Background to the study
Customer service encompasses the support provided to customers before, during, and after a purchase, and is a collective effort from everyone in the organization Successful customer service prioritizes the customer experience, as highlighted by Kurtenbach (2000) Ettore (2001) emphasizes the importance of gathering current customer information to better understand their perceptions of service quality Service quality directly influences customer satisfaction, which is defined by how well a company's products and services meet or exceed expectations In a competitive market, customer satisfaction serves as a crucial differentiator and is integral to business strategy It is essential to monitor and manage customer satisfaction as a valuable asset, underscoring the critical link between customer service and customer satisfaction.
Deloitte research reveals that customer loyalty is primarily driven by exceptional customer service rather than the products and services themselves, challenging common perceptions This emphasizes that outstanding customer service is essential for fostering deeper, long-term relationships with clients.
In today's competitive landscape, companies and banks have shifted from a product-centric approach to a customer-centric focus, recognizing that customer satisfaction hinges on the quality of services offered This is particularly crucial in the banking sector, where customers can easily switch to competitors with better service Understanding the factors that drive customer satisfaction and loyalty is essential VIB Bank prioritizes customer service and aims to assess whether its offerings meet customer expectations and satisfaction levels Additionally, the research seeks to identify opportunities for service enhancement to further satisfy customers.
Statement of the problem
Achieving growth in retail banking is increasingly challenging due to declining mortgage and deposit revenues, coupled with stagnant credit card growth The market share is also becoming fragmented as competition intensifies, making it essential for banks to adapt to the evolving landscape.
Since late 2015, banks and credit institutions have increasingly offered both traditional and tech-based banking services, resulting in heightened competition in pricing and technology that persists to this day.
VP Bank has distinguished itself in the Vietnamese market by implementing a modern live chat feature, enhancing customer convenience compared to traditional banking channels In contrast, traditional competitors like FE Credit capitalize on their straightforward pricing and rapid approval processes, providing customers with appealing deposit products at competitive rates and a diverse array of lending options with generally lower interest rates.
A 2017 Deloitte survey of banking executives revealed that customer service quality is a key driver of brand loyalty, accounting for 50% of customer retention when high-quality products and services are offered Additionally, outstanding customer service contributes to 41% of customer loyalty, highlighting the importance of exceptional service in the banking industry.
Banks are struggling to leverage the strategic value of their interactive branches, which hinders their ability to achieve overarching company goals This challenge affects their efforts to enhance customer experience, effectively cross-sell and up-sell products and services, and boost agent productivity and satisfaction.
Objectives of the study
Theoretical framework for customer service procedures, customer satisfaction and the relationship between customer processes and procedures with customer satisfaction
Analyzing, assessing customer satisfaction with the process of credit, credit card at VIB
Proposed solutions to improve the process, customer service procedures to improve customer satisfaction with VIB
Research questions
1 How is current state process?
2 What are dominant transactions and how long is processing time?
3 Does the service quality have any effect on customer satisfaction?
4 How services can be improved in the branch of bank?
Significance of the study
VIB Bank prioritizes customer service as a core offering, prompting an evaluation of its effectiveness in delivering this service To gain a competitive edge in the market, it is essential to identify areas for improvement in their customer service strategies.
This article explores the impact of exceptional customer service on customer satisfaction within the context of Vietnam It also analyzes the current state of customer service, supported by relevant statistics and figures.
This article aims to provide insights for the bank under study, enabling management to understand customer perceptions of the services offered and identify areas for improvement in service quality.
Educational institutions, corporations, and policymakers will gain valuable insights from this research, enabling them to make informed decisions that enhance customer service quality and ultimately satisfy customers.
Overview of research methodology
Data collection
The thesis uses both secondary data and primary data to find out satisfaction of customers by VIB proceses, regulations and procedures
Secondary data: The secondary data were collected from the following resources:
- From documents, reports, policies, stage of lending processs: Lending Process, Credit Card Process of VIB
- Other articles on newspapers, journals, books, magazines related to factors affecting Lending Process, Credit Card Process of VIB
Primary data: The primary data were collected from two methods of in-depth interview and survey
With the qualitative method, in-depth interviews were conducted with relevant and experienced senior managers at VIB Head Office as follows to collect their opinions and comments
+ Interviewees: senior managers at VIB Head Office including the three followings:
* Mr Dang Khac Vy – Chairman of the Board of Directors of VIB
* Mr Tran Nhat Minh – Deputy General Director of VIB
* Mrs Nguyen Hoang Hai – Head ofCorporate Transformation Center
The researcher conducted direct interviews by organizing a meeting where prepared questions guided the discussion Throughout the interview, insights and feedback from participants were gathered and meticulously recorded to compile valuable information.
The objective of conducting in-depth interviews is to gain a deeper understanding of VIB's information, identify barriers related to branch processes, regulations, and procedures, and recommend improvements aimed at enhancing customer service.
* Respondents: 200 customers, who have been using the service lending process, credit card process of VIB in Ha Noi
The questionnaire design focuses on key factors influencing customer satisfaction regarding the lending and credit card processes at VIB It is structured into two main sections, beginning with general guidance followed by personal information and assessments related to the research topic Customers are encouraged to evaluate both the lending and credit card processes of VIB The completed questionnaires will be emailed to each customer for their convenience.
The number of survey’s responses obtained are as follows:
Table 1: No of survey’s responses for required competencies
No Respondent Planned response Actual response %
Data analysis method
The analysis of interviews and survey questionnaire data was conducted using tables, graphs, and comparisons Descriptive statistics proved to be an effective method for this study, as it is a fundamental approach in academic research, incorporating measures such as percentages (%), frequencies (f), and means.
The researcher utilized Excel software to conduct descriptive statistics and create tables and graphs By analyzing percentage (%), frequency (f), and means, it was determined that elements with low means indicate weaknesses that require improvement.
Analyzing the data revealed key insights that led to conclusions and actionable solutions aimed at improving customer satisfaction in the service processes and procedures at VIB.
Scope of the study
- Research subjects: Process of credit, credit card at VIB
- Space: study done at VIB
- About time: study conducted in the period 2014-2016
Structure of thesis
The thesis is started with the Introduction and ending by the Conclusion The main contents of this thesis are divided into three chapters as following:
Chapter 1: THEORETICAL FRAMEWORK ON CUSTOMER
SERVICE PROCEDURES, CUSTOMER SATISFACTION AND
RELATIONSHIP BETWEEN CUSTOMER SERVICE PROCEDURES AND CUSTOMER SATISFACTION
Chapter 2: REALITY OF CUSTOMER SATISFACTION TOWARD PROCEDURES FOR CREDIT AND CREDIT CARD GRANTING SERVICES
Chapter 3: SOLUTIONS TO IMPROVE PROCEDURES FOR CREDIT AND CREDIT CARD GRANTING SERVICES TO ENHANCE CUSTOMER SATISFACTION AT VIB
THEORETICAL FRAMEWORK ON CUSTOMER SERVICE
Research overview
On conducting the research, the author found several published works related to the topic as follows:
The study by Adams B Steven, Yan Dong and Martin Dresner (2012) on
The study investigates the linkages between customer service, customer satisfaction, and organizational performance within the U.S airline industry Findings indicate a significant correlation among customer service factors, customer satisfaction, and overall performance of airlines Furthermore, the research emphasizes the critical role of effective customer service in enhancing profitability and returns for airline companies While the study contributes valuable insights to the development of American aviation, it falls short of detailing the specific relationship between service procedures and customer satisfaction levels.
A study by Olowokudejo and Adeleke (2011) investigated the relationship between customer-focused service and customer satisfaction within Nigeria's insurance industry The researchers reviewed relevant literature and tested a model consisting of four variables through empirical data collected from an experimental survey involving 180 modern clients, of which 149 questionnaires were deemed valid Utilizing correlation analysis, regression analysis, and the Cronbach Alpha coefficient, the findings indicated a positive relationship between customer-focused service and customer satisfaction The study concluded that attractive customer service significantly enhances customer satisfaction in insurance companies Consequently, the authors recommended that insurance firms prioritize product design and customer-centric services to improve overall customer satisfaction.
Enyonam Afi Ako-Nai's 2011 study, "Effect of Customer Service on Customer Satisfaction: A Case Study of Fidelity Bank, Adum, Kumasi," aimed to determine the impact of customer service on banking satisfaction Utilizing a case study approach, the research involved questionnaires distributed to both customers and staff at Fidelity Bank's Adum branch Findings revealed that despite the bank's focus on enhancing customer service, customer satisfaction remained low, primarily due to ineffective online banking and poor management decisions The study proposed several solutions, including increasing staff numbers and enhancing product and service offerings to better meet customer needs However, it noted a significant gap by not addressing the bank's service procedures.
The study by Krishna, Jacob Alexander and Mihir Dash (2012) on
This research investigates the connection between basic customer service and customer loyalty, utilizing primary data from a survey of 142 business organizations in Bangalore, India The findings emphasize that organizations must regularly assess customer complaints and provide timely updates to enhance customer satisfaction and retention However, the study faces limitations, including a relatively small sample size and inconsistent data from participating companies Additionally, the research lacks a focus on a specific industry, making the applicability of the results challenging.
Bui Thi Trang's 2017 research on the "Impact of Customer Service Quality on Customer Satisfaction at Vietravel Ha Hoi Tourism Company" was conducted in two phases The preliminary phase involved discussions with five experts from major service providers like Vietravel, Hanoitourist, and Redtour, along with in-depth interviews with ten regular customers and a preliminary survey of thirty clients The formal study utilized quantitative research methods after modifying the questionnaire based on preliminary findings Results indicated that convenience and reliability in customer service quality significantly impacted customer satisfaction The author proposed solutions to enhance customer satisfaction, including improving customer care activities, creating a positive brand image, diversifying marketing strategies, and enhancing product and service convenience and safety While the research demonstrated high reliability, it focused solely on service quality without examining the influence of service procedures on customer satisfaction Notably, despite numerous studies on customer satisfaction, none addressed the impact of customer service procedures To address this gap, the author initiated further research titled "Improving Customer Service Procedures to Enhance Customer Satisfaction - A Case Study at VIB," aiming to achieve specific research objectives.
- Synthesizing the theoretical frameworkon customer service procedures; clarifying the relationship between customer service procedures and customer satisfaction
- Evaluating the reality of service procedures at VIB (evaluating the procedures for granting credit and credit cards in detail);conductingsurvey with customers on service procedures of VIB
- Proposing a system of new procedures for the implementation of credit and credit card services and a number of supporting solutions to improve customer satisfaction.
Basic concepts
Customers are defined as individuals who utilize the results of work, serving as the end users of products or services They can be categorized as internal customers, such as employees and directors, or external customers, including the general public, other businesses, or government entities Essentially, a customer is anyone who purchases goods or services from a provider, which also encompasses potential buyers.
The term "custom" refers to a habitual practice, exemplified by customers who regularly purchase from a specific store According to Peter Drucker, today's consumers represent a new breed with elevated standards and expectations (Dei-Tumi, 2005) As competition intensifies, businesses must adopt innovative strategies to satisfy the sophisticated and knowledgeable modern customer, who not only demands high-quality products and services but also has numerous alternatives at their disposal.
Customer service is an organization's ability to supply their customers' wants and needs (http://sbinfocanada.about.com)
Customer service encompasses the support provided to customers before, during, and after their purchases, with its effectiveness largely hinging on employees' ability to adapt to guests' personalities The emphasis an organization places on customer service can influence its approach to product innovation and pricing strategies Consequently, companies that prioritize exceptional customer service may invest more in employee training and actively seek customer feedback to enhance their service quality.
Customer service is a crucial component of the overall sales process, significantly impacting an organization's revenue generation Therefore, it should be integrated into a comprehensive strategy for systematic improvement A single positive customer service experience can transform a customer's perception of the organization.
Procedures are the ways and regulations to carry out an activity.Procedures are mandatory to meet the specific objectives in the business operation of an organization
A procedure is a specific method to perform a process or task Procedures are usually expressed in writing Procedures aredesigned to control the work in an organization
Customer service procedures encompass the guidelines and methods for delivering products and services to customers, covering all stages before, during, and after the service experience These procedures are essential for maintaining consistency and uniformity in service delivery, ensuring a reliable customer experience at all times and locations.
Customers gauge service quality based on their overall experience, which ultimately determines their satisfaction A customer's contentment post-purchase hinges on the performance of the offer and the quality of customer service relative to their expectations While service quality and customer satisfaction are often used interchangeably, Zeithaml et al (2006) highlight a critical distinction between the two concepts.
Customer satisfaction occurs when the results of a service align with customer expectations According to Looy et al (2003), customer satisfaction and service quality are interconnected, with one being a component of the other Zeithaml et al (2003) define customer satisfaction as the assessment of a product or service based on whether it fulfills the customer's needs or expectations.
Failing to meet customer needs leads to dissatisfaction and a negative perception of service quality Customer satisfaction varies based on individual needs and can encompass feelings of fulfillment, contentment, pleasure, delight, relief, or even ambivalence Understanding these diverse aspects is crucial for improving service delivery and enhancing overall customer experience.
Role and characteristics of customer service procedures
1.3.1 Role of customer service procedures
When an organization adheres to established procedures for its products and services, it ensures consistent results Implementing a robust system of procedures, especially in customer service, facilitates smooth operations and enables managers to address discrepancies more effectively.
In any organization, employees possess varying knowledge and skills, leading to diverse working methods Implementing clear customer service procedures is essential for guiding staff on the necessary steps to follow, the correct execution of these tasks, and the expected outcomes in customer service delivery By establishing these procedures, organizations can significantly reduce instances where employees undertake tasks from higher management without adequate understanding, ensuring that work aligns with leadership expectations and quality standards.
As for customer services that need teamwork, service procedures enable members to work together in a consistent and orderly way and help them clearly understand their responsibilities
The customer service procedure system enables management to effectively monitor the progress and quality of staff performance during customer service delivery.
1.3.2 Characteristics of customer service procedures
Customer service procedures are established by organizational managers when launching a new product or service Although developing these procedures may require time, they ultimately enable managers to effectively oversee the customer services offered.
To ensure the successful implementation of customer service procedures, it is essential to thoroughly train staff on all protocols The effectiveness of these service procedures relies on employees' adherence to established guidelines and the seamless execution of these procedures, ultimately leading to high-quality service delivery.
Service procedures are outlined in organizational documents, and if these documents fail to accurately represent current practices, it can negatively impact the execution of those procedures.
Adhering to customer service procedures offers several benefits, including streamlining service delivery, enhancing service quality, aiding managers in organizing and coordinating activities, and facilitating consistent implementation of services through effective inspection, supervision, and evaluation processes However, a notable drawback is that these procedures can often be complex and cumbersome, leading to a mechanical execution of tasks that lacks flexibility within organizations.
1.4Relationship between customer service procedures and customer satisfaction
Numerous studies have highlighted the link between customer service procedures and customer satisfaction Specifically, the 7P marketing theory in the service industry suggests that organizations that implement effective customer service procedures can reduce errors in service delivery, leading to positive customer feedback and increased satisfaction with the services offered.
In addition, Rust and Chung (2006) also point out that customer satisfaction is the result of providing regular customer service withclose, consistent and flexible procedures
Customer service procedures play a crucial role in fostering positive relationships between organizations and their customers, as highlighted by Gan et al (2006) and Varki & Colgate (2005) While effective customer service can enhance customer satisfaction, inadequate procedures may lead to dissatisfaction with the services offered.
Levitt (1983) emphasizes that organizations exist primarily to fulfill customer needs rather than merely to sell products Effective customer service procedures are essential for understanding and addressing these needs and expectations, enabling organizations to deliver appropriate products and services The specificity of customer service procedures directly influences how accurately organizations can identify and meet customer requirements When organizations successfully meet these needs, customer satisfaction increases, highlighting the strong connection between customer service practices and overall service satisfaction.
Previous studies confirm that there is an interactive relationship between customer service procedures and customer satisfaction Specifically, when customer service procedures are well-defined and specific, customer satisfaction with an organization's products and services increases, and this relationship is reciprocal.
Influence of factors of customer service procedures on customer
The implementation of customer service procedures begins when organizations identify customer needs and continues until the service is fully delivered This timeframe represents the duration customers must wait for the services provided by these organizations.
Efficient and quick service procedures significantly reduce implementation time, minimizing customer wait times This swift response not only enhances customer satisfaction but also directly correlates with their overall experience Consequently, shorter service procedure times lead to higher levels of customer contentment, highlighting the importance of efficiency in service delivery.
Criteria for assessing the time of procedure implementation include:
- Time to handle credit documents according to the listed procedures
- Waiting time of customers while the bank is implementing procedures
- Number of times customers have to cam back to resolve service procedures
- Time to implement procedures isquite long, which makes customers dissatisfied
Human resources are essential to the success of any organization, as all operations rely on the quality and professionalism of the workforce When human resources are skilled and competent, the effectiveness of organizational activities significantly increases.
Effective customer service relies on well-trained human resources who thoroughly understand and implement the organization's service procedures When operations are executed consistently and smoothly, customer satisfaction significantly increases, leading to a better overall experience for those utilizing the services.
Customer satisfaction is significantly influenced by the attitude and service style of human resources As the primary point of contact for customers, these individuals play a crucial role in addressing customer needs When human resources exhibit enthusiasm in assisting and guiding customers, along with professionalism throughout the service delivery process, it fosters greater confidence in the organization and ultimately enhances customer satisfaction.
Criteria for assessing the human resources implementing the procedures include:
- Ability to communicate with customers
- Knowledge and skills to handle the work in the customer service procedures
- Ability to solve problems related to service procedures satisfactorily
- Friendly and polite attitude of human resources when implementing procedures
Efficient customer service procedures enhance the speed and accessibility of transactions for customers When these processes are straightforward, they enable customers to easily access services, leading to increased satisfaction with the organization's offerings.
The convenience of customer service procedures significantly impacts customer satisfaction, as it is determined by the time taken, the methods of implementation, and the number of required steps An accessible and efficient service procedure system enhances the overall experience for customers utilizing the services.
Criteria for assessing the convenience in the implementation of service procedures include:
- Modification/ renewal of procedures to help customers carry out simple and convenient transactions
- The system of procedures of is simple and not cumbersome
- Customers can easily complete the documents at the service provider’s request
- Customers can easily access information about the procedures on the organization's website
The application of customer service procedures always requires the speed and convenience, but the safety for customers and organizations also need to be ensured
Safety in organizations is demonstrated through the benefits realized after delivering services to customers, while for customers, it means the security of their information and the advantages gained from using these services To maintain safety in service delivery, organizations must implement stringent procedures and ensure all employees adhere to them This strict compliance fosters consistent operations, enhancing safety for both customers and the organization Well-designed service procedures boost customer confidence and satisfaction, leading to a positive overall experience.
Criteria for assessing the safety in the implementation of procedures
- Organization of confidentiality of personal information of customers
- Customers’ documents are free from errors or loss
- The organization provides high security methods for customers using the services
- The organization ensures the confidentiality of customers’personal information
Customer service procedures often pose a significant challenge for users due to their complexity and rigidity When employees adhere strictly to established regulations, it can lead to a lack of flexibility, ultimately resulting in customer dissatisfaction To enhance customer satisfaction, organizations must prioritize flexibility in their service procedures.
An effective customer service procedure should be tailored to align with the unique services and attributes of an organization, ensuring flexibility to adapt over time This approach enables the delivery of services to customers in the shortest possible timeframe, enhancing customer attraction and satisfaction with the organization.
Criteria for assessing the flexibility in the implementation of procedures include:
- The staff of the organization demonstrates the flexibility within the regulation framework to remove difficulties for customers
- The regulations on procedures of providing services of the organization ensure good flexibility
- The organization is flexible in the time of service delivery to customers if customers fulfill the obligations and requirements of the organization
Experience in designing customer service procedures to improve customer
At BIDV, service procedures are established by the General Director and uniformly implemented across the entire banking system, from headquarters to transaction offices This approach ensures maximum convenience for customers while prioritizing safety for both clients and the bank Key procedures at BIDV exemplify this commitment to efficient and secure banking services.
BIDV maintains consistent and synchronized procedures for granting retail credit, clearly outlining the responsibilities and rights of all departments and individuals involved in the process The bank prioritizes quick and convenient retail credit procedures, ensuring customer satisfaction while also facilitating increased sales for the bank.
BIDV's wholesale credit procedures are designed to align with the bank's evolving organizational structure, ensuring that credit and credit card activities are conducted in a consistent and scientific manner These procedures establish a solid foundation for effective supervision, mitigate risks, enhance safety, and clearly define responsibilities at each stage, all while continually improving customer convenience.
The procedures for granting credit at BIDV are conducted as the following chart:
Chart 1.1: The process of credit services deployed in BIDV
BIDV's credit card granting procedures outline clear conditions for issuing cards, ensuring a streamlined process that enhances convenience for customers seeking to utilize these financial services.
In addition, BIDV also has procedures for consistent application and the
Drafting contracts; implementing procedures on security property
Dealing with customers on additional conditions / approvalcond itions
Enter information into the system
Management reviews the contents of credit contracts and verifies the completeness of required documents By informing customers about the necessary paperwork for transactions, BIDV ensures that credit card transactions are processed swiftly, reducing customer wait times and enhancing overall satisfaction with the services provided The specific procedures are outlined below.
Chart 1.2: The process of implementing the credit card service in
Vietcombank's service procedures are meticulously aligned with its organizational charter, ensuring uniformity across its operations The bank currently features two primary service procedures: the credit granting procedure and the credit card granting procedure These procedures are systematically applied throughout the bank's network, promoting consistency and efficiency in service delivery.
Credit granting procedures are established by bank management based on their operational model, ensuring that departmental roles are clearly defined for customer convenience during transactions These procedures also prioritize the bank's business security and the information security of customers using their services Furthermore, they are tailored to suit different customer groups, loan types, and credit technologies to meet all necessary requirements.
Deliver and receive cards + PINs
Issuing credit cards Processing data
BIDV is committed to enhancing customer experience by streamlining document appraisal and service implementation, ultimately saving time for both clients and the bank Credit cards offered by BIDV are recognized as a comprehensive and effective payment solution, leading to a continuous increase in cardholders The bank prioritizes the design of flexible and convenient procedures for credit card issuance Vietcombank further exemplifies this by clearly defining individual responsibilities, outlining usage conditions, and specifying required documents, ensuring that the credit card provision process is efficient and maximizes customer satisfaction.
Currently, Vietcombank's service procedures are governed by mandatory banking regulations, which are documented in written form or handbooks to ensure consistency in operations This approach enables bank staff to clearly understand their responsibilities and foster effective relationships with colleagues, ultimately leading to enhanced customer satisfaction.
The procedures of providing credit of Vietcombank are shown in detail in the chart below:
- Guide customers to make loan applications
- Receive and check loan applications
- Borrowing options and projects of customers
- Head/ Deputy Head of Loan
- Director/ Deputy Director of the branch
- Receive and check the bases for loan disbursement
Check the process of debt use:
- Heads of loan offering branches
- Requests for loansplus business plans
- Documents related to financial situation and business activities
- Loan contracts enclosed with withdrawal schedule
- Check the use of loans
- Make written records and inspection reports
- Continue to urge debt collection
From the experience of improving customer satisfaction through the system of customer service procedures at a number of commercial banks, the lessons can be drawn and applied at VIBas follows:
Firstly, the system of service procedures should be widely applied in the whole system and printed in writing or employee handbook
To enhance customer satisfaction, it is essential to implement service procedures that clearly outline the responsibilities of each individual or division This clarity ensures that employees adopt a positive working attitude aligned with their specific tasks and responsibilities.
The service procedures must be tailored to meet the diverse needs of different customer groups and service types, ensuring that essential information is readily available This approach not only enhances flexibility in service delivery but also reduces customer waiting times, ultimately improving overall satisfaction.
Fourthly, the service procedures should clearly state the conditions for service provision andnecessary documents in order to create maximum convenience for customers
+ Fifthly, the system of service procedures should be strictly and rigorously constructed in strict compliance with current regulations in order to ensure the safety of the bank and customers
Chart 1.3: The process of credit services deployed at Vietcombank
REALITY OF CUSTOMER SATISFACTION TOWARD
Overview of Vietnam International Commercial Joint Stock Bank
2.1.1 The formation and development process
Established on September 18, 1996, the Vietnam International Commercial Joint Stock Bank is headquartered at 16 Phan Chu Trinh, Hoan Kiem Dist., Hanoi Over nearly 21 years, the bank has expanded its network to 160 branches and transaction offices across more than 30 provinces, employing over 5,000 staff members As of March 2017, the bank's chartered capital reached VND 5,644 billion.
Vietnam International Commercial Joint Stock Bank is recognized as one of the top 12 leading banks in Vietnam, showcasing its professional reputation, dynamic approach, and stable financial foundation Between 2014 and 2016, the bank implemented aggressive growth strategies aimed at increasing its market share and enhancing customer engagement Emphasizing a customer-centric philosophy, the bank transformed its branches with updated images, operating models, and improved service facilities These enhancements not only enriched the bank's product offerings but also significantly boosted customer satisfaction, leading to an expansion in its customer base.
Vietnam International Commercial Joint Stock Bank has significantly enhanced its reputation through continuous renovations, achieving 12 prestigious international awards in 2016 alone It proudly became the first Vietnamese commercial bank to obtain the national trademark and was recognized for three consecutive years at this program Notable accolades include being named "Vietnam International Commercial Joint Stock Bank of the Year 2016" by The Banker (Financial Times, UK) and receiving awards for the most innovative SME banking services and best trade finance bank in East Asia from Global Finance and ADB, respectively Additionally, it was honored with the "Best e-Banking" and "Best Retail Mobile Banking Experience 2016" awards by The Asset Triple A Digital Awards These recognitions underscore the bank's outstanding products, services, and competitive position in the Vietnamese financial market, affirming its strategic direction for future growth.
International Commercial Joint Stock Bank will focus on renovating products and services to increase benefits to customers, improving service quality towards international standards
Banks originated from the need to securely store valuable items, such as gold and jewelry, for wealthy individuals in exchange for a fee As society evolved and trade expanded, the demand for money increased, leading to the emergence of banking as a vital industry Banks serve as intermediary financial institutions that mobilize excess capital within society, lending it to individuals and organizations in need This fundamental principle underscores the operation and function of banks in the financial system.
VIB serves as a vital intermediary that mobilizes idle capital by connecting individuals and organizations with those in need of loans By attracting surplus funds, VIB facilitates the transfer of money to borrowers who have the ability to repay The bank's primary source of profit comes from the difference between the deposit rates and the lending rates.
In developing countries like Vietnam, commercial banks, particularly VIB, play a crucial role in ensuring a smooth flow of capital, which is essential for driving economic growth and fostering social development.
Figure 2.1: Organizational structure of VIB
By the end of 2016, VIB has more than 160 transaction offices with a number of staffs over 5.000 in regions nationwide
In Ho Chi Minh City there are 18 branches and transaction offices
In the North (Ha Noi, Hai Phong, Nam Dinh, Hai Duong, Hung Yen, Bac Giang, Bac Ninh, Quang Ninh, Vinh Phuc): 72 branches and offices
In the central areas (Thanh Hoa, Da Nang, Nghe An, Ha Tinh, Lam Dong): 18 branches and transaction offices
In the West (Long An, Tien Giang, Vinh Long, Can Tho, Bac Lieu, Tra Vinh, Dong Thap, An Giang, Hau Giang, Ninh Kieu, Ca Mau): 25 branches, transaction offices
In the East (Dong Nai, Tay Ninh, Binh Duong, Binh Phuoc, Vung Tau): 7 branches and transaction offices and the others
2.1.5 The results of the banking business
Based on smart (and right) policies and efforts, over the past 3 years, Vietnam International Commercial Joint Stock Bank has achieved many remarkable results as follows
Table 2.1: Business results of Vietnam International Commercial
Outstanding credit (loans and guarantee) 77,290 85,030 89,221 7,740 10.0% 4,191 4.9%
Source: Vietnam International Commercial Joint Stock Bank’s business results during the period of 2014-2016
By the end of 2016, total assets of Vietnam International Commercial Joint Stock Bank reached nearly 160 trillion dong, 15.3 percent higher than in
In 2016, customer deposits at Vietnam International Commercial Joint Stock Bank totaled nearly 93 trillion dong, reflecting a slight decrease from 2015 However, the bank's before-tax profit rose by 12.6% year-over-year, reaching 2,922 billion dong, primarily driven by gross profit and an increase in outstanding credit.
In 2016, the outstanding credit growth of Vietnam International Commercial Joint Stock Bank was 4.9%, significantly lower than the banking industry's average growth rate of 10.9% This growth was largely driven by the expansion of retail services, which include individual customers, private enterprises, and SMEs As a result, the bank has seen an increase in business performance over the past three years, primarily attributed to innovations in its business strategy and improvements in service quality.
Reality of customer satisfaction toward procedures for credit and credit
2.2.1 Overview of procedures for credit and credit card granting services
The market is in a constant state of flux, with customers increasingly demanding added value from services beyond mere quality This trend presents both competitive advantages and challenges for banks in Vietnam, particularly for VIB, which recognizes the need to adapt to current market dynamics However, due to its extensive business model, VIB faces difficulties in executing comprehensive innovations This article will explore two key aspects of retail banking procedures that can significantly impact customer satisfaction.
The initial stage of the lending process is crucial as it establishes the foundation for all business operations, ensuring that procedures are followed while delivering comprehensive loan services and maintaining effective risk measurement and control.
The initial phase, known as "Generate Leads," involves identifying and analyzing potential customers through various channels, including cross-selling, call centers, and online platforms The goal of this stage is to compile a comprehensive list of prospective clients.
The next phase is "Perform Sales," where VIB staff will directly engage with potential customers from the established list to introduce and sell products The primary objective during this stage is to secure customer agreements for loans or the purchase of VIB products.
The third stage, "Manage Originations," involves an internal process that appraises and evaluates loan applications based on the bank's defined risk appetite The primary goal of this stage is to determine whether the bank will approve a loan for the customer.
The following stage is ―Process Contracts‖ After getting a confirmation to create a loan, customer & bank will sign off a pack of legal contract to fulfill the commitment among two parties
―Process Collateral‖ is next actions if the loan has collateral as secured
―Disburse fund‖ is the sixth stage In this time, money or a limit will be disbursed & available for customer to use
Next stage is ―Manage Repayment‖ The purpose is to collect & manage repayment of customer for each of period Besides, it also handles all of loan condition changes
The final stage is ―Monitor Loans‖ VIB applies the list of procedures to ensure the compliance without being out of risk control
In reality, bank can customize the process to adapt to specific product, specific segmentation or specific demands that leads to the re-arrangement of stage in queue
VIB's lending process, which encompasses home loans, auto loans, business loans, and credit card services, is structured within its Retail Banking Division This analysis focuses on the first six stages of the lending process, as they have a significant impact on customer satisfaction by shaping relationships, providing quick service, and creating initial impressions In contrast, the final two stages—Management Repayment and Monitor Loans—are primarily supportive and involve long-term interactions between the bank and customers, making them less critical from the customer's perspective.
Process 2.1: Current Lending Procedure Part A Generate Leads &
Process 2.2: Current Lending Procedure Part B Manage Originations
Process 2.3: Current Lending Procedure Part C Process Contract;
1 Customer Customer directly finds out information for lending in various sources They contact to the bank & show up their borrowing demand In this stage, this is called
―Lead‖ because it only is a potential request
Collect the lending request from various resources This can be collected from existing customers, the relation, partnership, etc or be directly contacted from customer Perform sales
3 Branch Contact to customer & arrange the meeting with customer
4 Customer VIB bank sales guy catch up the customer’s need & consult for customer the appropriate product
In case of customer agree to choose VIB service: Go to step 5
5 Branch Collect application’s documents following the product’s checklist of bank from customer In basically, the documents should be includes in 5 groups as:
6 Branch Sales guy runs prequalification step of VIB (E.g CIC,
Customer rating, Collateral Evaluation, etc.) to make sure customer to fulfill minimum conditions to borrow
Minimum conditions unfulfilled: Go to step 7
Minimum conditions fulfilled: Continue to process step 8
7 Customer Be informed for conditions unfulfilled In this step, customer can adjust or cancel the lending request
8 Branch Create the proposal & complete the loan’s application before submission
Based on the proposal information & approval limit authority, it is defined manually to go Retail Banking Approver (step 9) or Risk Approver (step 10)
In the Retail Banking model, loan applications are reviewed and approved by individuals at different managerial levels, including Branch Managers, Region Managers, and Zone Managers, each possessing progressively higher authority limits The designated approver is responsible for making decisions on the application, and if additional clarification or documentation is required, they will request the necessary supplements at step 11 of the process.
Two separate tasks are defined as Re-appraisal & Make decision with two different officials
Verifiers play a crucial role in the loan evaluation process by assessing applications and preparing re-appraisal reports for submission to the approver level During the evaluation, they may issue supplement requests to gather additional information as needed.
The approver level can be Risk Approver (go to step 15) or Credit Committee (go to step
16) which depend on the approval limit authority
11 Branch Receive the specifically supplement request Branch will contact to customer to fulfill if necessary
12 Customer Collect & fulfill the supplement request
13 Branch Consolidate & send to requester
Make decision for loan’s application The declined or approved decision can be made
Make decision for loan’s application The declined or approved decision can be made
A committee is created to review & approve the loan The declined or approved decision can be made
17 Branch Branch is responsible to get the approval result and inform to customer
18 Customer Customer receives the result
The result is declined or customer cancel, the process is end
Customer agree to approval conditions, go to step 19 Process Contracts
19 Branch Request to Credit Admin to support to compose a list of contracts legally
Review the application with approval decision and compose the contracts with appropriate conditions
21 Branch Receive and review list of contracts Then, contracts should be printed before being signed off with customer
22 Customer Customer is required to sign the contracts as legally commitment
If the loan has secured collateral, it is required go to Process Collateral stage If not, go directly to step 26 Process Collateral
23 Customer Customer cooperates with VIB official to register collateral with Government Department as lending secured collateral
24 Branch After register collateral successfully, Branch request to create management entry and store collateral
Review & check relating documents then process to store collateral if condition is fulfilled
26 Customer Request to disbursement as contract agreement
27 Branch Review & transfer request with documents
Review the documents & application Check the pre- disbursement conditions if required Then, disburse money into customer’s current account
29 Branch Check & support customer to transfer into cash if required
Process 2.4: Current credit card granting procedure Part A
Process 2.5:Current credit card granting procedure Part B Manage
Process 2.6: Current credit card granting procedure Part C
Process Contract, Perform Collateral; Disburse Fund
Description of credit card granting procedure
Table 2.3: Credit card process description
1 Customers Customers directly find out information aboutloans from various sources They contact the bank andpresent their borrowing requests This stage is called ―Lead‖ because it is only a potential request
Collect borrowing requests from various resources These requests can be collected from existing customers, relations, partnership, etc or directly contacted by customers
3 Branch Contact customersand arrange meetings with them
4 Customers VIB bank sales staffsreceive the customers’ requestsand consult customers with appropriate products
If customers agree to use VIB’s services,go to step 5
5 Branch Collectscustomers’ applications according to the bank’s checklist Basically, the documents should include 5 types of documents:
6 Branch The sales staffshandle prequalification steps of VIB (E.g
CIC, Customer rating, Collateral evaluation, etc.) to make sure that customers fulfill minimum conditions for loans
minimum conditions are unfulfilled,go to step
minimum conditions are fulfilled,go to step 8
7 Customers Are informed aboutunfulfilled conditions In this step, customers can adjust or cancel the borrowing requests
8 Branch Makes proposalsand completesthe applications before submitting
Based on the proposalsand approval authority, applications can go Retail Banking Approver (step 9) or Risk Approver (step 10)
In the Retail Banking model, the approvers are typically the Branch Manager, Region Manager, and Zone Manager, each possessing higher authority These individuals are responsible for reviewing applications and making decisions If further clarification or additional documents are required, the approver will send supplementary requests to step 11.
Two separate tasks are defined as Re-appraisal anddecision making with two different officials
Verifiers: are responsible for evaluatingapplications and create the re-appraisal reports before submitting to approver level In the process of evaluation, they may send supplementary requeststo step 11
The approver level can be Risk Approver (go to step 15) or Credit Committee (go to step 16) depending on the approval authority
11 Branch Receives supplementary requests The branch will contact customers to fulfill these supplementary requests if
12 Customers Collect and fulfill the supplementary requests
13 Branch Consolidatesand sends to requesters
Make decisionsonapplications The declining or approving decisions can be made
Make decisionson applications The declining or approving decisions can be made
A committee is set up to review and approve the loans The declining or approving decisions can be made
17 Branch The branch is responsible for getting the approving results and informing customers
18 Customers Customers receive the results
the applicationsare declined or customersrefuse to use the services, the procedure is ended
customer agree with the conditions, go to step
19 Branch Requests Credit Admin to make a list of legalcontracts
Review the applications with approving decisions and make contracts with appropriate conditions
21 Branch Receives and reviews the list of contracts Then, contracts are printed before being signed with customers
22 Customers Customersare required to sign the contracts as legal commitments
If the loansrequire collaterals, go to Process Collaterals
Step Processer Detail stage If not, go directly to step 25
23 Branch Currently, VIB only uses VIB’s valuable papers as collateral for credit cards so the Branch requests to create management entry and store collaterals without the collateral registration task
Reviewsand checks relating documents then store collaterals if conditionsare fulfilled
25 Branch Sends card issuance request
Reviews documents and issue cards if the conditions are fulfilled
Cards will be packed then sent to the requesting Branch (step 27) or directly to customers via by post (step 28) based on the pre-registration information
27 Branch Receives&delivers cards to customers
28 Customers Receive new cardsand PINs Then, they are requested to activate the cards to be ready to use
Customers can activate their cards by requesting assistance from Customer Service staff at the branch or by calling the call center After verifying some information, the call center representatives will proceed to activate the cards.
30 Customers Cards are available to use
2.2.2 Analysis of factors affecting procedures for credit and credit card granting services
2.2.2.1 Average time for processing transactions
The appraising and approving tasks were manually handled by people, which was one of the reasons for the low scoresof the time of implementation
At VIB, the average processing time for loans is 10.46 working days, while credit card approvals take approximately 5.2 working days However, the approval decisions are significantly influenced by the risk tolerance levels of different approving authorities, which can create inconsistencies and confusion for customers, ultimately impacting their satisfaction negatively.
Figure 2.2: Average transaction processing time + Time of procedure implementation
Currently, customers did not appreciate VIB's implementationtime Specific results were shown in the table below:
Table 2.4: Assessment of customer on time service performance
Customers generally do not feel impatient while waiting for transactions at the bank, indicating a satisfactory experience The processing time for credit documents aligns well with the bank's established procedures, which are deemed reasonable by clients Additionally, the waiting time at the bank is perceived as manageable, contributing to an overall positive banking experience.
You do not have to come back many times to deal with credit procedure/ credit card granting procedure of the bank 3.93 3.11 -0.82
The survey revealed a significant gap between customer expectations and actual service assessments, with differences ranging from 0.31 to 0.81 points Customers experienced long wait times, averaging 10.46 working days for credit approvals and 5.2 days for credit card approvals, primarily due to manual handling of procedures without modern equipment This inefficiency not only prolonged transaction times but also led to subjective credit approval decisions, which varied based on the approver's risk tolerance Consequently, customer satisfaction fell short, highlighting the need for improvements in service delivery to align with expectations.
Customers frequently faced the inconvenience of returning multiple times to complete documentation during service procedures, resulting in a low satisfaction survey score of 3.11 points, which fell short of expectations by 0.82 points This significant discrepancy arose from the extensive approval processes required for credit and credit card applications at VIB, involving multiple departments such as document approval, property appraisal, and accounting Additionally, the emergence of new documentation requirements in each department often necessitated further visits, leading to increased transaction times and negatively impacting overall customer satisfaction.
In summary, the survey indicated that customers expressed dissatisfaction with the duration of the credit and credit card approval processes at VIB, which has negatively impacted the bank's service revenue growth in recent years.