Improving the quality of retail banking services in bank for investment and development of vietnam bac sai gon branch

According to economic experts in the Asian Institute of Technology-AlT, retail banking service is to supply products, banking services to each individual, small and medium enterprises th

@OUM OPEN UNIVERSITY MALAYSIA

BAC SAI GON BRANCH

STUDENT’S FULL NAME ~— : VO PHAM QUYNH GIANG

September, 2016

ACKNOWLEDGMENTS

I would like to thank to my instructor - Dr Phi Hung, who have the attitude

and the spirit to help me enthusiastic he continually and convince convey the spirit

of the subject of research problems this, and an excitement related to teaching Without the intructor of the faculty, I can hardly be successfully completed

I also thank my classmates talked with me many difficulties and problems can help me complete this research

Also, I thank the Hutech and OBM has created opportunities for me to join this course and help me expand knowledge, improve the sector than in business

administration as well as the business sector in the market current.

ADVISOR’S ASSESSMENT

Advisor’s signature

DR BUI PHI HUNG

TABLE OF CONTENTS

ACKNOWLEDGMENTS -.- << sssĂeeseeeemeeeen222010810090000010n90050900990 1

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ADVISOR°S ASSESSMENT <-<<e<eseeeeeenseeeeessesasene210n05001n04 3 TABLE OEF CONTEENTS «=5 << nSs<sSSSseneeis48100860000010010004000004 4 CHAPTER 1: INTRODUCTION - =-==<<=5Sseseeseeeeseensasseessee 8 1.1.BACKGROUND AND REASON CHOOSE THIS TOPIC . 8 1.2.RESEARCH AIMS AND OBJIECTTIVES eeeeieeeeerrresesaesraesee 9 1.3.JTUSTTIFICATION OF THỂ STUDY -< <<-<<<<+5nsesenerssseeese 10 1.4.RESEARCH STRUCTURRE . - 5 << <=°><SEEsseEssneeeseressessasseesen 10 CHAPTER 2 LITERATURE REVIEW :sssssessssersssscssesorersnvonccoesanscontsvenaeans 11

2.1 Introduction .cccccsccssssssssesssccscoccnecseresscnsscassscanossersnensaasovsnonconsncensecnsases 11 2.2.Overview of retail banking serVC€S -«<e<ssessseessseesiesaesaeneessseeee 11 2.2.1 DeÑñnition of retail banking s€rVIC€S -. -sseserreerrrrrrrrrrrrrrrrrrerrserrr i

2.2.2 Characteristics of retail banking s€TVIC€§ -«-secereirrenrerrrrrrrrterrrrse 12

2.2.3 Roles of retail banking s€rVIC€S -s-senerrntrerrrrrirrrnerrrirterrrrrerrre 13 2.2.3.1 For the econiormy + s«+++eerererrrrertrtrtrrrrtrrrrrrrrrrrrrrtrirrrrrerr 13

2 2:3.2 For the bank - 55-5 +++sÉ929222e tr 13

2.2.3.3 For the CuSEOI€S - << Street tr 14 2.2.4 Products - retail banking S€rVỈCES -. -ceneeereiertrerterrrrrsrrrrrrrrrre 14 2.2.4.1 Capital mobilizafion -+ssstererrreeerrrrtrrtrrtrtrrtrrrtrrrree 14 2.2.4.2 Credit S€TVỈC€ - Ăn shnerttenterrrrerrerrrrrerrrererrrrrreesee 14 2.2.4.3 Card S€TVC€ -.-. - Ăn SH HY 94212 m1e111nc14 14 2.2.4.4 Paymenf S€FVIC€S -scnsnentrrtttrtrttrtrrtirrrrrrrrrrrtrrrrrrrrtrrrer 15 2.2.4.5 Electronic banking serFViC€S -sseneetrrerrrtrrrrrrrrrrrrrrtrt 15 2.2.4.6 Other banking s€rViCCS -. -+ scnneneerhrttretrrrrrrrrrrretrirtrre 16 2.3.Service qualify of retail banking -. -eeessesesssettsetrsesratesnereeesee 16 2.3.1 Service quality ConC€pt . -sreerrrterrrrtertrrrtrirertrrrrrrrrrrrrererrrrrer 16

2.3.2 Relationship between service quality and customer satisfaction - 19

4

2.4 The evaÌuation theory of the service quaÌÏfy «-e-««-seeeeeseeseeresesee 20 2.4.1 Five service quality gap model . -+s-+++sestsettrrttrrerrreertrrrrrrre 20 2.4.2 Model technical quality and functional quaÏity -‹ -+-r+e-ee+ 23

2.4.3 Model of Banks Service quality BSQ (Bank Service Quality) - 23

2.5 Model research of proposals and factors affecting to quality of retail

banking Services -ssccsssssssssenscencosassnensnssenssssensnenessensnconssarersnarscnaneceansonanees 26 2.5.1 The main factors affecting the quality of retail banking services at the Bank

for Investment and Development of Vietnam — BSG Branch - 26-

2.5.2 Build model research the quality of retail banking services in BIDV BSG 28 2.6 Build to scale quality retail banking services BSQ -«-<- 30 2.7 COMCIUSION 0 0sccsccseccssssescssnsrconssccessnssnnssnsnseesscesanseseesseesssanssssnesscseacezees 31 CHAPTER 3 METHODOLOGY AND DATA COLLECTION METHOD 32 3.1.Preliminary researCÌ <-<<=seeenssesnssenssseeeereeens9000000c 9n 33 3.1.1 Technique plays, group diSCUSSÍOTNS -+-cssnenerrrrtrererreeterrrreree 33 3.1.2 Scale adjustment csesssessesssessseneeeessssnsessseenesaseneesseaceneenesansonsensenennenss 33 3.1.3 Design survey questiOnInaiF€s -s+ttertrretrrtrrtrrtrrtrrtrrrrrerrrree 33 3.1.4 Official researchh - - - 5< <s set 1123241 1 9-00 36 3.1.4.1 Method of information collection and sample $1Z€ - - 36 3.1.4.2 Data analysis plan -s+cseeehrrrrrrrerrrrrrrerrrsrrrieeerr 36 3.2 ConcÌusiom << 5 5< << << << n928n844856068899253078680872000001050929900009240090999000 36 CHAPTER 4 RESULTS, FINDINGS AND PRESENTATION OF DATA 37 4.1, Survey results quality retail banking services as perceived by customers37 4.1.1 Description fOrim -s«cssreerrretrrertritrrrrrrrrerrrrrrrrertrrrtrtrnerre 37 4.1.2 The rating scale using Cronbach's coefficient alpha reliability 39 4.1.2.1 Result analysis quality scale retail banking services modeled BSQ 39 4.1.2.2 Analytical results satisfaction scale and perceived quality Retail

banking CuStOIm€FS: . - +: 5 s+s‡nnhtttrtrerttrtrtrrrrrrrrrrrrrrrrretrirrerrrrrrree 39

4.1.3 Rafting scales using factor analysis to điscover EFA -e-eeree 41 4.1.3.1 Scale quality retail banking services under the model BSQ 4I

4.1.3.2 Scale satisfaction and perceived quality of banking services 43 4.1.3.3 Adjust Ist research model . -+reerrrrrerrrrertrtrrrrrrrrre 44 4.1.4 Test the research model BSQ by multiple regression analysis - 45 4.1.4.1 Considering the correlation matrix of variables -. - 45 4.1.4.2 Multiple regression anaÏySIS -+rerrrrereerrrrrrrrtrtrdrrtrrrrerrr 46 4.1.4.3 Adjust the 2nd research modeÌ . -rteeerersetrrrrrrtee 48 4.2 Comparing the difference in the quality assessment of retail banking services by age, income, education, #€Hd€FF - -›-«-see=seeeeeersretrersrserrsee 49 4.2.1 Comparing the differences by age€ -rrrerrrrrerrrrrrrrtrrrrerrrree 50 4.2.2 Comparing the differences by InCOTm€ -+sssreertrrrrrreertreerrrrr 50 4.2.3 Comparing the difference according to education levels -< <<«- 50

4.2.4 Comparing the differences by genider -cceerrrrereerrrerrrrrrrre 51 CHAPTER 5- DISCUSSION AND ANALYSIS OF FINDINGS - 52 5.1 ORIENTED DEVELOPMENT BANK INVESTMENT AND

DEVELOPMENT OF VIETNAM .cccscesrcasrssescesccnsessonenensssanensansronenscensennes 52

5,2 Overall evaluation of quality retail banking services at the BIDV BSG 53 5.2.1 Approach -ecrerrerretrrrrrirrrirrirrrirrrrirrrrtrrrrrtrrtrrrtrrrtrrerrrrrrtr 33

5.2.1.1 Advantage - ces ¬ — 53

5.2.1.2 Disadvanfages -scstnnenrrrrrriririrrrrrrrrrrrrrrrrrrtrrderrtrrerere 33

5.2.2 Tangible & List products and seTVÍC€S -seenrerreerrrerrtrrterrtrrrrrte 54 5.2.2.1 AdVanfage -+ssrrrrrrtrirrrerrrrretrttrrrrrrrrrrertrrrrrrrrre 54 5.2.2.2 Disadvanag€S -ceenrreerirrrerrertrrrrrrrrrrrrrrreerrdtrtrrrrer 34

5.2.3 Reliabilify -c+errterrtrrrtrrerrrrrrtrrrrtrrtrrrrrritrrirrrrrrrtrrtrrrrrrrtrrer 55 5.2.3.1 Advanfage cseeseeeerreerrrrrrree mm 55

52.3.2 Disadvantages .sssccecsecesseeneeeeseseeesseensesensssessensesenarecacananenensas 55 5.2.4 Ensure and EffEtive -.- -+-s+eerereerererir.18110 nen 55 5.2.4.1 AdVan2g6 -cccsererrrtrrrrrrrrerertrtrrrrrirrrrrrrrrrrrrerrtrrrtrrrtrtreerer 35 5.2.4.2 Disadvantag€S -. - sen sennnrttrrrrritrtrrrrrrrrtrrrrrrrrtrrrrrsrrrrrrer 56

5.3 Comparing the quality of retail banking services between BIDV BSG and

5.4.3 Solutions to improve reliabilify . -+-eersererseterrrerrrrrrrerree 61

5.4.4 Solutions to improve efficiency and ©ñiSUT€ -.- <ssseserseerrerrrereree 62 5.4.5 Solutions of developing new retaiÏ S€TVIC€S -. -cecerrerersrrrrrerrrre 64

5.4.6 Designing service quality standards: -ereerreeerrrrrrerrere 66 5.4.7 Risk COnifrol - 5 5< + 222222<E.er214081 7421 41E.1181705 11m0 67 CHAPTER 6 - RECOMMENDA TIONS AND CONCLUSION - 68

6.1 Suggesting to the State Bank and Government Ofiices . - 68 6.2 ConcÌsiÏ0H - << < «5< <==ss E22 752408984582008220033000002000100094008040004 69

REFERENCES -2.-e2+.e21 EE.E 1 1 0mm _— 70

CHAPTER 1: INTRODUCTION 1.1.BACKGROUND AND REASON CHOOSE THIS TOPIC

The international economic integration has opened up many opportunities, but it also places many challenges to the banking service suppliers because they have to compete severely with foreign banks who are not only powerful on the

financial potential but much experienced about modern banking service

development (Berger va Smith, 2003)

Under the competition pressure on banking service supply and the fast IT development, the year 2010 and 2011 is evaluated to be a “booming year” on retail banking service with increased approaches to the individual customers and small and medium enterprises

Following to report of Lam et al (2013), Vietnam’s economy during the period of 2007-2012 has been undergoing through extremely complicated

movements with unusual changes of the stock market, real estate, gold and

especially the spreading impact of the global financial crisis derived from the U.S During the recent global crisis, while most of the commercial banks have their strategy focusing on retail withstand, lots of banks with huge investment go bankrupt such as Merrill Lynch and Lemon Brothers or have lots of difficulties and have to switch to retail banking development (Taylor et al., 2012) According to the General Statistic Office (GSO), Vietnam has a population of over 90 million

people, estimated to increase up to 92 million in 2016 and every year Vietnam’s

population increases by Imillion people However, only 10 percent of the population opens their bank account, which is very clear that the room for banking service development is really huge (Vierra and Vierra, 2010) Therefore, the trend

to promote retail banking activities has been increasingly busy since 2007 (Dinh and Kleimeier, 2007; Pincus, 2009; Thanh and Hung, 2011; Bélanger et al., 2012;

‘Truitt, 2012) The term “retail banking” has appeared in Vietnam for a long time;

however a standard model is still a difficult question that needs further discussion (Thanh and Hung, 2011)

With the aim of building the retail banking service system of high quality, safety with high economic effectiveness on the base of enhancement of international economic integration, retail banking service market expansion by through the bilateral and multilateral management, application of advance banking technology and suitable development of distribution system to provide sufficiently, timely and conveniently retail service products and utilities for all customers

With the continuously changing trend of consumption according to the life demand, BIDV- BSG Branch must build new strategy and solution to become a multi-functional retail bank For meeting the increasing banking demand in the severe competition among banks, BIDV-BSG Branch is trying to extend the business net, increasing the retail banking service with the improved service style

“customers are God”, step by step increasing the reputation and brand name of BIDV in general and BIDV-BSG Branch in particular in the financial market

From the above fact, the quality of the retail banking service of BIDV-BSG

as well as supporting in building solutions for enhancing the retail services during the incoming time in order to increase the satisfaction of customer is very important, so I have considered and selected the thesis subject “Improving the quality of retail banking services in Bank for Investment and: Development of Vietnam — Bac Sai Gon Branch " The subject is conducted for the above objectives and hopefully the author will receive contribution ideas to complete the subject matter

1.2 RESEARCH AIMS AND OBJECTIVES

Research objectives The objectives of this dissertation are listed as following:

- Assessing the quality of retail banking services of BIDV - BSG Branch

- Proposing recommendations to improve quality of retail

1.3 JUSTTIFICATION OF THE STUDY

Research significance Based on the evaluation of actual state of quality of retail banking in BIDV — BSG Branch, unsatisfied and satisfied factors in management of retail banking services are analyzed, thus recommending solutions

to improve retail services in BIDV — BSG Branch in the future

1.4 RESEARCH STRUCTURE

Research structure Apart from the Introduction of the content and the

conclusion, structure of the research including six chapters with the specific content

Chapter 4: Results observed through the study on the actual state of quality of

retail banking in on the evaluation of actual state of quality of retail banking in

BIDV

Chapter 5: Discussion and Analysis of findings

Chapter 6: Recommendations and conlusion

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CHAPTER 2- LITERATURE REVIEW 2.1 Introduction

All over the world, since 1980s, Parasuraman et al (1985) identified five factors that generally affect the service quality are the reliability, responsiveness, assurance, understanding the customer and tangibles Besides, Elliot et al (1996) and Reeves and Bednar (1996) noted the impact of price on the use of banking services Gerard and Cunningham (2001) conducted their study to find out factors

influencing the bank selection such as ATM, speed of service Holstius and Kaynak

(1995) conducted his study to determine the most important factors influences

www.ccsenet.org/ass Asian Social Science Vol 11, No 18; 2015 365 the customers for choosing a bank and found that reception at the bank, fast and efficient services,

lower service charges, friendliness of personnel are most important criteria for selecting banks Riggall (1980) showed in his study that convenience of location is the most influential factor for bank selection by new comers Laroche et al.(1986)

reveals that the most important factors in choice of bank were location,

convenience, and spread of service, competence and personnel behavior In Vietnam, the studies of Le Kieu Anh (2012), Huynh Thi Tram Anh (2011) and Nguyen Huynh Bao Chan (2010) shows factors affecting RBS include scale, the

state of macroeconomics, competition, information technology, legal environment,

financial capacity, customers’ demand, distribution channels

2.2 Overview of retail banking services

2.2.1 Definition of retail banking services

In the open economy, the demand on banking services is increasingly high, especially for the retail banking services The targets of retail banking services are

individual customers, so the services are usually simple, easy for implementation

with focus on the services of deposit, account, debts, credit card registering and so

on Depending on different ideas and research approaches, there are some concepts

on “retail banking services” being recognized as followed:

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Retail market is a total new concept in the financial market, through which a

large number of individual laborers will approach the banking services, creating a potential, variable and dynamic market The terminology is Retail Banking- it means that supplying services to the hand of end-users with quantity It should be understood that retailing is an activity of distribution, in which the researching, promotion, study, experiment, discover and develop the modern distribution channels- the outstanding feature is online business The retailing includes three main fields: market, distribution channels, services and service supply Retailing is more developed to be international

According to economic experts in the Asian Institute of Technology-AlT, retail banking service is to supply products, banking services to each individual, small and medium enterprises through branches, customers who can approach directly to products and banking services through telecommunication electronic equipments and Information Technology

According to the WTO, the retail banking is a typical service type of banks where individual customers can make transactions in branches/ transaction offices

of banks to perform the services like: Deposit, account checking, mortgage, loan,

‘credit card service, debit card and related services

According to the BIDV, retail banking services are the supply of products mainly for individual customers with services like saving deposit, card services, money transfer for abroad study, remittance services, electronic banking services,

individual consumption loans , business, etc In short, retail banking services can be

fully understood as "retail banking services banking are services provided to the individual or individuals, small and medium-sized businesses through a network of branches or customers can directly access to the banking services through electronic media and telecommunication "

2.2.2 Characteristics of retail banking services

- The served customer objects are variable from individuals, households and small and medium enterprises

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- The retail banking services are variable but the value of each transaction is not high so the risk level is low

- The retail banking services require building a large number of various distribution channels to supply services ton customers on wide region

- The retail banking services base mostly on the modern IT background with

a professional staff team to extend and increase the product quality, bringing the products to each individual customer

- The service is simple and easy to implement: The target of retail banking service is individual customers, so the services focus on deposit, payment, loan and card services

- The business development mainly bases on the brand name, quality of the banking services, so the service quality is an important factor to develop the retail banking services

-The average operation cost is high Although the number of customers is

high but they are in different place, so the transaction is not convenient The bank usually opens the network and invest into the online transaction with high cost

- More various management ways which is more complicated because of the wide customer network '

2.2.3 Roles of retail banking services

2.2.3.1 For the economy

The retail banking services directly change the cash economy into the non- cash economy, increasing the effectiveness of the state management, reducing the social cost of payment and cash circulation, Beside, through retail banking services, the money circulation process is enhanced with higher effectiveness, making use of and exploiting the capital potential to promote the business and consumption, increasing the people’s living standard

2.2.3.2 For the bank

The retail banking services play an important role in diversifying the products, extending the market, increasing the competition capacity, creating the

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capital source for medium and long term for the banks to change the income

structure of banks, reducing the risks in banking business, at the same time

contributing to diversifying the banking activities, strengthening the national finance

2.2.3.3 For the customers

The retail banking services brings to the customers the conveniences, safety, cost saving and effectiveness in the process of payment and income usage In fact, now the retail banking services have brought to banks a stable income with decentralized risk, creating a steady base for the bank’s operation Therefore, commercial banks have initially considered the retail banking services as a core activity for building, reinforce a stable customer network, then expand the business

to other sectors of the banks Vietnam commercial banks have been developing, increasing the retail banking services as a inevitable trend, consistent with the

common trend of banks in the region and in the world

2.2.4 Products - retail banking services

2.2.4.1 Capital mobilization

One of important functions of Commercial banks is to mobilize capital for

giving loan and investment Through methods and tools used, commercial banks

mobilizes capital from individual customers and small-medium sized enterprises under the main forms such as non-term deposits, term deposits, valuable papers

(bills, bank bonds, etc.) and other forms of deposit

2.2.4.2 Credit service

The retail credit services provide individual customers and small and medium enterprises short-term, mid-term and long-term loans including loan for abroad study, real estate, consumption, securities business, production and business, overdraft loan, mortgage of valuable paper

2.2.4.3 Card service

Bank card is a personal multi-functional financial products issued by the banks with many utilities for customers Cards can be used to withdrawing deposit,

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2.2.4.4 Payment services

The payment services are considered to be a profession component with high profit rate but has not been paid proper attention Payment means include cheque, payment order, commercial bills, payment orders

Money transfer services, money remittances are increasingly expanding and developing Many commercial banks have cooperated and been agents for money

transfer and remittance for a number of international financial institutions such as

Western Union, Money Gram

2.2.4.5 Electronic banking services

In the situation of integrated financial- banking market, Vietnam has gradually opened door for foreign banks, services of domestic banks should be distinctive in forms and contents In which, the outstanding feature is the modern banking services

Currently, SMS Banking, eBanking, Mobile Banking and so on are services selected by many customers With this service, customers do not have to go banks

or spend much time on performing necessary transactions like account transfer,

account checking, payment, deposit and loan and so on

The modern electronic service can be listed as follow:

+ Call center: The center provides information and explains all questions, claims of

customers Currently, most of banks have Call center like 247/247 of ACB, 24/7 of

BIDV

C Phone banking: is a service, in which customers call to a fixed number of the

service providing banks for performing transactions or check accounts and exchange rate, interest rate information

UO Mobile banking: is a banking service through mobile phone Customers can

check the balance, transaction; receive the balance information, interest rate through

SMS banking, payment for electricity, water, phone, internet and so on

© Home banking: is a kind of service in which transactions can be implemented at home through computer system connected to the computer system of the banks including

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money transfer, report, balance report, exchange rate, interest rate

[1 Internet banking: is a kind of banking services, in which customers perform the

transaction with banks through Internet Customers can search information about

products, services of the banks or access information on personal account, balance,

deposit and loan

2.2.4.6 Other banking services

Apart from the above services, services for individual customers include

collection/payment, money transfer for abroad study, valuable asset consignment, safe lease and so on The services for small and medium enterprises include international settlement, foreign currency business, bond security

2.3 Service quality of retail banking

2.3.1 Service quality concept

Quality of service is the issue managers are more interested in current

business, a good quality product is not necessarily the customer accepted if accompanied services such product to be underestimated

Quality of service is a concept made headlines and controversy in the research papers The researchers have faced many difficulties in the define and measure the quality of service that has not been proposed yet unity

According to Gronroos (1984) [11.6], the quality of service is a review of two aspects, such as technical quality (say to capacity serving) and quality function (we served) and in the 1988 study for that matter perceived service quality is the difference between the quality of service expected and quality of service received

According to Lehtinen, U & J R Lehtinen (1982) [118] service quality evaluation process on both sides including service providers and service results

According to Parasuraman et al (1985, 1988) [IL9, II.10], the quality of services Service is the gap between the expectations of customers in the utilities and services will bring them and perceptions, their feelings about the results they get after used across services This can be considered as a most general concept, which meaningful levels of service quality, as well as view the most relevant review the

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quality of services in view of the customer, if the customer is the focus

Thus, the concept of retail banking and definition of quality of service, we can understand the quality of retail banking services as perceived by the customers

of the gap between the expectations of service quality of retail banking services will provide their awareness and use of the service after the quality of retail banking services

Service is a popular concept in marketing and business It is a "special products" with many different characteristics from other commodities such as intangibility, heterogeneity, inseparability and can not be stored Therefore, so far there is no complete definition for service According to VA Zeithaml and MJ Bitner (2000), "Service is behaviors, process and method to do a certain work in order to create value for customers to satisfy their needs and expectations"

Services play an increasingly important role in the national economy Service quality is one of the determining factors for the efficiency of services and creation

of value to contribute to the national economy

Service quality is evaluated in connection with culture, job sector and field Therefore there are many different definitions for it Depending on the object and environment of research that understanding of service quality can serve as the basis for implementing measures to improve it

In development history, many service providers have found their differences from rivals and keep customers through the implementation of excellent quality service Service quality has become a major marketing tool to differentiate competitors and boost customer loyalty Customers can only assess the quality after having purchased and used a service Therefore, the definition of service quality is often subjective, largely based on the attitude, feeling and knowledge of service users After referring to materials, there is some concept of service quality that is used by many writers

Service quality is a measure of to what level a service has satisfied a customer’s expectation A quality service is one that meet the expectations of

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customers in a consistent manner (Luu Van Nghiem, 2008, page 163) Gronroos (1984) saw service quality in two aspects, one is technical quality (what is served) and functional quality (how it is served) In the 1998 study, he described perceived service quality is the difference between expectations and the service received Parasurman, Zeithaml and Berry (1985.1988) (cited from Nguyen Dinh Tho and ctg.,2007) thought that "quality is the distance difference the real service and products and the perceptions, feeling of customer when they use that products and services” He explained that in order to know a customer, it is best to identify and understand his expectations It is necessary to develop of a system to identify customer’s expectation, and then formulate an effective service quality strategy This can be considered the most general concept that covers the entire meaning of quality service from a customer’s point of view, and places customer in the centre Although there are many different definitions, but taken as a whole, quality of service includes the following features:

Superiority: For customer, service quality is marked with significant

"superiority" compared to others This superiority becomes competitive strengths of the service provider Evaluation of service quality superiority is greatly influenced

by feelings of the services receiver, especially in marketing and customer satisfaction research

Characterization: Service quality is the core of most products and services; it makes up the characteristics of products and services Therefore, high-quality products and services will have more "dominant characteristics" than low-end products and services This distinction is associated with the identification of superior tangible or intangible properties of products and services It is thanks to

these characteristics that clients can tell the quality of a company from other companies However, in practice, the core characteristics of the service only

relative, it is difficult to determine them fully and accurately

Provision: Service quality is associated with the implementation/delivery of

service to customers Service delivery, serving style will determine whether the

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quality is good or bad These are internal elements expressed by the service providers Therefore, in order to improve service quality, firstly service providers must be aware to improve this internal factor to create their long-term advantage

Demand satisfaction: Service is designated to meet the needs of customers Quality of service must fulfill customer demand and improve according

to customer's requirements If customers feel that the service does not meet their needs, they will not be satisfied In the modern business environment, service providers must always pay attention and try their best to meet customers’ needs In terms of customer service, "Demand satisfaction" includes "provision" This is so because services quality starts from the moment when enterprises get to know customer needs to the moment when they provide service, in the process of service delivery that customers will feel satisfied or not and therefore consider a service good or bad If the provision has internal factor demand satisfaction is more driven

by external influence

Value creation: The quality of service is associated with the value created to

serve customers It would be useless to provide service that is considered having no

quality by customer Enterprise must create value for customer Therefore, consideration of service quality or more specifically value brought to customers depends on customer assessment, not the enterprise Clients will receive value the service bring and compare them with what they expect to get Hence, value creation

is the basic characteristics and foundation for the construction and development of service quality of business

2.3.2 Relationship between service quality and customer satisfaction

The existence of any business is the customer "Customer is the King", is the ones who decide revenue based on their level of satisfaction for products and services quality Therefore operation principles of suppliers are to meet the needs of customers and then their ability to come back is very high "Customer satisfaction is the feeling of a person through the consumption of products and services, the level

of value that the product and service offer compared to what he expected” ( Philip

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Kotler, 1991) Or according to Bachelet (1995), "satisfaction is the emotional reaction of customers for a product or service based on his personal experience." Normally the service provider often assumes service quality and customer

satisfaction to be the same However, many studies have revealed that these two

concepts are different, but have mutual relationship Quality of service is the most influencing factor on customer satisfaction If service providers bring customers good quality products that meet their needs, they have set the first step to make customers happy

Therefore, to have better customer satisfaction, the service providers must increase service quality Quality services must focus on specific components of the

service, it is the source that decide customer satisfaction Customer satisfaction can

be used to measure service quality

2.4 The evaluation theory of the service quality

2.4.1 Five service quality gap model

The existence of any business is the customer "Customer is the King”, is the ones who decide revenue based on their level of satisfaction for products and services quality Therefore operation principles of suppliers are to meet the needs of customers and then their ability to come back is very high "Customer satisfaction is the feeling of a person through the consumption of products and services, the level

of value that the product and service offer compared to what he expected" ( Philip

Kotler, 1991) Or according to Bachelet (1995), "satisfaction is the emotional reaction of customers for a product or service based on his personal experience." Normally the service provider often assumes service quality and customer

satisfaction to be the same However, many studies have revealed that these two

concepts are different, but have mutual relationship Quality of service is the most influencing factor on customer satisfaction If service providers bring customers good quality products that meet their needs, they have set the first step to make customers happy

Therefore, to have better customer satisfaction, the service providers must

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increase service quality Quality services must focus on specific components of the

service, it is the source that decide customer satisfaction Customer satisfaction can

be used to measure service quality

During service provision, there is always distance between providers (banks) and customer The distance varies depending on the two major factors of customer and the bank Besides are impact from the surrounding environment on customer

and the bank Greater distances reflect the lower ability of banks to meet the needs

of customers Therefore, management of service quality is essentially "the service quality distance" Narrowing the distance is the goal of service providers

Figure 2.1: Model of five service quality gap

Information dissemination via Past experience

conversation Personal demand

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eco ee ees eee ee se ece mane bP +

5 Gap Ị 1G ap + Received level of service

+

l

BANK Service provision (contact |, ,| Dissemination of external

Gap I: Appear when there is a difference between customer expectations of the service and the bank awareness of these expectations Gap 1 usually occurs because the bank does not understand all the characteristics that make up the quality of their service and do not see customers' needs

Gap 2: This gap occurs during the implementation of service quality objectives The bank has difficulty in changing their perception of customer expectations for the characteristics of their service The second gap depends mainly

on the products design capacity of the bank

Gap 3: Appears when the bank staff does not provide services to customers according to the specified criteria This depends on the quality of staff directly providing products and services Even when the product is designed well, fulfilling customer demand, if the provision, attitudes and professionals of the staff are not good, causing bad impression for customers, the bank's efforts in understanding market demand, designing products, is no longer worthy

Gap 4: This is the gap between the actual service quality and the customer's expectations under the influence of external information dissemination and communication such as advertising, marketing, etc They are exaggerations that exceed ability of the service provider It is very easy to lose customer’s trust if the service provider advertises far beyong the truth

Gap 5: After using the service, customer will compare the service quality they receive and what they have expected initially The key is to ensure that the quality customer receive must meet or exceeds what they expect Thus, high or low quality depends on customer’s perception of the service in the context of what he expects from a bank Parasuraman & ctg (1985) suggested that service quality is a function

of the fifth gap This gap depends on the distance before it Therefore, to shorten the

5 gap and increase service quality, service managers must attempt to shorten the gap 1,2,3,4

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2.4.2 Model technical quality and functional quality

Service quality model of Gronroos was built from 1984 to that service

quality is judged on two criteria: technical quality(Technical quality) and quality functions Functional quality)

Figure 2.2: Model of Gronroos service quality

b Functional quality: the way in which customers receive the results engineering

of the supply process

c The image: The image is a very important factor, built mainly based on technical quality and functional quality of the service, in addition to a number of other factors such as traditions, oral and pricing policies, PR)

2.4.3 Model of Banks Service quality BSQ (Bank Service Quality)

SERVQUAL is rather common model for assessing the quality measurement This course has limited model is only a general assessment service quality of service and apply the most in the marketing research Although based on five components measuring basic quality Carman (1990) [11.2] says when researching a particular field of public services, apart from the basic components 5 SERVQUAL model, necessary to analyze and evaluate additional new elements affect At the

23

same time, according to Gilmore and Carson (1992) [II.5]the model SERVQUAL evaluation focused on the composition of goods and services Is that not much attention to tlie composition of the market, especially the elements price

From the above limitations, Bahia and Nantel (2000) [II.1] has developed into the BSQ model to assess perceived quality retail banking services from customer This model is built on the basis of the ten components of measurement original model Parasuraman et al (1985) [H.9], plus other models added new elements to represent the components of the marketing mix 7Ps like product (product), price (price), location (place), communication (promotion), people (people), processes (process) and environmental services (physical)

BSQ model after adjusting the remaining 31 variables to measure six observers

Components related to the quality of retail banking services, including:

1 Effectiveness and assurance:

- Efficiency: the service can be provided efficiently to customers and the ability to make customers feel safe

- Assurance: demonstrate the capacity of the bank employees when dealing customer requirements through the communication skills and the ability to protect

of banking confidentiality

2 Approach: relating to the creation of favorable conditions for clients in accessing services such as shorten customer waiting time res(aurant, catering_venues and opening hours for customer convenience

3 Price (Price): The price of the service is the subjective perception of the customer the price of similar services by other vendors Measure the cost price supply for customer service Due to the volatility of financial markets and specialty enemy of business culture, product pricing or interest rates customers are always compared match, rated among banks

4 Tangible: shown through appearance, attire staff and equipment and facilities to serve the customer service,

5 he list of products and services: assess the scope, the consistency and innovation

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of banking products to meet customer needs groin

6 Reliability: demonstrate the ability to perform the service certainly according to

the commitments to customers

Figure 2.3: Model of Bank Service Quality service

Effectiveness and HI

assurance

H2 Approach

H3 Price

— H4

Tangibles

H5 Product list

2.5.Model research of proposals and factors affecting to quality of retail banking services

2.5.1.The main factors affecting the quality of retail banking services at the Bank for Investment and Development of Vietnam — BSG Branch

- Reliability: Consistency and Reliability during providing services

BSG BIDV, reputation and devotion are always top priority With the direction of the Board of Directors, staffs constantly learn to improve knowledge, always study needs and meet the highest expectations of customers

Besides the development of system and standardization for formality and procedures to ensure a consistent supply, providing reliable products to customers Always make sure that promises on media are true and customer’s trust can be achieved BIDV pays special attention to the management of customer’s expectations

- Responsiveness:BSG BIDV actively improves processes, minimizes the of processing dossiers in order to maximize the responsibility to situations happening more and more regular Make sure that the customers’s time during waiting to receive services is the shortest -

Staffs get basic training courses for profession as well as necessary skills so that they can meet requirements of our customers in the best way

Besides actively compiling instructive documentation to help staffs to reply well to questions, requests and complaints from customers are also paid attention to by BSG BIDV

- Tangibles: Tangible elements of the service make the presence of matter

These factors affect directly to whether or not BSG BIDV has built a tangible environment that provides good retail banking services

In general, the network of branch’s transaction offices is allocated comfortably in the area Due to the characteristics of the banking service, the first impression is

very important This decides which bank is the option of customers Grasping that

26

problem, BIDV in general and BSG BIDV in particular have built for themselves a unified model for headquarters and transaction office In design, the spaciousness, atrractiveness of inside and outside Interior are always ensured The layout of

counter, table, shelf of brouche, leaflet is always convenient and creates comfort for

customers Also, there are air hot & cold beverages and a number of newspapers so that customers can updates news during waiting for their turn The effectiveness of

ATM network reflectes in the number of transactions and transation sales

- Assurance: Expertise, courtesy and safety that bank offers to customers

Human resource factor serving retail has major influence on the quality of retail banking services through the human factor If human resources are the same human resources will make up the difference and become competitive advantage of bank Understanding that, BSG BIDV focuses on the management of people Subordinate staffs almost are at young age, brave, good profession, devoted to the development

of bank With youth, dynamism, creativity and enthusiasm are very good conditions

for the stability and development of human resources for the bank in the future To

be able to build a team of qualified staff who are professional, moral, devoted to their work, leaders of BSG BIDV has always focused on developing and improving management policies and human resource development in the general direction of

the whole system of BIDV

Appearance of each employee is also important so equipping uniform for the whole branch has been implemented Uniforms with very young style always create

a friendly and professional impression to customers But just wearing uniform three days a week limits partly the image of the branch in the customers’mind

Personnel’s qualification of BSG BIDV is fairly equal BSG BIDV always - encourages and creates the best conditions so that staff can improve their expertise

in many different forms contributing in improving the effectiveness of business,

service

With its strategy for human resources at BSG BIDV, it creates trust to some extent

through the knowledge and skills to serve their clients Create professionality, diligentness

27

in service Creating impressive image reflects the bank's value to contribute to building a BIDV strong brand

The ability of providing personal services

Through the training course of the BIDV, the staffs are able to identify the needs of customers more clearly and accurately Always make the customer feel themselves important by meeting their needs and understand their concerns Always put yourself in the role of customers to understand Enthusiastic, friendly gesture, words sometimes also make customers heartwarming and back with more banking transactions Developing long-term relationships with customers are also BSG BIDV’s interest and attention But warm gifts in the birthday of customers, the gratitude on the holidays, anniversaries creates connection retaining regular customers with BSG BIDV

2.5.2.Build model research the quality of retail banking services in

BIDV BSG

At the above presents the theoretical basis and the theoretical model

assessment service quality In this section, the author will introduce the models of

dissertation research and research method to test the model selected

Currently, there are many models to measure the quality of service, but the author have chosen the pattern quality banking services to perform research BSQ This thesis because it is the model Bahia and Nantel (2000) [II.1] designed to measuring the quality of retail banking services and proven measuring success

in some countries of the world such as Greece, Bulgaria, Serbia, Lybian, Iran

28

Figure 2.4: Model of Quality Assessing in Retail banking services

H3

— _—

H4 Tangibles

HS Product list

29

Some hypotheses posed for research model as follows:

- Hypothesis H1: composition ensures effective and customer reviews the more they

feel their level of service quality for retail banking increasing and vice versa

- Hypothesis H2: Composition reach more customers evaluate the their perceived level of service quality for retail banking services is increasing and vice versa

- Hypothesis H3: Composition pricing feel valued by customers as more then their perceived level of service quality for retail banking services is increasing and vice

- Hypothesis H6: Composition trusted more customers evaluate the their perceived level of service quality for retail banking services is increasing and vice versa

2.6 Build to scale quality retail banking services BSQ

This study used 7 point Likert scale, from small classified (1) to Large (7), as _ proposed by the Bahia and Nantel (2000) [II.1]

2.6.1 Quality scale retail banking services

BSQ scale is a scale quite complete and has_been.successfully applied Measuring the quality of retail banking services in a number of countries in the

world Greece, Bulgaria, Lybian However, each country has the economic

characteristics, political, cultural differences, while research on application scales BSQ requires adjustments and supplements to match the characteristics of the sector retail banking services in Vietnam in general and retail banking services in the Bank BSG particular

Quality general scale retail banking services under the model BSQ of 31

observed variables to measure the six components of quality of service In particular, (1) the and ensure effective part of 13 observed variables, (2) access

30

components 5 observed variables, (3) component prices 5 observed variables, (4) components means Tangible 4 observed variables, (5) component product portfolio includes 2 services observed variables, (6) including 2 reliable components

observed variables, in particular in Annex 1

2.6.2 Scale satisfaction and perceived quality of retail banking services of

customers

In addition to use as a basis BSQ scale to build scale for measuring quality of retail banking services This study also builds the scale of satisfaction and perceived quality of customer service based on Research Lassar et al (2000) [II.7] to reflect the quality of banking services retail banking from service providers including 3 variables observed as follows:

1 In general, he / she completely satisfied with the quality of retail banking services

In addition, this chapter also has synthesized the theoretical basis of quality, quality of service, quality of retail banking and quality research models

as the model of SERVQUAL service, technical quality models and quality of functionality, quality model BSQ banking services

31

CHAPTER 3 METHODOLOGY AND DATA COLLECTION METHOD

Table 3.1: Progress of implementation of the thesis research

Step Formal Research Techniques used Execution

Theoretical Preliminary Scale draft BSQ

Foundations Scale research: (Adjust the scales 1st)

BSQ Using techniques

`

Official research: Official Scale BSQ Preliminary research:

quantitative research (Adjustable time - Discussion groups

(n = 367) _scales 2) - Interview Test

factor analysis J1.>pe variables correlation coefficients less variable overall rall

Cronbachs Alpha 2 Inspection of Cronbach's alpha coefficient

Ỷ

The rating scale: explore factor 1 Type the variable weighted sma : b ; ted small EFA

analysis +> 2 Check elements are extracted

breaking EFA 3 Check variance extracted is

3.1 Preliminary research

3.1.1 Technique plays, group discussions

Preliminary studies were conducted through qualitative research methods

Technical features include role plays and group discussions Based BSQ scale (see

appendix Contents 1) the quality of service measurement, preliminary research techniques through play Shoulder to adjust time scale 1 (see Appendix 2) Then, the authors use the chnique group discussions, group of 10 people with ages 25 to 45 who are knowledgeable about banking sector and those who are using the services

of retail banking at the bank BIDV, ACB through qualitative discussion outline (see Appendix 3.1)

The purpose of this study to explore, modify and supplement the observed variables for the service quality scale accordingly BSQ with retail banking services

in Vietnam market

The results showed that the group discussed a number of observed variables

to remove by guests line that it does not matter and they do not pay much attention

to these factors.A total of 10 observed variables are removed, there are variables in numerical order is 3, 4, 6, 8,12, 17, 18, 20, 22, 24, in Appendix 2

3.1.2, Seale adjustment

From the results discussed in the model group, the scale BSQ after that adjustment variable remaining 28 observers (Annex 3.3) In particular, (1) an effective and ensure observation of 8 variables, (2) access component includes 5 observed variables, (3) price includes 4 components observed variables, (4) components of tangible of 4 observed variables, (5) component product portfolio includes three variable service observed, (6) reliable components including 2 observed variables Satisfaction scale consists of 3 variables remain is retained as the original

3.1.3 Design survey questionnaires

After the group discussion, the questionnaire was designed as a two-part Six:

- Part I of the questionnaire was designed to gather the customer reviews line of

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quality retail banking services, customer satisfaction in the Bank 32 BSG, ACB, other local banks in Ho Chi Minh City This section Design includes 31 observed variables, including the first 28 observed variables used to measure quality of retail banking services under the model BSQ and 3 other variables re used to measure the satisfaction and perceived quality of customer service according to research every Lassar et al (2000) [II.7]

1 CAEE 1 | Bank always create the trust for him /her when transactions

2 | CAEE 2 | Banker always interested in him /her

3 |CAEE 3 | Bank transaction for him /her without interruption

4 |CAEE 4 | Banker capable consultants to help him /her perform products retail

banking services the most efficient way

5 |CAEE_5 | Banking services are provided on time as promised to him /her

6 |CAEE 6 | Bank has a good brand reputation in the market

7 |CAEE 7 | Bank ensures safe when him /her transaction

8 |CAEE 8 | The advertising program, website information about retail banking

services the bank's very good

Component approach ( CA)

9 |CA_1 Bank’s ATM have enough activity

10 |CA_2 Bank facilities have modern technology

11 |CA 3 Banks have enough tellers to meet the needs siblings

12 |CA_4 Time of transaction at the counter of him /her not long

13 |CA_5 The Bank has a wide network transactions

Composition price (CP)

14 |CP_I Bank always explain the service charges

15 |CP 2 Banks often have incentive programs (open reduction cards, interest,

gifts, .) for him /her

16 | CP 3 Banks have deposit interest rate competition

17 |CP 4 Loan products of banks have attractive interest rates

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Tangible components ( TC)

18 [TC 1 Facilities of banking facilities clean

19 1TC 2 Design transaction counter decorative harmony remarkable

20 | TC_3 Bank's Working time convenient transaction for him /her

21 |TC 4 Bank employees dress neatly and politely

22 | CLPS _1 | Information products and services of retail Banking service is

presented full retail Banking service on the brochures and clearly arranged on shelves

23 | CLPS 2 | Products and services of retail Banking service always be improved to

suit the need him /her

24 | CLPS 3 | Products and services of retail Banking service very diverse

Reliable components (RC)

25|RC_1 The Bank provides products and services to ensure reliability

261 RC _2 The Bank has information storage system, the property of him /her

make accurate and secure protection

27 | RC _3 Bank always true and correct implementation of transactions for siblings

28 | RC_4 him /her completely trusted when making transactions at the bank

29 |CS_1 In general, him /her completely satisfied with the quality of retail

banking services by the banks offer

30 |CS_2 him /her will introduce relatives to use retail banking services by the

banks offer

31 |CS_3 In short, him /her will continue to use retail banking services of banks in

the near future

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3.1.4 Official research

Research is done by informal research methods measure Quantitative research to test the scale of model research through survey questionnaires

3.1.4.1 Method of information collection and sample size

Information and data is collected through surveys of individual customers use retail banking services in BSG BIDV, ACB and Other local commercial banks

in Ho Chi Minh City Reason for choosing bank author ACB as ACB survey is

considered one of the commercial banks with market share leading retailers in Vietnam today, and the selection of ACB to have a basis for comparison compare service quality assessment of BIDV BSG

Model study authors observed variables is 31 If the standard 5: 1 (five samples for an observed variable) and appropriate sample size survey to analyze and assess the quality of services at the two banks BSG BIDV and ACB, the minimum sample size n = 310 is (31 x 5 x 2) To achieve the proposed sample size,

400 questionnaires were sent directly interviewing customers at ACB, BIDV BSG

in Ho Chi Minh City

3.1.4.2 Data analysis plan

First, the scale of quality retail banking services will be coded will be coded

correction, and transparent

Research methods of banking, human, social help create factors to the author

completed research projects better

36

CHAPTER 4 RESULTS, FINDINGS AND PRESENTATION

OF DATA

4.1 Survey results quality retail banking services as perceived by customers 4.1.1 Description form

Survey results have collected 367 valid questionnaires and standards to make

Data for the study

- Statistical Table 2.2 shows respondents mainly concentrated in two large banks BIDV and ACB Form is convenient sample survey respondents directly

to customers who use retail banking services in BSG BIDV, ACB and banks other Results rate of BIDV sample allocation accounted for 46.1%, accounting for

44.1% Remaining ACB 9.8% was from other commercial banks The data collection is done according to 4 criteria the following criteria

- According to age: survey sample rate is 47.7% for the highest sample aged 21-30, followed by 30.8% for the sample aged 31-40; 16.3% for the sample aged

from 41-50; 4.1% for samples over 50 years and the lowest rate of 1.1% for those

younger than 20 fresh Survey results show that customer group for children aged

21 to 40 accounted for high rates 78,5%

- According to study level: survey sample of qualified college / university accounting 75.7% is the Highest rate, followed by a high school degree is 14.7%, on Higher Level study was 7.6% and lower secondary education have the lowest rate

of 1.9% findings That showed consumer groups have college level / graduate and undergraduate accounting a high rate of 83.3%

.- According to income (million / month): sample with the highest rate is 42% the form of income from 5-10 million, followed by 28.1% for income from samples 10-15 million, 21.0% for samples with incomes above 15 million and the lowest

rate is 9.0% for samples earn less than 5 million

- By sex: survey results showed that the rate of relative gender survey evenly

- with 51% male and 49% female

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Table 4.1: Sample allocated according to respondents

old

From 41-50 years 60 16,3 16,3 95,9 old

Over 50 years old 15 4,1 4,1 100

4.1.2 The rating scale using Cronbach's coefficient alpha reliability

This method allows the analysis of variables eliminates inconsistent,

limiting junk variables in the research process and evaluate the reliability of the scale Cronbach's coefficient through Alpha Scale Cronbach's alpha coefficient of 0.6 or up that can be used in the case studies are new concepts

4.1.2.1 Result analysis quality scale retail banking services modeled

BSQ

The analytical results in Table 2.3 found all 28 variables measuring quality retail banking services under the model BSQ have a correlation coefficient of total variation (Corrected Item-Total Correlation) are greater than 0.3 should be

accepted

In addition, Cronbach's alpha coefficient of the materials easurement

(efficiency and guaranteed; approach; price; Tangible; portfolio of products and services; credit reliability) are greater than 0.7 indicates that this is a good scale Thus, all 28 variables measuring 6 observed quality of service components BSQ are modeled using factor analysis for the next EFA

4.1.2.2 Analytical results satisfaction scale and perceived quality Retail banking customers:

Table 4.2 Cronbach's alpha coefficient components scale satisfaction

Satisfaction scale consists of 3 variables (CS_1, CS_2, CS_3) are systems

Correlation of the total variation greater than 0.3 should be accepted In addition,

the coefficients Cronbach's Alpha was 0.778 (greater than 0.6) proved to be a good scale There fore, the variables the satisfaction scale were included in the analysis

next EFA factor

39