MINISTRY OF EDUCATION AND TRAININGHANOI UNIVERSITY OF BUSINESS AND TECHNOLOGY HOANG THI NGOC THUY DEVELOPMENT OF RETAIL BANKING SERVICES AT JOINT STOCK COMERCIAL BANK FOR INDUSTRY AND TR
Trang 1MINISTRY OF EDUCATION AND TRAINING
HANOI UNIVERSITY OF BUSINESS AND TECHNOLOGY
HOANG THI NGOC THUY
DEVELOPMENT OF RETAIL BANKING SERVICES AT JOINT STOCK COMERCIAL BANK FOR INDUSTRY AND TRADE OF VIETNAM IN THE CONDITION OF INTERNATIONAL INTERGRATION IN FINANCE AND
BANKING Major: Business Administration Code: 9.34.01.01
SUMMARY OF ECONOMIC DOCTORAL THESIS
Hanoi- 2021
Trang 2The work was completed at the Hanoi University
of Business and Technology
Science supervisor: 1 Prof Dr Vu Van Hoa
At hour , day month 2021
The thesis can be found at the National Library andLibrary of Hanoi University of Business and Technology
1
Trang 31 Necessity of the topic
On the theoretical basis, at present, the concept of retailbanking services is quite diverse, there is no consensus There is aview that banking services are only services for individual customers,but there is also a view that retail banking services include services forindividuals, households and individuals small and mediumenterprises Regarding the scope of activities in the field of retailbanking, there is also a certain change The provision of retail bankingservices is no longer the business or business of the banks alone, it isseen as a market where technology companies are involved
In practical terms, international integration has become areality of the times and has taken place strongly in many fields.Accordingly, in parallel with reaching out to the world market,Vietnam must also open up the domestic market, including thefinancial - banking sector Especially, starting from 2018 Vietnam'sinternational integration goes on the path of new-generation FreeTrade Agreements (FTAs), where the widest level of commitment,covering almost all goods goods and services without exclusion;deepest level of commitment; and extremely strict enforcementmechanism
Vietinbank is a leading bank in the commercial bankingsystem, Vietinbank is also a leader in providing retail banking services
in Vietnam However, so far Vietinbank is still making constantefforts and facing many difficulties in finding the right direction forthis service segment
From the above analysis, along with the importance andcharacteristics of the banking industry in the process of economicdevelopment, in order to make the most of the opportunities and limitthe challenges of the international integration process, research
Student decided to choose the topic "Development of retail banking services at Joint Stock Commercial Bank for Industry and Trade of Vietnam (VietinBank) in the condition of international integration in finance and banking"
2 Overview of research related to the topic
Trang 4Third, if we consider 2010-2014 as the first stage of the race
to develop retail banking services in the context of integration on thebasis of traditional FTAs, then the period 2015-2025 is the period ofacceleration, the market for banking services will be accelerated.Retail banking services thrived on the foundation of new generationFTAs Vietinbank needs to have a strategy and solution to match thenature of this race and the next races
Fourth, how to create a retail banking service system linkingcommercial banks so that they can diversify products, save costs foreach bank, and be convenient and safe for each bank customer
Fifth, how does the emergence of payment platforms fromcurrent financial technology (fintech) companies (such as momo,moca, vietelpay, vinapay, .) affect the development strategy ofbanking services retail sales of Vietnamese commercial banks ingeneral and Vietinbank in particular
3.2 Research question
Firstly, is Vietinbank's retail banking service strong or weak?
Strong in what factor, weak in what factor? Compared to other
Trang 5commercial banks in Vietnam, where does Vietinbank's retail bankingservice rank?
Second, the position of Vietinbank's retail banking services in
the Vietnamese banking market in general and retail banking inVietnam in particular? What are the new opportunities and challenges
in developing retail banking services on the basis of new generationFTAs?
Third, why is the development of retail banking services at
Vietinkbank now a more appropriate and effective direction than otherservices?
Fourth, what are the advantages and disadvantages of retail
banking services at Vietinbank today? How can customers easilyaccess and use Vietinbank's retail banking services as the first choice?
Fifth, how should retail banking services at Vietinbank in the
future change in the context of globalization (integration) and bankdigitization?
4 Purpose and tasks of research
Trang 6Third, analyze opportunities and challenges for Vietinbank'sdevelopment of retail banking services in the context of internationalintegration in finance and banking on the basis of the new generationFTA and the influence of Industry 4.0.
Fourth, from the theoretical system and analyzed reality, thethesis proposes solutions and recommendations to develop retailbanking services at Vietinbank in the current international integration
of banking and finance
5 Object and scope of research
5.1 Research obbject
The thesis focuses on researching the theory of retail bankingservices and the practice of developing this service at Vietinbank Theneed to develop retail banking services at Vietinbank in the context ofinternational integration in finance and banking
5.2 Research scope
About the content: Practical research on developing retailbanking services at Vietinbank in the context of internationalintegration in finance and banking Vietinbank offers retail bankingproducts and services to the market such as retail capital mobilization,retail credit, card business and other e-banking services, remittanceand Bacassurance
In terms of space: The thesis studies the development ofVietinbank's retail banking services in the context of internationalintegration in finance and banking Information and data from thehead office and some branches of commercial banks Vietnam Industryand Trade Joint Stock Company In addition, additional data from theAssociation of Banks, the Vietnam Card Association, the VietnamAssociation of SMEs, the Consumer Protection Association andinformation from other reputable sources are used
About time: The thesis studies Vietinbank's retail bankingservices in the period of 2015 - 2020 and proposes solutions for theperiod to 2030
Trang 76 Research Methodology
* Methodology: The research is based on dialectical and historicalmaterialism methodology
* Research method: Determining necessary information for research
on development activities of retail banking services of Vietinbank;Explore data sources; Conduct information gathering; Evaluate thedata collected
7 Thesis new contribution
Theory and academics aspect: The concept of retail bankingservice development, the author goes from the original concepts ofretail banking service development in books, textbooks, monographs
of modern economists, to give a general concept of developing retailbanking services of commercial banks This concept is a keyword,guiding the author to research the next content and give the author'spoint of view
In practice: A method to assess the current situation ofdeveloping retail banking services of Joint Stock Commercial Bankfor Industry and Trade of Vietnam The thesis uses methods tocomprehensively and fully evaluate the development of retail bankingservices of Joint Stock Commercial Bank for Industry and Trade ofVietnam The author selects the main retail banking service activities,analyzes retail banking services according to the criteria and comparesthe internal criteria of the Bank and other commercial banks withsimilar development levels copper The results of the analysis andevaluation show the level of development of retail banking services,the successes and limitations of the development of retail bankingservices of Joint Stock Commercial Bank for Industry and Trade ofVietnam in recent years research period (period 2015-2020).Proposing new solutions: Solution group "Diversify retail bankingservices", this is a group of thesis solutions based on diverse needs ofcustomers in the market economy From there, we propose methods ofdeveloping traditional products, new products, and products imbuedwith modern technology This is an important premise for the rapiddevelopment of retail banking services; Solution "International
Trang 8cooperation and market share expansion" This is a supportivesolution but has a very important impact in the context of internationalintegration in finance and banking, which is increasingly expandingand the competition of the domestic banking system and in the fierceinternational market This is a guarantee condition for thedevelopment of retail banking services of Joint Stock CommercialBank for Industry and Trade of Vietnam.
8 Thesis structure
In addition to the introduction, conclusion, list of references,the thesis content is divided into 3 chapters:
Chapter 1 Overview of commercial banks and development
of retail banking services in terms of international integration in finance and banking.
Chapter 2 Situation of development of retail banking services
at Joint Stock Commercial Bank for Industry and Trade of Vietnam in the period 2015-2020.
Chapter 3 Solutions for developing retail banking services at Vietnam Commercial Bank for Industry and Trade in the context of international integration in finance and banking.
Trang 9CHAPTER 1 OVERVIEW OF COMMERCIAL BANKING AND RETAIL BANKING SERVICE DEVELOPMENT IN THE CONDITION OF INTERNATIONAL INTERGRATION IN
FINANCE AND BANKING 1.1 COMMERCIAL BANKING AND RETAIL BANKING SERVICES OF COMMERCIAL BANKING IN THE MARKET ECONOMY
1.1.1 Overview of commercial banks in the market economy
1.1.1.1 The formation and development of commercial banks
The formation and development of the banking industry isdetermined by the development process of commodity-monetaryrelations At the same time, there are other factors that have a decisiveinfluence on the structure and development of the banking system,such as the rule of law, war conditions, and economic and financialcrises
In Vietnam, since 1986, the banking system was reorganizedaccording to Decree 53 of the Council of Ministers and was split intotwo levels: the State Bank in charge of issuing money and regulatingmoney circulation , while the business function is performed bycommercial banks Today, the commercial banking system hasdeveloped strongly, deeply involved in socio-economic fields and hasbecome an indispensable part of the development process of eachcountry
1.1.1.2 The concept and characteristics of commercial banks
Concept
Commercial bank is a type of bank that is permitted to carryout all banking activities and other business activities in accordancewith the provisions of the Law on Credit Institutions with the aim ofmaking a profit
Trang 10Doing business in the monetary and financial sector andproviding payment services; Products and services, associated withthe distribution and use of capital, financial advice; Business activitieswith many potential risks; Business activities are systematic, having achain effect on each other
1.1.1.3 Function and transaction of commercial banks
* Function: Credit intermediary, payment intermediary,money creation function
* Transactions: Liabilities, assets and intermediaries
1.1.1.4 The role of commercial banks in the market economy
Encourage savings, contribute to the formation and support ofworking capital flows; Efficiently allocate capital among sectors andfields; Reduce costs, minimize risks; Support technological innovation
to improve production efficiency; Activities of commercial bankscontribute to improving the quality of the business environment andbuilding business culture for businesses
1.1.2 Retail banking services of commercial banks in the market economy
1.1.2.1 Concept and characteristic of retail banking services
Concept
Retail banking is a service performed with small-scale publiccustomers and through branches in contrast to wholesale banking,which is a banking service for financial institutions banking servicesare provided in large quantities (According to the Dictionary ofFinance - Investment - Banking - Accounting, Scientific andEconomic Publishing House, 1999)
Some researchers emphasize the role of informationtechnology in the products offered by banks Accordingly, “Retailbanking is the provision of banking products and services toindividual individuals and small and medium enterprises through anetwork of branches, where customers can directly access products
Trang 11and services banking products and services through electronic means
of telecommunications and information technology” (Economist ofthe Asian Institute of Technology – AIT)
In this study, retail banking services are understood asbanking services provided to individual individuals, businesshouseholds, and SMEs through a network of traditional distributionchannels and on public platforms technology
Characteristic
The retail bank's customers are large and diverse, with a largenumber of transactions, but the value of each transaction is not high;Products of retail banking are diversified and abundant; Simple andeasy retail banking services; The service area of retail bankingactivities is wide and dispersed; The development of retail bankingdepends a lot on the level of technology
1.1.2.2 The change of opinion about retail banking services
Differences of opinion: Some banks think that retail banking
is only a service relationship with individual customers, but there arealso banks that believe that retail banking services also includeservices with customers customers are SMEs
Differences in coverage: Some banks scope retail banking to
individual customers only, while some extend more to includehouseholds, and some banks including services provided to small andmedium enterprises
The operating boundaries in retail banking are increasingly blurred There will be no more retail banking offering
for banks alone, but only a retail banking market where technologycompanies are involved
Differences in service delivery organization.
1.1.2.3 Distinguish between retail and wholesale banking services
Wholesale commercial bank: is a commercial bank that
focuses on customers who are corporations, economic groups,enterprises, and large enterprises The portfolio of products this type
Trang 12of bank provides to customers is often not diversified, but the value ofeach transaction is often very large.
Retail commercial bank: is a bank that focuses on exploiting
individual customers or small and medium enterprises
1.1.2.4 Classification of retail banking services
Based on the professional content of commercial banks, retailbanking services include: retail credit services, payment services,modern banking services and other retail banking services
1.1.3 The role of retail banking services in socio-economic development
Meeting the needs of socio-economic development
Meeting the development needs of commercial banks
Satisfy the diverse needs of customer segments
1.2 RETAIL BANKING SERVICE DEVELOPMENT AND CRITERIA FOR ASSESSMENT OF RETAIL BANKING SERVICES OF COMMERCIAL BANK
1.2.1 Retail banking service development concept
Some economists believe that "Developing retail banking services is the growth in scale, increasing profits while ensuring safety and controlling risks."
Others said that "Development of retail banking services is an increase in the number of services provided, network of activities and utilities of products, improvement of the quality of each type of service
in order to best satisfy the needs of subjects in society”
The author's point of view is that "Development of retail banking services is an increase in the quantity and quality of retail banking services, and an increase in customer experience on the basis
of modern technology".
1.2.2 Contents of developing retail banking services of commercial banks
Trang 13Formulate a strategy to develop retail banking services:Develop the scale of mobilization of capital from households,households and SMEs; Developing retail credit scale; Developingother retail banking services; Developing the number of individual,household and SME customers; Developing distribution networks andchannels; Developing a new system of products and services
1.2.3 Criteria for evaluating the development of retail banking services of commercial banks
1.2.3.1 Quantitative Criteria
An increase in the portfolio of retail banking products andservices; Increasing market share in providing retail banking services;The growth of the number of customers; Outstanding balance of retailbanking services; Scale of capital mobilization for retail bankingservices; The increase in distribution channels of retail bankingservices of commercial banks; Business efficiency of retail bankingservices
1.2.3.2 Qualitative Criteria
The development of retail banking service quality; Anincrease in retail banking services; Customer satisfaction with retailbanking products and services
Trang 141.3.1 Overview of international integration in finance and banking
1.3.1.1 The concept of international integration in banking and finance
International integration in finance and banking is the gradualimplementation of liberalization and expansion of the financial andbanking market according to international commitments
1.3.1.2 Contents of international integration in finance and banking
of Vietnam
This part of the thesis presents the content of internationalintegration in banking and finance of Vietnam with the Association ofSoutheast Asian Nations, the Vietnam - US Trade Agreement, theWorld Trade Organization, and with other countries Free TradeAgreement (CPTPP and EVFTA)
1.3.1.4 A little bit about the industrial revolution 4.0 and its impact
on the banking and finance sector
Business model shift; Change of central role from bank tocustomer; Easy access to customers in remote areas; The competition
to open up and liberalize domestic retail banking activities, providedthat such activities must be consistent with international practices andlaws
1.3.2.2 Basic factors determining the international integration capacity of Vietnamese commercial banks in developing retail banking services