NATIONAL ECONOMICS UNIVERSITY
BUSINESS SCHOOL
NGUYEN DOAN KHANG
IMPROVE PERSONAL LENDING PRODUCTS
IN RETAIL BANKING OF ANZ BANK
MASTER OF BUSINESS ADMINISTRATION THESIS
HANOI - 2011
NATIONAL ECONOMICS UNIVERSITY
BUSINESS SCHOOL
NGUYEN DOAN KHANG
IMPROVE PERSONAL LENDING PRODUCTS
IN RETAIL BANKING OF ANZ BANK
MASTER OF BUSINESS ADMINISTRATION THESIS
SUPERVISOR: Dr. Pham Truong Hoang
HANOI - 2011
ACKNOWLEDGEMENTS
From experience I can tell that this thesis has depended on the generous support,
help of many people. Throughout the thesis I have able to improve the knowledge
regarding managing services of banking industry.
Firstly, I would like to thank my supervisor Dr. Pham Truong Hoang for his
guidance through the process of the research.
My thanks are also given to my friends and teachers in Business School in
helping me during this course.
Lastly, I would like to thank to my colleagues, manager in ANZ and especially
customers, for contributing me worthwhile feedback.
TABLE OF CONTENTS
ABREVIATIONS...................................................................................................1
LIST OF FIGURE...................................................................................................2
LIST OF TABLES..................................................................................................3
CHAPTER 1: INTRODUCTION...........................................................................7
1.1. RATIONALE...............................................................................................7
1.2. RESEARCH FORMULATION...................................................................8
1.3. RESEARCH OBJECTIVES........................................................................9
1.4. RESEARCH QUESTIONS.......................................................................10
1.5. RESEARCH METHODOLOGY...............................................................10
1.5.1. Research process.................................................................................10
1.5.2. Research data sources.........................................................................11
1.5.3. Data analysis.......................................................................................12
1.6. RESEARCH SCOPE.................................................................................13
1.7. RESEARCH STRUCTURE......................................................................13
CHAPTER 2: THEORETICAL BACKGROUND ON PERSONAL LENDING
PRODUCT............................................................................................................14
2.1. RETAIL BANKING OF COMMERCIAL BANK...................................14
2.1.1. Definition of retail banking.................................................................14
2.1.2. The services of retail banking.............................................................15
2.2. PERSONAL LENDING PRODUCTS......................................................20
2.2.1. Concept of product..............................................................................20
2.2.2. Personal lending products...................................................................24
2.2.3. Marketing mix in service....................................................................26
2.2.4. General theories about product development.....................................30
2.3. FACTORS EFFECT DEVELOPING PERSONAL LENDING
PRODUCTS......................................................................................................36
2.3.1. Factors of bank itself...........................................................................36
2.3.2. Activity environment of bank.............................................................38
2.3.3. Factors about customers......................................................................39
CHAPTER 3: ANALYZING PERSONAL LENDING PRODUCTS IN
RETAIL BANKING OF ANZ BANK.............................................................41
3.1. INTRODUCTION OF ANZ......................................................................41
3.1.1. ANZ’s strategy....................................................................................41
3.1.2. ANZ’s brand.......................................................................................43
3.1.3. ANZ’s Core Activity Standards - summary........................................43
3.1.4. ANZ’s Governance.............................................................................44
3.1.5. Introduction of ANZ in Vietnam........................................................46
3.2. PERSONAL LENDING PRODUCTS IN RETAIL BANKING
INDUSTRY......................................................................................................52
3.3. ASSESSING PERSONAL LENDING PRODUCTS IN RETAIL
BANKING OF ANZ BANK............................................................................57
3.3.1. Customer and market..........................................................................57
3.3.2. Analyzing personal lending activities in retail banking of ANZ bank
.......................................................................................................................59
3.3.3 Assessment of customer about the service quality of personal lending
activities of ANZ Vietnam............................................................................70
3.4. Summary of findings..................................................................................78
CHAPTER 4: RECOMMENDATION TO IMPROVE PERSONAL LENDING
PRODUCTS IN RETAIL BANKING OF ANZ BANK......................................80
4.1. STRATEGIC ORIENTATION OF ANZ IN DEVELOPING PERSONAL
LENDING PRODUCT.....................................................................................80
4.1.1. The economic – banking and financial trends....................................80
4.1.2. Strategic orientation of ANZ in developing personal lending products
.......................................................................................................................82
4.2. RECOMMENDATION TO IMPROVE EXISTIM PRODUCTS.............83
4.2.1. Diversifying and improving services/products...................................84
4.2.2. Developing modern distribution network...........................................88
4.2.3. Developing human resource...............................................................91
4.3. RECOMMENDATION TO DEVELOP NEW PRODUCTS....................93
4.4. CONDITIONS TO IMPLEMENT RECOMMENDATIONS...................95
CONCLUSION.....................................................................................................97
LIST OF REFERENCES......................................................................................99
APPENDIX.........................................................................................................101
ABREVIATIONS
ATM:
Automatic Tellers Machine
GDP:
Gross domestic product
JSCB:
Joint Stock Commercial Bank
NPD:
New Product Development
SBV:
State Bank of Vietnam
SME:
Small and Medium Enterprise
SOCB:
State Owned Commercial Bank
SOE:
State Owned Enterprise
WTO:
World Trade Organization
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LIST OF FIGURE
Figure 2.1: Service marketing mix ……… ……………………………………27
Figure 3.1: Organization of ANZ Vietnam ……………………………………49
Figure 3.2: Numbers of branches of some big banks in Vietnam ……………..54
Figure 3.3: Total asset of 4 large local banks, US$ billion ……………………55
Figure 3.4: Structure of customers of retail banking …………………………..58
Figure 3.5: Structure of retail banking loans……….…………………………..62
Figure 3.6: Lending process at ANZ Vietnam ………………………………...64
Figure 3.7: Mortgage interest rate competitor matrix – as at 15th August ……..66
Figure 3.8: Customer satisfaction of service quality …………………………..76
Figure 3.9: Customer’s evaluation about the success of services ……………..77
Figure 3.10: Customer’s willingness to continue to use other services of ANZ 77
Figure 3.11: Recommendation the service at ANZ to friends and relatives ..….78
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LIST OF TABLES
Table 1.1: Time plan ………………………………………………………...
Table 1.2: Data sources ……………………………………………………...
Table 3.1: Business result in 2010 …………………………………………..
Table 3.2: Products categories of some banks ………………………………
Table 3.3: Number of loans …………………………………………………
Table 3.4: Respondent’s evaluation for service quality ……………………..
Table 3.5: Respondent’s evaluation for service quality (Continued) ……….
Table 3.6: Respondent’s evaluation for service quality (Continued) ……….
Table 3.7: Respondent’s evaluation for interest and fees at ANZ …………..
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12
51
56
69
71
73
74
75
EXCUTIVE SUMMARY
The thesis was conducted to study about the current situation of personal lending
activities in retail banking of ANZ Vietnam; the thesis also proposed some
possible solutions for developing personal lending product policies at ANZ
Vietnam.
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The research objectives of the thesis are to study and analyze current situation of
personal lending product policies at ANZ Vietnam. Other objectives of thesis are
to assess the quality of personal lending service at ANZ and propose solutions to
improve personal lending product at ANZ Vietnam.
The research is mainly based on interviews and questionnaire with existing and
potential customers. The research methodologies used in the thesis are
comparisons. Real figures and documents were colleted from the annual report
and newspaper as well as report that are published in order to determine factors
that effect the developing of personal lending activities and propose solution to
develop retail banking operations.
From findings of thesis, the thesis has some following contributions:
- The thesis researches details of personal lending activities
- Finding some assessments on business operation of personal lending
activities
- Propose some solutions to improve personal lending product
The thesis divides into four chapters as follows:
CHAPTER 1: Introduction
The first chapter is introduced main points of the study. This chapter provides
overview information about Vietnam’s banking industry development, and also
presents the the background, the questions and the objectives of this research.
CHAPTER 2: Theoretical background on personal lending product
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In this chapter, the thesis refers to concept, operations and personal lending
products of retail banking of commercial bank. This chapter consists of three
parts. The first part is to study retail banking and all operations of retail banking.
The second part relates to personal lending products of retail banking. The last
part goes into factors affecting developing personal lending products. This part
will conduct all factors that affect personal lending products.
CHAPTER 3: Analyzing personal lending product in retail banking of
ANZ bank
This chapter, the thesis analyzes current situation of personal lending products in
retail banking of ANZ bank. This chapter will outline overview about ANZ
global and ANZ Vietnam; it also summaries the current situation at ANZ retail
banking. Besides, the thesis examines and assesses personal lending products in
retail banking of ANZ bank. Theses assessments will supply all achievements,
advantages and constraints of personal lending products.
CHAPTER 4: Recommendation to improve personal lending products
in retail banking of ANZ bank
In this chapter, the thesis will propose solutions to improve personal lending
products in retail banking of ANZ bank. The chapter researches all solutions
based on strategic orientations of ANZ retail banking and the economic –
banking trends. These solutions were executed based on both theoretical aspect
and the assessment reality of retail banking. Implementing solutions will enable
retail banking to develop personal lending products.
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CHAPTER 1: INTRODUCTION
1.1. RATIONALE
The Vietnamese economy is now on the hot growth with GDP in 2009 of 5.32%
and in 2008 of 6.78%. Along with the GDP growth, Vietnam banking industry is
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now growing very fast. Until May, 2008 Vietnam has 36 Joint stock commercial
banks, 5 Stated – owned commercial banks, 6 Joint venture banks and 44
branches of foreign commercial banks with hundreds branches nationwide and
numerous of banks and financial companies are waiting effort the license
(Worldbank, 2007).Vietnam banking sector has been scaling up recently and
even, state-run banks, which are busy with equitisation continue opening more
branches, transaction offices.
However, commercial joint stock banks have still seen the strongest growth when
they continue aggressively developing their operation networks and established
more new banks. Additionally, many foreign banks are actively speeding up pace
of establishing branches or 100%-foreign owned subsidiaries. Such a move is
attracting significant attention of the public. By the end of 2007, it is estimated
that total transaction offices, branches of commercial joint stock banks nearly
doubled the figure of 2006.
The possibility of the prime minister’s approval for the government proposal to
hike the limit on foreign holding from 10% to 15% or even 20% would prove to
be another powerful incentive for overseas banks to anticipate fresh competition.
Moreover, under WTO commitments in banking sector, Vietnam approved
oversea banks to set up their 100% foreign owned subsidiaries in the country
from 1 April, 2007. This is an incentive for them to speed up their business
activities in Vietnam. As of now, many foreign banks have expressed their
interest in taking advantage of the 100% foreign –owned bank policy of Vietnam.
Vietnam is becoming more and more attractive for overseas banks as it provides
a competitive base to these banks due to healthy economy and government
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policies. In Intellasia news, they call Vietnam a perfect market to give
competitive ground to international banks due to the country’s fast growing
economy, thriving financial and stock markets and initiation of government
policies aimed at opening the market.
1.2. RESEARCH FORMULATION
Being a wholly foreign owned bank makes a debut for ANZ a potential to support
the growth of its retail business. ANZ is operating over 153 years in banking
experience, ANZ believe that they has contributed a creditable success to the
Vietnam’s economy and committed to develop more by enhance their activity,
services and especially in retail banking. ANZ gained constantly “Best retail bank
2008, 2009” reward in two years.
In earlier 2010, ANZ has implemented a new strategically development on retail
banking to expand its business and managerial capacity to become a top four
foreign bank in Vietnam by 2012. In this road map, ANZ focus on retail banking,
consolidating operation of retail, reforming sales force, balancing lending and
capital mobilizing.
In fact, ANZ has developed more consumer lending products to meet more
customers’ needs by launching new mortgage loan, car loan, and wealth and
financial advisory in order to approach new customers. The consumer lending
section in ANZ has achieved some significant in area of new customer, credit risk
management. After three years, there are more than 5,000 customers getting
home loan approval, growth rate is about 10%/year. However, the consumer
lending products are still poor, it seem to be so basic and simple, no niche
products to various segments so the actual gained is still far from target.
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Moreover, lending process at ANZ also face many difficulties in adapting with
local market practical that block ANZ access deeply retail market such as
assessment of borrowers’ income based on bank account only. The problem is
how ANZ operation can be adjusted to adapt the practical in Vietnam.
In order to improve consumer lending product, ANZ must create an appropriate
policy which is rooted from the fundamental of ANZ bases and the emerging
market of retail banks in Vietnam.
1.3. RESEARCH OBJECTIVES
The detail objectives of the research are:
- To study and summary theoretical background on lending products of
retail banking;
- To analyze current situation of personal lending at ANZ;
- To recommend solutions to improve personal lending products in retail
banking of ANZ bank.
1.4. RESEARCH QUESTIONS
The research will focus on studying factors that driving the improvement of
lending products at ANZ and propose some solutions to future enhanced products
at ANZ. Thus, the research will try to answer the following questions:
How many kind of consumer lending product in Vietnam market?
What is difference between lending product at ANZ Vietnam compared to
competitors’ products?
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What ANZ’s product is most suitable for Vietnam market?
1.5. RESEARCH METHODOLOGY
1.5.1. Research process
The data is collected through delivering the questionnaire. This questionnaire
includes 49 items. General information asks about the background of respondents
and. The main part of the questionnaire, which surveys about the service quality
and customer satisfaction, was designed based on the given variables and
measured by a five-point Likert’s scale from 1 (strongly disagree) to 5 (strongly
agree).
The field research was conducted from 15 June to 8 August, 2011 excluding the
time for questionnaire preparation, testing and refining. The job schedule is
indicated in the below Time Plan:
Table 1.1: Time Plan
Task name
May
Time schedule (2011)
Jun
Jul
Aug
Sep
Consultancy for advices of
professors
Questionnaire revision for the
first time
Pilot survey and reliability
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Questionnaire revision for the
second time
Conduct field survey
Data input and analysis
Writing research report
1.5.2. Research data sources
The data of thesis consists of two sources, including primary data and secondary
data. The secondary data is collected from newspapers, annual reports,
magazines, internet, books… The primary data is summed from interview and
questionnaire research will be conducted as followed:
- Collect data lending products and sales result at ANZ during period 2009 –
20011 and analyze. Product of competitors is also screened to identify the gap
between ANZ against the real market.
- In- depth interview and customer survey:
The survey paper can be sent to borrowers in Hanoi only by email or post even
face to face interview within:
50 people who are existing customer to rate their satisfaction
10 people who have discharged their loan to understand why they
moved to another bank
Table 1.2: Data sources
No.
Methods
Data Source /
Sample
Respondents
Size
Information collected
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ANZ annual reports,
Guideline and models on business
1 Secondary datadocuments and
strategy,
business plan
2 Primary Data
2.1 Questionnaires Existing customers
Discharged
2.2 In-depth
interviews
customer
Managers, staff at
ANZ, potential
customers
50
Find-out their agrees & disagrees on
persons product and service
10
Find-out their agrees & disagrees on
persons product and service
To know their perspectives
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opinions on the bank’s business
persons
and
1.5.3. Data analysis
The result of the interview will be developed through Statistical Package for the
Social Sciences (SPSS) program in order to bring out the objectives of this
research. In addition, the Microsoft Excel and Microsoft Word software version
2003 was used to group items and draw charts.
1.6. RESEARCH SCOPE
This research focuses on the development of the lending products in ANZ.
Consumer lending is defined as a bank for individual customer. Lending for SME
and corporation is excluded.
The subjects of study in this research involve individual borrowers, banks and
regulating authorities.
1.7. RESEARCH STRUCTURE
Chapter 1: Introduction
Chapter 2: Theoretical background on personal lending products
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Chapter 3: Analyzing personal lending products in retail banking of ANZ bank
Chapter 4: Recommendation to improve personal lending products in retail
banking of ANZ bank
Conclusion
CHAPTER 2: THEORETICAL BACKGROUND ON PERSONAL
LENDING PRODUCT
2.1. RETAIL BANKING OF COMMERCIAL BANK
2.1.1. Definition of retail banking
There are several definitions of retail banking ranging from very simple to
comprehensive.
According to Wikipedia, the free largest encyclopedia, retail banking refers
to banking in which banking institutions execute transactions directly with
consumers, rather than corporations or other banks. Services offered include:
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savings and checking accounts, mortgages, personal loans, debit cards, credit
cards, and so forth (Wikipedia.com, 2009).
Investopedia explains retail banking aims to be the one-stop shop for as
many financial services as possible on behalf of retail clients. Some retail banks
have even made a push into investment services such as wealth management,
brokerage accounts, private banking and retirement planning. While some of
these ancillary services are outsourced to third parties (often for regulatory
reasons), they often intertwine with core retail banking accounts like
checking and savings to allow for easier transfers and maintenance
(Investopedia.com, 2009).
Investor Words simply defines retail banking is banking services for
individual customers (InvestorWords.com, 2009).
Investor Glossary has the most comprehensive and well-defined definition.
According to Investor Glossary, retail banking is a banking service that is
geared primarily toward individual consumers. Retail banking is usually made
available by commercial banks, as well as smaller community banks. Unlike
wholesale banking, retail banking focuses strictly on consumer markets. Retail
banking entities provide a wide range of personal banking services, including
offering savings and checking accounts, bill paying services, as well as debit and
credit cards. Through retail banking, consumers may also obtain mortgages and
personal loans. Although retail banking is, for the most part, mass-market driven,
many retail banking products may also extend to small and medium sized
businesses. Today much of retail banking is streamlined electronically via
Automated Teller Machines (ATMs), or through virtual retail banking known as
online banking (InvestorGlossary.com, 2009).
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