THEORETICAL FRAMEWORK ON CUSTOMER SATISFACTION
Retail banking services
In a market economy, commercial banks serve a vital role by acting as a bridge between various economic entities, with retail banking services being particularly crucial Numerous studies have explored the concept of retail banking services, highlighting their significance in facilitating financial transactions and supporting economic growth.
Literally, retail banking is the provision of banking products and services to consumers in small quantities (Mạc Quang Hưng, 2010)
Retail banking refers to the delivery of banking products and services directly to individual customers, either through a network of physical branches or via digital channels such as information technology, electronics, and telecommunications.
Retail banking services cater to the general public and encompass a variety of financial offerings, including installment loans, mortgages, securities credit, deposit accounts, and personal banking services.
Currently, commercial banks are restructuring their operating models according to customers: individuals, SMEs, and large enterprises Therefore, it can be said that
“Retail banking services are understood as banking services provided to individuals, business households, and SMEs through a network of traditional distribution channels or an electronic distribution network”
1.1.2 Characteristics of retail banking services
Retail banking services primarily target individuals, households, and small to medium-sized enterprises (SMEs), with individual customers and SMEs significantly outnumbering wholesale clients Typically, a commercial bank that offers both wholesale and retail services will find that retail customers constitute approximately 70-90% of its overall customer base (Tô Khánh Toàn, 2015).
Retail banking offers a wide array of products and services tailored to meet the diverse needs of its extensive customer base With customers varying in income, age, qualifications, and understanding of banking, the demand for customized solutions is significant This diversity underscores the importance of offering a rich selection of banking options to cater to different preferences and financial situations.
In 2015, it became essential for commercial banks to continually evolve and enhance their offerings to provide a diverse range of retail banking products This includes both traditional services and modern banking solutions tailored to the unique needs of various customer segments While the volume of transactions is significant, the value of each transaction tends to be relatively small.
Retail customers, being numerous and diverse in their demands, contribute to a significantly higher volume of transactions compared to wholesale customers Although individual consumer loans and payments for goods and services are relatively small, the cumulative balance from retail services constitutes a substantial source of capital Furthermore, by maintaining and developing products and services that cater to customer needs, commercial banks can ensure stable income and sustainable growth from their retail activities.
A robust and diverse distribution network is essential for retail banking to effectively handle its extensive transaction volume In addition to conventional channels like branch networks and transaction offices, advancements in information technology have expanded access for retail customers through various platforms, including ATMs, KIOSs, POS systems, online banking, telephone banking, and mobile applications (Cassy Gleason & Akua Soadwa, 2014).
Transaction costs in retail banking are notably high due to the large number of customers and transactions, despite each transaction typically involving a small amount This leads to significant expenses related to lending, appraisal, supervision, and management.
Modern technical infrastructure and information technology are essential for the effective operation of retail banking services These elements are crucial not only for commercial banks in the wholesale sector but also play a significant role in enhancing the performance and growth of retail banking.
Modern information technology and robust technical infrastructure are essential for retail banking services, enabling commercial banks to efficiently store and process vast databases from their branches A centralized management system ensures that all transactions are instantly recorded at the data center, allowing for timely and accurate data updates across various industries and services This technological advancement has facilitated the growth of e-banking services, enabling online transactions and automated banking through ATMs, POS systems, and mobile platforms Consequently, banks can offer advanced retail banking services, including automatic money transfers, capital mobilization, and diverse residential lending options.
Retail banking services face a wide array of dispersed risks, as these risks are divided across numerous transactions involving small amounts from a large customer base, including individuals, business households, and small to medium-sized enterprises (Cassy Gleason and Akua Soadwa, 2014) Due to the low value of each transaction, banks can effectively respond and adapt to shifts in the business environment, resulting in significantly lower risks compared to wholesale banking operations.
Retail banking services are characterized by significant fluctuations, unlike the stability seen in wholesale banking This volatility arises from the ever-changing consumer demands and small-scale production (Trịnh Bá Tửu, 2014) As a result, commercial banks must remain agile in forecasting market trends, adapting their retail banking products, and strategically adjusting interest rates and service fees, as well as timing promotions effectively.
1.1.3 Types of retail banking services
Commercial banks mobilize capital from individuals, households or SMEs in the society for the purpose of banking business (lending and investing) The main forms include:
- Mobilizing capital from individual customers: Capital is mobilized via the form of time deposits, demand deposits, checkable deposits (Reynold & Philip, 2015);
- Mobilizing capital from business households, SMEs: Capital is raised via the following services: Time deposits, checkable deposits or current accounts; non- transaction deposits (Trịnh Bá Tửu, 2014)
- Mobilizing capital through the issuance of valuable papers, including certificates of deposit, promissory notes, bills of exchange and bonds
Retail credit services are the direct lending to borrowers, who are individuals, households and SMEs Types of retail credit include:
- Based on credit granting subjects: Personal loans; Household loans; SME loans
Credit granting serves various purposes, including loans for production, business, industry, and commerce, as well as personal consumption, real estate purchases, agricultural production, and import-export activities Additionally, lease-purchase credit is available to support these diverse financial needs.
Credit periods are categorized based on their duration: short-term credit, which finances current assets, has a maximum duration of 12 months; medium-term credit, used for fixed asset investments, ranges from 12 to 60 months; and long-term credit, aimed at funding investment projects, extends beyond 60 months (Lê Văn Tư, 2001).
- Based on customers’ credit status: Unsecured loans and secured loans
- Based on the lending method: Stand-alone loans; Limit loans; Overdrafts; Credit cards; Underwriting loans; Discounted valuable papers; Hire-purchase credit;
- Based on repayment methods: Lump sum repayment at Maturity; Installment loans;
- Domestic payment services: Issuing and paying domestic checks, payment via payment orders, payment via collection orders (Mạc Quang Hưng, 2010)
- International payment services: Import and export payment, export/import letter of credit, export/import collection of payment (Phan Thị Thu Hà, 2004)
Customer satisfaction towards retail banking services
Numerous studies have explored the concept of customer satisfaction, leading to various interpretations Terrence Levesque and Gordon H.G McDougall (1996) define customer satisfaction as a customer's perception of a service provider following their experience with that service Similarly, Philip Kotler (2000) describes customer satisfaction as the emotional response a person has when comparing the outcomes of consuming products or services against their expectations Ultimately, the degree of satisfaction is influenced by the gap between the actual results received and the anticipated outcomes.
Customer satisfaction hinges on the alignment between expectations and actual results: when results meet expectations, customers are satisfied; when they exceed expectations, satisfaction levels rise significantly These expectations are shaped by past shopping experiences, recommendations from friends and colleagues, and information provided by sellers and competitors To enhance customer satisfaction, businesses must invest more in marketing programs, as highlighted by Oliver (1999) and Zineldin.
Customer satisfaction is defined as the emotional response of customers towards a service provider, which arises from comparing their actual experience with their expectations (Levesque and McDougall, 1996) Kotler (2003) emphasizes that satisfaction reflects the feelings a person has after evaluating the outcomes of a product or service against their prior expectations Additionally, Oliva et al (1995) assert that customer satisfaction is fundamentally linked to the value of a product or service in relation to customer expectations.
Customer satisfaction is defined as the state in which a product or service meets or exceeds the needs, wants, and expectations of consumers This satisfaction leads to repeat purchases, customer loyalty, and positive word-of-mouth recommendations.
Customer satisfaction encompasses various concepts linked to several key factors, including the affection and attitude customers hold towards service providers, their expectations regarding the provider's ability to fulfill their needs, the performance results and values derived from the service, and their willingness to continue utilizing the service.
Based on the concepts of customer satisfaction and the concepts of retail banking services, the author presents her views on customer satisfaction towards retail banking services as follows:
Customer satisfaction in retail banking reflects the perceptions of individuals, households, and SMEs regarding the products and services offered by commercial banks When the quality of these offerings surpasses customer expectations, it leads to enhanced customer satisfaction.
In order to measure customer satisfaction, 5 important indicators can be used:
Customer satisfaction is assessed by comparing expectations with actual perceptions, as established by Parasuraman in 1985 When customers perceive the service they receive as exceeding their initial expectations, they report satisfaction; conversely, if their experience falls short, dissatisfaction ensues.
Customers are more inclined to recommend products and services to friends and family when they are satisfied with their experiences.
Evaluating the gap between customers' actual and ideal experiences is crucial for determining if a product or service fulfills their needs When customers find that their actual experience surpasses their expectations, it significantly enhances their satisfaction.
Customer satisfaction is significantly influenced by affection and perception, which shape an individual's liking or disliking of a product or service The quality of service benefits, such as response time, plays a crucial role in this satisfaction Perception involves the customer's judgment regarding the product's usefulness and its alignment with their needs, ultimately determining their overall satisfaction or dissatisfaction.
Customer satisfaction plays a crucial role in determining the likelihood of repeat business, influencing whether customers will continue using the service or purchase additional products Organizations can effectively gauge customer satisfaction by evaluating the probability of customers returning for future services.
1.2.2 Research models related to customer satisfaction towards retail banking services 1.2.2.1 ECSI model
Customer satisfaction is a crucial asset for businesses and organizations aiming to enhance service quality, foster customer loyalty, and boost competitiveness According to the European Customer Satisfaction Index (ECSI) model, customer satisfaction is influenced by four key factors: image, perceived value, and the perceived quality of both tangible and intangible products Additionally, the quality of products and services plays a significant role in shaping customer satisfaction.
Source: Cited in Nguyen Ngoc Chanh (2019)
Perceived quality significantly influences customer satisfaction and encompasses two main dimensions: perceived product quality, which refers to customers' evaluations of the tangible aspects of a product, and perceived service quality, which involves assessments of intangible factors like after-sales support and delivery conditions Both dimensions consist of key attributes inherent to the product or service, including responsiveness, utility, and security, that shape the overall customer experience.
The American Customer Satisfaction Index (ACSI) model highlights that perceived value is shaped by perceived quality and customer expectations, with the latter directly influencing the former Higher customer expectations elevate the perceived quality standards for products and services To ensure customer satisfaction, businesses must consistently meet or exceed these quality standards Ultimately, customer satisfaction is derived from the interplay of perceived quality, expectations, and perceived value; when perceived quality and value surpass expectations, it fosters customer loyalty Conversely, if they fall short, it can result in customer complaints.
Source: Cited in Nguyen Ngoc Chanh (2019) 1.2.2.3 La Thi Thanh Binh’s model (2017)
In her 2017 study, La Thi Thanh Binh conducted research on customer satisfaction regarding the quality of personal lending services at Asia Commercial Joint Stock Bank, utilizing the SERVPERF model developed by Cronin and Taylor to identify key service quality factors.
RESEARCH METHODS
Research process
The reseach on on customer satisfaction towards retail banking services at Vietcombank – Bac Ha Noi branch was carried out according to the following process:
Source: Designed by the author
The above diagram can be explained as follows: First, the author defined the research problem and set the research objectives After determining the research
The author established a theoretical framework addressing the research problem, incorporating foundational theories related to customer satisfaction and reviewing both domestic and international studies on customer satisfaction in banking services A research model was proposed, followed by the selection of research methods, which included preliminary research involving expert interviews and questionnaire design, as well as formal research utilizing SPSS for data analysis through Cronbach Alpha, Exploratory Factor Analysis, and Multiple Regression Ultimately, the study assessed the level of customer satisfaction with the bank's retail banking services.
Research Methods
This study developed a scale to evaluate the factors influencing customer satisfaction in retail banking services, drawing on established research models from scholars such as Cronin & Taylor (1992) and Avkiran (1994) The survey questions for each variable were adapted from these prior studies, focusing on key research factors including Employee Conduct, Credibility, Responsiveness, Tangibles, and Service Accessibility The primary aim was to assess the interviewees' awareness of the factors that significantly impact their satisfaction with retail banking services.
The study utilized a one-to-one discussion technique for data collection, involving direct conversations between the author and respondents (Tho, 2011) This approach was essential due to the unique nature of the research and the diverse perspectives of the participants, allowing for deeper insights During the interviews, the author clearly defined and explained research concepts to ensure that the interviewees fully understood, enabling them to provide valuable contributions to the study.
The interviewees were chosen using convenience sampling methods, a form of non-probability sampling where the author selected participants based on accessibility This approach allows researchers to easily identify and engage with respondents who are readily available.
The study involved interviews with six experienced leaders from the banking sector, specifically branch managers and retail banking department heads These experts, with years of experience in enhancing customer satisfaction, provided valuable insights relevant to the research.
The author conducted interviews with experts to identify the key factors influencing customer satisfaction in retail banking services at branches Following the discussions, the author presented a research model featuring six factors, which most experts agreed upon The findings from these interviews are summarized in the accompanying table.
Table 2.1: Interview questions to experts
Source: Synthesized by the author
According to Table 2.1, a significant majority of experts concurred that the factors outlined in the model significantly influence customer satisfaction with retail banking services, with each factor receiving a selection percentage exceeding 80% Consequently, the author has decided to include these factors in the study.
To conduct this research phase, the author developed a questionnaire targeting factors that influence customer satisfaction This questionnaire was then distributed to experts for their insights The feedback from these experts was summarized, leading to adjustments in the questionnaire for improved accuracy and relevance.
24 formal interviews were conducted The purpose of the scale adjustment was to change some ideas to match the actual situation
A quantitative research study was conducted using a survey questionnaire, which was refined during preliminary research before being finalized for data collection The gathered data was utilized to assess the reliability of the scale, evaluate the scale's effectiveness, and test the proposed model.
The author utilized a closed-ended, one-option format for the questionnaire, which was specifically designed for face-to-face interviews Respondents, who were customers utilizing retail banking services at the branch, provided their answers on an answer sheet The questionnaire comprised two distinct parts.
- The main part consisted of questions about the factors in the model: Employee conduct, Reliability, Responsiveness, Tangibles, and Service Accessibility
- The remaining parts were designed to collect information and test the difference in individual characteristics in evaluating the influence of the factors
The survey data was collected by distributing questionnaires directly to customers, ensuring they fully understood the content to minimize inaccuracies and avoid disturbing uncooperative respondents.
Sample designing
Sampling is crucial in quantitative research as it impacts both the cost and quality of the project (Tho, 2011) Researchers can choose between probability and non-probability sampling methods, each offering distinct advantages Currently, non-probability sampling is frequently utilized in quantitative studies Consequently, the author opted for the non-probability sampling method to conduct the research.
The larger the sample size is, the higher the accuracy is (Trong et al., 2011) Sample size is usually based on allowable cost, accuracy requirements, sampling frame
Previous research indicates that an adequate sample size for studies typically ranges from 100 to 150 samples (Hair et al., 1998) Comrey and Lee (1992) provide a scale for sample size evaluation: 100 is considered poor, 200 fair, 300 good, 500 very good, and 1000 or more excellent Some scholars suggest that the minimum sample size should be determined by the ratio of samples to variables in factor analysis Gorsuch (1983, cited by MacClallum et al., 1999) asserts that the number of samples should be at least five times the number of variables In the author's study, with 5 independent variables and 26 factors, the minimum sample size calculated is 130 To account for potential invalid samples, the author plans to collect 350 samples.
Methods of data collection
Primary data: The primary data was collected from April 1 to April 30, 2021 The primary data was collected through a survey with customers of the branch with the non-probability sampling method
Secondary data was gathered to evaluate the business performance of the branch, focusing on the outcomes of retail banking services, programs, and activities Detailed findings from this research will be presented in Chapter 3.
Methods of data analysis
To conduct the research, the author employed the following data analysis methods:
The comparative method was employed to analyze and assess research indicators through tables and graphs, highlighting changes over various years or periods This approach also facilitated the evaluation of shifts in research indicators against original benchmarks, revealing both the positive aspects and limitations of retail banking services at the branch level.
- Data analysis with SPSS software To conduct this study, the author used the following analysis methods:
First, preliminary assessment of the scale with Cronbach's Alpha reliability coefficient
Reliability is a measurement used to avoid random errors (Truong & Ngoc,
2011) In this study, Cronbach's Coefficient Alpha was used to evaluate the reliability of each scale and the suitability of the items
Cronbach's Alpha coefficient is a statistical measure that assesses the internal consistency of a scale by examining the correlation among its items (Truong & Ngoc, 2011) This coefficient evaluates measurement reliability through the variance of individual items and their correlation with the overall scores of the remaining items According to Tho (2011), Cronbach's Alpha is calculated using a specific formula to determine the degree of reliability in the measurement.
In which: α : Cronbach’s Alpha k : number of items in the scale
T : Total variance of the scale
Many researchers suggest that a Cronbach's Alpha value of 0.8 to 1 indicates a good scale, while a value between 0.7 and 0.8 is considered acceptable Additionally, some experts propose that a Cronbach's Alpha of 0.6 or higher may be appropriate for studies involving new concepts or unfamiliar respondents (Nunnally, 1978; Peterson, 1994; Slater, 1995 cited Trong & Ngoc, 2011) Consequently, this study accepts a Cronbach's Alpha of 0.6 or more as satisfactory.
To assess the reliability of each item, those with an item-total correlation of 0.3 or higher are deemed acceptable, as indicated by Truong and Ngoc (2011) Conversely, items with a correlation below 0.3 will be excluded from the scale.
Second, evaluation of the scale with EFA
Factor analysis will answer whether the observed variables used to examine the impact of factors affecting customer satisfaction have high cohesion and whether they
27 can be combined into a single factor to consider Variables that do not guarantee reliability will be removed from the scale
Once the reliability of the scale has been assessed, the next crucial step is to evaluate its value, focusing on two key aspects: convergence validity and discriminant validity To effectively analyze these types of validity, Exploratory Factor Analysis (EFA) will be employed.
To assess the suitability of Exploratory Factor Analysis (EFA), two key tests are utilized: Bartlett's test of sphericity and the Kaiser-Meyer-Olkin (KMO) measure Bartlett's test evaluates whether the correlation matrix is an identity matrix, which consists of zeros except for ones on the diagonal A significant result, indicated by a p-value less than 5%, leads to the rejection of the null hypothesis (H0) that the correlation matrix is an identity matrix, suggesting that the variables are indeed correlated (Tho, 2011; Trong & Ngoc, 2011).
The KMO test is an index that assesses the strength of the correlation coefficient between two variables in relation to their partial correlation coefficient (Norusis, 1994) For effective use of Exploratory Factor Analysis (EFA), a KMO value exceeding 50 is required (Tho, 2011; Trong & Ngoc, 2011).
In selecting the number of factors for analysis, three common methods are utilized: the eigenvalue criterion, the inflection point criterion, and the predetermination of factors This study adopts the eigenvalue criterion, which stipulates that factors must have an eigenvalue of at least 1 (≥1) (Tho, 2011) Additionally, when assessing scale validity through Exploratory Factor Analysis (EFA), it is essential for the factor loading coefficient to be equal to or greater than 0.50, while the weight difference should not exceed 0.30 (Tho, 2011).
When evaluating data, it is crucial to consider the Total Variance Explained (TVE), which indicates the percentage of variance captured by the factors A TVE of 50% or higher is essential, signifying that the general variance should exceed the specific variance Additionally, an error rate of 60% or more is deemed acceptable (Tho, 2011).
The correlation coefficient is analyzed to assess the relationship between customer satisfaction and the factors influencing it in retail banking services Following this, a multiple linear regression analysis using ordinary least squares is performed to evaluate the theoretical model and identify the significant influences on customer satisfaction.
28 magnitude of each factor that affects customer satisfaction towards retail banking services The process of linear regression analysis in the study was performed as follows:
- Including variables in regression analysis is the method of including variables at the same time
- Using F test to consider the suitability of the overall linear regression model
- Using t-test to reject the hypothesis that the overall regression coefficients are 0
- Evaluating the level of impact (strong or weak) among the impact variables through Beta coefficient
To verify the reliability of the final regression equation, a thorough examination of key linear regression assumptions was conducted This analysis included testing for a linear relationship, ensuring constant variance of residuals, confirming the normal distribution of residuals, assessing the independence of residuals, and evaluating multicollinearity.
CUSTOMER SATISFACTION TOWARDS RETAIL BANKING
Overview of Vietcombank – Bac Ha Noi branch
3.1.1 History of foundation and development
Vietcombank - Bac Ha Noi Branch, previously known as Vietcombank Soc Son, was established on January 13, 2013, under Decision No 28/QĐ-VCB-HĐQT by the Chairman of the Board of Directors of the Joint Stock Commercial Bank for Foreign Trade of Vietnam The branch is located at Lai Xa Industrial Cluster, Van Xuan Street, Kim Chung Commune, Hoai Duc District, Hanoi City.
Amid the robust growth of the national economy and Hanoi's development, Vietcombank - Bac Ha Noi Branch has demonstrated consistent progress, solidifying its reputation in the innovation of currency trading and financial services Currently, the branch operates with a head office and three transaction offices, staffed by over 70 professionals, offering a comprehensive range of modern banking products and services.
Under the strategic leadership of the Board of Directors and the unwavering commitment of the bank's staff, the bank has experienced significant positive growth in its business activities over the years The branch consistently meets the objectives established by the Board and plays an active role in advancing the socio-economic development of the city.
Vietcombank – Bac Ha Noi Branch functions as a multi-functional branch of Vietcombank, overseen by a Board of Directors responsible for management and staffing decisions in accordance with the bank's authorized framework Beneath the Board, distinct functional departments operate to ensure efficient service delivery and organizational effectiveness.
- Customer Service Department: performs the function of providing banking products and services to customers, supporting the Customer Department according to Vietcombank's regulations
Figure 3.1: Organizational structure of Vietcombank – Bac Ha Noi Branch
Source: Vietcombank – Bac Ha Noi Branch
- Customer Department: performs the function of providing financial products/services to customers including individual and institutional customers and develops the market according to Vietcombank's regulations in different periods
The Human Resources and Administration Department at Vietcombank is responsible for a variety of administrative tasks, including supporting information technology systems, managing clerical duties, overseeing driving operations, and handling funds, all in accordance with the bank's regulations.
- Accounting Department: performs the function of accounting finance, reporting statistics and taxes, and verifying documents at the branch
- Debt Management Department: performs functions related to credit management and credit support for arising documents at the branch
- Transaction Department: performing the function of selling and providing products and services to customers according to Vietcombank's regulations in different periods
The economic development has positively impacted the business activities of commercial banks, notably Vietcombank - Bac Ha Noi Branch Increased incomes and substantial idle money in the economy have provided banks with opportunities to enhance capital mobilization to satisfy lending demands Between 2018 and 2020, the branch experienced significant results in capital mobilization.
Human Resource s and Administ ration
Debt Manage ment Departm ent BOARD OF DIRECTORS
Table 3.1: Results of capital mobilization activities of Vietcombank – Bac Ha Noi
Difference 2020/2019 Value % Value % Total capital mobilization 3,784 4,354 4,454 570 15.06 100 2.29
Categorized by types of customers
Foreign currency converted to VND 496 558 293 62 12.5 -265
(Source: Business results of Vietcombank – Bac Ha Noi Branch)
Vietcombank - Bac Ha Noi Branch has consistently increased its capital mobilization from customers over the years, with a balance rising from VND 3,784 billion in 2018 to VND 4,354 billion in 2019, reflecting a 15.06% growth To cater to long-term deposit needs, the bank implemented various capital mobilization activities and promotional programs, offering competitive interest rates and attractive incentives In early 2020, facing the pressures of Circular 22/2019/TT-NHNN from the State Bank of Vietnam, the branch intensified its efforts in capital mobilization amidst significant competition, taking strategic measures to establish a stable capital foundation to support growth and comply with regulatory requirements.
In 2020, both the domestic and global economies faced significant challenges due to the outbreak of the Covid-19 pandemic, leading to business stagnation and a decline in credit demand To combat the epidemic, Hanoi implemented stringent prevention measures, resulting in widespread disruptions for businesses and economic entities across the country As operations halted and credit demand fell, commercial banks experienced a decrease in mobilization interest rates, driven by a lack of competitive pressure amid abundant liquidity.
Vietcombank - Bac Ha Noi Branch has lowered its deposit interest rates by 0.1% to 0.5% per year, leading to a capital mobilization balance of VND 4,254 billion by the end of 2020, marking a modest growth rate of 2.29% Despite the reduction in mobilization interest rates, the branch successfully launched the VCB Digibank application, integrating VCB - Mobile B@nking and VCB - Internet B@nking to promote non-cash payment services in line with the state's 5K program for epidemic prevention This initiative not only enhanced the branch's CASA capital but also contributed to an overall increase in total mobilized capital amid the challenging economic landscape.
Vietcombank - Bac Ha Noi Branch has not only increased its mobilized capital but has also shifted its capital mobilization structure towards sustainability, with a significant portion coming from retail customers From 2018 to 2020, the branch successfully implemented promotional packages that contributed to meeting capital adequacy requirements amid the need for substantial scale growth Additionally, the branch focused on enhancing stable capital sources from organizations and individuals while prioritizing low-cost capital mobilization segments.
Between 2018 and 2020, Vietcombank - Bac Ha Noi Branch experienced significant success in capital mobilization, with a steady increase in mobilized capital However, the branch predominantly focused on mobilizing capital in VND and has yet to prioritize foreign currency mobilization, largely due to the associated high-risk levels.
In the near future, the bank should enhance its strategies for mobilizing foreign currency capital to boost the effectiveness of its capital mobilization efforts, ultimately leading to improved business performance.
Lending is the primary business focus of Vietcombank - Bac Ha Noi Branch, representing the largest share of its asset portfolio and significantly contributing to the branch's profitability In this segment, the bank temporarily transfers capital usage rights to borrowers, who are required to repay both principal and interest after a specified period Vietcombank - Bac Ha Noi Branch relies on mobilized capital to facilitate these lending activities.
Ha Noi Branch carries out other credit and intermediary activities
Vietcombank has successfully enhanced its capital mobilization and credit activities under the motto "Accompanying customers." The bank is committed to innovating and improving its existing products and services while also introducing new offerings tailored to the diverse needs of its clientele As a result, the credit activities at Vietcombank's Bac Ha Noi Branch have yielded positive outcomes.
Table 3.2: Lending activities at Vietcombank – Bac Ha Noi Branch
Difference 2020/2019 Value % Value % Outstanding loan balance 2,350 2,486 2.771 136 5,47 285 10,28
Categorized by type of loan
Foreign currency converted to VND 250 265 285 15 5.66 20 7.54
(Source: Business results of Vietcombank – Bac Ha Noi Branch)
From 2018 to 2020, Vietcombank - Bac Ha Noi Branch experienced a steady increase in its outstanding credit balance, rising from VND 2,350 billion in 2018 to VND 2,771 billion by 2020 Despite the challenges posed by the Covid-19 pandemic, which impacted numerous production and business enterprises, the branch remained committed to following the directives of its Head Office and adhering to its operational motto.
Business of retail banking services at Vietcombank – Bac Ha Noi branch
Vietcombank - Bac Ha Noi Branch has recognized the crucial role of capital mobilization in retail banking, effectively tapping into the potential of local residents and small to medium-sized enterprises Over the years, the branch has expanded its network to facilitate easier deposit access for customers, promoting the opening of deposit accounts and encouraging payment transactions through bank accounts By implementing flexible interest rate policies aligned with market conditions and the State Bank's guidelines, the branch has successfully increased its retail mobilized capital through various methods, including savings with adaptable terms and the issuance of promissory notes and bonds in both VND and foreign currencies The significant growth in mobilized capital during the period from 2018 to 2020 reflects the branch's successful strategies.
Table 3.4: Results at of retail capital mobilization at Vietcombank – Bac Ha Noi
Difference 2020/2019 Value % Value % Retail capital mobilization 2,284 2,354 2,454 70 3.06 100 4.25
Small and medium- sized enterprise customers 715 740 750 25 3.49 10 1.35
Proportion of retail capital mobilization 60.35 54.06 55.09
(Source: Business results of Vietcombank – Bac Ha Noi Branch)
Between 2018 and 2020, the retail capital of Vietcombank - Bac Ha Noi Branch grew significantly, rising from VND 2,284 billion in 2018 to VND 2,454 billion in 2020 Individual and household customer deposits constituted the majority of this growth, reaching VND 1,704 billion in 2020, which marked a 5.58% increase from the previous year In contrast, capital mobilized from small and medium-sized enterprises was lower, totaling VND 750 billion in 2020, with a modest increase of 1.35% compared to 2019.
Over the years, the retail mobilized capital at Vietcombank - Bac Ha Noi Branch has significantly decreased from 60.35% to 55.09%, indicating a decline in the branch's retail banking services amid increasing market competition Unlike other commercial banks that are adopting free service policies to attract demand deposits, Vietcombank continues to charge relatively high service fees, which diminishes its competitive edge This reduction in retail mobilized capital highlights a critical limitation that the branch must address to enhance its retail banking service offerings.
Lending serves as the primary profitable service for commercial banks, particularly for Vietcombank - Bac Ha Noi Branch Between 2018 and 2020, the branch experienced significant growth and restructuring in its retail loan offerings, achieving commendable results during this period.
Table 3.5: Results of retail credit services at Vietcombank – Bac Ha Noi Branch
Difference 2020/2019 Value % Value % Retail loan balance 1,011 1,096 1,029 85 7.75 -67 -6.11
1 Loans for production and business 600 700 675 100 16.67 -25 -3.57
2 Loans for housing and car purchase 350 347 335 -3 -0.85 -12 -3.45
Proportion of retail loan balance 43.02 44.08 37.13
(Source: Business results of Vietcombank – Bac Ha Noi Branch)
Between 2018 and 2019, Vietcombank - Bac Ha Noi Branch experienced a growth in retail lending revenue, rising from VND 1,011 billion in 2018 to VND 1,096 billion in 2019 However, in 2020, this revenue saw a slight decline of VND 25 billion, or 3.57%, attributed to the impact of the epidemic The branch's revenue growth was primarily driven by its expansion into various customer segments and adherence to the Headquarter's strategy of transitioning from wholesale to retail lending, as well as diversifying lending methods and sectors, which significantly broadened its credit scale.
In the retail lending structure, the branch mainly focused on loans for business and production, accounting for more than 50% of total loan sales and obtaining VND
In 2020, the total loans reached 675 billion VND, with housing and car purchase loans making up a significant portion at 335 billion VND, while consumer loans constituted the smallest share at 19 billion VND This retail credit structure indicates the branch's stable interest income, primarily due to the medium and long-term nature of most lending sectors However, it also highlights potential liquidity and term risks for the branch.
To ensure sustainable development, commercial banks are increasingly focusing on service fees alongside loan interest income Vietcombank, particularly the Bac Ha Noi Branch, has implemented various strategies to boost sales and enhance fee collection from payment services The outcomes from 2018 to 2020 reflect these efforts.
Table 3.6: Domestic payment and international payment services at Vietcombank
Difference 2020/2019 Value % Value % Revenue from payment services (billion dong) 9,473 10,843 10,720 1,370 14.46 -123 -1.13
Fee collection from payment services
(Source: Business results of Vietcombank – Bac Ha Noi Branch)
- Domestic payment services: To fulfill customer's payment request,
Vietcombank - Bac Ha Noi Branch provides a variety of payment methods, including intra-bank payments, inter-branch transactions, interbank payments, and treasury services both regionally and nationally Additionally, the branch fully implements non-cash payment instruments such as checks, payment orders, collection orders, and letters of credit, ensuring a comprehensive range of financial services.
Vietcombank - Bac Ha Noi Branch has demonstrated significant growth in domestic payment services, achieving a revenue of VND 5,398 billion in 2018, which increased to VND 6,527 billion by 2020 Additionally, revenue from fee collections rose from VND 1,129 million in 2018 to VND 1,288 billion in 2020 This success is attributed to the bank's technological advancements and the implementation of electronic payment services across its system, which have enhanced payment quality and efficiency, allowing for same-day money transfers.
Vietcombank, particularly its Bac Ha Noi Branch, offers a range of international payment services, including money transfers (Telegraphic Transfer and Mail Transfer), payment collections, and letters of credit, with the latter being the preferred method due to its legality and safety However, from 2018 to 2020, the branch experienced a decline in international payment activities, with revenue from these services falling to VND 750 billion in 2020, a decrease of 3.84%, while fee collection revenue dropped to VND 1,006 million, down by 7.11% This downturn was largely attributed to the disruptions caused by the Covid-19 pandemic, which affected global import and export operations and led to restrictions on travel.
Stagnant import and export activities led to a decrease in customer demand for services and a decrease in service revenue
Table 3.7: Card services at Vietcombank – Bac Ha Noi Branch
Difference 2020/2019 Value % Value % Revenue from card services 168 256 205 88 52.38 -51 -19.92
Revenue from card payment (billion dong) 90 173 115 83 92.22 -58 - 33.52 Revenue from card use
Income from card services (million dong) 1,185 1,515 1,381 330 27.84 -134 -8.84
(Source: Business results of Vietcombank – Bac Ha Noi Branch)
Vietcombank - Bac Ha Noi Branch experienced fluctuations in card service revenue, with payment via POS consistently representing a significant portion In 2018, the branch generated VND 168 billion from card services, which rose to VND 256 billion in 2019, marking a 52.38% increase However, in 2020, the revenue declined to VND 205 billion, reflecting a 19.92% decrease compared to the previous year.
In 2020, Vietcombank - Bac Ha Noi Branch experienced a decline in revenue from card service payments, primarily due to the effects of the Covid-19 pandemic The outbreak led to complicated circumstances and the implementation of social distancing measures, which reduced people's travel and shopping activities, ultimately causing a significant drop in card payment revenues.
Revenue from card services of Vietcombank in general and Vietcombank - Bac
The Ha Noi Branch of Vietcombank imposes various fees, including ATM transaction fees, discounts at card-accepting units, credit card usage fees, annual fees, and additional charges Overall, the fees for utilizing Vietcombank's services are considered relatively high The fee collection policy for certain card services has played a significant role in boosting the bank's service income.
The fee schedule implemented by Vietcombank, particularly at the Bac Ha Noi Branch, has led to a significant loss of customers, as many were dissatisfied with the charges This dissatisfaction has negatively impacted the branch's retail banking performance.
E-banking is a group of banking services provided to customers through electronic devices In recent years, with the explosion of the information technology revolution, e-banking services have gradually become a tool that creates competitive advantages for commercial banks With the current technology platform, Vietcombank in general and Vietcombank - Bac Ha Noi Branch in particular are constantly taking measures to increase sales and income from e-banking services The specific results in the period 2018-2020 were as follows:
Table 3.8: E-banking services at Vietcombank - Bac Ha Noi Branch
Revenue from E- banking services 49,376 57,546 123,862 8,170 16.55 66,316 115.24 Revenue from
Income from E- banking services 743 830 788 87 11.71 -42 -5.06 Income from SMS banking service 98 102 76 4 4.08 -26 -25.49
Income from collecting money transfer fees on the system 645 728 712 83 12.87 -16 -2.20
(Source: Business results of Vietcombank – Bac Ha Noi Branch)
Research results on customer satisfaction towards retail banking services at
3.3 Research results on customer satisfaction towards retail banking services at Vietcombank – Bac Ha Noi branch
To conduct the survey, the author distributed questionnaires and to collect opinions of customers who were using retail banking services of Vietcombank - Bac
Ha Noi Branch The characteristics of the respondents participating in the survey were as follows:
Table 3.10: Characteristics of survey respondents
(Source: Research results of the author, 2021)
In a study of 329 samples, 185 were male, representing 56.2% of the total, while 144 were female, making up 43.8% Although there were more male respondents than female, the difference in gender representation was not statistically significant.
The survey results revealed that the age group of 25-35 years old represented the largest segment of respondents, comprising 34.3% with 113 customers, likely due to their increased demand for banking services like loans and savings Conversely, the 18 to 25 age group accounted for only 11.6%, with just 38 customers, indicating a lower interest in these services.
The survey revealed that a majority of respondents, 58.7%, held college degrees, totaling 193 out of 329 customers Additionally, 22.8% of participants, or 75 customers, had university-level education The survey also included 14 respondents with postgraduate qualifications and 47 with intermediate education, highlighting the diverse educational backgrounds of the customers.
47 relatively high, so these subjects would have sufficient awareness to make accurate and reliable assessments
The survey revealed that 42.2% of respondents were office workers, totaling 139 customers, indicating a stable income and frequent banking transactions Civil servants accounted for 20.1% with 66 customers, while 64 retirees and 60 customers from various other occupations, including students and housewives, were also represented Overall, the diverse occupational backgrounds of the survey participants contribute to a comprehensive and representative assessment of customer demographics.
The survey revealed that 45% of respondents, totaling 148 customers, reported a common income level ranging from VND 10 million to VND 15 million This stable income allows them to maintain regular transactions with the bank, while other income levels represented a smaller percentage of the overall responses.
The survey revealed that most respondents were male, aged 25-35, with high educational backgrounds and stable incomes, primarily working in office environments These traits align with the profile of customers utilizing retail banking services at Vietcombank - Bac Ha Noi Branch.
3.3.2 Analysis of the scale reliability
Reliability refers to the consistency and stability of a measurement scale, indicating its ability to minimize random errors (Parasuraman, 1991) In this study, Cronbach's Coefficient Alpha was utilized to assess the reliability of each scale and the appropriateness of individual items A Cronbach's Alpha of 0.8 or higher is generally deemed excellent, while a range of 0.7 to 0.8 is considered acceptable Additionally, some researchers argue that a Cronbach's Alpha of 0.6 or above can be sufficient when exploring new concepts or contexts (Nunnally, 1978; Peterson, 1994; Slater, 1995 cited in Hoang Trong & Chu Nguyen Mong Ngoc, 2005) Consequently, this study accepts a Cronbach's Alpha of 0.6 or greater as reliable.
Table 3.11: Reliability of the scale
Cronbach's Alpha if Item Deleted
Cronbach's Alpha if Item Deleted Cronbach's Alpha
Cronbach's Alpha if Item Deleted Cronbach's Alpha
Cronbach's Alpha if Item Deleted Cronbach's Alpha
Cronbach's Alpha if Item Deleted Cronbach's Alpha
Cronbach's Alpha if Item Deleted Cronbach's Alpha
(Source: Research results of the author, 2021)
The analysis of scale reliability demonstrated high reliability across all scales, with Cronbach's alpha coefficients ranging from 0.817 to 0.862, exceeding the acceptable threshold of 0.6 Additionally, the corrected item-total correlations for the observed variables in each scale were all above 0.5, indicating that none of the variables were ineffective and that they effectively represented their respective scales Consequently, the survey data obtained was deemed reliable and appropriate for further analysis.
3.3.3 Results of Exploratory Factor Analysis (EFA)
The factor analysis results are presented in the table below, detailing the number of factors identified, the observed variables associated with each factor, the factor loadings, and the essential values required for the analysis process.
Table 3.12: Reliability of the scale
(Source: Research results of the author, 2021)
The factor analysis results showed that:
- The KMO was 0.794, which was higher than the minimum level of 0.6, showing that the survey data ensured reliability
- The Average Variance Extracted was 66.739, indicating that the variation of the analyzed factors could explain 66.73% of the total variation
- The Sig value was 0.0001, which ensured the difference among the factors
Assessing the impact of various factors on customer satisfaction is crucial for identifying effective strategies to enhance it A regression equation was developed to quantify the influence of these factors, derived from exploratory factor analysis, thereby establishing a clear hierarchy of their effects on customer satisfaction.
Y: dependent variable expressing customer satisfaction β0, β1,β2, β3, β4, β5: regression coefficients
X1, X2, X3, X4, X5: independent variables in the same order as in the factor analysis
The results of the regression analysis were stated as follows:
Std Error of the Estimate
Sum of Squares df Mean
(Source: Research results of the author, 2021)
The results of regression analysis showed that:
- The Adjusted R Square was 0.551, indicating that the variation of the five factors could explain 55% of the variation of customer satisfaction
- ANOVA test showed the suitability of the model with a Sig value of 0.000< 0.05 The Durbin-Watson coefficient was 1.847 (nearly 2), showing that there was no autocorrelation among independent variables
- The VIF value of every factor was 1, showing that there was no multicollinearity in the survey data
- The Sig value of every variable in the model was 0.000