Quality of noncredit services in sogiaodich1 branch, bank for investment and development of vietnam jsc

Model of non-credit service quality research at Vietnam Joint Stock Commercial Bank for Investment and Development, Sogiaodich1 Branch ..... ANALYSIS OF THE QUALITY OF NONCREDIT SERVICES

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

-

ĐẶNG THỊ THUỲ TRANG

QUALITY OF NONCREDIT SERVICES IN

SOGIAODICH1 BRANCH, BANK FOR INVESTMENT

AND DEVELOPMENT OF VIETNAM JSC

CHẤT LƯỢNG DỊCH VỤ PHI TÍN DỤNG TẠI CHI NHÁNH SỞ GIAO DỊCH 1 NGÂN HÀNG TMCP ĐẦU

TƯ VÀ PHÁT TRIỂN VIỆT NAM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2021

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

CHẤT LƯỢNG DỊCH VỤ PHI TÍN DỤNG TẠI CHI NHÁNH

SỞ GIAO DỊCH 1 NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT

TRIỂN VIỆT NAM

Chuyên ngành: Quản trị kinh doanh

Mã số: 8340101.01

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS Đỗ Xuân Trường

HÀ NỘI - 2021

COMMITMENT

The author undertakes that the research results in this thesis are the results of the author's own labor obtained mainly during the time of study and research and have not been published in any other research program

The results of other people's research and data used in this thesis have been agreed and specifically cited by the authors

I am fully accountable to the thesis defense council, the Faculty of Business Administration and the state law for the above commitments

ACKNOWLEDGEMENT

The author would like to sincerely thanks for the guidance, dedicated, responsible and effective help of Dr Do Xuan Truong during the research and completion of the Thesis

The author would also like to express gratitude to the teachers of the Faculty

of Business Administration, Hanoi National University for their dedicated help, teaching and knowledge transmission

Sincerely thanks the Board of Directors and staffs of Joint Stock Commercial Bank for Investment and Development of Vietnam, Sogiaodich1 Branch for

facilitating and assisting the author in the process of completing this thesis

TABLE OF CONTENTS

LIST OF TABLES v

LIST OF FIGURES vi

INTRODUCTION 1

CHAPTER 1: BASIC THEORY ON QUALITY OF NONCREDIT SERVICE OF COMMERCIAL BANK 12

1.1 An overview of the commercial bank's non-credit services 12

1.1.1 The definition and characteristics of the non-credit service of commercial banks 12

1.1.2 The major non-credit services of commercial banks 15

1.2 Quality of non-credit service of commercial banks 20

1.2.1 The definition of non-credit service quality 20

1.2.2 Models for measuring the quality of non-credit services of commercial banks 21

1.3 Research model and design research on the quality of non-credit services at commercial banks 24

1.3.1 Model of non-credit service quality research at Vietnam Joint Stock Commercial Bank for Investment and Development, Sogiaodich1 Branch 24

1.3.2 Scale Creations 27

1.3.3 Questionnaire design 28

1.3.4 Research sample design 29

CHAPTER 2 ANALYSIS OF THE QUALITY OF NONCREDIT SERVICES AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT – SOGIAODICH1 BRANCH 31

2.1 An overview of the Vietnam Joint Stock commercial bank for Investment and Development – Sogiaodich1 Branch 31

2.1.1 History and development 31

2.1.2 Organizational structure 33

2.1.3 Business performance results 33

2.2 Analysis of the current status of non-credit operations at Vietnam Joint Stock

Commercial Bank for Investment and Development, Sogiaodich1 Branch 37

2.3 Analysis of the current status of non-credit service quality at Vietnam Joint Stock Commercial Bank for Investment and Development, Sogiaodich1 Branch 40

2.3.1 Descriptive statistics 40

2.3.2 Analyze the reliability of the scale 42

2.3.3 Exploratory factor analysis 44

2.3.4 Regression analysis 47

2.3.5 Analyze the current status of non-credit service quality at BIDV – Sogiaodich1 Branch 55

CHAPTER 3 SOLUTIONS TO IMPROVE THE QUALITY OF NON-CREDIT SERVICES AT VIET NAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT 61

– SOGIAODICH1 BRANCH 61

3.1 Oriented development of non-credit services at Joint Stock Commercial Bank for Investment and Development of Vietnam – Sogiaodich1 Branch 61

3.2 Solutions to improve the quality of non-credit services at Vietnam Joint Stock Commercial Bank for Investment and Development – Sogiaodich1 Branch 62

3.2.1 Improve the quality of staffs dealing directly with customers 62

3.2.2 Increase the reliability of non-credit services at BIDV – Sogiaodich1 Branch 64

3.2.3 Increase information to customers 66

3.2.4 Increase product utility for customers 66

3.2.5 Adjust service fees to be reasonable and competitive with other banks 67 CONCLUSION 69

REFERENCES 70 APPENDIX

v

LIST OF TABLES

Table 1.1 Groups of factors scale 27

Table 2.1 Business performance of BIDV – Sogiaodich1 Branch 36

Table 2.2: Results of net service revenue of BIDV – Sogiaodich1 Branch 39

Table 2.3 Descriptive statistics of research samples 42

Table 2.4: Analysis results of Cronbach'sAlpha 43

Table 2.5: KMO and Bartlett's Test 44

Table 2.6: Results of EFA of the independent variable 45

Table 2.7: Groups of factors after performing the exploratory factor analysis 47

Table 2.8: Correlation coefficient matrix 48

Table 2.9: Testing of regression model appropriateness 50

Table 2.10: Multicollinearity test 51

Table 2.11: Regression analysis result 53

Table 2.12 The level of customer satisfaction about staff 55

Table 2.13 Level of customer satisfaction with the utility of the non-credit service 56

Table 2.14 Level of customer satisfaction with non-credit products and services 57

Table 2.15 The level of customer satisfaction on the reliability of the non-credit service 58

Table 2.16 The level of customer satisfaction about Information factor 59

Table 2.17 Customer satisfaction with non-credit services at BIDV – Sogiaodich1 Branch 60

2019 35 Figure 2.4 Net service revenue ratio in the total profit before tax of BIDV – Sogiaodich1 Branch 38 Figure 2.5 The structure of net service revenues by types of non-credit services in

2019 40 Figure 2.6: Normalized residual scatter plot 51 Figure 2.7: Frequency graph of normalized residuals 52

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INTRODUCTION

1 The urgency of the topic

In recent years, the credit environment has faced many difficulties, the level

of risks is still high, the State Bank of Vietnam has strictly managed the growth of the annual loan balance of commercial banks in order to control inflation; the income from lending activities for customers has slowed down, so it can be seen that non-credit services provide a fairly stable source of income for most of Vietnam's commercial banks in the period of 2017 - 2019, if any commercial bank having reduced, the reduction will not be much fluctuation, unusual fluctuations such as foreign exchange trading, securities trading, Therefore, the strategy to increase the proportion of non-credit service is still being concentrated by Vietnamese commercial banks

In the context of the 4.0 revolution, the application of Fintech and Blockchain technology, use of mobile devices and the development of digital technology; the project of non-cash payment under the Prime Minister's Decision is approved and strengthened the direction and strongly promoted by The State Bank

of Vietnam; the Vietnamese commercial banks have also increasingly competed, increased investment in financial resources, human resources, and developed, improved non-credit services, especially modern services, such as internet banking, digital banking, using QR codes, e-wallets Commercial banks have also expanded cooperation with the taxation, customs, state treasury, social insurance, payment companies, organizations providing public services such as electricity, telecommunications, cable TV, clean water, hospitals, gasoline, road transportation and railway, airlines, traffic registration stations, universities and colleges, vocational training,…; labor export companies, travel agencies; supermarkets, trade centers, insurance companies, The provision of non-credit services also helps Vietnamese commercial banks cross-sell products such as deposits, overdrafts,

In the context of fierce competition among commercial banks in non-credit services, the products and fees of banks are almost close to each other The price competition becomes less meaningful in the current context Instead, improving the

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quality of non-credit services is becoming a very effective competitive tool for commercial banks Therefore, it is very necessary to research to improve the quality

of non-credit services of commercial banks

Facing that trend, BIDV in general and Sogiaodich1 Branch have concentrated resources and finance to develop non-credit services and brought positive results such as revenue and income from non-credit service is increasing in both absolute value and proportion in total revenue, the number of customers using non-credit services at the Branch also increases strongly in the period of 2017 -

2019 with rapid rate growth is over 10% In addition to the achieved results, the quality of non-credit services is still limited, such as: the staff is still limited in quantity and professional qualifications Many customers have complained about the working attitude of staff at the transaction center Branch 1 Non-credit products and services do not have many associated benefits, the fee for using non-credit services is even higher compared with other joint stock commercial banks The limitations on the quality of non-credit services have a great impact on the growth and development of non-credit services at BIDV - the transaction center Branch 1 Great effects on competitiveness and accounting for market share of the Exchange

1 Despite having 60 years of experience in the banking sector, strong financial capacity and huge number of current customers, BIDV's non-credit services is still not appreciated compared to Techcombank, Vietcombank and Tien Phong Bank Therefore, in order to increase competitiveness in the current context, it is very urgent to improve the quality of non-credit services at BIDV – Sogiaodich1 Branch

From the above reasons, the author chose the topic "Quality of non-credit services in Sogiaodich I Branch of the Joint Stock Commercial Bank for Investment and Development of Vietnam" for master thesis

2 Research overview

There have been a number of studies on non-credit services and non-credit service quality of commercial banks In which, the author mentioned a number of typical research as follows:

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In recent years, Vietnamese commercial banks have made great efforts to improve non-credit services, but these efforts have not yet achieved much Therefore, finding solutions to develop non-credit services is a strategic significance for the bank's operations This issue has received great attention from researchers, and is divided into two main groups: one group focuses on macro strategies to improve the general non-credit services of all banks in Vietnam while the other group goes towards improving non-credit services in a particular bank

About the first group which focus on the noncredit services in general of all the commercial banks in Vietnam, in 2012, the author Dao Le Kieu Oanh and Pham

Oanh Thuy have published an article about the role of developing noncredit services

in Vietnamese commercial banks on Phat Trien va Hoi Nhap Magazine In this article, the authors emphasized on the role of noncredit services and how to develop them in banks They also improved that the noncredit services brought benefits not only for the banks and the customers but all the society, from that they pushed up economic development

In 2013, in PHD thesis of developing noncredit services of commercial banks in Vietnam, author Pham Anh Thuy wrote about some experiences in the noncredit service development of foreign bank, through which the author composed

of eight key valuable lessons for commercial banks in Vietnam The author also assessed the current state of noncredit service development of Vietnamese commercial banks by combining two research methods including qualitative and quantitative methods From the findings of the research, the thesis summarized the strategy of developing banking noncredit services of Vietnamese commercial banks

by 2015 and the vision of 2020

The most famous thesis about this issue belongs to PHD Thesis of Phan Thi Linh: “Developing noncredit services of Stated-own commercial banks in Vietnam”

in 2015 The author provided definitions, characteristics, classification and role of noncredit services in banks From the theory as the secondary data collected from four stated – own commercial banks, Phan Thi Linh identified the limitation for noncredit services widening, the positive affect of noncredit services to the whole

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business’ efficiency The thesis was also focused on clarifying the factors affecting the development of non-credit service of the commercial banks, including: The internal and external factors Firstly, through analysis and evaluation of secondary source on investment cost of non-credit service in the period of 2000 -2015, the author uses regression analysis using SPSS software to make regression function representing the variation in investment cost of non-credit service of the banking profit The survey results show that if the annual investment cost in non-credit service is at 30%, the bank will gain maximum profitability at 34% Secondly, through analysis and evaluation of secondary source and survey results from bank staffs about the factors affecting the development of non-credit service such as bank resources; Networks of distribution channels; Quality of Service; Customer policies; Advertising and marketing activities,; Reputation and brand of the banks; Management capacity; Goals and strategies of the development, these factors can positively impact on the development of non-credit service

Do Quang Tri (2018) with the article: “The trend of increasing the scale and the proportion of income from non-credit services in the total income of commercial banks in Vietnam” published in Banking Review No 23/2018 researched and analysed data in the financial statements of the end of the third quarter of 2018 on income from service and income proportion of joint stock commercial banks on the Vietnamese stock market, on that basis, made a number of comments and recommendations

The second group which focuses on noncredit service of a particular bank

also has received great concern from the researchers Accordingly, Le Nguyen Anh Dao (2013) has studied the development of the noncredit services at The Bank of Foreign Trade of Vietnam, Da Nang branch In the theorical basis, the author has developed the evaluation criteria, so that the author can evaluate the development of the noncredit situation at Vietcombank Da Nang from 2009 to 2011 In addition, the author has conducted an actual survey on the noncredit services delivery at Vietcombank Da Nang branch, which has provided an assessment of the development of the quality of the provision of the service in recent years Finally,

2008 - 2012 according to two contents: (i) Assessing the status of factors MB's credit service quality impacts include: Banking facilities; Human resources to provide non-credit services; Organizational and management work; managing transaction counters at MB; (ii) Assessment of service quality through customer satisfaction survey results On that basis, evaluate the results achieved, the limitations and the reasons for the limitation From there, proposing specific solutions to improve the quality of non-credit services at MB

non-Nhu Thuy Linh (2015) has a research “Solutions to improve the quality of non-credit services at Vietnam Joint Stock Commercial Bank for Industry and Trade

- Hai Ba Trung Branch” The research has codified the theoretical basis of the quality of non-credit services of commercial banks From studying the current situation of the quality of non-credit services at Vietinbank - Hai Ba Trung branch

to draw out the advantages and limitations in non-credit services and find out the causes of those aspects From there, contribute to improving the quality of non-credit services, thereby attracting and expanding many types of customers Optimal response to the needs of the economy, contributing to consolidating the growth and enhancing BIDV's reputation and position in the economy Distributing risks for the bank, bringing a stable source of income for the bank, increasing the bank's profit Based on the research results, the thesis proposes a number of solutions and recommendations to improve the quality of non-credit services at Vietinbank - Hai

Ba Trung branch in the period 2016-2020

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Do Minh Thuy (2018) with the subject of his master's thesis "Improving the quality of non-credit services at the Joint Stock Commercial Bank of Industry and Trade of Vietnam - Luu Xa branch" of Thai Nguyen University The thesis systematized the theoretical basis of non-credit services and non-credit service quality On the basis of the built theory, the thesis goes into depth analysis of the quality of non-credit services at Vietinbnak - Luu Xa branch through the following contents: Non-credit service quality is assessed through evaluation criteria; Analysis

of factors affecting the quality of non-credit service at Vietinbank - Luu Xa branch

On that basis, evaluate the achieved results, limitations and causes of limitations and propose some solutions to improve the quality of non-credit services at Vietnam Joint Stock Commercial Bank for Industry and Trade - spending Luu Xa branch

Nguyen Hoang Tung (2019) with Master Thesis “Development of non-credit services at Saigon Thuong Tin Commercial Joint Stock Bank, Quang Binh branch”

of Hue University of Economics Research has systematized the theoretical basis of the development of non-credit services at commercial banks In depth analysis of the development of non-credit services at Sacombank Joint Stock Commercial Bank, Quang Binh branch in the 2016-2018 period through the following contents: Analyze and assess the development of Treasury services; Analyze and evaluate the current situation of the guarantee services development; Analyze and evaluate the current status of the international payment service development; Analyze and evaluate the current status of the domestic payment service development; Analyze and assess the development of non-credit services; Analyze and evaluate other service development status At the same time, research and evaluate customer satisfaction with the quality of non-credit service provision at Sacombank Based on the research results, the author has proposed a number of solutions to develop non-credit services at Saigon Thuong Tin Commercial Joint Stock Bank, Quang Binh branch until 2025

There have been many scientific research, articles as well as dissertations on non-credit services with many diverse aspects and methods at different times Therefore, this thesis will research the quality of non-credit services at the Joint

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Stock Commercial Bank for Investment and Development of Vietnam, Sogiaodich 1 Branch, is completely not the same with the previous aspects

Service quality is an important area to academicians because of its relevancy

to service companies and therefore many researchers have tried to develop various models to measure it, even though some claim it is hard to measure because of its intangibility which is hard to quantify (Eshghi et al., 2008, p.121); (Douglas & Connor,

2003, p.171) This is why as services are intangible in nature, evaluating the customer’s perception of quality can be done through the interaction with the personnel offering services, (Magi & Julander, 1996, p.35) From their suggestion, interaction between consumer and service provider is very important when measuring service quality because through that interaction, the service provider could easily understand the consumer better and identify what he/she exactly wants Knowing the theory about service quality, the author uses SERVQUAL MODEL (Parasuraman, 1988) to assess the determinants of quality of bank noncredit services of BIDV Sogiaodich1 branch then give solution to improve the service quality

3 Aims of research

3 1 Objectives of the study

On the basis of analyzing the current status of non-credit service quality at BIDV, Sogiaodich 1 Branch, the author proposes solutions to improve the quality of non-credit services at BIDV – Sogiaodich 1 Branch in the period of 2020 - 2025

6 Research methodology

6.1 Data collection methods

Collecting secondary data:

Secondary data is collected from the following sources:

- Financial statements of BIDV – Sogiaodich1 Branch from 2017 - 2019

- Summary report of BIDV – Sogiaodich1 Branch from 2017 - 2019

- Summary report on service development of BIDV – Sogiaodich1 Branch from 2017 - 2019

- Internal reports of BIDV – Sogiaodich1 Branch

Secondary data is collected to analyze some main business results of the Branch and the current status of non-credit services and quality of non-credit services at BIDV – Sogiaodich1 Branch

Collecting primary data:

Primary data was collected through the survey

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- Objective: Customers using service at BIDV – Sogiaodich1 Branch in 2019

- Survey content: Assessment of non-credit service quality by subjects such as: Staff, utility; Reliability; Information; Counter services and general customer satisfaction with non-credit services at BIDV – Sogiaodich1 Branch

- The purpose of the survey: Analyze the real situation of non-credit service quality; Analyzing the factors affecting the quality of non-credit services at BIDV – Sogiaodich1 Branch

- Sample size: The author conducts a survey of 250 customers using credit services at BIDV - Sogiaodich1 Branch in 2019

non Sample selection method: The author uses a convenience sampling selection method - conduct a survey of customers willing to answer all the questions

in the survey

6.2 Analytical method

Descriptive statistics method

The author uses the descriptive statistical method to describe the non-credit service business situation at BIDV - Sogiaodich1 Branch Perform statistics to describe the indicators such as the number of customers using, the number of transactions, revenue, profit from non-credit services and descriptive statistics of mean, standard deviation, maximum value, and minimum value of customer reviews for the non-credit service of BIDV - Sogiaodich1 Branch

Comparative method

In the research, the author uses the vertical and horizontal comparative method The author conducted a vertical comparison to see the development trend

of non-credit services over the years Horizontal comparison to see the development

of non-credit service of BIDV - Sogiaodich1 Branch compared to other bank branches in the same area

Evaluate the reliability of the scale

The assessment of the reliability and value of the scale is done by Cronbach alpha reliability coefficient and exploratory factor analysis (EFA) through SPSS

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20.0 processing software to screen and remove observe variables that does not meet the reliability standard

Exploratory Factor Analysis EFA

Exploratory Factor Analysis (EFA) criteria included:

+ The Bartlett standard and the KMO coefficient are used to evaluate the suitability of EFA Accordingly, the Ho hypothesis (variables that are not correlated

in the population) are rejected and therefore EFA is considered appropriate when: 0.5 ≤ KMO ≤ 1 and Sig <0.05 (Hoang Trong and Chu Nguyen Mong Ngoc, 2008)

- The factor extraction criteria include the Engenvalue index (which represents the amount of variation explained by the factors) and the Cumulative index (the sum of the variance extracted shows how many % and % of the factor analysis can explain the factor is lost) In which, Engenvalue> 1 and accepted when the total variance extracted ≥ 50%

- Factor loadings criteria denote single correlations between variables and factors, which are used to evaluate significance of EFA According to Hair and CTG, Factor loading> 0.3 is considered the minimum; Factor loading> 0.4 is considered important; Factor loading> 0.5 is considered of practical significance In addition, the case of variables with Factor loading is extracted to different factors whose weight difference is very small (researchers usually do not accept <0.3), that

is, it does not make a difference to represent a factor, then that variable is also eliminated and the remaining variables will be grouped into the corresponding factor extracted on the sample martrix (Pattern Matrix)

Multiple linear regression analysis

The linear regression analysis is done through steps:

Step 1: Check the correlation between the independent variables with each

other and with the dependent variable through the correlation coefficient matrix

Step 2: Building and testing regression models

- Selection of variables included in the regression model

- Evaluate the suitability of the model by the coefficient R squared However, R square will increase if there are many independent variables So,

- Determine the coefficients of the regression equation

Step 3: Check for violation of regression assumptions

The regression model is considered appropriate for the total research when it does not violate assumptions Therefore, after building a regression equation, the following necessary assumptions must be checked:

- There are linear relationships between the independent variables and the dependent variable

- The remaining of the dependent variable has a normal distribution

- The variance of the error is constant

- No correlation between residues (independence of the errors)

- No correlation between independent variables (no multicollinearity phenomenon)

7 Thesis structure

Apart from the introduction, conclusion, list of abbreviations, table of content, list

of table, list of figures, the main thesis contains three main chapters as follow:

Chapter 1: Basic Theory on quality of noncredit service of commercial bank Chapter 2: Assessing the current quality of noncredit service at BIDV – Soogiaodich1 Branch

Chapter 3: Solutions to enhance the quality of noncredit services at BIDV Sogiaodich1 Branch

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CHAPTER 1: BASIC THEORY ON QUALITY OF NONCREDIT SERVICE

OF COMMERCIAL BANK

1.1 An overview of the commercial bank's non-credit services

1.1.1 The definition and characteristics of the non-credit service of commercial banks

1.1.1.1 Definition

- Banking service definition

In the world, banking services are understood in a broad sense, including all monetary activities, credit, payment, foreign exchange of the Bank with individuals and organizations

According to the National Assembly (2010), “Banking operations are money trading and banking services with the regular content of receiving deposits and using this money for the purpose of providing credit and providing payment services”

According to the Law on State Bank No 46/2010/QH12 issued June 16,

2010 (Clause 1, Article 6) stipulates that “Banking operation is the regular provision

of one of the following operations: (a) take the deposit; (b) Credit extension; (c) Providing payment services via account ”

Thus in Vietnam, the definition of banking services have not been official yet There are many opinions that all operations of commercial banks (monetary operations, credit, foreign exchange .) are called banking services This point of view is formed from the world, when banking services are understood in a broad sense, include monetary activities, credit, foreign exchange, payment of individuals and organizations

- Definition of non-credit service concept of commercial banks

Similar to parallel views on services, non-credit services of banks also have many different expressions

According to Barron Educational Publisher's dictionary, 5th edition of Thomas P Fitch defines non-credit services: Non-credit banking services are banking services base on fee which is not related to credit extensions that the bank offers to correspondent banks or corporate customers Income from non-credit

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services can be a significant source of income for banks and financial institutions Examples of non-credit services include trust and revenues related to investments, global cash management, and foreign currency exchanges

According to the project “Survey and evaluate non-credit banking services in Vietnam” of Deloitte Touche Tohmatsu organization, the documents presented clearly that non-credit service is any service or product provided by financial intermediaries in the market that are not credit services Non-credit service is a service provided by a bank to a customer in order to bring a bank a certain income directly or indirectly without including credit service to meet customers' needs

Thus, non-credit services are all banking services excluding credit services, it also has full features of banking services The main difference between credit services and non-credit services is that when performing non-credit services, banks

do not collect interest but collect fees from the services In order to simplify the understanding, it is possible to rely on two basic features of non-credit services to distinguish from credit services:

Firstly, non-credit services do not require customers to use capital in transactions

Secondly, the non-credit service is only provided when the customer pays a fee to the bank This fee is determined by the bank, or depends on the service agreement At this point, the bank's income is come from fees instead of interests

However, in the process of service provision, non-credit services may arise concurrently with the operation of credit services (mobilizing capital and providing capital) of commercial banks to meet the demand of deposits and loans from customers Besides, there are many other non-credit services that operate independently from credit activities

In general, the author's opinion on non-credit services is as follows:

“Non-credit service is a service provided by a bank to customers to meet the financial and monetary needs of customers as well as directly or indirectly bring to the bank an income equal to specified fees collected from customers, excluding credit services”

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1.1.1.2 Characteristics

Service activities have many different characteristics in comparision with ordinary physical products such as intangibility, indissolubility, instability and difficulty to determine, two-way information flow or diversity and constantly evolving Non-credit services of banks are also a high-level service activity, with more and more unique characteristics With its own characteristics, the non-credit services can be easily distinguished from other services:

- Firstly, the non-credit service activity is a fee-based activity

Unlike interest-collecting credit operations, non-credit services are characterized by fees collected from customers during service provision Fee collected by agreement between the service provider and the user corresponding to each type of service

- Secondly, non-credit services are not monopoly

Creating a new banking product requires a complicated, costly research process However, products created on the market are usually not long-life due to the changing of customers’s need Besides, banking products and services are created that are easy to imitate and have no monopoly, so copying products from each other is inevitable Meanwhile, there is no way to catabolize products and services between providers This requires forced competition among institutions through quality of service, image competition and even price competition Service quality is considered the core of the product

- Thirdly, non-credit services in particular as well as other financial services

in general require integration on a high-tech platform

Technology is considered as the premise for the diversified development of banking services There are many types of non-credit services born and developed with the help of information technology Customers do not need to go to the bank but can sit

at home to perform transactions through modern transaction channels such as: Banking, Home Banking Thus, the requirement of technology usage set up is not only

E-in the Bank but also to the bank's customers The bank's non-credit products and services have been replicated through normal distribution channels

1.1.2 The major non-credit services of commercial banks

1.1.2.1 Card service

Card service is a modern banking service aimed at individual customers Banks are constantly adding new features to the cards, such as ATM has been upgraded to debitit cards, connecting directly to customers’ deposit accounts Customers can overdraw the balance on their account after signing the limit contract with the bank Cardholders not only use for traditional services, but can gradually use this card to pay electricity, water, telephone, internet bills and meet the needs of shopping, even using payment for services and goods and no interest is charged in a certain period of time In addition, banks also issue international card payment agents such as Visa, Mastercard

- Domestic cards: are cards issued by domestic banks and used by customers

to pay for goods-service transactions, deposit or withdraw cash at ATM Despite issuing a debit card, many banks also provide an overdraft limit to create convenience and diversify benefits for customers using the service

- International payment card: is a card that can be circulated around the world, is considered as a modern way of payment without using cash to minimize the risk in the process of using cash Typical international cards are being circulated

at most banks such as Visa; JCB; or MasterCard

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1.1.2.2 E-banking services

This is the combination of banking services with utilities in the information technology field to create modern, diverse transaction The bank providing banking services through supporting tools such as Internet services, telephones, computers, network services and transmission lines that customers can transact anytime, without directly coming to the bank The bank is required to provide the customer with username and access code, and the customer is responsible for protecting the name and access code provided by the bank

- Internet banking: is a service through the internet connection that can provide information about banking products and services automatically After accessing the bank's website at any place or at any time, customers can be provided with necessary information and instructions to conduct transactions with just a personal computer

This service helps customers to control the operation or fluctuation of accounts and make transfers on the network To participate in transactions, customers access the bank's website, then query for necessary information or perform financial transactions on demand Customers can also make purchases at many different websites after accessing and making payment All transaction information of customers is provided in detail and program information is applicable to customers of the bank However, the biggest limitation of banks in Vietnam at the moment is the security of transactions in order to respond effectively

to major risks threatening not only domestic but also international Because the more modern the technology, the higher the risk, the banks need to focus on investing in security systems

- Homebanking: is considered as a service to help customers perform most bank transfers and payments while staying at home or at the company through the network and specialized application that the bank has installed for the customer With home banking, through the bank's own intranet system, customers can make transactions with the bank Thanks to Homebanking, customers can perform many different types of transactions such as transaction statistics, exchange rate access,

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interest rate access, Thus, to be able to use this service, customers only need a computer connected phone line Therefore, the customer's phone number must be registered and absolutely can only be used to perform services with the bank

- Phone banking: is the 24/24 answering system of commercial banks Customers use their phones to listen to information about products, banking services, and account information When the customer presses the necessary keys

on the mobile phone according to the code specified by the Bank, the system will answer itself according to the customer's request Only information that has been pre-programmed in a bank's information system is answerwed automatically Therefore, various information related to financial markets such as exchange rate information, securities, interest rates or information related to individual customers such as transactions with accounts, notices to customers are predefined automatically If the customer requests to send faxes, automatic SMS of information needed in the supply list, they can be easily responded by the system Moreover, through phone banking, thanks to the development of technology, customers not only are provided with information of the end of the previous day but also receive updated information immediately

- Mobile banking: is one of the growing services of commercial banks which are implemented through mobile phones Via a customer's message with a predetermined syntax sent to the Bank's service phone number, the customer will be sent a reply by the Bank to satisfy the request There are many transaction requests that can be met through command syntax such as personal account information, transactions to pay bills, or more complex actions such as delivery transaction on stock market or gold A transaction via mobile banking with a very large frequency

of implementation is internal or even interbank transfer

For transactions which are automatically set up or have small payment transaction value, mobile banking appears to be seen as an effective problem solving solution Customers register to join official membership through their mobile number, personal payment account number used to make transactions Service provider provides customers with an identification number (ID), which is

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not identical to the mobile number and identified in the form of bar code to help quickly and accurately provide customer information Customers are also provided with a PIN by the bank to confirm their authenticity when they requested for a transaction Customers only really become official members to use the service after fulfilling all the necessary regulations as required

- Call center: is a service center that provides information to customers Call center is known as a landline to provide general and personal data when required Service base is set up on a centralized processing data warehouse to help all customers open accounts at the bank The call center not only shows the available information that is programmed like phone banking, but also processes other information flexibly However, for Call center, people on duty 24/7 requirement is considered a limitation

1.2.2.3 Foreign exchange business services

Foreign exchange trading services include services related to buying and selling foreign currencies including foreign currency trading transactions between financial institutions in the market and between customers who are individuals or organizations

Foreign currency purchase and sale transactions are mainly performed between the bank and enterprises whose business involves import and export Exporting enterprises that collect foreign currency from customers or individuals who receive money from relatives abroad will sell foreign currency for VND to meet domestic needs Importing businesses buy foreign currencies to pay the sellers Individuals buy foreign currencies to meet reasonable needs such as business trips, travel, medical treatment, or study abroad The provision of foreign exchange services helps banks to benefit from exchange rate differences from trading activities

in the opposite case, when there are relatives working abroad, they send money to their relatives in Vietnam Remittance service is safe, fast, efficient, save time but cost more than transfer by ordinary postal service On the other hand, with modern technology of the bank, it is possible to transfer money at the same time to many locations with high accuracy

1.2.2.6 Other services

- Entrusted service: where one's property is assigned to another for the

management and fulfillment of requests by the owner The deliverer does not have the right to hold or manage the property The receiver is responsible for the management of the property, not from the profits arising from the property, but only for an amount paid by the trustee called the trust fee Entrusted services of individual customers include asset liquidation, personal entrusted management, custodial entrustưd and asset preservation, entrusted fiduciary Entrusted services

of corporate customers includes retirement benefits, distribution of profits and share bonuses, issue of bonds, redemption of funds, payment

- Consulting service: The Bank implements advisory services for clients

such as consulting on deposit banks, effective deposit terms and quantity; appraisal and re-evaluation of investment projects, financial options, economic and technical indicators of the project, risks that the project may encounter; financial investment consulting in projects or businesses; equitization consulting; securities transaction registration consulting; tax advisory or listing activities

- Monitoring service: This varied service includes asset custody of

securities funds or firms or asset management of public funds with separate assets

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Supervisory activities are strictly carried out in accordance with the Law on Securities and the regulations, the fund's operating charter, the charter of the securities investment company to ensure the fund management company or the leaders of the investment company Securities investment is required to comply At the request of a legal fund management company, securities company carries out money transfer, payment or transfer operations related to the lawful operation of the public fund

- Money brokerage service: means the Bank acts as an intermediary

between credit institutions or other financial institutions in order to arrange the implementation of banking activities and various business activities and collect brokerage fee

1.2 Quality of non-credit service of commercial banks

1.2.1 The definition of non-credit service quality

Quality is a complex category that people often encounter in their areas of activity Depending on different opinions, the quality is generalized by many different concepts, but in general, the ultimate nature that both producers and consumers are interested in is the historical characteristic, high usage, facilities and affordable price

Scientists have many researches about service quality, depending on the purpose of research pursuing different goals, researchers, business practices, enterprises can offer or using different concepts of service quality Some of the views on quality come from the producer, the consumer, or from the product and the demand of the market

According to Svensson (2002), service quality is reflected in the interaction between customers and employees of the service provider Lehtinen (1982) argued that service quality must be assessed on two aspects: service delivery process and service results Gronroos (1984) also suggested two areas of service quality, namely technical quality and functional quality

Another viewpoint, Parasuraman & CTG (1985) advised that quality is customer satisfaction determined by the comparison between the quality expected

by the customer, not by the service provider The customer evaluates the quality of services provided through the service provision of the business and evaluates the service provider The quality of products and services is a problem for all production levels, it is an objective requirement in the process of creating products,

so it is not reserved for specific level However, the difference will depend on the production level and the quality level

The quality of non-credit service also follows the characteristics of the general service quality Thus, the quality of non-credit services can be understood

as follows: Non-credit service quality is the satisfaction of customers in the process

of using of non-credit services that banks provide

1.2.2 Models for measuring the quality of non-credit services of commercial banks

1.2.2.1 Technical / functional quality assessment model of Gronroos (1984)

In business activities, enterprises need to understand how customers feel about service quality and factors affecting service quality In order to achieve customer satisfaction, in the management of service quality, enterprises need to combine both expected quality and perceived quality Gronroos (1984) said that the service quality of a business is determined by three components: technical quality, functional quality and image

Moreover, Gronroos (1984) also argued that customer expectations are influenced by factors: traditional marketing activities (advertising, public relations, pricing policy) and external factors (custom, consciousness, word of mouth), in which word of mouth has a more significant impact on potential customers than traditional marketing and also emphasizes that research into the amount of service should be based on the consumer's point of view

1.2.2.2 The SERVQUAL model

When the SERVQUAL model (Parasuraman et al., 1988) was published, there was controversy about how to measure the service quality After nearly two decades, many researchers attempted to prove the effectiveness of the SERVQUAL

Perceived service

Image

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model The SERVQUAL model aims to measure the perception of service through the five components of service quality, including:

Reliability: showing the ability to deliver appropriate and punctual service at

the first time

Responsiveness: showing the willingness of the service staff to provide

timely service to customers

Assurance: showing the professional qualifications and polite service

manners to customers

Empathy: showing the care to each individual customer

Tangibles: showing through the appearance, attire of the service staff, and

equipment to perform the service

The scale consists of 2 parts and each part has 22 observed variables The first part aims to define the customer's expectations for the general type of service

of the business That is, regardless of a particular business, the interviewees will share their desired level of service The second part aims to determine the customer's perception of the service performance That is based on the specific services of the surveyed business to evaluate The research results aim to identify the gaps between the customer's perception of the service quality performed by the business and the customer's expectation of that service quality

Specifically, according to the SERVQUAL model, service quality is defined

as follows:

Satisfaction level of service quality = Perceived level - Expected value

1.2.2.3 The SERVPERF model

Many views believe that the SERVQUAL scale is quite long because the customer has to evaluate on two aspects of expectation and real sense when receiving the service, sometimes the constant assessment makes the customer confused Among the critics, Cronin and Tailor (1992) have adjusted the SERVQUAL scale to the SERVPERF scale This scale retains the components and observed variables of SERVQUAL, which omits the assessment of customer expectations, retaining only the actual perception of the customer about the service

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they receive Therefore, according to SERVPERF model, service quality is what

customers perceive

1.2.2.4 The Avkiran's BANKSERV model

To build a set of tools to measure service quality at bank branches, Avkiran (1994) developed a set of tools for measuring the quality of banking services initially consisting of 27 observed variables in 6 components: (1) service staff; (2) credibility; (3) information; (4) response; (5) access to withdrawal services; and (6) the ability to approach branch management on the basis of the SERVQUAL measurement by Parasuraman & CTG (1985) After testing the service quality measurement toolkit through the survey of customers using retail banking services

at branches of Australian commercial banks, Avkiran (1994) proposed a service quality measurement BANKSERV includes 4 components with 17 observed variables to measure the performance of bank branches as well as to forecast problems arising in the process of service delivery and customer segments for better decision-making in Marketing

(1) Staff conduct: Demonstrating the response method, behavioral culture and professional image of the bank staff to customers

(2) Credibility: Demonstrating the ability to maintain customer confidence in bank employees by correcting mistakes and reporting handling results to customers

(3) Communication: Demonstrating the fulfillment of bank's basic needs with customers by successfully communicating financial statements and delivering timely notifications

(4) Access to teller services: A bank's customer service officer have to be fully present throughout working hours, even during peak hours

1.3 Research model and design research on the quality of non-credit services at commercial banks

1.3.1 Model of non-credit service quality research at Vietnam Joint Stock Commercial Bank for Investment and Development, Sogiaodich1 Branch

Service quality is the assessment of customers based on criteria through their experiences, expectations and the effects of the business image (Caruana, 2000)

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The intangible, heterogeneous, inseparable and irreversible characteristics of the service make it difficult to assess service quality Therefore, the identification of factors affecting service quality is necessary to identify, measure, control and improve customer perceptions of service quality The BANKSERV model was developed by Avkiran (1994) and adapted from SERVQUAL to suit the banking industry It is a tool designed to allow customers to reflect their expectations and perceptions 17 factors of service quality in the BANKSERV model are categorized into 4 groups: (1) Employees: attitudes, responsiveness and willingness to serve customers; (2) Trust: Reflecting the level of customer trust with the bank in transactions and security; (3) Information: Fulfill the needs of customers by providing financial advice and timely notification service; (4) Counter service: The bank has a sufficient number of transaction staff to serve customers during working hours and during peak hours

In the thesis, the research model of the quality of non-credit services at BIDV – Sogiaodich1 Branch is inherited from the BANKSERV model of Avkiran (1994) This is a model developed from the SERVQUAL model which has been proven the suitability in the banking sector through research by Do Tien Hoa (2007), Hoang Xuan Bich Loan (2008), Nguyen Thi Kim Anh (2010), Huynh Thi Thinh (2013) In addition, from the review of research projects related to the quality

of banking services in general as the above studies, the utility factor is added The non-credit service quality research model at BIDV – Sogiaodich1 branch is shown

in Figure 1.2

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Figure 1.2: Proposed research model

Source: Author compiled

Statistical theories

H1: Employee factor has a positive impact on customer satisfaction using

non-credit services at BIDV – Sogiaodich1 branch (Avkiran, 1999; Do Tien Hoa

2007; Huynh Thi Thinh, 2013; Melaku Yilma, 2013)

H2: Utilities components have a positive impact on the satisfaction of

customers using non-credit services at BIDV – Sogiaodich1 branch (Do Tien Hoa,

2007; Hoang Xuan Bich Loan, 2008; Tran Thi Tram Anh, 2011; Huynh Thi Thinh, 2013)

H3: The reliability factor has a positive impact on the satisfaction of

customers using non-credit services at BIDV – Sogiaodich1 branch (Avkiran, 1999;

Do Tien Hoa, 2007; Hoang Xuan Bich Loan, 2008; Tran Thi Tram Anh, 2011; Melaku Yilma, 2013)

H4: Information factor has positive impact on customer satisfaction using

non-credit services at BIDV – Sogiaodich1 branch (Avkiran, 1999; Hoang Xuan

Bich Loan, 2008; Melaku Yilma, 2013)

H5: Counter service factor has a positive impact on customer satisfaction

using non-credit services at BIDV – Sogiaodich1 branch (Avkiran, 1999; Melaku

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1.3.2 Scale Creations

The author creates the scale on the basis of inheriting from the research of Avkiran (1994): revised some terms to suit the research topic and suit the characteristics of customers using the non-credit services at BIDV – Sogiaodich1 branch Then, the author consulted experts (5 bank staff who directly perform non-credit services with working time from 10 year or more at BIDV – Sogiaodich1 branch and 5 customers using the non-credit services at the branch) to supplement and adjust the scales accordingly On that basis, the author has built up scales including 30 scales representing 5 groups of impact factors and the concept of satisfaction (Table 1.1)

Table 1.1 Groups of factors scale

Staff (NV)

Utilities (TI)

identify customers

customers

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Reliability (TC)

and confidential

and do not make mistakes

) with the right quality and committed time

Information (TT)

Counter service (DV)

and enthusiastically at the counter

Sogiaodich1 Branch to others

Source: Author compiled, 2020

1.3.3 Questionnaire design

The content of the questionnaire is divided into 3 parts:

Part 1: General information: Full name, age, occupation

To build the questionnaire for part 3, the author inherited the scales amended

in the study above Then, the client uses the 5-level Likert scale for the survey questions Score from 1 to 5 according to increasing satisfaction level Inside:

1.3.4 Research sample design

In this research, the author uses the exploratory factor analysis (EFA), the research sample size is selected according to the experimental rule of Hair and CTG (1998) with 5 observations / measurement variable Theoretical model consists of 6 research concepts (05 independent variables and 01 dependent variable) measured

by 30 variables, so according to the experimental rule of Hair and CTG (1998), the minimum sample size is 150 (30x 5) In addition, to compensate for a percentage of the rejected information (questionnaires with multiple missing information cells, or more than one answer box, or with a basis for unreliable determination), and to have high reliability, the author decided to interview 250 non-credit service users at BIDV – Sogiaodich1 branch from June 2019 to the end of December 2019 The number of votes given out was 250, which were filled out by customers and returned directly to the author or at the counter After that, the author screened the votes, removed invalid surveys: incomplete votes or information with no reliability (for example, customers choose the same answer to all questions…) The results showed that the number of votes collected reached 234 votes, and the number of valid votes was 231

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Sample information was collected by direct interview, sending votes at the counters via email and phone to customers who use non-credit services at BIDV – Sogiaodich1 branch The interview results, after filtering (removing questionnaires with many missing information cells, or more than one answer cell, or with a basis for unreliable determination) are entered into the data matrix on SPSS software 20.0

to continue to the next steps

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CHAPTER 2 ANALYSIS OF THE QUALITY OF NONCREDIT SERVICES

AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT

AND DEVELOPMENT – SOGIAODICH1 BRANCH

2.1 An overview of the Vietnam Joint Stock commercial bank for Investment and Development – Sogiaodich1 Branch

2.1.1 History and development

The Vietnam Joint Stock commercial bank for Investment and Development – Sogiaodich1 Branch was established on March 28, 1991 under Decision No 76 / QD-TCCB1 of March 28, 1991 of the General Director of Bank for Investment and Vietnam Development, from the ideas of the Board of Directors of the Bank for Investment and Development of Vietnam, to build the Sogiaodich as the unit in charge of the Head Office, step by step become the key unit in the BIDV system in terms of scale and turnover of operations At the same time, the Sogiaodich is also trusted to be a place to test new products, deploy new technology, perform other tasks to serve special customers, is place where train management staff, professional staff for the Head Office

Over the 20 years of construction and growth, can be generalized into four stages of development as follows:

The first 5 years (1991-1995): As a newborn, the Sogiaodich has successfully completed the task of managing, allocating budget capital and monitoring and checking the use of savings, right purpose, right addresses for projects

The next 5 years (1996-2000): A start-up period with a strong shift to business operations, self-financing economic accounting By expanding the network

of Transaction Offices, Savings Fund and implementing commercial banking operations, expanding customers, the Sogiaodich has achieved important results, established its position and image in the banking industry in Hanoi

Entering a new stage (2001-2005): With the responsibility of the leading branch in the whole system, the Sogiaodich has been entrusted with great tasks by

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the Head Office In addition to the function of raising capital for key projects, national programs for its business activities, the Sogiaodich also supports capital for other branches, is the pioneer branch in the public to pilot new products implementation, establish new branches to serve BIDV's network development strategy, train personnel for Head Office and newly established branches

In addition to the excellent completion of the business targets assigned by the Head Office, the Sogiaodich is always one of the units contributing most actively to the network development of BIDV in the area After separating and establishing 03 new units, branches of level 1 under BIDV from 2002 to 2004 (North Hanoi branch,

Ha Thanh branch, Dong Do branch), in 2005 the Sogiaodich continued to split and establish Quang Trung branch on the basis of upgrading from the transaction office

In the condition of continuously splitting and establishing tier-I branches, the Sogiaodich still maintains an operating network including 02 transaction offices with 11 capital raising points in Hoan Kiem and Hai Ba Trung districts

From 2006 - now: The Sogiaodich has split and upgraded 3 more units of level I branches under BIDV in the area These are Hai Ba Trung (2008) and Hoan Kiem (2010), Hong Ha (2013) with a total assets of over 1,000 billion VND per unit and hundreds of employees Restructuring operations along with the organizational restructuring, retail operations, and SME lending were transferred to newly separated branches The Sogiaodich focuses on three main goals: Raising capital to meet local business needs and contribute to increasing capital for the whole industry; serving big customers, corporations regardless of ownership form; developing modern banking services November 1, 2009 was an important milestone, the Sogiaodich put on its new name "Sogiaodich1" With this new name, the Sogiaodich and the Sogiaodich1 Branch are still 2 names, a tradition