Tài liệu Improving the quality of retail banking services in bank for investment and development of vietnam - hanoi branch south

Paris Graduate School of Management Thai nguyen University THESIS INTERNATIONAL BUSINESS MANAGEMENT THESIS "IMPROVING THE QUALITY OF RETAIL BANKING SERVICES IN BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM - HANOI BRANCH SOUTH" Student : Nguyen Hong Phong Class : ieMBA.B01 10/2012 ACKNOWLEDMENT First, I would like to say my sincere thank to our teachers in the Paris Graduate School of Management who have equipped me with valuable knowledge in the past. I would like I would like to express my sincere thanks to the Doctor Nguyen Thanh Hieu, who has enthusiastically instructed me to complete the thesis. After all, I would like to send many thanks to my friends, my colleages and my closed people who did not hesitate to spend time on support, give comments and help me during my study time. I want to express my sincere thanks to all of you Student’s name: Nguyen Hong Phong Class: ieMBA.B01 Paris Graduate School of Management i DECLARATION I declare that the Thesis for Master of Business Administration "Improving the quality of retail banking services in Bank for Investment and Development of Vietnam - Hanoi Branch South" has been conducted by myself, which is reliable with clear information source written by the subjective view. I'm solely responsible for the accuracy from the reference materials. Hanoi, 10th October 2012 Author Nguyen Hong Phong ii TABLE OF CONTENS ACKNOWLEDMENT................................................................................................ DECLARATION........................................................................................................ TABLE OF CONTENS ............................................................................................ LIST OF TABLES AND FIGURES......................................................................... INTRODUCTION...................................................................................................... CHAPTER 1: THEORETICAL BASES ON RETAIL BANKING SERVICE QUALITY.................................................................................................................... 1.1 General view on retail banking services.............................................................. 1.1.1 Definition of retail banking services............................................................. 1.1.2 Characteristics of retail banking services...................................................... 1.1.3 Roles of retail banking services.................................................................... 1.1.3.1 For the economy.................................................................................... 1.1.3.2 For the bank........................................................................................... 1.1.3.3 For the customers................................................................................... 1.1.4 Retail banking services................................................................................. 1.1.4.1 Capital mobilization............................................................................... 1.1.4.2 Credit service......................................................................................... 1.1.4.3 Card service........................................................................................... 1.1.4.4 Payment services.................................................................................... 1.1.4.5 Electronic banking services.................................................................... 1.1.4.6 Other banking services........................................................................... 1.2 Basic quality issues of retail banking service...................................................... 1.2.1 Service quality concept................................................................................. 1.2.2 Relationship between service quality and customer satisfaction................. 1.2.3 The evaluation theory of the service quality............................................... 1.2.4 Retail banking services quality................................................................... 1.2.5 Measuring the services quality of retail banking......................................... 1.2.6 The need to improve retail banking services quality................................... 1.3 Experience of improving retail banking services quality of a number of banks in the world and lessons for commercial banks in Vietnam.......................... iii 1.3.1 Experience of improving retail banking services quality............................ 1.3.2 Lessons on improving retail banking service quality for commercial banks in Vietnam................................................................................................. CHAPTER II: THE CURRENT SITUATION ON SERVICE QUALITY OF RETAIL BANK AT BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – HA NOI SOUTH BRANCH...................................................... 2.1 About Bank for Investment and Development of Viêt Nam – Ha Noi South Branch ................................................................................................................................ 2.2 Results of business operations of Retail banking at Ha Noi South BIDV......... 2.2.1 Capital mobilazation................................................................................... 2.2.2 Credit.......................................................................................................... 2.2.3 Other services............................................................................................. 2.2.4 Business results........................................................................................... 2.3 Analyse, evaluate the actual situation of service quality of the retail banking through business results of retail banking at the Bank for Investment and Development of Vietnam - Hanoi South Branch..................................................... 2.3.1 The quality of retail capital mobilization service........................................ 2.3.2 The quality of retail credit service.............................................................. 2.3.3 Quality of other service:............................................................................. 2.3.3.1 Quality of card service:........................................................................ 2.3.3.2 Quality of payment service.................................................................. 2.3.3.3 The quality of electronic banking......................................................... 2.4 The main factors affecting the quality of retail banking services at the Bank for Investment and Development of Vietnam – South Hanoi Branch..................... 2.4.1 Reliability................................................................................................... 2.4.2 Responsiveness........................................................................................... 2.4.3 Tangibles..................................................................................................... 2.4.4 Assurance................................................................................................... 2.4.5 Empathy...................................................................................................... 2.5 Assessment of retailing service quality at Bank for Investment and Development of Vietnam at South Hanoi Branch based on the comment of iv customer.................................................................................................................. 2.6 Review of retailing service quality of BIDV at South Hanoi Branch after investigation and analysis........................................................................................ 2.6.1 Achievements in the Quality of Retail Banking Services........................... 2.6.2 Restrictions on the quality of retail banking services.................................. 2.6.3 The cause of the limitation.......................................................................... CHAPTER III: SOLUTIONS FOR SERVICE QUALITY IMPROVEMENT IN RETAIL BANKING OF BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM –HA NOI SOUTH BRANCH........................ 3.1 The development orientation of Bank for Investment and Development of Vietnam - South Hanoi Branch in the near future................................................... 3.1.1 The general development Orientation......................................................... 3.1.2 The development of retail banking services................................................ 3.2 Several Solutions for Retail Banking Service Quality Improvement................. 3.2.1 Improving the quality of infrastructure....................................................... 3.2.2 Solutions to improve the quality of human resources................................. 3.2.3 Solutions to improve the quality of organizational management of services systems retail banking............................................................................ 3.2.4 Solutions of developing new retail services................................................ 3.2.5 Designing service quality standards............................................................ 3.3 Suggesting to the State Bank and Government Offices..................................... CONCLUSION......................................................................................................... REFERENCES......................................................................................................... APPENDIX ............................................................................................................... v LIST OF TABLES AND FIGURES TABLES Table 2.1: Table 2.2: Table 2.3: Table 2.5: Table 2.6: Table 2.7: Table 2.8: Table 2.9: Table 2.10: Table 2.11: Table 2.12: Table 2.13: Table 2.14: Table 2.15: Table 2.16: Table 2.17: Table 2.18: Table 2.19: Table 2.20: Table 2.21: The Situation of capital mobilization of Ha Noi South BIDV, 2007 -2011 stage............................................................................................. The Situation of credit activities of Ha Noi South BIDV, 2007 -2011 stage............................................................................................ Business results of Ha Noi South BIDV, 2007 -2011 stage.................... Expense for interests from mobilizing population’s capital of Noi South BIDV............................................................................................ Scale of individual lending service of Ha Noi South BIDV................... The quality of retail credit of Hanoi south BIDV................................... Card sales of Ha Noi South BIDV in 2007 2011 stage........................... Number of new card issuance of Ha Noi South BIDV during 2007 -2011 stage............................................................................................. Number of ATM, POS of Ha noi south BIDV during 2007 – 2011 stage ................................................................................................................ Comparison oF property between domestic debit cards among banks ................................................................................................................ Number of payment transaction of individuals at Ha Noi south BIDV ................................................................................................................ Money transfer sales of individuals at Ha noi south BIDV.................... Average time to deal with payment transaction of individual at Ha noi south BIDV...................................................................................... Number of customers using modern services oF Ha Noi south BIDV ................................................................................................................ Data encryption...................................................................................... Classifying survey.................................................................................. Result of descriptive survey analysis...................................................... Result of testing Cronbach’alpha............................................................ Summary of the coefficient on the conformity of model........................ Result of linear regression analysis........................................................ FIGURES vi Figure 1.1: Model of five service quality gap........................................................... Figure 1.2: The theoretical study model.............................................................................. vii INTRODUCTION 1. THE THESIS SIGNIFICANE The international economic integration has opened up many opportunities, but it also places many challenges to the banking service suppliers because they have to compete severely with foreign banks who are not only powerful on the financial potential but much experienced about modern banking service development. Under the competition pressure on banking service supply and the fast IT development, the year 2010 and 2011 is evaluated to be a “booming year” on retail banking service with increased approaches to the individual customers and small and medium enterprises. According to the estimate, the Vietnam population will increase by 90 million people in 2012 with the increasing income for people. It is the potential market for the commercial banks, when aiming at the payment not by cash. Therefore, the retail bank development strategy of BIDV- the South Hanoi Vietnam will focus specially on individual customers with various retail products which are professional and suitable to the demand and capacity of each different objects and customer segments. With the aim of building the retail banking service system of high quality, safety with high economic effectiveness on the base of enhancement of international economic integration, retail banking service market expansion by through the bilateral and multilateral management, application of advance banking technology and suitable development of distribution system to provide sufficiently, timely and conveniently retail service products and utilities for all customers. With the continuously changing trend of consumption according to the life demand, BIDV- Southern Hanoi Branch must build new strategy and solution to become a multi-functional retail bank. For meeting the increasing banking demand in the severe competition among banks, BIDV-Southern Hanoi Branch is trying to extend the business net, increasing the retail banking service with the improved 1 service style “customers are God”, step by step increasing the reputation and brand name of BIDV in general and BIDV-Southern Hanoi Branch in particular in the financial market. From the above fact, the quality re-evaluation of the retail banking service quality of BIDV- Southern Hanoi Branch as well as supporting banks in building solutions for enhancing the retail services during the incoming time in order to increase the satisfaction of customer is very important, so I have considered and selected the thesis subject “Improving the quality of retail banking services in Bank for Investment and Development of Vietnam - Hanoi Branch South" The subject is conducted for the above objectives and hopefully the author will receive contribution ideas to complete the subject matter. 2. STUDY SUBJECTIVES: - Evaluate the real situation of the retail banking service quality of BIDV- Southern Hanoi Branch. - Suggest some solutions for increasing the retail banking service quality of BIDVSouthern Hanoi Branch. The main objective focuses on the Credit and Capital mobilization. 3. SUBJECT, METHOD AND RESEARCH SCOPE - Research: The quality of retail banking services in BIDV- Southern Hanoi Branch. - Research methodology: Analyze main factors affecting the quality of retail banking services at BIDV- Southern Hanoi Branch, after that conducting the analysis of the customer satisfaction through practical survey, then proposing the solutions for increasing the retail banking service quality. -Scope of study: The research data is to 31/12/2011 in BIDV- Southern Hanoi Branch. 4. THE PRACTICAL MEANING OF THE RESEARCH SUBJECT: Based on evaluation of retail banking service system in BIDV- Southern Hanoi Branch, analyzing the achievements and failures in the retail banking system quality, then propose the solutions for increasing the retail banking service system in BIDV- Southern Hanoi Branch. 2 5. STRUCTURE OF THE RESEARCH SUBJECT: Apart from the Introduction of the subject and the Conclusion, the research subject is divided into 3 chapters with the detailed contents as below: CHAPTER 1: Theoretical bases on retail banking service quality CHAPTER II: The current situation on service quality of retail bank at bank for investment and development of Viet Nam – Ha Noi South branch CHAPTER III: Solutions for service quality improvement in retail banking of bank for investment and development of VietNam – Ha Noi South branch 3 CHAPTER 1: THEORETICAL BASES ON RETAIL BANKING SERVICE QUALITY 1.1 General view on retail banking services 1.1.1 Definition of retail banking services In the open economy, the demand on banking services is increasingly high, especially for the retail banking services. The targets of retail banking services are individual customers, so the services are usually simple, easy for implementation with focus on the services of deposit, account, debts, credit card registering and so on. Depending on different ideas and research approaches, there are some concepts on “retail banking services” being recognized as followed: Retail market is a total new concept in the financial market, through which a large number of individual laborers will approach the banking services, creating a potential, variable and dynamic market. The terminology is Retail Banking- it means that supplying services to the hand of end-users with quantity. It should be understood that retailing is an activity of distribution, in which the researching, promotion, study, experiment, discover and develop the modern distribution channels- the outstanding feature is online business. The retailing includes three main fields: market, distribution channels, services and service supply. Retailing is more developed to be international. According to economic experts in the Asian Institute of Technology-AIT, retail banking service is to supply products, banking services to each individual, small and medium enterprises through branches, customers who can approach directly to products and banking services through telecommunication electronic equipments and Information Technology. According to the WTO, the retail banking is a typical service type of banks where individual customers can make transactions in branches/ transaction offices of banks to perform the services like: Deposit, account checking, mortgage, loan, credit card service, debit card and related services. 4 According to the BIDV, retail banking services are the supply of products mainly for individual customers with services like saving deposit, card services, money transfer for abroad study, remittance services, electronic banking services, individual consumption loans , business, etc. In short, retail banking services can be fully understood as "retail banking services banking are services provided to the individual or individuals, small and medium-sized businesses through a network of branches or customers can directly access to the banking services through electronic media and telecommunication " 1.1.2 Characteristics of retail banking services - The served customer objects are variable from individuals, households and small and medium enterprises. - The retail banking services are variable but the value of each transaction is not high so the risk level is low. - The retail banking services require building a large number of various distribution channels to supply services ton customers on wide region. - The retail banking services base mostly on the modern IT background with a professional staff team to extend and increase the product quality, bringing the products to each individual customer. - The service is simple and easy to implement: The target of retail banking service is individual customers, so the services focus on deposit, payment, loan and card services. - The business development mainly bases on the brand name, quality of the banking services, so the service quality is an important factor to develop the retail banking services. -The average operation cost is high. Although the number of customers is high but they are in different place, so the transaction is not convenient. The bank usually opens the network and invest into the online transaction with high cost. - More various management ways which is more complicated because of the wide customer network. 5 1.1.3 Roles of retail banking services. 1.1.3.1 For the economy The retail banking services directly change the cash economy into the noncash economy, increasing the effectiveness of the state management, reducing the social cost of payment and cash circulation, Beside, through retail banking services, the money circulation process is enhanced with higher effectiveness, making use of and exploiting the capital potential to promote the business and consumption, increasing the people’s living standard. 1.1.3.2 For the bank The retail banking services play an important role in diversifying the products, extending the market, increasing the competition capacity, creating the capital source for medium and long term for the banks to change the income structure of banks, reducing the risks in banking business, at the same time contributing to diversifying the banking activities, strengthening the national finance. 1.1.3.3 For the customers The retail banking services brings to the customers the conveniences, safety, cost saving and effectiveness in the process of payment and income usage. In fact, now the retail banking services have brought to banks a stable income with decentralized risk, creating a steady base for the bank’s operation. Therefore, commercial banks have initially considered the retail banking services as a core activity for building, reinforce a stable customer network, then expand the business to other sectors of the banks. Vietnam commercial banks have been developing, increasing the retail banking services as a inevitable trend, consistent with the common trend of banks in the region and in the world. 1.1.4 Retail banking services 1.1.4.1 Capital mobilization One of important functions of Commercial banks is to mobilize capital for giving loan and investment. Through methods and tools used, commercial banks mobilizes capital from individual customers and small-medium sized enterprises 6 under the main forms such as non-term deposits, term deposits, valuable papers (bills, bank bonds, etc.) and other forms of deposit. Each individual customer or a small and medium enterprise has idle capital which is not great but with a large number of customers, an abundant and potential source of capital will be created for commercial banks. Currently, in addition to traditional deposit products, the commercial banks have diversified more flexible savings product in term of terms and interest rate in order to improve the quality of services to meet the needs of customers . 1.1.4.2 Credit service The retail credit services provide individual customers and small and medium enterprises short-term, mid-term and long-term loans including loan for abroad study, real estate, consumption, securities business, production and business, overdraft loan, mortgage of valuable paper. The weight for lending individual customers, small and medium enterprises are higher day by day in the total debt balance of the banks, contributing to increasing sales and profit for commercial banks. Loans to individual customers and small and medium companies brings a great potential with non-stop development. However, the amount for one loan is small and dispersed, so the management cost is high. Besides, customers are very sensitive with the interest rate, term and procedure, so the commercial banks are usually affected with competition factors in the market and the customer’s profitability. 1.1.4.3 Card service Bank card is a personal multi-functional financial products issued by the banks with many utilities for customers. Cards can be used to withdrawing deposit, sending deposit, issuing credit, payment or account transfer. Cards are used for many non-financial services like account information inquires and so on. Many kinds of different payment cards are available, but in general, there are two basic types which are debit card (domestic and international) and credit cards. Debit cards use the current balance of the account. While the credit cards are outstanding with the feature of “purchasing first, payment later” based on the credit line issued by the 7 banks. The card services contribute an important part to the commercial banks in capital mobilization, service charging and image PR. The card services go with the technology application and the in interconnection among commercial banks for market exploitation and IT infrastructure usage. 1.1.4.4 Payment services The payment services are considered to be a profession component with high profit rate but has not been paid proper attention. Payment means include cheque, payment order, commercial bills, payment orders . Banks on behalf of customers make payments for goods and services through the clearing, m online payment transfer through the banking system within the banking system or other, transfer within the country border or to the foreign countries. Salary payment to the personal account, payment for electrical bills, water bill, telephone bill and so on through the card services is developing and creating substantial receiving source for commercial banks. Money transfer services, money remittances are increasingly expanding and developing. Many commercial banks have cooperated and been agents for money transfer and remittance for a number of international financial institutions such as Western Union, Money Gram ... 1.1.4.5 Electronic banking services In the situation of integrated financial- banking market, Vietnam has gradually opened door for foreign banks, services of domestic banks should be distinctive in forms and contents. In which, the outstanding feature is the modern banking services. Currently, SMS Banking, eBanking, Mobile Banking and so on are services selected by many customers. With this service, customers do not have to go banks or spend much time on performing necessary transactions like account transfer, account checking, payment, deposit and loan and so on. It is really an utility, bringing customers to approach closely to the modern life. The application of electronic banking services in business of current commercial banks is a competitive advantage and it is one of important factors deciding the success in the 8 development trend of retail banking services in future. The modern electronic service can be listed as follow:  Call center: The center provides information and explains all questions, claims of customers. Currently, most of banks have Call center like 247/247 of ACB, 24/7 of BIDV.  Phone banking: is a service, in which customers call to a fixed number of the service providing banks for performing transactions or check accounts and exchange rate, interest rate information.  Mobile banking: is a banking service through mobile phone. Customers can check the balance, transaction; receive the balance information, interest rate through SMS banking, payment for electricity, water, phone, internet and so on.  Home banking: is a kind of service in which transactions can be implemented at home through computer system connected to the computer system of the banks including money transfer, report, balance report, exchange rate, interest rate.  Internet banking: is a kind of banking services, in which customers perform the transaction with banks through Internet. Customers can search information about products, services of the banks or access information on personal account, balance, deposit and loan. 1.1.4.6 Other banking services Apart from the above services, services for individual customers include collection/payment, money transfer for abroad study, valuable asset consignment, safe lease and so on. The services for small and medium enterprises include international settlement, foreign currency business, bond security. 1.2 Basic quality issues of retail banking service 1.2.1 Service quality concept Service is a popular concept in marketing and business. It is a "special products" with many different characteristics from other commodities such as intangibility, heterogeneity, inseparability and can not be stored. Therefore, so far there is no complete definition for service. According to VA Zeithaml and MJ 9 Bitner (2000), "Service is behaviors, process and method to do a certain work in order to create value for customers to satisfy their needs and expectations" Services play an increasingly important role in the national economy. Service quality is one of the determining factors for the efficiency of services and creation of value to contribute to the national economy. Service quality is evaluated in connection with culture, job sector and field. Therefore there are many different definitions for it. Depending on the object and environment of research that understanding of service quality can serve as the basis for implementing measures to improve it. In development history, many service providers have found their differences from rivals and keep customers through the implementation of excellent quality service. Service quality has become a major marketing tool to differentiate competitors and boost customer loyalty. Customers can only assess the quality after having purchased and used a service. Therefore, the definition of service quality is often subjective, largely based on the attitude, feeling and knowledge of service users. After referring to materials, there is some concept of service quality that is used by many writers. Service quality is a measure of to what level a service has satisfied a customer’s expectation. A quality service is one that meet the expectations of customers in a consistent manner (Luu Van Nghiem, 2008, page 163) Gronroos (1984) saw service quality in two aspects, one is technical quality (what is served) and functional quality (how it is served). In the 1998 study, he described perceived service quality is the difference between expectations and the service received. Parasurman, Zeithaml and Berry (1985.1988) (cited from Nguyen Dinh Tho and ctg.,2007) thought that "quality is the distance difference the real service and products and the perceptions, feeling of customer when they use that products and services”. He explained that in order to know a customer, it is best to identify and understand his expectations. It is necessary to develop of a system to identify customer’s expectation, and then formulate an effective service quality strategy. This can be considered the most general concept that covers the entire meaning of 10 quality service from a customer’s point of view, and places customer in the centre. Although there are many different definitions, but taken as a whole, quality of service includes the following features: Superiority: For customer, service quality is marked with significant "superiority" compared to others. This superiority becomes competitive strengths of the service provider. Evaluation of service quality superiority is greatly influenced by feelings of the services receiver, especially in marketing and customer satisfaction research. Characterization: Service quality is the core of most products and services; it makes up the characteristics of products and services. Therefore, high-quality products and services will have more "dominant characteristics" than low-end products and services. This distinction is associated with the identification of superior tangible or intangible properties of products and services. It is thanks to these characteristics that clients can tell the quality of a company from other companies. However, in practice, the core characteristics of the service only relative, it is difficult to determine them fully and accurately. Provision: Service quality is associated with the implementation/delivery of service to customers. Service delivery, serving style will determine whether the quality is good or bad. These are internal elements expressed by the service providers. Therefore, in order to improve service quality, firstly service providers must be aware to improve this internal factor to create their long-term advantage. Demand satisfaction: Service is designated to meet the needs of customers. Quality of service must fulfill customer demand and improve according to customer's requirements. If customers feel that the service does not meet their needs, they will not be satisfied. In the modern business environment, service providers must always pay attention and try their best to meet customers’ needs. In terms of customer service, "Demand satisfaction" includes "provision". This is so because services quality starts from the moment when enterprises get to know customer needs to the moment when they provide service, in the process of service delivery that customers will feel satisfied or not and therefore consider a service 11 good or bad. If the provision has internal factor demand satisfaction is more driven by external influence. Value creation: The quality of service is associated with the value created to serve customers. It would be useless to provide service that is considered having no quality by customer. Enterprise must create value for customer. Therefore, consideration of service quality or more specifically value brought to customers depends on customer assessment, not the enterprise. Clients will receive value the service bring and compare them with what they expect to get. Hence, value creation is the basic characteristics and foundation for the construction and development of service quality of business. 1.2.2 Relationship between service quality and customer satisfaction The existence of any business is the customer. "Customer is the King", is the ones who decide revenue based on their level of satisfaction for products and services quality. Therefore operation principles of suppliers are to meet the needs of customers and then their ability to come back is very high. "Customer satisfaction is the feeling of a person through the consumption of products and services, the level of value that the product and service offer compared to what he expected" ( Philip Kotler, 1991). Or according to Bachelet (1995), "satisfaction is the emotional reaction of customers for a product or service based on his personal experience." Normally the service provider often assumes service quality and customer satisfaction to be the same. However, many studies have revealed that these two concepts are different, but have mutual relationship. Quality of service is the most influencing factor on customer satisfaction. If service providers bring customers good quality products that meet their needs, they have set the first step to make customers happy. Therefore, to have better customer satisfaction, the service providers must increase service quality. Quality services must focus on specific components of the service, it is the source that decide customer satisfaction. Customer satisfaction can be used to measure service quality. 12