RESEARCH BACKGROUND
The retail banking segment is emerging as a promising business opportunity for banks, particularly in challenging domestic and international financial markets With a recent slowdown in credit growth, banks are increasingly investing in modern retail banking models to diversify their revenue streams beyond traditional credit profits This shift allows banks to tap into a larger market and mitigate business risks Vietnam, with its nearly 90 million population and rising income levels, presents a significant potential retail market for commercial banks Additionally, the growth of small and medium enterprises (SMEs) indicates a flourishing market driven by increasing income and business expansion Retail banking encompasses the provision of banking services to individuals and SMEs via bank networks or digital platforms, offering services such as savings and transaction accounts, mortgages, personal loans, debit and credit cards, and online banking.
Since 2008, the retail banking model has evolved significantly, marked by the rise of card services and consumer loans, with the number of circulating cards increasing to 44.6 million by April 2012, a twelvefold increase since 2006 This growth is complemented by the installation of over 13,700 ATMs and 83,000 POS terminals, enhancing customer access to banking services Additionally, online banking has expanded rapidly, growing from just four banks offering services in 2004 to 40 banks by the third quarter of 2012, primarily providing information, bill payments, and cash transfers Furthermore, the integration of financial products, such as bancassurance, which combines banking services with insurance, has created new revenue streams for banks and diversified offerings to attract customers and enhance service utility.
The expansion of the banking market has intensified competition in retail banking, prompting banks to enhance service quality to strengthen their business positions and brand reputation By focusing on cultivating client relationships, banks aim to attract prestigious clients and mitigate risks associated with sustainable retail banking A Capgemini Group survey of 18,000 retail customers across 35 countries revealed that in 2012, 79% of customers considered changing their banking products and services, a 12% increase from 2011 In Vietnam, 69% of customers expressed uncertainty about their loyalty to their current bank, primarily due to concerns over service quality, interest rates, and fees As customer retention becomes increasingly vital, banks must identify the factors influencing customer perceptions and implement strategies to foster positive impressions.
Research indicates that the performance of frontline employees is crucial to the quality of service operations, as they represent the organization to customers (Harline and Ferrell, 1996; Schneider, Wheeler and Cox, 1992) Customers seek relatedness, assurance, empathy, and reliability from these employees, which directly impacts service quality (Brady and Cronin, 2001) To enhance service quality, banks must focus on improving frontline employee performance, ensuring they possess the knowledge and experience necessary to effectively consult on services/products, introduce new offerings, and resolve customer issues As a result, enhancing frontline employee performance has become a key focus for managers and economists alike.
RESEARCH OBJECTIVES
In order to solving problems that mentioned above, the study specify the following objectives:
-Figure out the most important factors that contribute to change frontline employee’s performance to customers in Vietnam retail banking sector
-Examine the extent of each factor influence on frontline employees’ performance The remainder of the paper presents the literature review and hypotheses and articulates the research method.
RESEARCH METHODOLOGY AND RESEARCH SCOPE
This study involved reviewing relevant literature and research to develop an English questionnaire, which was then tailored to the needs and culture of the Vietnamese population through translation An initial in-depth interview with ten participants provided valuable feedback for refinement The questionnaire underwent a pilot study with 50 responses to address specific issues prior to a larger-scale study Subsequently, the finalized questionnaire was distributed via two methods: face-to-face interviews and an online survey using Google Drive, shared across social networks and banking websites.
The study will be conducted in Ho Chi Minh City, the largest and most populous city in Vietnam, home to nearly 8 million residents A minimum of 200 frontline employees and 200 customers will be observed to gather comprehensive data for the research.
The analysis of the collected data was conducted using SPSS software, employing multiple linear regression techniques The process began with testing Cronbach's alpha to assess the reliability of the measurement scale, followed by Exploratory Factor Analysis to evaluate its validity After verifying the necessary assumptions, multiple regression analysis was performed to interpret the results.
This research includes five chapters:
The first chapter presents the background and purpose of the study through following part: Research Background, Research Objectives, Research Methodology and Scope
Chapter 2: Literature review and Hypotheses
This chapter reviews previous research to support and enhance the hypotheses related to frontline employee performance It presents literature and findings from various global studies, highlighting the positive influence of three key factors: personality traits, human resource practices, and organizational climate Based on this foundation, hypotheses and a conceptual model are developed and tested within the context of Vietnam's retail banking sector.
This chapter outlines the research methodology, detailing the processes involved in conducting the survey, including the identification of target populations, selection of sampling techniques, data collection procedures, and measurement scales for items It is organized into two main sections: Sample and Measurement Scale.
Chapter 4 presents the survey results, where the author evaluates items, hypotheses, and the conceptual model The chapter details the analytical steps taken, including the Cronbach’s Alpha Coefficient of Reliability Test, Exploratory Factor Analysis, and Multiple Regression Analysis, to thoroughly assess the database.
Chapter 5: Conclusions, Implications, Limitations and Further Research
The final chapter synthesizes the research findings and discussions, highlighting their significance to the thesis Additionally, the author outlines practical implications for real-world applications To provide a comprehensive overview, the chapter also addresses limitations and suggests directions for further research.
CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES
In this chapter, the literature that concerned to frontline employees will be provided and hypotheses will be suggested:
Frontline employees play a crucial role in banking by directly interacting with customers and influencing their perceptions of the bank's products and services According to Solomon et al (1985), these employees serve as the primary link between the organization and its customers, with their performance significantly affecting customer retention and sales While many banks focus on acquiring new customers, they often overlook the importance of maintaining existing relationships, as each interaction with frontline staff shapes public opinion about the bank Customers seeking information about retail banking typically turn to these employees for guidance, making their first impressions vital Chase and Tansik (1983) highlight the necessity for frontline employees to possess strong knowledge and communication skills, enabling them to navigate unpredictable situations effectively Additionally, Schneider and Bowen (1984) assert that these employees are invaluable for generating new service ideas and implementing them to enhance customer satisfaction.
Previous studies have examined the factors influencing employee performance in high-contact services, where direct interaction between service providers and customers is essential (Chase, 1981) Schlesinger and Heskett (1991) identified two key elements in developing a service strategy for high-contact organizations: human resources and service delivery systems Human resources encompass tangible attributes such as experience and education, as well as intangibles like personal characteristics, while service delivery systems refer to the processes and infrastructure for delivering services Harline and Ferrell (1996) highlighted that employee attitudes and behaviors significantly impact customer perceptions and service quality; inexperienced service providers often experience lower job satisfaction and performance, negatively affecting customer perceptions Conversely, employees with control over service encounters—exhibiting self-efficacy, job satisfaction, and adaptability—are better positioned to meet customer needs Goldstein (2003) further elaborated on service strategy dimensions in high-contact environments, aligning with Schlesinger and Heskett's framework, which includes work systems, staff education and training, and staff well-being to enhance employee motivation and organizational effectiveness.
Liao and Chuang (2004) explored the factors affecting employee service performance and customer outcomes, proposing a conceptual model that highlights the influence of managerial practices and service climate on customer perceptions of service quality and financial performance at the store level Their research introduced a multilevel framework, examining employee service performance as a function of individual characteristics and service environment factors Unlike previous studies that focused solely on organizational or individual levels, this research uniquely integrates both macro and micro approaches to assess employee service performance However, it is important to note that the study's findings are limited, as the survey samples were drawn from a single occupation within 25 restaurants in the U.S Midwest Building on Liao and Chuang's work, this study aims to identify factors impacting frontline service employees in retail banking.
Research has shown that personality traits significantly influence individual work performance across various industries, including restaurants, hotels, banks, and hospitals To enhance this understanding, Costa and McCrae (1994) developed the Big Five model, which assesses five distinct personality traits—agreeableness, conscientiousness, extroversion, neuroticism, and openness—without overlap Studies by Liao and Chuang (2004) and Barrick and Mount (1993) indicate that four of these traits (conscientiousness, neuroticism, extraversion, and agreeableness) are linked to job performance, particularly in service-oriented roles that require interpersonal interactions Notably, conscientiousness, characterized by dependability, responsibility, carefulness, and perseverance, along with extroversion, which describes individuals as energetic, communal, and confident, positively impacts employee performance in high-contact services.
Agreeableness is characterized by a person's inclination to get along with others, while neuroticism is associated with difficulties in emotional regulation, often leading to feelings of hostility, anxiety, depression, and vulnerability.
Yavas, Karatepe, and Babakus (2009) emphasize the need to shift the focus from the basic personality traits of the Big Five model to specific traits that are more relevant for frontline service jobs They identify intrinsic motivation, competitiveness, and self-efficacy as key traits that impact job performance in high-stress environments These traits are particularly important for frontline employees who must maintain a positive demeanor while interacting with customers Their research reveals a significant connection between these specific personality traits and the job performance of frontline employees in various hotels in Ankara, Turkey.
Intrinsic motivation, as defined by Ryan and Deci (2000), refers to engaging in activities for the inherent satisfaction they provide, rather than for external rewards or pressures Oldham and Cummings (1996) further emphasize that intrinsic motivation drives employees to find excitement in their work, although not everyone is intrinsically motivated for every task This type of motivation enhances creativity, work quality, and job performance, as individuals are driven by personal satisfaction, skill development, and self-esteem In the banking sector, intrinsically motivated frontline employees exhibit greater creativity and a strong desire to excel, leading them to tackle challenges independently Consequently, fostering intrinsic motivation is crucial for service enterprises, as it promotes positive personality traits and encourages employees to explore new solutions and take calculated risks.
Hypothesis 1a: There is a positive relationship between Intrinsic motivation and front line service performance
Research indicates a positive relationship between competitiveness traits and job performance (Carsrud and Olm 1986; Brown and Peterson 1994; Brown, Cron, and Slocum 1998) Competitiveness is defined as an internal and intentional drive to engage in activities involving interpersonal competition (Kohn 1992) According to Spence and Helmreich (1983), individuals with high competitiveness enjoy competition and possess a strong desire to outperform others Kohn (1992) further notes that highly competitive individuals consistently monitor their performance to ensure they surpass their peers, setting ambitious goals and exerting extra effort in their preparation and execution In the banking industry, competitive frontline employees are motivated by their desire to excel professionally, leading them to set higher revenue targets and pursue faster promotions, ultimately driving them to engage in behaviors that enhance their performance.
Hypothesis 1b: There is a positive relationship between Traits competitiveness and front line service performance