Tài liệu Improve personal lending products in retail banking of anz bank

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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 1 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 2 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 ………….. 11 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. 3 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 4 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. 5 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 6 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 7 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. 8 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? 9  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 10 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 11 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 10 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 12 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: 13 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). 14
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