Recommendations to enhance customer satisfaction towards deposit products of SHB

Step 2: Selecting model After comparing the models in previous studies on customer satisfaction in banking industry in general and towards deposit products in particular, the author wil

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: April, 20, 2017

I woud like to express my great gratitude to my supervisor Nguyen Thi Kim Oanhfor her useful comments, remarks and engagement during my process of doing this master thesis

I also would like to thanks my classmates for their friendship and reciprocal encouragement to make our class time to be unforgettable time

TABLE OF CONTENT

DECLARATION i

ACKNOWLEDGEMENT ii

TABLE OF CONTENT iii

LIST OF TABLES vi

LIST OF FIRGURES viii

Chapter 1: INTRODUCTION 1

1.1 Background to the study 1

1.2 Research overview 2

1.3 Aims of the study 3

1.4 Object of the study 4

1.5 Scope of the study 4

1.6 Research methodology 4

1.7 Proposed research structure 5

Chapter 2: RESEARCH FRAMEWORK 8

2.1 Deposit products at commercial banks 8

2.1.1 Concepts 8

2.1.2 Deposit products at Vietnamese commercial banks 8

2.2 Customer satisfaction and models to evaluate customer satisfaction towards deposit products at commercial banks 13

2.2.1 Customer satisfaction towards deposit products 13

2.2.2 Models related to customer satisfaction towards banks’ deposit products 15

2.3.2 Proposed model in the study 22

Chapter 3: METHODOLOGY 26

3.1 Preliminary research (qualitative) 26

3.1.1 Building the preliminary scale 26

3.1.2 Adjusting the scale 27

3.2 Formal research (quantitative) 27

3.2.1 Designing the survey questionnaire 28

3.2.2 Collecting information from the survey questionnaire 28

3.2.3 Designing the sample 28

3.2.4 Processing the data 29

Chapter 4: THE REALITY OF CUSTOMER SATISFACTION TOWARDS DEPOSIT PRODUCTS AT SAIGON - HANOI COMMERCIAL JOINT STOCK BANK 32

4.1 Overview of Saigon - Hanoi Commercial Joint Stock Bank 32

4.1.1 History of foundation and development 32

4.1.2 Functions and duties 33

4.1.3 Organization 33

4.1.4 Business results 36

4.1.5 Business results of the bank’s deposit products 37

4.2 Some activities to enhance customer satisfaction towards SHB's deposit products 40

4.2.1 In terms of prestige and image 40

4.2.2 In terms of the staff’s responsiveness 40

4.2.3 In terms of facilities of the bank 43

4.2.4 Product policy 44

4.2.5 Interest rate policy 46

4.2.6 Marketing policy 47

4.3 Results of the survey on customer satisfaction towards the bank’s deposit products 48

4.3.1 Scale testing 48

4.3.2 Factor analysis 50

4.3.3 Correlation and regression analysis 53

4.3.4 Evaluation of customers on factors affecting the customer satisfaction towards the bank’s deposit products 58

4.4 General assessments 67

4.4.1 Achievements 67

4.4.3 Causes of the limitations 69

Chapter 5: SOLUTIONS TO IMPROVE CUSTOMER SATISFACTION TOWARDS DEPOSIT PRODUCTS AT SHB 70

5.1 SHB’s developing target and orientation 70

5.1.1 Opportunity and challenge 70

5.1.2 SHB's developing orientation and target 73

5.1.3 Developing orientation of deposit products 76

5.2 Solutions to improve customer satisfaction towards deposit products 77

5.2.1 Solutions to improve business facilities 77

5.2.2 Solutions to improve staff quality 78

5.2.3 Solutions to enhance the prestige of the bank 80

5.2.4 Solutions to improve product policy 81

5.2.5 Solution to improve the interest rate policy 82

5.2.6 Solution to improve marketing policy 84

5.2.7 Deposit insurance solution for customers 87

5.3 Recommendations 87

5.3.1 Recommendations to the government 87

5.3.2 Recommendations to the State Bank 89

CONCLUSION 91

REFERENCES 92

LIST OF TABLES

Table 2.1 Interpretation of variables in the research model 21

Table 2.2: Summary of previous research models 23

Table 3.1: Interview questions to SHB’s experts 27

Table 4.1 Business results of SHB 36

Table 4.2: Business results of the bank’s deposit products 38

Table 4.3: Qualifications of transaction staff 41

Table 4.4: The training of bank transaction staff at the bank 42

Table 4.5: System of branches and transaction offices of the bank 43

Table 4.6: Some specific products of the bank 44

Table 4.7: Comparison of SHB’s interest rates with those of other banks 47

Table 4.8: Results of scale testing 48

Table 4.9 Factor analysis results of independent variables 50

Table 4.10 Factor analysis results of dependent variables 52

Table 4.11 Results of correlation matrix between factors in the model 54

Table 4.12 Results of regression analysis 55

Table 4.13 Results of testing research hypotheses 57

Table 4.14 Evaluation on the prestige of the bank 58

Table 4.15: Evaluation on the staff’s responsiveness 59

Table 4.16: Evaluation on the facilities of the bank 60

Table 4.17: Evaluation on the product policy 62

Table 4.18: Evaluation on the interest rate policy 63

Table 4.19: Evaluation on the marketing policy 65

Table 4.20: Evaluation on customers’ general satisfaction 66

LIST OF FIRGURES

Figure 2.1: SERVQUAL model (Parasuraman et al., 1988) 15

Figure 2.2: BANKSERV model (Avkiran, 1994) 17

Figure 2.3: Duong Thi Thanh Hai’s model (2014) 18

Figure 2.4: CBSQ model of Xin Guo et al (2008) 20

Figure 2.5: Research model of Phan Dinh Khoi et al (2015) 21

Figure 2.6: Nguyen Thi Nhu Quynh’s model (2014) 22

Figure 2.7: Proposed model in the study 25

Chapter 1: INTRODUCTION 1.1 Background to the study

Banking industry is the heart of the economy The banking system in Vietnam has changed in recent years in both quantity and ranking Banks in Vietnam have been developing in the trend of providing customers flexible products and high quality services According to Vietnam Banking Industry Report in 2015, there were currently 48 banks operating in Vietnam, in which there were 5 state- owned commercial banks (SOCBs), 33 joint stock commercial banks (JSCBs), 5 joint venture banks, and 5 wholly foreign-owned banks (Tran et al., 2015)

Apart from domestic debit cards (ATM cards), deposits are the primary product of each bank Customers’ deposits are the source for the flow of money within a bank Being in top 5 largest private commercial banks in Vietnam, Saigon-Hanoi Commercial Joint Stock Bank (SHB) also pays attention to developing deposit products The bank’s annual report in 2015 showed that one of the main business activities of SHB is mobilizing short-term, medium-term, and long-term deposits from individuals and organizations In 2015, the total customers’ deposits into SHB were over 157 billions VND whereas the customer loans were over 131 billions VND In comparison to 2014, the total amount of customers’ deposits has increased 23.7% (SHB, 2015) It can be seen that mobilizing deposits is one of the vital business activities of SHB

During more than 22 years of development, SHB has maintained steady growth and sustainability as well was the confidence and expectations of customers, shareholders, and investors The success and reputation of SHB has been recognized

by the Party and the State and the bank has received many prestigious awards from reputational domestic and international organizations In 2015, SHB was awarded

as the “Best Customer Service Bank” in Vietnam by the Global Banking and Finance and the Alpha Southeast Asia The success in its customer service may result in positive customers’ attitudes and behaviors towards the bank

Within the diversely and strictly competitive environment of the banking market in Vietnam, customers have various choices to entrust their assets

Therefore, all the banks are on the race to gain customer satisfaction, and further to gain customer loyalty in depositing their money into the bank by opening savings accounts Defining customer deposits as the most important service product in SHB’s business, the bank is also striving to win the race However, during the operation process, SHB only focuses on large customers (groups and corporations) without paying much attention to individual customers As a result, the customer satisfaction towards SHB deposit products is not very high The number of complaints about SHB's deposit transactions has increased steadily (from 65 complaints to 97 complaints in the period of 2014 to 2016) The average waiting time for a customer's transaction also increased from 13 minutes to 16 minutes In addition, customers were not pleased with the interest rate policy and deposit policy issued by SHB.

Because of those facts, the need to study the determinants of customer satisfaction and the strategies to achieve customers’ satisfaction is an urgent problem Customer satisfaction in the banking industry is not the new or exploratory research field both in Vietnam and overseas However, most of the studies focused

on other segments such as credit, cards, internet banking, or consumption loans There have been only a few of studies on deposit products and services In addition, there have been no studies on customer satisfaction towards deposit products

conducted at SHB Therefore, the author selected the topic “Recommendations to enhance customer satisfaction towards deposit products at SHB” as his master thesis

1.2 Research overview

In Vietnam, there have been some similar topics by other authors including: Master thesis of Le Minh Trang (2014) entitled “Studying the customer satisfaction towards quality of deposit service of AGRIBANK in Ho Chi Minh City” The research aimed at investigating the important elements of deposit service

of AGRIBANK, evaluating customers’ feeling about these elements, then identifying the satisfaction of customers towards these elements to improve the

quality of deposit services provided by AGRIBANK The research results were achieved by employing both qualitative and quantitative research methods

Master thesis of Nguyen Thi Quynh Nhu (2014) entitled “Evaluating the satisfaction of individual customers towards deposit products of VIETINBANK – Can Tho Branch” The research applied quantitative method by analyzing data collected from a survey questionnaire It considered the satisfaction of more than

100 customers and evaluated the factors that significantly affected the level of customer satisfaction towards deposit products of AGRIBANK in Can Tho

In addition to specific topics in customer deposits segment, there have been also various studies on customer satisfaction in banking products and services in general and other banking segments in particular

Scientific research of Tran Hong Hai (2014) entitled “Studying factors affecting customer satisfaction towards ATM card services of VIETCOMBANK – Vinh Long Branch” The research model was built based on models such as SERVQUAL (service quality model), SERVPERF (service perform model), ACSI (American Customer satisfaction Index) and ECSI (European Customer satisfaction Index) The result showed four factors affecting customer satisfaction towards ATM card services of VIETCOMBANK-Vinh Long On that basis, the author proposed some recommendations to enhance this satisfaction

From the results of previous studies, some aspects of customer satisfaction were revealed Although the quality of services has constantly been increasing, there are still some limitation in the quality of services such as service capacity, behavior, infrastructure conditions, equipment, network, and service charges This

is the basis for the author to conduct a study on deposit products of SHB in Hanoi in these aspects

1.3 Aims of the study

Basing on the urgency of the study, the main purposes of the research consisted of:

 Reviewing primary theories and issues that are generally related to customer satisfaction

 Specializing the theoretical frameworks and research models to evaluate the customers’ satisfaction in banking industry in general and

in deposit products in particular

 Analyzing the customer satisfaction towards SHB’s deposit products in Hanoi

 Determining the factors that influence customer satisfaction towards SHB’s deposit products in Hanoi

 Providing some recommendations to enhance the satisfaction of

customers with SHB’s deposit products in Hanoi

1.4 Object of the study

 Customer saving deposit products of SHB

 Data collected from SHB’s customers who were using SHB’s deposit

products in Hanoi

1.5 Scope of the study

Due to limitations in time and budget, this research had a limited scope in terms of space and time

 Space: This study was carried out on the basis of gathering information from SHB and a survey with customers who were using SHB’s deposit products in Hanoi

 Time: Survey information used in this topic is the data collected from the survey using questionnaire with customers using deposit products of SHB in Hanoi The research was carried out during the period of July, 2016 to November, 2016

 Content: The core content of the study was to focus on identifying the factors that influence customer satisfaction and analyze the impact of these factors on

the satisfaction of customers who were using deposit products of SHB in Hanoi

1.6 Research methodology

This study combines two methods: qualitative and quantitative methods through the following steps:

Step 1: Qualitative study

Qualitative study is used to have an overview of the research problem and clearly identify the topics by studying secondary data The source of the data includes Internet, essays, research projects, books, newspapers, professional documents, and so on

Step 2: Selecting model

After comparing the models in previous studies on customer satisfaction in banking industry in general and towards deposit products in particular, the author will review and select the elements to build the research framework in his study

Step 3: Building the questionnaire

The author refers to relevant questionnaires to build up appropriate contents for each factor in the study

Step 4: Conducting the survey

After the questionnaire has been built and adjusted, the author will deliver the survey questionnaires to the customers

Step 5: Data analysis

After the entire collected data are input, they will be analyzed to consider the influence of variable factors to be studied and the exact impact of each factor on customer satisfaction towards SHB’ deposit products in Hanoi

Step 6: Discussion and recommendations

After the data has been analyzed, some recommendations to enhance the level

of customer satisfaction towards SHB’s deposit products will be proposed

1.7 Proposed research structure

Apart from acknowledgement, abstract, appendices, this research consists of

Moreover, the highlights of SHB’s business overview in general and its deposit services in particular will be mentioned

Chapter 2: Research framework

Research framework consisted of two main part (1) Literature review and (2) Research model

Literature review: Firstly, the term “Customer satisfaction” will be discussed based on published articles including: concepts and the importance of customer satisfaction in business Secondly, the related researches by both domestic and international researchers on the factors affecting customer satisfaction in general and in banking industry in particular will be reviewed and discussed as the basis to conduct the research

Research model: By studying and taking advantages of existed research model

on customer satisfaction, especially in banking industry, the research model in the study will be proposed The research model is the inheritance and modification from previous studies on deposit products

Chapter 3: Research methodology

In this chapter, the research process will be discussed in more details for each stage The main focus of this chapter is questionnaire design and data analysis method The procedure of designing the questionnaire including identifying sample size and sampling method and stating the questionnaire structure Moreover, the process of data collection and data analysis will also be clearly explained in this chapter

Chapter 4: Research findings

Data collection through survey will be the core content of this chapter Then, the analysis will be implemented through the following steps:

Reliability testing using Cronbach’s Alpha coefficient

Exploratory Factor Analysis (EFA) with KMO test

Correlation analysis

Regression analysis

Chapter 5: Discussion and recommendations

Basing on the data analysis from chapter 4, the results will be further discussed in this chapter It focuses on the determinants of customer satisfaction towards SHB’s deposit products Subsequently, the feasible recommendations to enhance the satisfaction of customers towards deposit products of SHB will be made Furthermore, those recommendations will also be considered to be applied to other banks in Vietnam

Chapter 2: RESEARCH FRAMEWORK 2.1 Deposit products at commercial banks

2.1.1 Concepts

* Banking service products

The concept of products in general is very complicated The concept of banking service products is even more complicated because of the generalization, diversification, and sensitivity of banking operations Basically, a product launched

to the market must be able to satisfy a certain need of customers Banking service products are offered to carry out payment services, allow customers to withdraw money at any time, and ensure the safety of the money kept at the bank and the convenience of performing payment transactions with modern technology, etc During the implementation process, each banking service product demonstrates its attributes and characteristics A banking service product is defined to be a collection

of features, functions, and uses created by the bank to meet certain needs and desires of customers in the financial market (Nguyen Thi Minh Hien, 2007)

* Deposit products

Deposit products are a part of the unused income of individuals or organizations They deposited money in the bank for the purpose of accumulating money safely and enjoying interest from that amount Deposits are a special form of money accumulation in the consuming sector When depositing money in a bank, the depositors receive a savings book as a certificate of having made a deposit into the bank On due date, the depositors withdraw their money and receive an interest amount on the savings book (Deposit Regulations, 2004)

The capitals mobilized from deposit products in the economy account for the large amount in the mobilized capital proportion It depends much on customers’ income, customers’ psychological characteristics, the service quality of the bank, the stability of the currency, and the solid growth of the economy

2.1.2 Deposit products at Vietnamese commercial banks

(1) Payment deposit

Payment deposit is one of the forms of capital mobilization of commercial

2008) This kind of account is opened to customers, individuals, or organizations who wish to make payments via banks

This type of deposit serves the customers’ non-cash payment activity but the interest that customers received from this payment account is very low Therefore, customers using this service do not aim at getting profits

(2) Demand deposit

In fact, this is a regular deposit For this deposit, the account holders can withdraw their money at any time without prior notice This type of deposit is similar to payment account, but it is always entitled to interest and customers do not enjoy payment services via banks People use this type of deposit to secure their money and reserve money for short-term spending needs while also enjoying a low interest This account balance is usually not large but less fluctuant than the payment account Therefore, this type of deposit is often paid higher interest rates than the payment account That is the condition for commercial banks to mobilize this source of capital

- Concept: Demand deposit is a kind of savings without definite time

Depositors can withdraw their money without prior notice on any working day of the deposit receiver (Bui Van Trinh, 2013)

- Objects and scope of application: Applied to all Vietnamese citizens and

foreigners living in Vietnam

Deposit account in foreign currency is only applied to the following objects: + Vietnamese citizens who have resided abroad for less than 12 months

+ Foreigners who have resided in Vietnam for 12 months or more

+ Vietnamese citizens who are studying, having medical treatment, or visiting abroad +Vietnamese citizens who are working in the following agencies: diplomatic representatives, consulates, army forces and political organizations, socio-political organizations, socio-professional organizations, social funds, charity funds of Vietnam overseas and individuals accompanying them

- Customers’ benefit: Customers can deposit and withdraw money but still

enjoy a stable interest rate which is higher than the interest rate of payment deposit

- Interest rate: The interest rate of demand deposit is a bit higher than the

interest rate of payment deposit but much lower than that of time deposit

- Interest calculation formula:

The interest is calculated as the percentage (%) over the actual balance with the interest rate and the number of actual deposit days For deposit accounts in VND, the interest rate is determined on a monthly (30 days) or annual (360 days) basis For deposit accounts in foreign currency, the interest rate is determined on an annual basis (360 days) The number of actual deposit days is counted from the date

of deposit until the end of the date prior to the withdrawal date (the withdrawal day

is not counted) (Bui Thi Hoai Thu, 2014)

- Interest payment method: The interest is paid or monthly added to the

principal on the closing date

(3) Time deposit

When individuals deposit money into a bank with a time deposit on the agreement between customers and the bank about the time and prescribed interest rates, the customers can only withdraw money on due date In theory, when customers use this type of deposit, they are not allowed to withdraw the money before due date However, to increase competition in attracting deposits, some banks still allow customers to withdraw money before due date and enjoy flexible interest under the policy of interest payment policy of the bank in each period

- Concept: Time deposit is a type of savings account that depositors can only

withdraw money after a certain deposit time as agreed with the deposit receiver (Nguyen Thi Minh Hien, 2007)

- Objects and scope of application: Similar to demand deposit

- Customer benefit: Serving the accumulating purpose and enjoying high

interest rates

Interest rate of demand deposit (annual) x number of actual deposit days Interest =

360

- Interest rate: Depending on the time levels, there are different interest rates

for customers to select

- Interest calculation formula (Bui Thi Quy, 2008)

- Interest payment method:

For time deposit, the payment of interests depends on the interest payment method that customers have registered under the regulations of the bank: Later payment (paid once on due date); Upfront payment (paid once at the time of depositing money); periodical payment (paid every 1 month, 3 months, 6 months,

12 months, etc.)

+ If customers withdraw the deposit on due time, they will receive the principal and the interest corresponding to the interest rate at the time of depositing + If customers withdraw the deposit before the agreed time, they will only be entitled to an interest rate lower than the agreed interest rate prescribed by the bank over the actual deposit time

+ If customers withdraw the deposit after the due time or if customers do not come to receive the principal and interest on due date, the bank will add the interest

to the principal to make new principal, change the new principal to the new time with current interest rates If customers only receive the interest without withdrawing the principle, the bank will pay the interest to the customers and change the principal to the new time with current interest rates

Deposit products of several commercial banks in the world

+ Commercial banks in Thailand (Ariful Islam & Proshenjit Ghosh, 2014)

- Checking account: This is a deposit account held at a commercial bank for the purpose of ensuring and promptly providing account information to customers on demand through a variety of distribution channels This deposit account is also called demand account or demand deposit account

Interest rate of time deposit (annual) x number of actual deposit days

Interest =

360

- Savings account: Deposit accounts are maintained by commercial banks and interests are paid periodically; customers can not directly use this account in cash but through the form check writing Although it is not as convenient to use as a checking account, this account allows customers to earn an income from interest Although not as convenient to use as checking accounts, these accounts let customers keep liquid assets while still earning a monetary return

- Money market deposit account: This deposit account has a relatively high interest rate It is a form of instant access deposit depending on savings account regulations

of commercial banks such as transaction limit and transaction time

- Term deposit: This is a deposit which customers can not withdraw before the transaction time When the term is over, customers can receive both principal and interest of the deposit or transfer to a new term

+ Commercial banks in India (Malhotra, Naresh K, 2012)

Commercial banks in India offer a variety of deposit products to customers There are two types of deposit products that are most commonly used: Savings account (Special savings account) and Term deposit account

- Savings account: is the most popular account opened by any individual for saving purposes Traditionally, commercial banks in India will add interest to their clients’ accounts daily/ monthly/ quarterly or semiannually depending on the banks' policies and clients’ agreements This deposit is mainly reserved for customers with small savings amount Savings accounts are divided into two main products:

(1) Regular savings accounts: are commonly used in India

(2) Special savings accounts: are private accounts which are offered to a number of subjects, including: Salary account, Access account, Post graduate account, High performance account, etc

- Term deposit account: This is a type of account which the principal is deposited in

a certain period of time and the interest is credited after a specific period of time The total amount of principal and interest will be paid when the account is settled This is a fixed deposit which the bank must pay after a predetermined period set by

2.2 Customer satisfaction and models to evaluate customer satisfaction towards deposit products at commercial banks

2.2.1 Customer satisfaction towards deposit products

* Customer satisfaction

There have been a lot of studies on customer satisfaction towards more than 15,000 essays and articles by many authors (Peterson and Wilson, 1992), and in fact there have been many different interpretations of this concept

In a simple way, customer satisfaction can be defined as customers’ perception/ feeling about the service provider after using the service (Terrence Levesque and Gordon H McDougall, 1996)

More specifically, customer satisfaction is the emotional response/ entire perception of customers towards the service provider on the basis of comparing the difference between what they receive and what they expected (Oliver, 1999 and Zineldin, 2000)

Also on this viewpoint, Kotler (2000) thinks that satisfaction is determined on the basis of the comparison between the results obtained from the service and customers’ expectations This satisfaction is based on the following levels:

If the results are less than expected, customers will be dissatisfied

If the results are the same as expected, customers will be satisfied

If the results are more than expected, customers will be very satisfied and enjoy the service

Meanwhile, Oliva, Oliver, and Bearden (1995) argue that customer satisfaction is the task of enterprises expressed in the relationship between the value

of the products and services and customer's prior expectations about them Obviously, although there have been many different concepts, the definitions of customer satisfaction always refer to the following factors:

Sentiment/ attitude towards the service provider

Customers’ expectations of the service provider’s ability to meet the demands Results of the service/ Values that the service brings

Intention to continue using the service

According to Hurbert (1995), before using a service, customers have formed a scenario on the quality of that service When the scenario of customers and suppliers is not the same, customers will feel dissatisfied

Crolin and Tailor (1992) argue that customer satisfaction should be evaluated

in a short time, and service quality should be evaluated based on customers’ attitudes towards that service over a long period of time

* Customer satisfaction towards bank deposit products

From the concepts of customer satisfaction and service quality mentioned above, the author gives his opinion on customer satisfaction towards deposit products as follows:

Customer satisfaction towards deposit products of commercial banks is the feelings of customers about the deposit products and services that commercial banks provide And these deposit products and services have quality exceeding customer expectations Deposit products and services of the banks must ensure the following aspects:

First, the deposit transaction staff (from senior managers to the lowest level

employees) must have good professional skills, communication skills, professional sales skills, agile manners, attentive and enthusiastic serving attitudes, etc since banking service is a service requiring high quality

Second, the banks' deposit products and services have their own characteristics

which are designed to meet the maximum needs of their customers

Third, the transaction process that provides fast, simple and accurate deposit

services to customers is supported by modern and reliable equipment

Fourth, with a convenient distribution channel, customers are easy to access

the deposit products aiming at the best customer service

2.2.2 Models related to customer satisfaction towards banks’ deposit products

2.2.2.1 SERVQUAL model (Parasuraman et al., 1988)

Parasuraman was one of the pioneers in the study of service quality The success of the model was a major breakthrough for enterprises and financial institutions to apply to improve their service quality The quality is evaluated through the feelings of the customers who use the enterprises’ services

This was also the most popular research model of service quality and was widely applied in marketing research According to Parasuraman, service quality can not be generally determined but depends on customers’ perceptions towards the service and these perceptions are considered based on many factors The SERVQUAL model was built based on the comparison between customers’ expectations and their perceptions SERVQUAL considered two key aspects of service quality including the outcome of the service and the process of service provision which were studied through 22 scales of the five criteria: reliability,

responsiveness, tangibles, assurance, and empathy

Figure 2.1: SERVQUAL model (Parasuraman et al., 1988)

2.2.2.2 BANKSERV model (Avkiran, 1994)

In order to build a set of tools to measure customer satisfaction towards service quality in general and deposit products in particular at bank branches, Avkiran (1994) developed the initial set of service quality measurement tool for banks including 27 observed variables in 6 components: (1) Staff conduct; (2) Credibility; (3) Communication; (4) Responsiveness; (5) Access to services; and (6) Access to branch management based on the SERVQUAL measurement tool by Parasuraman et al (1985) After examining the set of service quality measurement through a survey with customers who were using banking services at branches of Australian commercial banks, Avkiran (1994) proposed a BANKSERV customer satisfaction measurement model with four components and 17 observed variables to measure the performance of bank branches as well as to predict the problems arising

in the process of providing services and customer segmentation as a basis for better decision making in marketing activities The components in the model included: (1) Staff conduct: Showing the bank staff’s responsiveness, behavioral manners, and professional image to the customers

(2) Credibility: Demonstrating the ability to maintain customers’ credibility with the bank staff by rectifying mistakes and informing results to customers

(3) Communication: Demonstrating the meeting of customers’ basic needs of the bank by communicating successful financial announcements and delivering announcements timely

(4) Access to services: The bank's customer service staff must be fully present throughout the working period especially during peak hours

Figure 2.2: BANKSERV model (Avkiran, 1994)

2.2.2.3 Duong Thi Thanh Hai’s model (2014)

Deposits are one of the main sources of mobilized capitals of the bank to ensure business operations Therefore, when studying the models related to customer satisfaction towards deposit service products, the author also approached the studies which evaluated the factors affecting customer satisfaction towards capital mobilization service at commercial banks The research model of Duong Thi Thanh Hai was one of such studies In her study, the author identified the internal factors as well as the external factors that determined the quality of the bank's capital mobilization service

The internal factors included: Business strategies of the bank; Forms of capital mobilization; Interest rate policy; Facilities; Marketing activities; Seniority and prestige of the bank The factors were explained in details by the author as follows: 1) Business strategy of the bank: Each bank must plan for itself a separate business strategy in accordance with the internal and external conditions the bank Business strategies have a decisive role for the efficiency of the bank The bank needs to determine its current position in the system, realize its strengths, weaknesses, opportunities, as well as challenges

2) Forms of capital mobilization: Due to the different needs of customers when coming to the bank, it is necessary to satisfy the diverse needs of customers to contribute to raising the efficiency of capital mobilization

3) Interest rate policy: This is one of the most important policies among the policies supporting for the capital mobilization of the bank today The bank uses the

Staff conduct

Credibility

Access to servicesCommunication

Customer satisfaction

interest rate system as an important tool in mobilizing and changing the size of capitals attracted to it, especially the size of deposits In order to maintain and attract more capitals, the bank needs to set competitive interest rates, apply preferential interest rates for large customers, customers with regular deposits, etc 4) Facilities: Nowadays, commercial banks are increasingly paying attention

to the application of modern science and technology to their professional operations, especially the payment phase This makes the funds flow quickly and offers convenience and safety to customers in process of depositing money, withdrawing money, and asking for loans

5) Marketing activities: This is a very important issue to help the bank understand customers’ requirements and expectations Since then, the bank can introduce appropriate forms of capital mobilization, interest rate policy, and credit policy

6) Seniority and prestige of the bank: Based on the available reality, each bank has been creating its own image in the market A large and reputable bank will be more advantageous in banking operations in general and capital mobilization in particular The trust of customers will make the bank able to stabilize the amount of mobilized capitals and save mobilization costs

Figure 2.3: Duong Thi Thanh Hai’s model (2014)

Thus, the factors affecting customer satisfaction towards deposit products at commercial banks in Duong Thi Thanh Hai's research model included: Business strategy of the bank, forms of capital mobilization, interest rate policy, facilities, marketing activities and seniority and prestige of the bank The influence of these

Business strategy of the bank

Forms of capital mobilization

Interest rate policy

Facilities

Marketing activities

Seniority and prestige of the bank

Satisfaction

factors was also verified by Truong Van Vu (2016) when he studied the reality of deposit mobilization at Agribank - Phu Yen Branch

2.2.2.4 CBSQ model of Xin Guo et al (2008)

With the objective to evaluate the whole range of banking services including deposit products and compare the levels of expectations and perceptions of customers towards the types of services provided by the bank, Xin Guo et al (2008) built a set of initial measurement of banking service products consisting of 31 observed variables with 7 components including (1) Reliability, (2) Empathy, (3) Facilities, (4) Human capital, (5) Access, (6) Technology, and (7) Communication based on SERVQUAL measurement tool and the results from in-depth interviews with 18 financial managers to measure service quality of wholesale banks in the Chinese financial market

After examining the expectations and perceptions of corporate customers using banking services at Chinese banks, Xin Guo et al (2008) proposed a model for measuring the quality of deposit services called CBSQ (Chinese Banking Service Quality) with 20 observed variables belonging to 4 components:

Reliability: Demonstrating the ability to perform promised services accurately and reliably

Human capital: Showing issues related to the appearance of employees, understanding about customers, and professional skills

Technology: Demonstrating the information technology system serving the bank's operations

Communication: Demonstrating communication channels between the banks and corporate customers, including access to banking services

Of the four components mentioned above, two components of "reliability" and

"human capital" belonged to the functional quality and two components of

"technology" and "communication" belonged to the technical quality

Figure 2.4: CBSQ model of Xin Guo et al (2008)

2.2.2.5 Research model of Phan Dinh Khoi and associates (2015)

The authors built the research model based on SERQUAL model in conjunction with Logit model and used control variables to determine the factors affecting the levels of customer satisfaction towards the savings deposit services at Agribank - Vinh Long branch Data were collected through a survey questionnaire with 130 customers who deposited savings at the branch The results showed that the 5 main factors that affected customer satisfaction included responsiveness, facilities, serving ability, sympathy, and security In addition, the control factor – age - had a negative effect on the levels of customer satisfaction Therefore, the bank not only required employees to focus on the age of customers while performing transactions but also actively encouraged employees to serve customers better based on the five factors mentioned above to improve the satisfaction levels

of depositors The model was set up by the authors as follows:

Technical quality

Customer satisfaction

Figure 2.5: Research model of Phan Dinh Khoi et al (2015)

The author gave the interpretation to the observed variables in the research

model as follows:

Table 2.1 Interpretation of variables in the research model

Factors Interpretation of the observed variables

Facilities Modern and attractive equipment; neat and elegant staff’s

clothes; convenient working time

Serving ability Showing good professional knowledge and professionalism

when consulting customers; having attentive and thoughtful serving attitudes, creating customers’ security; ensuring safety when performing transactions; always keeping appointments

Empathy Serving customers enthusiastically; always paying attention

to customers’ desires; paying attention to customers’

difficulties

Security Secured account information; Reasonable and competitive

interest rates; Trusting in communication

Responsiveness Convenient depositing; convenient transaction; fast

transaction time; Ready-to-serve attitudes; Assisting customers with the procedure enthusiastically

Source: Phan Dinh Khoi et al (2015)

Income Customer satisfaction

2.2.2.6 Research model of Nguyen Thi Nhu Quynh (2014)

Nguyen Thi Nhu Quynh (2014) built her research model based on the reference of SERVQUAL and FTSQ models of foreign researchers and the models

of domestic researchers such as Dinh Phi Ho (2009), Do Tien Hoa (2008), and Hoang Xuan Bich Loan (2008) At the same time, the author based on the practice

of banking operations in 2014 to propose factors that affected customer satisfaction towards the quality of banking services including: tangibles, perceived quality, the bank’s image, staff’s responsiveness, and service prices As a result, the research model of the author was designed as follows:

Figure 2.6: Nguyen Thi Nhu Quynh’s model (2014)

Following the study by Nguyen Thi Nhu Quynh, Thai Thi To Trinh (2016) also applied this research model to assess the effectiveness of deposit mobilization

of Vietnam Prosperity Joint Stock Commercial Bank - Binh Dinh Branch through the analysis of customer satisfaction at the branch Thai Thi To Trinh also verified the statistical significance of independent variables towards dependent variable, which was the satisfaction of depositors at commercial banks

2.3.2 Proposed model in the study

After studying and synthesizing the theory, the author realized that there were

Tangibles

Service prices

Perceived quality

The staff’s responsiveness

The bank’s image

Customer satisfaction

all had things in common and were suitable with the research topic of the thesis Therefore, the author summarized all the previous research models into a complete research model with the following elements:

Table 2.2: Summary of previous research models

Parasuraman et al (1988), Avkiran (1994), Xin Guo et

al (2008), Phan Dinh Khoi and partners (2015), Nguyen Thi Nhu Quynh (2014)

Facilities

Duong Thi Thanh Hai (2014), Parasuraman et al

(1988), Avkiran (1994), Xin Guo et al (2008, Phan Dinh Khoi and partners (2015), Nguyen Thi Nhu Quynh (2014)

Product policy Phan Dinh Khoi and partners (2015), Nguyen Thi Nhu

Quynh (2014)

Interest policy Duong Thi Thanh Hai (2014), Nguyen Thi Nhu Quynh

(2014)

Marketing policy Duong Thi Thanh Hai (2014)

Source: Summarized by the author

Thus, the proposed research model for the thesis would consist of 6 components: Facilities, Staff’s responsiveness, Prestige, image of the bank, Interest policy, Product policy, and Marketing policy Although some factors in previous research models such as communication, empathy, security, serving ability, and perceived quality were not mentioned in the model, the author included them in the model variables due to their duplicate contents The avoidance to study these factors individually was to reduce the number of observed variables, avoid boredom, and

consume time of interviewees The factors in the proposed model were explained as follows:

Facilities: are the exterior image of the bank, equipment, machinery, staff style, papers, manuals, and communication systems In general, all that customers can see directly with their eyes and feel with their senses can influence this factor: The equipment is always been modernized; The infrastructure of the bank is eye-catching and beautiful; The staff is always neat and clean; The brochures and manuals related to the service are beautiful

(2) Prestige, image of bank: Prestige is reflected in the bank’s willingness and ability to pay customers and the quality of the bank’s operations (Oanh, 2012) Based on the available reality, each bank has been creating and will create its own image in the market A large and reputable bank will be more advantageous in its banking operations in general and capital mobilization in particular The trust of customers will help the bank stabilize the amount of mobilized capitals and save mobilization costs (Hai, 2012, Thu, 2014) As a result, the bank can set up a back-

up strategy more easily Even when the deposit rates at a reputable banks are slightly lower, people will still choose that bank to deposit their money without looking for other banks who offer more attractive interest rates because they believe that their money here will be absolutely safe (Thu, 2014)

(3) Staff’s responsiveness: This is a criterion measuring the staff’s ability to solve problems quickly, handle complaints effectively, be ready to help customers, and meet customers’ requirements In other words, the service effectiveness is the response from the service providers to what their customers expect, namely: The bank staff will tell the customers when to conduct the service andconduct it quickly; always be ready to help customers when they have problems; never be too busy to meet customers’ requirements

(4) Product policy: The bank's product policy meeting customer satisfaction is expressed in attractive promotions and fast and convenient transactions

(5) Interest rate policy: This is an important factor attracting a large number of

policy ensures customer satisfaction when the interest rates are attractive and the efforts and costs spent on a transaction are reasonable

(6) Marketing Policy: Marketing policy plays an important role in all industries nowadays, including the banking industry (Thu, 2014) To create good a image in the customers’ eyes, commercial banks need to synchronize many factors

in which they not only have to focus on advertising forms such as advertising in magazines, posters, , Internet, etc but also have to combine with other policies such

as customer policy, product policy, etc The propaganda and advertising for all classes of residents to understand the information is very necessary (Oanh, 2012) Once the mobilization purpose of the bank is understood, people will respond more enthusiastically

The research model was as follows:

Figure 2.7: Proposed model in the study

Marketing policy

Chapter 3: METHODOLOGY

3.1 Preliminary research (qualitative)

3.1.1 Building the preliminary scale

The development of the scale to measure the factors affecting customer satisfaction towards deposit products was based on the research models in previous studies such as Parasuraman, Zeithaml & Berry (1988); Avkiran (1994) Duong Thi Thanh Hai (2014); Xin Guo et al (2008); Phan Dinh Khoi et al (2015); Nguyen Thi Nhu Quynh (2014) The questions for each variable were adapted from previous studies In this study, the research concepts used included: Prestige and image of the bank, staff’s responsiveness, product policy, interest rate policy, and marketing policy of the bank The purpose of this study was to discover if the interviewees were aware of which factors were important in affecting customer satisfaction towards the deposit products of the bank

In this section, the study employed one-to-one discussion technique, a method for data collection through a discussion between the researcher and each respondent (Nguyen Dinh Tho, 2011) Due to the specificity of the research as well as the dissimilarity in participants’ viewpoints, this discussion would help the author clarify and dig deeper into the information In the interviewing process, the author defined and explained the research concepts for the interviewees to understand so that their contributions would be really helpful for the study

The interviewees were selected based on convenience sampling methods (or non-probability sampling methods) in which the researcher approached the samples

in a convenient manner This means that researchers could choose the people that they could access (Nguyen Dinh Tho, 2011) The respondents participating in the interviews were the leaders of SHB and some branch managers of SHB The total number of experts that the author interviewed was 30

The interviews were conducted as follows: First, the author directly asked the experts about the factors affecting the satisfaction of customers who were using the

model to suggest the experts The results showed that most experts agreed with the author The results of the research were presented in the following table:

Table 3.1: Interview questions to SHB’s experts

Number of selected options

Number of interviewee

s

Proportio

n

3.1.2 Adjusting the scale

In order to carry out this research phase, the author prepared a questionnaire with questions asking about the factors affecting the satisfaction of customers who were using the deposit products of the bank After that, the questionnaire would be sent to the experts for comments The opinions of the experts would be summarized and the questionnaire would be adjusted before the formal interviews were conducted The purpose of the scale adjustment was to change some ideas to suit the actual situation of the bank and make the questions easier to understand

3.2 Formal research (quantitative)

Quantitative research was conducted through the survey questionnaire After the questionnaire was modified to become the formal questionnaire, data collection was

carried out The collected information was used to evaluate the reliability of the scale, measure the scale, and test the model

3.2.1 Designing the survey questionnaire

In this questionnaire, the author used closed-ended question type in one-option format The questionnaire was designed for face-to-face interviews in which the interviewees answered the questions through an answer sheet The interviewees were customers who were using SHB's deposit products including both individual customers and organization customers

- Main part: consisted of questions asking about the factors affecting the satisfaction of customers who were using the deposit products of the bank

- Remaining parts: were designed with the purpose of gathering information to test the influence of individual characteristic differenceon the assessment of the factors

3.2.2 Collecting information from the survey questionnaire

The data collection through interview questionnaire was conducted by delivering questionnaires directly to the customers Customers are clearly explained about the content of the questionnaire to avoid collecting inaccurate information or disturbing some non-cooperative interviewees

3.2.3 Designing the sample

It is the most ideal to conduct this research on all SHB’s customers However, due to the constraints in costs, time, and convenience, this study employed a

convenient or non-probability sampling method which was described in the above qualitative research section (Section 3.1)

In this study, the author used the EFA and regression analysis, so the sample size was determined on the following bases According to Hair et al (1998), it is necessary to collect data from at least 5 samples per observed variable Moreover, to conduct regression analysis, Tabachbick & Fidell (1996) suggest that the sample size has to ensure the formula: n ≥ 8m + 50, in which n: sample size; m: number of independent variables of the model (cited in Nguyen Dinh Tho, 2011) There were totally 6 independent variables in this study, so the minimum sample size of the

generality of the study is In addition, SHB’s customers were allocated in all three areas of the North, Central, and South of the country Therefore, the author would choose to select 100 representative samples from each area The interviews were conducted at regional branches with the customers who are using SHB’s deposit products Thus, the total number of delivered questionnaires was 300 and the number of collected questionnaires was 290, in which 10 questionnaires were invalid The author would conduct the research with the sample size of 280 samples

3.2.4 Processing the data

Analyzing Cronbach’s Alpha Coefficient

The Cronbach's Alpha reliability coefficient shows whether the measures are linked or not, but it does not indicate which observed variables are excluded and which ones are retained Then, the calculation of Corrected Item-Total Correlation coefficients will help exclude the observed variables that do not have much contribution to the description of the studied concept (Hoang Trong & Chu Nguyen Mong Ngoc, 2005)

Criteria are used when performing a scale reliability assessment:

- Exclude observed variables with small Corrected Item-Total Correlation coefficients (less than 0.3); Cronbach's Alpha reliability coefficient must be greater than 0.6 (the greater the Cronbach's Alpha coefficient are, the higher the internal consistency is) (Nunally & Burnstein, 1994, cited in Nguyen Dinh Tho & Nguyen Thi Mai Trang, 2009)

- Value of Cronbach's Alpha: greater than 0.8: the scale is good; fom 0.7 to 0.8: the scale is usable; 0.6 or more: the scale can be used in cases where the research concept is new or new in the research context (Nunally, 1978; Peterson, 1994; Slater, 1995, cited in Hoang Trong & Chu Nguyen Mong Ngoc, 2005)

- Observed variables with small Corrected Item-Total Correlation coefficients (less than 0.4) are considered garbage variables and are excluded; the scale is accepted when the Cronbach's Alpha coefficient meets the requirement (greater than 0.7)

Based on the above information, the study conducted a scale assessment based

on the criteria:

- Exclude observed variables with Corrected Item-Total Correlation coefficients of less than 0.4 (These variables do not have much contribution to the description of the studied concept and many previous studies used this criterion)

- Choose the scale with the Cronbach's Alpha coefficient of greater than 0.6 (The concepts in this study were relatively new to the study population)

Exploratory Factor Analysis

After evaluating the reliability of the scale, the next step is to evaluate its value Two important values of the scale are the convergence validity and the discriminant validity The Exploratory Factor Analysis (EFA) will evaluate these two types of validity

To determine the suitability of EFA, two types of tests, Barlett’s and KMO, are used

Bartlett's test of sphericity is used to consider if the correlation matrix is a unit matrix, a matrix with a diagonal of 1 and other elements of zero If Bartlett's test has

p <5 %, the hypothesis H0 (the correlation matrix is the unit matrix) is rejected, meaning that the variables are correlated (Nguyen Dinh Tho, 2011)

The KMO test is an index used to compare the magnitude of the correlation coefficient between two variables and the magnitude of their partial correlation coefficient (Norusis 1994) To use EFA, KMO must be greater than 50 (Nguyen Dinh Tho, 2011)

To select the number of factors, three commonly used methods include eigenvalue criterion, inflection point criterion, and predetermination of factors In this study the author selected the eigenvalue criterion With this criterion, the number of factors is determined in the factor with eigenvalue of at least 1 (≥1) (Nguyen Dinh Tho, 2011)

When evaluating the scale validity by EFA, the factor loading coefficient must

be more than or equal to 50 and the weight difference must be less than or equal to 30 (Nguyen Dinh Tho, 2011)

Finally, when conducting evaluation, we need to consider the Total Variance