch as the thesis topic

Suggest some solutions to help BIDV Thai Ha branch in particular and commercial banks in general to promote banking services at BIDV Thai Ha branch

to bring efficiency to the branch, reduce risks, contribute enhancing competitiveness and sustainable development

1.3 Subjects and scopes of study

Subjects of study: Improving retail banking activities of BIDV Thai Ha branch

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Research scope:

- The improvement of retail banking services at BIDV Thai Ha branch in 2015, 2016;

- Direction and solutions to improve services of BIDV Thai Ha branch to 2020

1.4 New contributions of the thesis

Theoretically, the thesis has made a systematic approach and explanation to further clarify the basics of retail banking activities of commercial banks with an independent role for sustainable development of banking activities and commercial banks retailing

In terms of practical research: Based on the analysis of BIDV's retail operation in Thai Ha in recent years, the thesis has identified certain achievements, shortcomings and constraints In retail banking activities, this is the field of activity that foreign banks, non-NH financial institutions are particularly interested in exploiting in the US market Therefore, in order to win the fierce competition, the general banks in Vietnam and BIDV Thai Ha branch in particular must inevitably focus on the development of retail banking activities

About practical application: The thesis analyzes and sums up BIDV's retail operations Thai Ha branch has evaluated the successes, shortcomings, constraints and causes of impacts Comments on the potential, trend of retail improvement of BIDV Thai Ha branch to offer solutions with high performance Based on this fact, BIDV Thai Ha branch can be applied in practical activities as well as adding theoretical basis in research activities in the unit

During the study of this topic, the author has some advantages and difficulties encountered are:

Advantages: The author is an experienced banker working for a long time in

a large commercial bank and very enthusiastic about the development of banking operations At the same time, the research unit is BIDV - Thai Ha Branch is the leading unit in implementing the strategy and the new banking products are in the period of strong transformation into retail banking Thus, the author has a comprehensive understanding of the retail banking 's activities, as well as about bank's activities in general, from which there are close research and practical

to provide banking products and services mainly to economic organizations with credit services account for a large proportion Until recently, in line with the trend

of the world, Vietnamese banks have been perfecting the organizational restructuring and development of moving towards moving towards retail customers

In addition, the data reported by banks that are still consolidated are still carried out according to the service segment and not really according to the beneficiaries, so collecting data reflects retail performance is quite difficult The detailed and uniform reporting system on retail activities is incomplete and incomplete, so the exploitation of data and comparison is difficult

1.5 Structure of the thesis

Thesis title: " Improving the Retail banking services in Bank for Investment and Development of Vietnam - Thai Ha Branch "

The composition of the thesis: In addition to the introduction and conclusion, the list of references, appendix, thesis consists of 5 chapters:

Chapter 1: Introduction to thesis

Chapter 2: Basic issues on improving retail banking service of commercial banks Chapter 3: Research methodology and development of survey instrument

Chapter 4: Situation of improving retail banking service in BIDV – Thai Ha branch Chapter 5: Solutions for improving retail banking service at BIDV – Thai Ha branch

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CHAPTER 2: BASIC ISSUES ON IMPROVING RETAIL BANKING

SERVICES AT COMMERCIAL BANK

2.1 Literature review

Regarding the issue of "Improving retail banking services at commercial bank", there are some authors who have access to different business areas and perspectives Some typical researches related to retail banking operations in the recent years such as:

Research in country

Research on the development of credit operations of Vietnamese commercial banks has a doctoral dissertation by Nguyen Kim Anh (2004) - the thesis presents

an overview of credit operations of Commercial banks, then propose some solutions

to develop credit business for both corporate customers and individual customers in the market economy;

MA Nguyen Trong Nghia (2015), Opportunities and Challenges for Vietnamese Credit Institutions in the course of International Economic Integration, Journal of Financial and Monetary Markets This research showed that opportunities and challenges for Vietnamese commercial banks when Vietnam joins WTO, the application of modern technology, human resources and experience of modern commercial banks require Vietnamese commercial banks to improve the banking system is and should have a breakthrough in the implementation process

Study on card payment method from Nguyen Danh Luong (2003) - the thesis presented an overview of card and card payment forms, shortcomings of card payment form in Vietnam From there, the solutions and recommendations to develop card payment in Vietnam;

Research on the mobilization and use of foreign currency by Nguyen Manh Tien (2002) - dissertation on deepening the mobilization and use of foreign currency in particular in AGRIBANK, analyzing situation of these activities; thus offers some solutions to complete

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The study by Do Huu Hai, Nham Phong Tuan and Pham Van Tuan (2015) showed the factors that helped to develop banking services in Hanoi, Vietnam This study has shown the impact of four groups of factors affecting the improvement of retail banking in Vietnam: scale, price, intangibles, infrastructure Information technology - service channels Specific scales are used to evaluate the diversity of retail banking, the level of information technology applications for retail banking, banking facilities, Transactional The authors point out that convenience, speed and quality of service of retail banking want to be developed banks should focus more on upgrading IT infrastructure news and online trading system In addition to upgrading equipment in the workplace, service and marketing However, this study

is only applicable to Vietnamese banks at present but not to specific banks

Research on retail banking service in Nguyen Thi Huong’s master dissertation explored deeply retail banking service of BIDV – So giao dich 1 branch However, this research only focused on assessing the strengths and limitations of products, the general picture of development of retail banking has not been drawn up on the basis of the qualitative and quantitative indicators

While retail banking activities are activities that cover many segments of services that serve the same target group as the individual and the household, previous studies focused largely on each of the service segments such as capital mobilization, use of funds, card services, or marketing in general From 2004 to now, there have been no overview studies on the retail operation of the commercial bank as well as BIDV

Research in abroad

Korda and Boris Snoj (2010) studied the quality of retail banking services with customer satisfaction This research has developed Gronroos' (1984) study to show that customer satisfaction in retail banking is only satisfactory in terms of technical quality (what customers receive from retail banking such as safety, etc.) and functional quality (how does retail banking work?)

Research on retail banking has also attracted research into retail banking support tools; which mentions to the Internet and the mobiphone Research by Pham

in Denmark, Sweden and Finland

Therefore, it can be defined that, this research is independent study, and the research topic is not duplicated with the previous published works In this thesis, the author has studied a general overview of retail services of commercial banks that is the history of development, concepts and characteristics, the role of retail activities, retail banking, distribution channels, common risks in retail services of commercial banks; viewpoints on the improvement of retail activity, criteria for assessing the development of retail activity, factors affecting retail services of commercial banks

At the same time, based on the analysis of BIDV's retail banking in Thai Ha branch over the past time as well as considering and inheriting the previous researches, the author has proposed a number of synchronous solutions It is highly practical to develop retail banking - a strategic activity of BIDV Thai Ha branch in the future

2.2 Retail banking activities of commercial banks

2.2.1 The over view of Commercial Bank

In the world, now, there are different points of view about commercial bank, such as:

According to Banking association of US (2016), commercial banks are defined as business firms specializing in providing financial services and operating

in the financial services industry

According to French Trade Department (2015), commercial banks are the foundations where the regular occupations receive the public's money in the form of deposits or in other forms, and use that resource for themselves in the operations of discount, credit and finance

According to report of India banking association, commercial banks are banks that receive deposits for loans or grants and investments

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In Turkey, commercial banks are understood as a type of limited liability company established for the purpose of receiving deposits and performing foreign exchange operations, bills of exchange, discounts and other Forms of borrowing or credit

In Vietnam commercial banks are the type of banks that can carry out all banking activities and other business activities in accordance with the Law No 47/2010 / QH12 on Credit Institutions by the National Assembly On June 17, 2010, aiming to profit

Thus, it can be said that commercial banks are a special business dealing in currency with regular activities of capital mobilization, lending, discounting, guaranteeing, providing financial services and other related activities

2.2.2 The Concept of Retail Banking Services

The retail market is a completely new view of financial markets There are now many ways to understand retail banking - "retail banking" in a variety of approaches Literally in the supply of normal goods and services, retail is sold directly to the end consumer It is the opposite of wholesale that is sold to intermediaries, to the supplier of the goods However, due to the peculiarities of the banking industry, the term retail can be understood slightly differently

Currently, there are two different perspectives on retail customers According

to the World Trade Organization, "retail banking is a typical service of a bank, where individual customers can trade at branches of a bank To make transactions such as savings deposit, checking account, mortgage loan, credit card service, debit card and some other services Thus, in this view, retail customer consists only of individuals and households

In addition, there is also the view that retail customer is not just individuals and households but also small and medium enterprises In his modern Banking career, David Cox said: "retail banking is a major banking service providing banking products directly to businesses, households and individuals and small credits " According to experts from the Asian Institute of Technology, "retail banking is the bank that provides products and services to individuals, small and

The subjects of retail customer within the scope of the thesis include, among others, individual consumers, households and small and medium enterprises

Obviously, it can be seen that retail banking is completely different from wholesale banking, which provides services to corporations, large corporations and financial institutions The size of a retail banking service transaction is also much smaller than the whole sale banking

2.2.3 Characteristics of retail banking

2.2.3.1 Target customers

According to banking association of US (2015), the subjects of retail banking services are individuals and households This group of clients has a large number of members in society, middle income, diversified in terms of qualifications, business fields, industries and short-term capital requirements

In addition, this is also a group of customers very sensitive to changes in prices, distribution methods and policies of the banks; the object of the bank's least loyal Of the individual clients surveyed by The Economist, 70% of clients left the bank due to product dissatisfaction and quality of service, 13% were due to inconvenience in trade, and 17% are other reasons (Eliot et.al, 1996; Reeves and Bednar, 1996)

2.2.3.2 Scope and number of transactions

The needs of each customer in the retail market are usually small, with a very small value per transaction compared to the whole sale banking services

However, this is a potential market segment for banks because of the large number

of customers Especially, small and medium enterprises often occupy high

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proportion in the economy, even overwhelming in total Businesses (In Vietnam, only registered enterprises are registered, this ratio is over 95%.) The numbers of customers together with the large number of transactions in terms of terms, types of products, help banks have Can disperse risk, creating a stable source of funds for the bank (Earn & Young, 2016)

2.2.3.3 Production catalog (Portfolio list)

Derived from the needs of customers, banks have developed and changed incessantly to offer a variety of products and services ranging from traditional services to new and modern services to satisfy their own requirements A wide range of products and services belonging to groups of services receiving deposits, loans, payments, electronic banking, trust investment, guarantee, preserve valuables, purchase and sell foreign currency are constantly developed In developed countries, the number of bank products and services for individual customers reaches thousands in order to serve the diverse needs of customers

2.2.3.4 Distribution channels

The bank's retail operation is heavily dependent on their multi-channel distribution network Nowadays, customers can access bank's products and services through many channels such as branch, transaction office, ATM, Internet, Phone, Kios, POS The multi-channel distribution in retail activities increasingly brings convenience to the KH, while also saving costs for banks and all social security

2.2.3.5 Information technology

Information technology (IT) plays an important role in the development of retail products, especially advanced products and services, which is an important premise for centralized storage and processing The bulk of the retail banking service is crowded and dispersed, sensitive to the way the bank distributes it Therefore, if there is no development of IT, banks cannot access and provide products and services to all customers, especially customers in areas where the bank has no capability to open a brand, or customers wishing to trade outside of office hours

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2.2.3.6 Risk

The risk is the possibility of future incidents makes the bank unable to achieve its stated objectives and/or causes damage to the bank In fact, the banks bear the risk in the course of business in general, and retail operations in particular These risks always exist and cannot be excluded from the business environment, bank can only analyze, find the causes, have solutions to prevent and limit the impact of risk to business activities In retailing there are major risks, including: credit risk, market risk, operational risk, ethical risk, etc

2.2.4 Retail banking products

In recent years, individuals and households have been the targets of most commercial banks From the traditional activities, up to now, banks have inherited and developed a series of new products and services to meet the increasing needs of the customers

2.2.4.1 Deposits

Deposit is the foundation for the existence and development of banks, in which personal deposits play a key role in creating medium and long-term capital for commercial banks Deposit activities include savings deposits and payment deposits These are the common retail activities of commercial banks At the same time, these are also key activities that individuals use as their basis in making the decision to choose a service provider for themselves as all individual and household customers are able to save, include low-income customers who wish to open a payment deposit account to receive money or make payments for individuals in society

a Residential savings deposits

Receiving residential savings deposits is the most traditional activity in any commercial banks Savings include free, small amounts of money for certain purposes of the plan in the future and are not used for personal payments such as checks and payment cards

Individual customers may choose to use a variety of terms such as term, short-term, one-week, one-month, multi-month, or long-term terms Currently, some banks have added new features such as interest payment periodically

short-12

(customers have long-term needs to enjoy high interest rates, expect to receive periodic interest to meet the demand for living) Flexible withdrawal of funds (meeting the flexible capital requirements of the plan without affecting interest or impact), bonus (prizes will be rewarded)

Residential savings deposits include demand deposits, term deposits, issuance of valuable certificates of deposits, promissory notes, bank bonds

b Deposit payment

The activity of receiving deposits to pay for cheap capital and more serves the needs of payment and payment of the population When opening a payment deposit account at a bank, the customer can pay in and withdraw at any time, using the money in the account to pay regularly or periodically payment needs, so the longer called demand deposits

With this activity, the bank not only attracts cheap capital through which the banks sell other products and services such as overdraft account, card issuance, e-banking services Therefore, for banks, this attraction is very important

Often in developed countries, commercial banks do not pay interest on deposits for payment purposes, whereas banks often charge fees for services such as account maintenance fees, fees for using services and payment instruments

Payment account allows the account holder to use for many purposes: Receiving salary, other income, receiving remittance from abroad, paying for goods, services, banking statements, interest payments Account holders can withdraw cash, issue checks, cards, transfer payments, issue automatic orders, or conduct e-banking transactions from accounts present The average balance on the deposits is not high, but the number of customers is very large so banks can mobilize a large amount of capital through this activity

Characteristics:

The number of clients is very large, but the ability to mobilize capital is concentrated in many cities, urban areas, some customers have economic potential

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The factor that most customers are most concerned about is the level of safety and interest rates So in addition to being easily attracted by high interest rates, they are also very sensitive to bank activity and risk news

The cost of capital is inconsistent among locations and times: based on economic and social conditions, interest rates in the area, customer demand, and the bank's demand which an appropriate interest rate would be given

2.2.4.2 Lending

Credit in general and retail credit in particular is one of the major profit businesses of the bank As a result, banks often try to maximize their lending exposure to an acceptable level of risk and within regulated limits

Loans to individual and household customers are small loans intended to finance individual and household spending and purchasing needs This loan is often used for such purposes as construction, repair and purchase of houses, purchase of household goods and transportation, personal expenses such as travel expenses, study abroad Forms of loans include consumer loans, overdraft loans, student loans, home mortgages, real estate loans, car loans, securities trading

High risk due to the low quality of customer financial information, the source

of repayment can fluctuate, depend on the work process, business of customers, the ability to make up from other sources almost no

High profits, high interest rates, large markets and constantly growing

2.2.4.3 Payment services

This is a typical activity and a key role for commercial service provision of commercial banks in general and personal plans in particular Today's payment services are provided to consumers through direct and indirect distribution channels

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based on modern technical infrastructure and processing technology With this progress, customer increasingly receives payment services are safe, accurate and high utility, not only in the country but also on a global scale

The more developed economics is, the more demand for payment for goods and services, the domestic payment activities of commercial banks meet the demand for the plan in general and population in particular Plans can use this service to pay for goods, services, securities trading, and donation to relatives or use automatic money transfer services, automatic investment to profit Customers can transfer money in foreign currency or currencies (according to foreign exchange regulations of each country from different sources such as payment deposit, loan, cash and in the forms such as checks, authorized collection, authorizing payment or money order

Today, in the trend of international integration, countries have loosened their current transactions, individuals are transferred abroad to pay for authorized purposes easily For example, in Vietnam, individuals who are Vietnamese citizens can transfer money abroad for study, medical treatment, travel, inheritance, expenses and fees Legally immigration money transferring

 Categorize card

Debit Card: When withdrawing money at ATMs or buying goods and services at card accepting units, the transaction value will be immediately deducted from the card holder's account

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Prepaid Cards: Customers do not have to perform card issuance procedures

at the request of the bank but only pay the bank a certain amount and will be sold by

a bank with a card with par value, Non-revolving card limits

Credit Card: Customers have the right to advance payment, pay later in a set amount and not pay interest if repayment of money on time

 Characteristics

Convenience and customer appeal due to the many features the service can integrate in a card product Overcoming the drawback of the check, the subject can withdraw, transfer, balance inquiry at any ATM tree

It requires banks to invest in modern infrastructure and machinery, which is a big but relatively lucrative investment

Can be profitable for banks if they are used regularly

2.2.4.5 Other service products

Financial Advisory Services: This service is particularly effective for retail clients due to their limited knowledge and skills The bank can advise on areas such

as securities, insurance, real estate, tax consultancy, and business establishment Based on strengths in volume of information, experience and networking

Remittance service: Serving remittances to individuals abroad for remittances to individuals in the country Typically, this service is offered to customers in the form of products associated with organizations providing international money transfer services such as Western Union, Moneygram Remittance activities are becoming revenue service cannot be Lack of business policy of commercial banks, this is also a large source of foreign exchange for the country

Insurance services: This is a financial service of a commercial bank, when the commercial bank acts as an insurance agent, establishes an insurance joint venture company or establishes a subsidiary in the insurance business With this service, customers are guaranteed reimbursement if they are at risk, and also enjoy the benefits when buying insurance through the bank

Foreign currency purchase and sale services: To meet the demand for the purchase and sale of foreign currencies to customers at the exchange rates posted at

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the banks This activity is governed by state policy in each period When buying foreign currencies, customers need to prove their full use purpose Currently, banks

in Vietnam rarely or do not sell foreign currency cool

Treasury services: To meet the needs of treasury funds such as money-rake and damaged currency exchange services, real money verification services, counterfeit money transfer services, safes

Mobile banking, internet banking, home banking: These are modern banking services, helping customers save time and money Customers can use mobile phones, computers connected to the network to make transactions with the bank: transfer, balance check, card activation

2.3 Improve retail banking

2.3.1 Theory of improvement of retail banking

According to Encyclopedia Dictionary, "Improvement or Development is the expansion from small to big, from weak to strong." According to the concept of philosophy, "Development is the concept of movement in the direction of advancement, the new, the progress is born in place of the old, the backward." Thus, improvement is understood to be progressive in all aspects, which is a close integration of the qualitative and quantitative improvement process

In the financial sector, the improvement of retail banking is a qualitative and quantitative change of the retail banking service to best meet the needs of individual clients, households and SMEs on a secure basis The bank's objectives include: increasing profitability in a sustainable manner, increasing the competitiveness of the bank, etc The improvement of retail banking services is not only aimed at increasing current income but also ensuring potential future development for the bank Accordingly, the improvement content of retail banking services is expressed through 2 main criteria including:

Quantitative assessment of quantity such as the number of products and services, distribution channels, retail sales growth rate, etc

Criteria for quality assessment: safety, convenience, utility of retail products, brand value of the bank

Through retail, the bank can take advantage of the funds in the payment of customers stored on the payment or deposit account These bank accounts do not pay interest or very low interest rates make the input cost of mobilized capital decreased, increasing profits for banks

Improve retail banking services to help banks disperse and mitigate risk:

Banking business is a special business, and banks often face a variety of risks: credit risk, interest rate risk, operational risk, etc In particular, credit activities contain many risks Therefore, the bank's development of retail banking services, the diversification of bank products will help banks to spread risk, avoid the situation of "put all the eggs in the same basket." When the market fluctuates, profits from different services will complement each other, helping banks stabilize their income In addition, the size of retail transactions is small and the number of transactions is large, so banks are able to diversify the risk by the customer

Improve retail banking services to promote other services:

Through the improvement of the retail banking, the bank builds a wide and diverse customer base that forms the basis for the development of other banking services, extends cross-selling capabilities between individuals and businesses Businesses with commercial banks, increasing competitiveness, contributing to enhancing the position, prestige and brand of the bank

The large number of customers, diversified needs, and strong competition in the retail sector force banks to improve their level of information technology,

2.3.2.2 For the customer

Customers are directly benefiting from the improvement of retail banking services The goal of retail banking services is individual customer service, so service is simple, easy to implement and regular It will be most comprehensive when the bank expands its retail network, expanding its product portfolio, and improving service quality The people have more opportunities to access the bank's products, are provided with appropriate financial solutions, cost savings, transaction time, security, increased income from the source Idle money, and enjoy the add-ons

With regard to small and medium enterprises, through the capital and payment services, guarantee , banks help the process of production and business

of enterprises are carried out smoothly, smoothly, speed up Produce and circulate goods, improve business efficiency, help enterprises overcome difficulties, increase competitiveness and improve their position in the market

2.3.2.3 For the economy

Improving retail banking services attracts more retail customers to open accounts and use bank payment services, which helps to speed up the process of currency circulation, generating foreign exchange earnings for the nation From overseas remittances, payment is limited by cash, contributing to reducing social costs through cost savings (printing, tallying, preservation, transportation .) and time Both bank and customer

Retail banking is diversified services help attract idle capital in the population for investment and economic development Especially for developing countries, the promotion of the internal resources of the economy through concentrating all potential small capital sources in the population into a large source

of capital is of great significance

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In addition, limiting payment in cash helps the State manage the transactions of the whole economy, contribute to anti-corruption and tax evasion The State Bank also has grounds for planning and implementation of national monetary policy

Together with the use of modern IT, the national financial system can integrate more closely with the international financial system, increase opportunities for economic co-operation and improve the level of people Location for residents

2.3.3 Criteria for assessing retail banking improvement

Currently, there are many organizations, agencies, especially magazines around the world involved in evaluating the retail operation of banks under different criteria system

The Asian Banker is the world's leading magazine providing strategic information on the financial services industry This magazine evaluates the retail performance of banks based on 10 criteria: brand value, service product abundance, retail strategy feasibility, distribution system efficiencies, Operational processes and

IT, retail market penetration, risk management capacity, income generating capacity, human resources and development potential

According to the criteria of Asian Banking and Finance and Retail Banker International magazine, the bank receives the best retailer award of the year must meet all factors including: business strategy different, outstanding; High growth rate and high efficiency have been maintained continuously over many years; Ensure effective indicators, risk management efficiency; Management model, professional operation with focus on serving customers according to international standards and flexible to adapt well to market fluctuations and customer needs

In general, although each organization's rating system is different, it includes the following categories of indicators:

2.3.3.1 Quantitative indicators

Retail market share index and number of customers

Market share is the part of the market that the bank holds The retail component is an important criterion for assessing the market penetration of the bank, the level of popularity, the preference of the products and services of

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Moreover, the large market share with a well-known brand is closely related to the bank's ability to pay Each bank often identifies its products and services and target markets Thus a bank can dominate the market in providing this retail service but has a lower market share in other services

Formula for calculating the market share of retail banking:Formula calculates the market share of retail banking operation:

Retail market share of the Bank = Revenue of Retail Banking of Bank

Total revenue of Retail banking of all banks

Based on this formula, it is possible to calculate the retail market share of each the banking product and service and the growth rate of the bank's retail market share

Product diversity - service

Along with the development of society, human needs are increasingly diverse In an era of economic integration, fierce competition, expansion of service products on the basis of increasing the number of customers using its services, becomes a vital issue for every bank The diversification of products and services helps the bank to meet the specific needs of customers and at the same time spread the risk The diversity of service products can be expressed through the number, increase and rate of increase of the bank's service products

Increase level in the number of retail service products = Number of service products (t + 1) - Number of service products in the year t

Distribution channel system

The distribution channel is the banking attachment to the market, which determines the efficiency and quality of retail banking services The branch network

is the most important distribution channel As clients of RETAIL BANKING operations have scattered residential areas, so to expand operations, the number of branches of the bank must constantly increase

of the criteria for assessing the improvement of retail banking operations

 Indicators of reflecting structure of retail banking service

Such indicators show the types of retail banking service, customer which the banks prioritize for improvement of retail banking service, and needs, preferences, consumption habits of clients for retail banking services The indicators consist of: ratio of capital mobilized from the local people, ratio of capital mobilized from small and medium enterprises to the total mobilized retail capital; ratio of capital mobilized for all terms to the total mobilized retail capital; ratio of outstanding

loans by each customer to total outstanding retail loans …

 Economic effectiveness for banks

The economic effectiveness of retail banking is evaluated in many aspects, including gross benefits from retail sales in terms of sales, costs and positive effects

of retail operation on other activities of the banks Retail banking service is only considered to be well-developed when the economic effectiveness from it is in line

with the banks' capital spent by the Bank

It is difficult to calculate accurately the economic effectiveness of retail banking; however, it is possible to use the pre-tax income as an assessment criterion The increase level and the increase rate of gross profit of retail are calculated according to the following formula:

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2.3.3.2 Indicators of qualitative assessment

The brand value of the bank in the retail market

For each bank, the brand is the name, logo, logo with color, design style,

as well as prestige, quality of products and services, outstanding features of the product Services meet the needs of customers A good brand will create customer loyalty, help banks save marketing budgets, easily attract talent and make sure business performance will be good Therefore, the brand is also a criterion for evaluating the success of the bank's retail operations Brand value of the bank can

be expressed through a number of criteria such as the number of retail brand enthusiasts, satisfied with the bank's retail operations

Completeness of existing retail products

To put products on the market accepted by the public, banks must ensure their usefulness, usefulness Products and services must be formed based on the actual needs

of the market, ensuring maximum savings time and costs for customers

When using a bank's product or service, customers want the product to be able to provide many benefits and meet their different needs Therefore, products that integrate multiple utilities will attract customers to use, thereby speeding up the growth rate, contributing to the development of retail banking services Therefore, banks often provide multi-benefit products to their customers

To objectively evaluate the perfection of a product, retail banking services may be based on actual customer satisfaction surveys for the product or through sales growth, Customers use the product

Risk management capacity, safety of retail banking:

Business operations of commercial banks are in fact using prestige to attract resources and use risk management capacity to source and develop other services as the one between the supply and force forces Demand for banking services As a result, the banking business has a lot of risks such as interest rate risk, credit risk, exchange rate risk Especially with retail activities, personal credit products always bring risks Great ro for the bank Therefore, in order to develop sustainable retail

Information technology infrastructure

The potential for retail banking improvement is the ability to increase income and other economic benefits for banks in a sustainable way in the future of retail banking It depends on the factors that come from the bank: future development strategies, facilities, quality of human resources, products and services, etc At the same time, As a result, when evaluating the potential development of a bank's RETAIL BANKING operations, it is important to consider it in terms of its correlation with its market value, competition of competitors, and socio-economic environment Between subjective and objective factors

Improvement potential:

Potential of retail banking improvement is primarily the ability to sustainably increase income and economic effectiveness from retail banking in future It depends on the factors derived from the bank: future development strategies, facilities, human resources, service products.…, at the same time, significantly affected by the external factors such as market demand, competition of competitors and socio-economic environment… Therefore, when evaluating the development potential of the retail banking of banks, the potential is required to be considered in relation to subjective and subjective factors

2.3.4 Factors affecting the improvement of retail banking

2.3.4.1 Objective factors

In research of Le Kieu Anh (2012), Huynh Thi Tram Anh (2011) and Nguyen Huynh Bao Chan (2010) showed that factors of macro environment and industrial environment effect on retail banking activities

Macro environment: PEST

- P: The political and legal factors,

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The stable political environment along with the complete legal system is always a prerequisite for a stable and developed economy A stable politics will create public confidence in the development of the country in general and the economy in particular, which will motivate the public to save money, deposit money into the bank for interest or loans Banks to invest in production and business Each small change in the policy of economic development, medium and long-term development strategy of the country, monetary policy have a positive

or negative impact on retail banking

In addition, the bank is a very sensitive and specialized business area, under strict supervision of state management agencies If the provisions of the law, especially regulations on retail banking are unclear, full and strict will greatly affect the bank

- E: Economic factors,

The economic environment includes many factors such as: interest rates, inflation and unemployment, per capita long-term GDP prospects, etc These factors strongly affect the bank's business

The developed economic environment, macro variables are stable and have good growth signs, will increase the expectation of enterprises for a higher profit, they want to expand production and business as The demand for bank loans is also higher It also promotes the use of associated services or services other than basic services such as consultancy, financial management, insurance, trust management

- S: Socio-cultural factors

The social environment encompasses a number of factors: size, population structure, income and income distribution, lifestyle, education, aesthetics, psychology of life This has a significant impact on the bank's retail banking service For areas with developed population and young population structure, it is a good opportunity for the bank to develop modern and advanced products and services which require a certain level of education The bank can also rely on the way people distribute their incomes in the area, such as spending more or saving more to determine their focus on developing loan products or deposit products

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In addition, the traditional culture, tastes, interests and habits of the people also play an important role in building the bank image, style of service, how to care customers accordingly

- T: Technological factors

Technological engineering plays a fundamental role in developing retail banking A modern technology environment contributes to improving labor productivity, minimizing costs, enabling banks to easily reach customers; on the other hand, customers also have easier access to banking products and services The increase in the number of specialized technology vendors has helped banks reduce pressure from suppliers, increasing the bank's ability to replace technology

At present, equipment and machinery for banking activities of Vietnam are mainly imported from abroad, this is also a great disadvantage for domestic banks with

access to modern technology of the world Microenvironment

According to "Five Competitive Pressure" models of M.E Porter (1985), factors that influence the bank's retail banking improvement include:

First, threats from new competitors entering the market: The banking sector in

general and retail banking in particular, accession, despite the strict requirements of the State Bank of Vietnam Capital, management team, risk management but in the context

of economic integration, opening up the financial market, joining is possible Some factors can be considered as barriers to entry into the retail market such as:

Customer loyalty with major brands: For example, in Viet Nam, Vietcombank's payment card service is quite popular; customers using Vietcombank's payment cards

do not want to switch to using their card other manufacturer However, in the retail banking sector, very few Vietnamese banks have affirmed its brand and market dominance, and have not gained loyalty from customers

High fixed costs and capital requirements: The investment in machinery technology in retail banking services is very expensive, so it can also be considered

a barrier to banks However, it only means barriers to newly-established domestic banks, and with foreign banks having strong financial strength, this does not really make much sense

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There are also other factors such as economies of scale, banks' ability to defend themselves, restrictions of law and government, etc However, government barriers have been relaxed in under conditions of economic integration, domestic banks can not rely on state protection to avoid international competition

Second: Power supplier

In the field of retail banking, the main supplier and direct driver of the bank

is the technology provider Some factors affect supplier's ability to negotiate:

- The number of technology suppliers is unique: The less this number, the higher the negotiation capacity of the supplier At present, in Vietnam, the technology suppliers to the bank are mainly from overseas, but through international cooperation, domestic banks can approach the technology suppliers in the world

- The ability to replace technology and the importance of a technology with banking: Although technology is extremely important and specific to banking, the alternative is likely due to scientific technical development

- The cost of switching suppliers: changing suppliers forced the bank to spend more

on replacement of equipment, the cost of hiring experts, training costs This is the main reason for the ability to innovate Upgrading retail banking services to Vietnamese banks is limited

These three factors put pressure on foreign banks not as strong as domestic banks as foreign banks have strong financial strength, with technological background as well as easy access to modern technology Easier

Third: the strength of the customer

In providing retail banking services, customers have been involved in directing service products and using them directly Therefore, the customer's desire, demand, and service is the key factor Determined to quantity, texture, quality of service Some of the reasons why customers become significant holders of power:

- Customers are very price sensitive and switching to other competing products is relatively simple

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- Despite the income, the level of education of the customer increasingly increasing the demand for services, but there are still habits in the large population that retail service has not become essential

- The conversion of customers increases the bank's expenses such as the cost of finding new customers, research costs, management costs, etc

As a result, banks must pay special attention to the acquisition of customer information such as age, income, interests, etc., so that customer care and product development can be improved Fit, best meet customer needs

The Fourth: Availability of alternative products

With the attractiveness of the retail sector, not only banks but also non-bank institutions such as insurance companies, funds, financial companies, etc also participate in providing retail services This increases the availability of alternative products To make a profit, individuals save money or invest in gold, real estate, securities In addition, the advantage of price, technology, utility of the product or customers are not aware of the Product differentiation, low cost of product conversion are also factors that make substitute products a threat to retail banking Fifth: The level of competition of existing banks

The field of retail banking in the world in general and Vietnam in particular are fierce competition in many forms, increasingly appearing many banks involved

in the retail sector, considering retail development orientation, Banks find ways to compete on price, service, customer care, marketing Therefore, the banks want to develop, they must mobilize all financial resources, constantly develop New products meet the needs of the customer

Retail banking services in Vietnam are still in a growth phase Therefore, despite acknowledging the fierce competition, we have also recognized the potential and long-term development opportunities for this field

2.3.4.2 Subjective factors

Improvement strategy and organizational structure of the retail banking

Each bank builds its own development strategy, which determines the format and direction of the bank in the future This strategy must be based on the

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investigation and survey of customers as well as the surrounding environment Depending on each bank, the development strategy will be developed in the direction of retail banking or whole sale banking, priority is given to which product groups and services the target customer is In order to expand the retail banking, the bank must have a sound investment strategy in terms of finance, technology, people The position of the retail banking in the development strategy will determine the size of the bank's retail banking operations

Based on the proposed development strategy, the bank will build the appropriate organizational structure This is very important because the organizational structure, the structure of the departments will greatly affect the performance of the bank Retail customers always have a diverse and rich demand, involving many major So, nowadays, most banks have built up the machine by customer, the department is designed to cater to specific customer groups Customers just need to go to a place that can meet all their needs

Financial strength and price

One feature of the retail banking service is the application of modern information technology and extensive network development Therefore, in order to develop retail banking services, the bank needs to have strong financial strength in order to modernize equipment technology, expand its distribution network, and at the same time, to have research costs, develop new products, train staff, advertise

to attract customers Beside that, price can be seen as the main reason for customer choosing your bank (Do Huu Hai, Nham Phong Tuan, Pham Van Tuan, 2014)

Reputation of the bank

In addition, the psychology of customers often tend to believe in large banks, reputable, healthy financial capacity When in need, customers often look to the stronger brands than the banks are not have names Therefore, banks need to find ways to build their brand and increase their financial capacity to attract customers and increase profits

Human resource quality

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For a service business like banking, the quality of the staff is important, deciding the strength of the organization Key employees are those who directly interact with customers, their attitudes and qualifications determine largely on the quality of service and image of the bank At present, with the appearance of many banks at home and abroad, the level of technology and products is almost no difference, the quality of human resources is one of the prerequisites for banks to be able to Improve competitiveness (Do Huu Hai, Nham Phong Tuan, Pham Van Tuan, 2014)

Facilities and science and technology of the bank

Good infrastructure is the foundation for developing retail banking services Not only facilitating the bank in deploying its products and services, it also contributes to building trust and image with customers It can be seen that most customers will be attracted by the more spacious, comfortable, beautiful rooms The widespread network

of branches also makes it easier for customers to access the bank, enhancing the bank's presence in the market, and attract customers to the bank (Do Huu Hai, Nham Phong Tuan, Pham Van Tuan, 2014)

Technology and application of technology has enabled banks to deploy new retail products such as electronic banking, electronic payment, card services, etc The more society develops, the more demand from customers for products High tech content In addition, information technology also assists the bank in its operational process Therefore, the development of science and technology for banks is an important factor, greatly affecting the improvement of retail banking activities (Do Huu Hai, Nham Phong Tuan, Pham Van Tuan, 2014)

These factors can be used to develop survey questionnaire of this research, which will be introduced in chapter 3