Improving service quality of bidv ibank at bidv so giao dich 1 branch

Service quality is one of the determinants of the existence of a bank and it helps banks to increase their competitiveness in the market. Banks have to understand that in order to achieve success, in order to achieve growth, they have to invest and expand their business areas on the basis of making their customers truly satisfied with the quality of their services. The objective of the study was to assess the service quality of IBank services of BIDV So Giao Dich 1 Branch, thereby determining the components of service quality assessment and the components that affect the service quality of IBank services of BIDV So Giao Dich 1 Branch. In general, the research has achieved the objective of identifying these components under the two arms of the research model shown above. First of all, research results show that the major cash flow is mainly contributed by several big corporations (4.1% customers) and half of the customers are using the service not yet registered with the financial package. Additionally, most of customer concern about the easetouse, effective function and security of the service which should be focused to improve in the future. Secondly, the study also indicates that two (2) factors affecting the quality of IBank service in BIDV are Reliability (β equal to 0.774) and Customer Friendliness (β equal to 0.575).

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

-

NGUYỄN THẾ ANH

IMPROVING SERVICE QUALITY OF BIDV IBANK

AT BIDV SO GIAO DICH 1 BRANCH

NÂNG CAO CHẤT LƯỢNG DỊCH VỤ BIDV IBANK

TẠI BIDV CHI NHÁNH SỞ GIAO DỊCH 1

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2020

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

-

NGUYỄN THẾ ANH

IMPROVING SERVICE QUALITY OF BIDV IBANK

AT BIDV SO GIAO DICH 1 BRANCH

NÂNG CAO CHẤT LƯỢNG DỊCH VỤ BIDV IBANK

TẠI BIDV CHI NHÁNH SỞ GIAO DỊCH 1

Chuyên ngành: Quản trị kinh doanh

Mã số: 8340101.01

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS TRẦN KIM HÀO

HÀ NỘI - 2020

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

ACKNOWLEDGEMENT

After studying MBA course, I have attained plenty of various knowledge, skills and insights The course raises my capacity of administration and management up to the next level

I declare that this is a true copy of my thesis The content of this thesis has been approved by the committee of Vietnam National University, Hanoi – Hanoi School of Business and Management (HSB) This thesis has not been submitted for

a higher degree to any other University or Institution

I would like to thank sincerely people for heloping, supporting and guiding

me conscientiously in order to finish this thesis successfully

First of all, I would like to thank all the professors of MBA program, especially Dr Tran Kim Hao – my supervisor Then I would like to thank deeply to the directors and staff of BIDV So Giao Dich 1 Branch, respondents and interviewees who allowed me to gather enough data for this research Finally, I would like to express my thanks to my wife, my family, my colleges and my fellow friends who always stand by me during the past two years and encourage me to keep moving from the beginning of my study

TABLE OF CONTENT

DECLARATION i

ACKNOWLEDGEMENT ii

LIST OF TABLES v

LIST OF FIGURES vi

INTRODUCTION 1

CHAPTER 1: THEORETICAL BACKGROUND ON SERVICE QUALITY AND INTERNET BANKING 8

1.1 Internet banking 8

1.1.1 Electronic banking 8

1.1.2 Internet banking 8

1.2 Services 10

1.3 Service quality 10

1.4 Internet Banking service quality 12

1.5 Service quality assessment models 17

1.5.1 Servqual model 17

1.5.2 Servperf model 20

1.6 Proposed model and hypothesis of the research 21

1.6.1 Propsosed conceptual model 21

1.6.2 Proposed hypothesis of the research 22

CHAPTER 2: ASSESSING THE SITUATION OF BIDV IBANK SERVICE QUALITY AT THE BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM – SO GIAO DICH 1 BRANCH 24

2.1 Introduction of BIDV – SO GIAO DICH 1 BRANCH and BIDV iBankservice 24

2.1.1 Foundation and development history 24

2.1.2 Introduction about BIDV So giao dich 1 Branch 28

2.1.3 BIDV IBank 31

2.2 General assessment of the quality of IBank service BIDV So Giao Dich 1 Branch 41

2.2.1 Advantages: 42

2.2.2 Limitations 43

2.3 Reasearch finding result 45

2.3.1 Internal data finding result 45

2.3.2 Survey results on quality of iBank service at Bank for Development and Investment of Vietnam, So Giao Dich 1 branch 47

2.4 Research result discussion 57

CHAPTER 3: SOLUTIONS TO IMPROVE SERVICE QUALITY OF BIDV IBANK AT BIDV SO GIAO DICH 1 BRANCH 59

3.1 Orientation on the development of BIDV iBank 59

3.2 Research recommendations 59

3.2.1 Recommendations for BIDV So Giao Dich 1 Branch: 59

3.2.2 Suggestions to the Government: 62

CONCLUSIONS, LIMITATIONS AND IMPLICATIONS 64

1 Conclusions 64

2 Limitations 66

2.1 Limitation of Sampling 66

2.2 Limitation of the option format of the answers 66

3 Implications 66

REFERENCES 67

APPENDIX I 74

LIST OF TABLES

Table 1.1 Key determinants of internet banking service quality 15

Table 2.1: Business results of the Branch in the stage of 2017 -2019 30

Table 2.2 BIDV iBank Fee Schedule 37

Table 2.3: Factors table after Cronbach test 52

Table 2.4: Reliable observed variables after running exploratory factor analysis 54

Table 2.5 Correlation analysis 55

LIST OF FIGURES

Figure 1.1 Five key elements as central influences on perceived quality 13

Figure 1.2 Service Quality 5 Gap Model in SERVQUAL 20

Figure 1.4: Conceptual model of the research 22

Figure 2.1 Registered customer number by year 45

Figure 2.2 Proportion of customer by service package 45

Figure 2.3 Proportion of customer and proportion of transaction volume by type of corporation 46

Figure 2.4 Number of registered customer by service function 46

Figure 2.5 Gender and age statistic 47

Figure 2.6 Company size and industry statistic 48

Figure 2.7 Service package statistic 48

Figure 2.8 Main reason to use iBank service statistic 49

Figure 2.9 Customer problem while using service statistic 49

Figure 2.10 Transaction frequency statistic 50

Figure 2.11 Amount of transactions per month statistic 50

Figure 2.12 Transaction volumes per month 51

Figure 2.13 Calibration model of service quality 56

INTRODUCTION

1 Rationale of the study

Under the development of market economy, the competition between financial institutions is stronger and the requirements of customers are higher day

by day, especially in the storm of technology development, internet banking was born and continuously developed and improved Information technology is a key to achieve competitive advantages and has been developing rapidly in recent years In order to provide customers efficient banking services, information technology and the internet become more and more important for banks to delivery banking services Banks have begun to setup their own web portal to provide internet service and gain the advantages of unlimited time, area, fewer cost, and more customers from internet banking

The service quality plays an important role for banks to compete Therefore,

it is important to utilize good service quality in order to differentiate itself from other service providers Although the form of internet services is different from that

of traditional services, service quality is still the core competitiveness of internet banking In view of development, service quality is a crucial issue in internet banking Service quality is one of most heavily researched constructs in the field of service marketing

In Vietnam, the situation in recent years showing the tendency of using electronic services over internet is becoming prevalent, the conveniences brought about by internet banking are great For the banks, the initial investments of technology can be expensive but the benefits on human resource' investment are not small Internet banking help banks reduce the cost for staffs, offices, printings, storage For customers, they will be satisfied by the speed of services, saving the cost and time, reducing paper procedures from the bank

In this tendency toward customers, BIDV in general and BIDV So Giao Dich

1 branch in particular is one of pioneers in developing electronic banking services

as Internet Banking, Home Banking; Phone Banking; Mobile Banking and

recently as BIDV iBank With the modern technicalbanking infrastructure, BIDV is holding many opportunities to the application of advanced technology in automatic operations and offering BIDV iBank to customers

BIDV So Giao Dich 1Branch is a major and leading branch of BIDV Being aware of the importance of service quality to satisfy customer and get their loyalty, BIDV So Giao Dich 1 Branch has been applying modern technology in improve performance of Internet Banking service Up to now, BIDV IBank has been attracting more and more customers by the benefits of the service The number of customers registered this service has been increasing over the year However, the satisfaction of customers toward BIDV IBank service quality in So Giao Dich 1 branch seems to be not high, the rate of customer registering BIDV iBank financial packages is still low This put urgent need for the author for assessing the situation

to give out measures aiming to improve service quality to enhance customer satisfaction, attract more customers, push up the rate of BIDV iBank usage, raise the trust of customer toward BIDV So Giao Dich 1 Branch service

With above reasons, the author decides to choose the topic "Improving service quality of BIDV iBank at BIDV So giao dich 1Branch" for mater thesis

2 Literature review

2.1 Research on the world

Jun et.al (2001) in research on " The key determinants of internet banking service quality: a content analysis " focus on the issues associated with internet banking service quality Identified a total of 17 dimensions of internet banking service quality which can be classified into three broad categories: customer service quality, banking service quality and online systems quality The most frequently dimensions as the main sources of satisfaction of dissatisfaction were reliabity, responsiveness, access and accuracy The findings help the author the guidance for the study

Khan et al (2009) in the study aims at evaluating the service quality of internet banking (i-banking) services in India from customer's perspective A structured questionnaire containing 44 quality items is administered to various

target groups Seven quality dimensions, viz reliability, accessibility, friendliness, privacy/security, efficiency, responsiveness and fulfilment, are identified based on principal component factor analysis Demographic analysis of data reveals that gender is hardly a bias for use and evaluation of service quality of i-banking in most of the cases across various categories of customers A valid mathematical model is proposed to assess the overall service quality using regression analysis The results show that customers are satisfied with quality of service on four dimensions such as reliability, accessibility, privacy/security, responsiveness and fulfilment, but least satisfied with the 'user-friendliness' dimension The empirical findings not only prioritise different parameters but also provide guidelines to bankers to focus on the parameters on which they need to improve

user-Simon et al (2013) in their empirically research on “Customer Satisfaction with Internet Banking Service Quality in The Ghanaian Banking Industry collected the main data from 200 respondents of the two banks The results show that customers of Merchant Bank, Ghana are satisfied with the quality of IB services offered by Ghana Commercial Bank In addition, the income factor also affects customer satisfaction towards IB service quality In general, the customers of the two banks are unhappy with the speed of the transaction, feedback to customers, online leads, offers, fees for IB services The findings of the study are both theoretical and practical, contributing to the research literature on service quality of internet banking

2.2 Research in Vietnam

Tran Thi Thu Duyen (2012) in her thesis on the contents "Improving the quality of IB services of Dong A Commercial Joint Stock Bank" showed the contents of IB and service quality After analyzing two service quality measurement models, SERVQUAL and SERVPERF, the researcher developed a model for the SERVQUAL model to conduct a review of the IB service quality of Dong A Commercial Joint Stock Bank through quantitative analysis and proposed some

solutions and recommendations That helps the author have a lot of findings to apply to research the objects at BIDV SGD1

Truong Huyen Uyen Trang (2013) in her thesis on the topic "Improving the quality of IB services at Vietnam Maritime Commercial Joint Stock Bank, Thua Thien Hue Branch" also uses 02 models SERVQUAL and SERVPERF, the reseacher has conducted surveys with model 150 Votes (135 valid votes) T-test and quantitative analysis using SPSS are tools that help the author analyze collected data to produce results and recommendations

Nguyen Lam Hoang Yen (2013) in the thesis on "Measuring IB service quality of Asia Commercial Bank, Da Nang branch" also presented some basic issues of service, service quality and models of customer satisfaction index; The author Yen has chosen the model SERVPERF as a model of research for dissertation The researcher also used quantitative research with the model SERVPERF research to analyze the quality of IB services of Asia Commercial Bank at Da Nang branch in the study of the situation The study aimed at measuring the service quality in the reference of foreign banks with a lot of differences that help to provide good experiences for the thesis of the author

The other study by Nguyen Phuoc Quy Hoang (2013) in the Master's thesis

on "Improving the quality of IB services of the Bank for Investment and Development of Vietnam, Thua Thien Hue Branch" The researcher also presented basic concepts, research models, quantitative analysis and specific solutions The differences in the research object also makes the work as a good reference for the author to learn

3 Objectives of the study

3.1 Overall objective

Base on evaluating service quality of iBank at BIDV So Giao Dich 1 Branch, the study will recommend the solutions to improve the quality of iBank at BIDV So Giao Dich 1 Branch in particular and BIDV in genaral

3.2 Specific objectives

Reviewing the service quality measurement models and building a suitable model for measuring iBank service quality

Analizing and evaluating the situation of iBank service quality at BIDV So Giao Dich 1 Branch by selected model; Outcomes, shortcomings and causes

Recommending suitable solutions to improve iBank service quality at BIDV

So Giao Dich 1 Branch

4 Subject and scope of the study

4.1 Subject of the study

Subject of the study are iBank service atBIDV So Giao Dich 1 Branch

Survey subjects are individuals, organizations who have been using iBank provided by BIDV So Giao Dich 1 Branch Until 31st of May, 2020, there are approximately 300 customers who have already been using IBank service of financial packages Therefore, research aim to survey one third of IBank customer

to discover factors affecting to IBank service quality

4.2 Scope of the study

- Scope of content: Service quality and solutions to improve it

- Scope of space: BIDV So Giao Dich 1 Branch, Hanoi

- Scope of time: Secondary data used in between 2019 and 2020

5 Research methodology

5.1 Data collection method

- Secondary Data Collection

Secondary data will be collected through reports of the BIDV Planning & Finance Department of BIDV So Giao Dich 1 Branch

- Primary data collection:

Primary data were collected from survey questionnaires to individuals, organizations who have been using iBank provided by BIDV So Giao Dich 1 Branch in June 2020 Expert interviews, observations and synthetic analytics will be applied

The research process is expressed in detail as following:

Base on reviewing theoretical literature and previous model, the author proposes the most appropriate research model The author will apply quantitative research method which includes some following steps:

• Building the questionnaire based on the proposed theoretical model

• Determining the sample size

Sampling:

- Sample size: 100 by random sampling

- Sampling objects: BIDV SO GIAO DICH 1 BRANCH‟s individual and

organizational customers who use iBank on average five times a month (that is to

ensure that chosen customers use IBank service frequently and understand it well)

Sample size can be identified by the formula ofCochran(1977):

5.2 Data analysis method

The research uses spss software to analyze questionnaire result through cronbach alpa analysis, exploratory factor analysis, correlation analysis and regression analysis

6 Thesis structure

In addition to the introduction, conclusion, references, appendixes; the dissertation is divided into three chapters:

Chapter 1: Theoretical background on service quality and internet banking

Chapter 2: Assessing the situation of BIDV iBank service quality at the Bank for Investment and Development of Vietnam – So giao dich 1 branch

Chapter 3: Solutions to improve service quality of BIDV iBank at BIDV So giao dich 1 branch

CHAPTER 1: THEORETICAL BACKGROUND ON SERVICE QUALITY

AND INTERNET BANKING

1.1 Internet banking

1.1.1 Electronic banking

For electronic banking, products and services can be defined as the bank distribution channel There are various definitionsaboutelectronic banking according to the given subject and researchers (Daniel 1999) Mobarek (2007) states that electronic and interactive communication channels, both new and traditional, transfer banking products and services directly to customers through an automatic distribution and “is defined as electronic banking, a new distribution channel for banking services by electronic banking (Mols 1998) Electronic banking definitions vary amongst researchers partially because electronic banking refers to several types of services through which bank customers can request information and carry out most retail banking services through computer connected network, television or mobile phone” (Mols 1998) In line with this, Kolodinsky et al (2004) mention that electronic banking could also be defined in several different platforms as follows:

• Internet banking or online banking

• PC banking or offline banking

or funds transfers, bill payments, money transfers and online shopping transactions Online banking services and products include account access, account statements,

fixed deposit inquiries, money transfers, credit card payments, invoices, payments and checkbook requests As more people embrace the Internet, online banking is expected to grow This expected growth will also affect people‟s income and education levels Research has been done on the adoption of Internet banking and the banks‟ performances Research for internet banking is less than the effect of scientific investigations (Daniel and Storey 1997) Banks began offering Internet services in 1995 (Sullivan 2000) Although the speed of Internet banking system expansion has slowed, most users are still determined to see further development More users are starting to become familiar with the use of personal computers, and mobile phones and the Internet use, so there is a rising hope that modern technology (Internet) in the banking sector will adopt the use of serious tests Existing customers these days only want to do online transactions, in every case, they use the desired text and e-mail messages, while all kinds of activities and financial accounts need to be used to get financial updates

In the increasingly competitive banking environment, Internet banking is seen as a useful tool to help reduce paper usage It is now very difficult to maintain and keep paper records, which are being destroyed Virtually all financial institutions with millions of customers have replaced paper records with online computer networks Some customers still ask for receipts and paper records even though such records can be kept in their own mobile phones and personal computers, which are connected to their bank (Sullivan 2000)

According to Circular 35/2016/TT-NHNN issued 29/12/2016 by state bank

of Viet Nam, internet banking is banking and payment services provided over internet System of internet banking are series of structures including hardware, software, data base, system of telecommunication and security to produce, transmit, collect, conduct, store and exchange digital information serving for managing and providing internet banking services The customers are individuals, organizations using internet banking

In opinion of the author, a concept of Internet banking can be understood as follows: Internet banking is an electronic banking service over the internet that

customers can perform banking services anytime and anywhere (except for cash withdrawal)

1.2 Services

Sasser et al., (1978) defined " A Service is a package of explicit and implicit benefits performed with a supporting facility and using facilitating goods " James (1977) defined service as“a time perishable intangible experience performed for a customer acting in the role of co- producer" Gronroos (1984) defined service as

"An activity or series of activities of a more or less intangible nature that normally, but not necessarily, take place in interaction between the customer and service employees and/or physical resources or goods and/or systems of service provider which are provided as a solution to customer problems " According to Payne (1993), service is any primary or complementary activity that does not directly produce a physical product - that is, the non-goods part to the transaction between customer and provider'' Whereas Zeithaml et al (2006) described services as deeds, processes, and performances The characteristics of services that distinguish it from products as intangibility, heterogeneity, simultaneous production and consumption

as well as perish ability According to Baron and Harris (2003) services are processes that occur over time There are three fundamental aspects of service: process, people and physical evidence Compatible to the simple definition is that services include all economic activities whose output is not a physical product and

is consumed at the time it is rendered In the broad definition of service, intangibility is the key determinant of whether an offering is or is not a service

1.3 Service quality

Quality and service quality have become major concerns during the past few decades for managers, researchers, practitioners because of its huge impacts on business performance of firms Crosby defined quality as „conformance to requirements (Crosby, 1979) Delivering quality service means conforming to customer expectations on a consistent basis In line with this thinking, Gronroos (1982) developed a model in which he contends that consumers compare the service they expect with perceptions of the service they receive in evaluating service

quality Gronroos defined two types of service quality exist: technical quality,

which involves what the customer is actually receiving from the service, and

functional quality, which involves the manner in which the service is delivered

(Gronroos 1982)

According to Lehtinen (1982), service quality must be assessed on two aspects: (1) service delivery and (2) service outcome Basic premise is that service quality is produced in the interaction between a customer and elements in the

service organization They use three quality dimensions: physical quality, which includes the physical aspects of the service (e.g., equipment or building); corporate quality, which involves the company's image or profile; and interactive quality,

which derives from the interaction between contact personnel and customers as well

as between some customers and other customers They further differentiate between the quality associated with the process of service delivery and the quality associated with the outcome of the service

According to Gronroos (1982), because of service intangibility, understanding how consumers perceive services and service quality may be more difficult "When a service provider knows how [the service] will be evaluated by the consumer, we will be able to suggest how to influence these evaluations in a desired direction"

Examination of writings of Gronroos 1982; Lehtinen 1982 and other literature on services suggests three conclusions:

- Service quality perceptions result from a comparison of consumer expectations with actual service performance

- Quality evaluations are not made solely on the outcome of a service; they

also involve evaluations of the process of service delivery

- Service quality is more difficult for the consumer to evaluate than goods quality

Over the decades, both marketing scholars and practitioners have experienced difficulties in correctly defining and measuring the concept of “service quality” (Parasuraman et al., 1988; Ananth et al., 2010) However, Parasuraman et

al (1988) have made an attempt to give seminal definition to this concept They

define “service quality” as a “global judgment or attitude relating to the overall excellence or superiority of the service.” This definition proposes a general conceptualization of service quality

Quality has been recognized as a strategic tool for attaining efficiency and business performance Quality in a service business has become a measure of the extent to which the service provided meets the customer‟s expectations Companies have found that in order to increase profits and market share, they should pay much attention to service quality Service quality has become a key strategic factor for companies to differentiate their products and services from other competitors by using service quality as a process that customers evaluate Therefore, service quality

is a key of survival to all servicing companies

1.4 Internet Banking service quality

Broderick and Vachirapornuck

(2002) indentified five key elements as central influences on perceived quality: + Customer expectations of service

+ The image and reputation of the service organization

+ aspect of the service setting

+ the actual service counter

+ Customer participation

Figure 1.1 Five key elements as central influences on perceived quality

Customers form expectations derived from many sources - Boulding et al (1993) propose that customers form expectations of what will happen in their next encounters based on what they "deserve" Zeithaml and Bitner (2000) identify two levels of performance and adequate service Desired service represents the "wished for " level of performance and adequate service reflects showing more basic service expectations The model permits exploration of the perceived difference between expected service and the experienced service, particularly the zone of tolerance developed by Parasuraman et al (1991)

Corporate image is regarded as an important determinant of perceived service quality Customers traditionally build trust based on the image and reputation of service provider (Gronroos, 1984) According to Shemwell el al (1994) the more a customer trusts a service provider, the more likely they are to continue the relationship and decrease the perceived inherent risk These issues are particularly important in Internet Banking service, partially because it is relatively new and untried and due to the intangible and uncertain processes which customers face Andreason and lindestad (1997) further argue that a service organization's

image will function as a filter in the perception of quality and satisfaction, as a simplification of the decision process and as extrinsic information cue for customers In the financial services sector, while image may be a clear filter of quality, the degree to which image is contributory to customer attitudes and beliefs about the online service quality is uncertain

According to Gronroos (1988) service quality consists of functional and technical quality with 2 elements of service experience: the service setting and service encounter In the internet environment, it is important to consider what specially influences service experience and how it is interpreted in both the service setting and the service counter The service setting is perhaps the most obvious element which will affect perceived service quality in Internet services Zeithaml and Bitner (2000) indicate that physical evidence is the environment in which the service is delivered and where the firm and customer interact; and any tangible commodities that facilitate performance and communication of the service Taking this and applying it to the internet environment, virtual service setting facilitates performance and communicates evidence to customers about the service Garnet (1996) suggests that physical environment itself plays an instrumental role in the customer's assessment of quality and service level expectations More recently, user satisfaction was found to be dependent on Web site features such as speed to download, content and design, interactivity, navigation and security (Jayawardhena and Foley, 2000) Some of key components of service setting are speed to download, navigation and interactivity with problems as slowness, poor navigation and interactivity Some of key points of service encounter are reliability, responsiveness, assurance and empathy

According to Broderick and Vachirapornuck (2002), customers on the internet, in general, tended to play very active role From the beginning of the process, customers have to access the Web site, fill in a form, call the bank - the customer both initiates the service script and makes efforts to continue with the script During the encounter with the service provider, through web site, the customers tended to form their roles from the perception of the service setting and

following the instruction given Customers expected other support personnel to play roles of information providers, particularly when customers had service problems and members noted poor performance of backstage services

According to Jun and Cai (2001), key determinants of internet banking service quality includes seventeen dimensions identified under three categories of internet banking service quality:

- Banking service product quality

- Customer service quality

Online systems quality

Table 1.1 Key determinants of internet banking service quality

- Ability to solve problems

- Knowledge to answer questions

5 Courtesy:

- Address complaints friendly

- Consistently courteous

- Informing customer of important information

- Availability of status of transactions

9 Understand the customer

- Continuous improvement on the online system

- Continuous improvement on banking products

- Continuous improvement on customer service

III Online systems

quality

(6 dimensions)

12 Contents:

- Information on products, services online

- Other information that customer needs

13 Accuracy:

- Accurate Online transactions

- Accessibility of the Web site

- The functions that the customers need

- Information transaction safety

Source: Jun & cai (2001)

1.5 Service quality assessment models

Measuring goods quality is easier because it can be measured objectively with indicators like durability and number of defects, but service quality is an abstract item According to Parasuraman et al(1988) service quality has three features which are unique to services: intangibility, heterogeneity, and inseparability of production and consumption Therefore, they suggest that in the absence of objective measures,

an appropriate assessment of the service quality of a firm is to measure consumers‟ perceptions of quality

1.5.1 Servqual model

Parasuraman et.al (1985) describes the functional dimension in more detail through ten service quality determinants:

1) Access – the ease and possibility of getting in contact with a company 2) Courtesy – that employees are polite, kind and respectful towards customers, and also that things are neat and clean

3) Communication – that the customer is being informed of facts and events in

an understandable way when it comes to the service itself, what the service will cost and that the service will be performed

4) Responsiveness –the employee‟s willingness and ability to serve That employees show an immediate interest for the customer and can provide the customer with a quick response

5) Competence – the employees have the competence that is needed to perform the service, both when it comes to customer interactions and when it comes to support functions It also means that there should be functional technology

6) Credibility – honesty and confidence that depends on the corporate image, personal traits of the employees and the degree of aggressive sales while in contact with customers

7) Reliability – the ability to function in a coherent manner That the service is performed right the first time, that the billing is correct and that the company is keeping their promises regarding time

8) Understanding – that the employees make an effort to understand the customer's needs and wishes Meaning that employees show personal and individual attention and recognize returning customers

9) Security – When it comes to risk, doubt or danger This includes a confidential working relationship, physical safety and financial safety

10) Tangibles – the physical elements of the service, such as premises, dress code, work tools and providing a receipt for a performed service

Ten service quality determinants model has the advantage of covering almost every aspect of the service However, it is quite complex in measuring Because this model is theoretical, there may be many determinants of the service quality model that do not reach distinctive values

Parasuraman et al (1988) developed a 22-item instrument, recognized as SERVQUAL, which is widely used for measuring service quality The five dimensions of SERVQUAL that rely on customers to form their judgment on perceived SERVQUAL are:

 Assurance – employees‟ knowledge and courtesy and their ability to convey trust and confidence;

 Empathy – caring and individual attention given to customers;

 Reliability – ability to perform the promised service dependably and accurately;

 Responsiveness – willingness to help customers and provide prompt service;

 Tangibles – appearance of physical facilities, equipment, personnel, and written materials

According to Parasurama (1988), service quality is the distance between

perception and expectation of a service The servqual model states that Service

quality = Perceived Level - Expected Value

SERVQUAL has been studied extensively in recent decades The scale of SERVQUAL was developed based on five industries, which are repair and maintenance, retail banking, credit card companies, securities and brokerages, and long distance telephone services Despite their advantages and popularity, however, both scales have their respective limitations While perception can be defined explicitly based on the customer's belief in the service they use, the expectation of customer seems to be quite vague Babakus and Boller (1992) proposed that a quality measurement scale be adapted to specific individual service industry, and that a general scale should not be used at all

Figure 1.2 Service Quality 5 Gap Model in SERVQUAL

Source: Parasuraman et al (1985)

1.5.2 Servperf model

Cronin and Taylor (1992) in their empirical work controverted the framework of Parasuraman, Zeithaml and Berry (1985, 1988) with respect to conceptualization and measurement of service quality, and propounded a performance-based measure

of service quality called „SERVPERF‟ illustrating that service quality is a form of consumer attitude They proposed what is referred to as the SERVPERF scale and provided empirical evidence across four industries: banks, pest control, dry cleaning, and fast food They argued that SERVPERF was an enhanced means of measuring the service quality construct They claimed that Parasuraman's study of relations between expected and experienced quality is not proper approach to quality assessment Evaluationof service quality is difficult, because of the difference between quality perceived by customer and expected by him/her Parasuraman, Zeithaml and Berry in 1988 proposed SERVQUAL model which described five gaps between those two visions of quality Elimination of those gaps should help the organization to improve service quality This approach is inconsistent with some research results, which show that customer's expectations

should be based on experiences They thought that expectation can be discarded and the performance can be used alone What's more, higher level of perceived service quality only sometimes is a cause of increased consumer satisfaction In many cases, the satisfaction is an antecedent of service quality

SERVPERF model consists of five service dimensions: tangibles, reliability, responsiveness, assurance, and empathy, with two sets of 22 item statements for the importance and perception sections of the questionnaire

 Tangibles are about physically visible aspects It could be viewed from the cleanliness of washroom, car parking facilities, waiting lounge comfort, and the appearance of the employees

 Reliability is the ability to provide reliable service immediately and accurately It relates to the adequacy of flight information, such as information display regarding baggage location and the availability of dependable officers

 Responsiveness is willingness to respond to the wishes or needs of the customers‟ support and fast services It includes the rapid airport access, as well as effective and efficient security clearance

 Assurance includes the knowledge, courtesy, skills, and trust-worthiness of the employees, as well as free from danger, risk, or doubt

 Empathy means the ease of relationships, good communication, personal attention, and understand the need of customers It can be observed from the availability of waiting time for check-in and immigration inspection and reclaim service for every single customer

1.6 Proposed model and hypothesis of the research

1.6.1 Propsosed conceptual model

Based on the SERPERF model and adapted from Jun & cai (2001)research, this research model has been adjusted to be more suitable for internet banking service analysis Specifically, the Tangible dimension will be transformed as Service content of IBank, Ease to use, Efficiency & Accuracy and Readiness are based on Empathy, Reliablity and Responsiveness dimensions Last but not least, Assurance dimension

will be divided into Security and Reputation In addition, situational factors and

personal factor will be eliminated

Figure 1.4: Conceptual model of the research

Source: Author (2020) Model in figure 1.4 analyzes the impact 6 factors to service quality of BIDV

So Giao Dich 1 Branch iBank We have the regression model estimated:

Service quality =βo + β1*Service content + β2*Ease to use + β3*Efficiency and

accuracy + β4* Security+ β5*Reputation + β6*Readiness

1.6.2Proposed hypothesis of the research

Based on the above conceptual framework, the following research

hypotheses are formulated to be tested as below:

H1: There is positive relationship between perception of Service contentof

iBank service and service quality ofiBank service in BIDV So Giao Dich 1 Branch

H2: There is positive relationship between perception of Ease to useof iBank

service and service quality of iBank service in BIDV So Giao Dich 1 Branch

H3: There is positive relationship between perception of Efficiency and

accuracyof iBank service and service quality of iBank service in BIDV So Giao

Dich 1 Branch

H4: There is positive relationship between perception of Readinessof iBank

service and service quality of iBank service in BIDV So Giao Dich 1 Branch

Service quality

Service content

Ease to use

Efficiency and accuracy

Readiness

Security

Reputation

H5: There is positive relationship between perception of Securityof iBank service and service quality of iBank service in BIDV So Giao Dich 1 Branch

H6: There is positive relationship between perception of Reputation of iBank service and service quality of iBank service in BIDV So Giao Dich 1 Branch

CHAPTER 2: ASSESSING THE SITUATION OF BIDV IBANK SERVICE QUALITY AT THE BANK FOR INVESTMENT AND DEVELOPMENT OF

VIETNAM – SO GIAO DICH 1 BRANCH

Nowadays, the applications of information technology in the service industry are prevalent, and Internet banking in Viet Nam is one of the prominent examples Banks are now providing Internet Banking service to customers through the Internet with various types of banking services as inquiring about account information, transferring money, implementing payment, etc.The advantages of internet banking are that it offers benefits to both banks and customers For customers, internet banking is convenient and time-saving compared with traditional retail banking

Customers can do transactions anywhere, anytime with accuracy and safety by

accessing the Bank's website without having to visit the bank's counter For the banks, the benefits include retaining a profitable customer base, reducing costs, supporting customer relations, extending and cross-selling related banking services and products, improving the business image, enhancing the bank competitive

2.1 Introduction of BIDV – SO GIAO DICH 1 BRANCH and BIDV iBankservice

2.1.1 Foundation and development history

Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) is one of the four largest commercial banks in Vietnam (AgriBank, Vietinbank, Vietcombank, and BIDV) in terms of total assets and operating network

- Full name: Joint Stock Commercial Bank for Investment and Development of Vietnam

- Abbreviated name: BIDV

- Establishment: 26 April 1957

- Address: BIDV Tower, 35 Hang Voi Street, Hoan Kiem District, Hanoi

BIDV was founded on 26 April 1957 under the initial name of Bank for Construction of Vietnam In the period 1957 - 1981, when the country was in the

period of economic recovery,the Bank for Construction of Vietnam made important contributions to the management and allocation of capital for construction

The Bank for Construction of Vietnam allocated capital for building industrial facilities and construction projects to serve national welfare and people‟s livelihoods, contributing to changing the face of North Vietnam The Bank and the Vietnamese people worked together to complete the tasks of construction in wartime, supplied capital for air defense projects, traffic projects and relocation of important industrial factories

In the period 1975 – 1981, the Bank joined to renovate economic facilities in the South of Vietnam and develop new infrastructures after the war period The bank provided capital for industrial, agricultural, transportation, public welfare projects, and key projects critical for the national economy

On 24 June 1981, the Bank for Construction of Vietnam was transferred from the Ministry of Finance to the State Bank of Vietnam under the new name Bank for Investment and Construction of Vietnam

In the period 1981 - 1990, the Bank for Investment and Construction of Vietnam improved operational mechanism for continued development This was also the period when the bank made strong movements in line with the national renovation in general and the banking sector in particular, progressively becoming one of the leading specialized banks in the country The bank also directly provided loans to businesses, progressively transforming into a commercial bank according

to market mechanism

BIDV made significant contributions to the country‟s innovation during this period The bank ensured working capital for construction companies, encouraging them to boost construction progress and improve technology and productivity

In 1990, the Chairman of Council of Ministers issued Decision 401/CT regarding the establishment of Bank for Investment and Development of Vietnam on the basis of the renaming of the Bank for Investment and Construction of Vietnam

In 1990, BIDV conducted its first international business operations The bank partnered with foreign financial institutions to establish joint ventures During

this period, BIDV‟s foreign business operations covered finance, banking, insurance and securities with the establishment of representative offices and banks in Laos, Cambodia, then Myanmar, Russia, Czech Republic

BIDV has transformed into a commercial bank since then, integrating into the international financial markets Since 1995, BIDV has been a fully commercial bank, continuing to develop and boost the market economy of Vietnam

BIDV was equitized according to the direction of the Government, ensuring the harmony in the interests of the State, enterprises, investors and employees, operating under market mechanism with a strong direction for international integration

On 28 December 2011, BIDV implemented equitization through initial public offering (IPO) On 27 April 2012, BIDV officially transformed into the Joint Stock Commercial Bank for Investment and Development of Vietnam, making significant changes to ownership structure, ensuring transparency in accordance with international practice BIDV has been listed on the stock exchange under the code BID since January

2014, operating effectively in international competitive market environment

Up to now, BIDV comprehensively completed its business targets, strengthening competitive capacity, becoming the leading commercial joint stock bank in Vietnam with sustainable development

Lines of business

- Banking: BIDV provides a full range of modern and convenient banking products and services including deposits, loans, trade finance, payment, card services and account services

- Insurance: BIDV provides various life and non-life insurance product packages that designed to meet the needs of each customer

- Securities: BIDV provides a wide range of brokerage services, investment consultancy with the ability of quickly developing agents

- Financial investment: BIDV contributes capital for investment in many key national projects and takes the lead in significant projects in Vietnam

Position of BIDV

BIDV is the leading commercial joint stock bank in Vietnam with sustainable development.The successful performance of BIDV is brought about by controlling credit growth and quality, boosting retail activities, mobilizing capital at reasonable costs, ensuring liquidity and safety of the system, reducing operating costs, strengthening inspection and supervision BIDV‟s total assets, outstanding loans and deposits in 2019 were higher than many key competitors in Viet Nam

Human resources

About 25,000 officers, employees who are well-trained and well-qualified with full experience are important factors to make BIDV get best achievements and bring its customers the benefits and reliability

BIDV' Customer

Organization Customer: BIDV is building the relation with nearly 200,000 corporate customers including groups, corporations, and small and medium-sized enterprises from all economic sectors

Financial institutions: BIDV is the trusted choice of nearly 1,700 financial institutions including domestic and international organizations

Individuals: 7.7 million individual customers currently use products and services of BIDV

Technology

BIDV is one of leading banks in the Vietnamese banking system in the application of modern technology In 2018, BIDV promoted the implementation of digital banking projects, evaluated by S&P as one of the leading banks actively cooperating with FinTech to promote digital banking applications, especially in the retail banking operation BIDV has made the Top 10 Sao Khue Awards for its

BIDV iBank and won Sao Khue awards

Network

BIDV‟s banking network: Up to the end of December 2019, there are 190 Branches, 855 transaction offices with 57,825 ATM/POS covering 63 cities and provinces in Vietnam

Subsidiaries: Lao-Viet Bank, Lao-Viet Insurance Company,BIDV Securities Joint Stock Company (BSC), BIDV Insurance Corporation (BIC), BIDV - Sumi Trust Leasing (BSL), BIDV Asset Management Company (BAMC), and companies

of which BIDV is the founder such as Vietnam Aircraft Leasing Company (VALC)

Joint venture banks: Vietnam-Russia Bank (with Russian partner), BIDV Tower Joint Venture Company (with Singaporean partner), BIDV MetLife Life Insurance Limited Liability Company (with US partner), etc

Overseas representative offices: BIDV has made the appearance in Cambodia, Laos, Myanmar, the Czech Republic, Russia and Taiwan (China)

2.1.2 Introduction about BIDV So giao dich 1 Branch

- Full name: Bank for Investment and Development of Vietnam SO GIAO DICH 1 BRANCH

- Abbreviated name: BIDV SO GIAO DICH 1 BRANCH

- Date of foundation: 28/03/1991

- Address: Vincom Tower, 191 Ba Trieu Street, Hai Ba Trung District, Hanoi

- Business activities: BIDV So Giao Dich 1 Branch provides all range of services including both traditional and modern ones such as deposits, loans, trade finance, payment, card services, account services and other activities stated in the charter of the State bank of Viet Nam

Until December of 2019: there are about 300 officers, employees including 97% of them are bachelor and 26% of them are master of degree The female rate is account for 60% and the average of age is 30 years old

The department of customer management:

- Enterprise Customer Division 1

- Enterprise Customer Division 2

- Enterprise Customer Division 3

- Enterprise Customer Division 4

- Enterprise Customer Division 5

- Enterprise Customer Division 6

- Individual Customer Division 1

- Individual Customer Division 2

Risk management Department:

- Risk management Division 1

- Risk management Division 1

Operation Department:

- Credit Management Division

- Customer Transaction Division

- Budget Management Division

Internal Management Department

- Planning and Finance Department

- Administrative work and personnel Department

- Transaction offices:

o Lotte Tower transaction office

Address: 54 Liễu Giai, Ba Đình district, Hà Nội

o Quốc Tử Giám transaction office

Address: 2 Tôn Đức Thắng, Đống Đa district, Hà Nội

o Khâm Thiên transaction office

Add: 23 Khâm Thiên, Đống Đa district, Hà Nội

o Ngô Thì Nhậm transaction office

Add: 58A Ngô Thì Nhậm, Hai Bà Trưng district, Hà Nội

o Hòa Bình transaction office

Add: 505 Minh Khai, Hai Bà Trưng district, Hà Nội

Business results

BIDV So Giao Dich 1 Branch is one of the biggest branch in BIDV' system The leading position is containing in many years With nearly 30-year-experience of foundation and development, BIDV SO GIAO DICH 1 BRANCH has achieved many successes in its operation process and successfully accomplished many assigned tasks The business results of the Branch in recent years have shown stable growth indicators over the years with the Business philosophy of Quality, Sustainable growth, efficiency and safety

Table 2.1: Business results of the Branch in the stage of 2017 -2019

Difference 2019/2018 Amount Ratio Amount Ratio

The credit balance of the Branch also increased over the years of 2017, 2018, and 2019 from 18.882 billion dong (2017) to 20.498 billion dong (2018) and to 22.202 billion dong in 2019 The scale of the credit balance increased in all customer groups especially retail group At the end of the Year 2019, the credit

balance of So giao dich 1 branch increased 8,3% compared to 2018, account for 9,9

% of Hanoi location and 2.3% of BIDV

The increasing credit balance was also strictly controlled in terms of quality with the bad debt ratio of much lower than the average in Hanoi location and the whole sector (in 2019 at 0.15%)

The profit before taxes of the Branch was always at the top of the BIDV system and was constantly increasing annually In 2018, the Branch's profit before taxes was 718.34 billion dong (increased 15.8% compared to 2017) and the number

of profit reached 776.42 billion dong in 2019 (increase by 8.1% compared to 2018)

These achievements can be reached thanks to the determination and effort of all leaders and officers of the Branch In recent years, the Branch has implemented many active, strong, comprehensive and effective measures in which group of measures relating to customer and service quality are concentrated

2.1.3 BIDV IBank

2.1.3.1 BIDV iBank service

BIDV iBank is an electronic banking service that constructed separately for organizational customers including economic groups, corporations, financial institutions and small and medium-sized enterprises from all economic sectors (except individual customers)

2.1.3.2 Features of BIDV iBank

- Convenient: BIDV iBank service offers customers with convenient method

of making transaction Instead of having a long queue at bank counters to make a transaction or only for taking an account statement, customer can do themselves for transferring money or checking account at any time, any where they want In details, IBank help customers proactively do online transactions as remittance, payment any time including breaking day or weekend without the concept of "closed" or "transaction postponed" or " cut

of time" Besides, customers can access their account anywhere as their offices, home or when go travelling or on trips IBank also help customers timely to find out mistakes or errors to correct Convenience is similar to

"easy to use" attributes Most people are interested in being easy to use which means saving time and reducing risks when deciding to use online services

- Minimize the cost: For customer, the cost relating to documents, printings,

transportation or workforces is reduced Therefore, the service fees are also lower than making transactions at the bank counters For the bank, the cost for facilities and staffs to operate and manage at bank counter will be cut down

- Security: Securityis always the most significant consideration of customer

whenever making transactions over theinternet Almost banks have invested huge amount of money to build high-class security system to minimize the risks of being attacked by hackers Besides, the security of online transactions depends on internet-user Firstly, customers register the service

by filling in iBank contract, signing and sending to the bank After receiving the iBank contract, the bank will check customer' request and register into the system All the personal information of customer will be keptsecret Password to the entry of BIDV iBanksystem will be sent directly to registered email of customer Besides, for account holder, customer should select smart OTP option or Digital Key option for verifying financial transactions Thus, the security of transactions will be improved effectively

- Speed of Transaction/Response: Almost all customers are interested in the

speed of internet banking Reponses They always compare the processing time of a service to other providers For organizational customers especially customers having huge amount of transactions, transaction/response speed

is one of the most significant concern when selecting internet banking service provider

- Reliability: Reliability means respecting commitments in areas such as

transaction accuracy, acceptable time per a transaction, and refund in case of mistakes from the bank, information relating to the status of remittances Many organizational customers pay great attention to bank' commitments on provided services as BIDV iBank