DETERMINANTS OF CUSTOMER SATISFACTION OF INTERNET BANKING IN VIETNAM

i TRƯỜNG ĐẠI HỌC MỞ TP HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITEÙ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL MBAVB4 HO MINH TUAN DETERMINANTS OF CUSTOMER SATISFACTION OF INTERNET BANKING IN VIETNAM MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION (PART-TIME) Tutor’s Name: Dr NGUYEN VAN PHUC Student’s Name: HO MINH TUAN Ho Chi Minh City (2011) ii COMMITMENT I hereby committed that the thesis content was prepared and written by myself with information obtained from reliable sources for the partial fulfillment of the requirement for the degree of Master in Business Administration program HoChiMinh City, December, 2011 HO MINH TUAN iii ACKNOWLEDGEMENT First of all, I would like to express my deepest gratitude to Dr NGUYEN VAN PHUC who gave me a lot of valuable comments and guidance during this thesis Secondly, I would like to express my sincere acknowledgement to Belgian professors from Solvay Brussels School of Economics and Management who taught me not only valuable knowledge and experiences on business administration but also analytical, creative thinking and professional working methods Thirdly, I would like to appreciate all Vietnamese professors from Ho Chi Minh City Open University who transfer me knowledge, experiences and spirit which guided me during this program Fourthly, I would like to thank Mr Serge Bywalski, Ms Hien and Ms Ha – program coordinators - for their support on schedule planning, academic procedure and extracourses tutoring Next, I would like to thank my team members and classmates who studied together during two years, contributed innovative ideas, shared experiences and developed close friendship Finally, I would like to express love to my parents and younger sister who have encouraged and motivated me during the program v ABSTRACT Internet banking is a new channel of banking services which have a lot of benefits against other traditional channels It allows customers to perform a wide range of banking services electronically via banks’ websites It helps customers to enjoy their financial services not only anywhere, anytime but also faster and more efficient Internet banking becomes a key and strategic component of every bank nowadays but its customers remain very modest Both customer development and customer retention are much focused Customer development takes considerably more time and cost because other potential Vietnamese customers have low level of income, less knowledge to use Internet and long time habit of cash transaction Therefore, customer retention strategy is more preferable by improving level of customer satisfaction This research is to find key determinants of customer satisfaction of Internet banking in Vietnam and to propose strategic recommendations for banks to increase customer satisfaction level and then to succeed in their customer retention About findings of the study, the three most important determinants of customer satisfaction of Internet banking are convenience, image, security and website content (security and website content have the same important level) In turn, key determinants of convenience are enabling customers to make their transaction at anytime and anywhere Key determinants of security are certification from a famous international institution and available 24/24 hot-line for any queries Key determinants of website content are accessible at anytime, each transaction performs fast and having confirmation notice Key determinants of customer support are fast, free hot-line available for any queries, collection of regular feedback from customers and consulting the reason and solution for future experiences Key determinants of promotion are higher saving interest rate and discounts for eating, shopping, tourism at some specific partnership stores Key determinants of image are modern and dynamic Keywords: Vietnam, Internet banking, customer satisfaction, determinants vi TABLE OF CONTENT COMMITMENT ii ACKNOWLEDGEMENT iii TUTOR’S COMMENT iv ABSTRACT v TABLE OF CONTENT vi ABBREVIATION ix LIST OF FIGURES x LIST OF TABLES xi CHAPTER 1: INTRODUCTION TO THE STUDY 1.1 Rationale of the study 1.2 Problem statement 1.3 Research objectives and questions 1.4 Significance and scope of the study 1.5 Research methodology 1.6 Structure of the study CHAPTER 2: LITERATURE REVIEW 2.1 Customer satisfaction 2.2 Service quality and Website quality 2.3 Research model 2.4 Internet banking 10 2.4.1 History of Internet banking 10 2.4.2 Definition of Internet banking 11 2.4.3 Security method 11 vii 2.4.4 The architecture of Internet banking 12 2.4.5 The advantages and disadvantages of Internet banking 14 2.4.6 The current situation of Internet banking in the World 15 2.4.7 The development of Internet banking in Vietnam 17 CHAPTER 3: RESEARCH METHODOLOGY 20 3.1 Type of research 20 3.2 Research design 21 3.3 Target population 24 3.4 Sample size 24 3.5 Questionnaire design 24 3.6 Data collection 25 CHAPTER 4: DATA ANALYSIS AND FINDINGS 26 4.1 Profile information of respondents 26 4.2 Usage volume of current and potential products 28 4.3 Determinants of customer satisfaction 29 4.4 Determinants of each customer satisfaction factor 32 4.4.1 Determinants of convenience 32 4.4.2 Determinants of security 33 4.4.3 Determinants of website content 35 4.4.4 Determinants of customer support 36 4.4.5 Determinants of promotion 38 4.4.6 Determinants of image 39 CHAPTER 5: CONCLUSION AND RECOMMENDATION 41 5.1 Conclusion 41 5.2 Recommendation for banks to improve their customer satisfaction 42 viii Image building 42 Product development 42 5.3 Limitation of the study and future suggestion 43 REFERENCES 44 APPENDICES 46 ix ABBREVIATION ASEAN Association of Southeast Asian Nations VNNIC Vietnam Internet Network Information Center ACSI American Customer Satisfaction Index CORE Centralized Online Real-time Exchange ATM Automatic Teller Machine SMS Short Message Service PIN Personal Identification Number TAN Transaction Identification Number SSL Secure Socket Layer VND Viet Nam Dong SEC Social Economic Class x LIST OF FIGURES Figure 1.6: The structure of the study Figure 2.1.1: American Customer Satisfaction Index Figure 2.1.2: Diagram of customer satisfaction factors Figure 2.3: Variables development Figure 2.4.4: The architecture of Internet banking 12 Figure 2.4.7.1: Internet users in Vietnam 2004 - 2010 16 Figure 2.4.7.2: Online business development 2007 - 2010 17 Figure 3.2.1: Research design Figure 4.1.1: Gender distribution 25 Figure 4.1.2: Age group distribution 25 Figure 4.1.3: Distribution of educational level 26 Figure 4.1.4: Distribution of Internet banking usage frequency 26 Figure 4.2.1: Usage volume of current products 27 Figure 4.2.2: Usage volume of potential products 28 Figure 4.3: Customer satisfaction determinants 29 Figure 4.4.1: Determinants of convenience 31 Figure 4.4.2: Determinants of security 32 Figure 4.4.3: Determinants of website content 33 Figure 4.4.4: Determinants of customer support 34 Figure 4.4.5: Determinants of promotion 35 Figure 4.4.6: Determinants of image 36 xi LIST OF TABLES Table 2.2.1: Service quality dimensions Table 2.2.2: Website quality dimensions Table 3.1: Comparison between traditional and Internet survey method 20 Table 3.2.1: Variables coding 22 Table 4.3.1: T-test for customer satisfaction determinants 29 Table 4.3.2: T-test for Likert scale 29 Table 4.4.1: T-test for determinants of convenience 31 Table 4.4.2: T-test for determinants of security 32 Table 4.4.3: T-test for determinants of website content 33 Table 4.4.4: T-test for determinants of customer support 34 Table 4.4.5: T-test for determinants of promotion 35 Table 4.4.6: T-test for determinants of image 36 37 Figure 4.4.4: Determinants of customer support Having support from free hot-line hot and fast for any troubles 85 Communicating politely and gentle 73 Consulting the reason and solution for customers in order not to face the same trouble in future 83 Notify new Internet banking products and their benefits that a customer would care about 65 Update feedbacks and wishes of customers about service quality on a regular basis 85 20 40 60 80 100 Table 4.4.4: T-test test for determinants of customer support Because value of Sig (2-tailed) (2 is less than 0.05, there are statistically significant groups: (CUS1, CUS5, CUS3); (CUS2, ( CUS4) From above figure and T-test T analysis, key determinants of customer tomer support are (CUS1, CUS5, CUS3): Fast and free hot-line hot for any troubles Consulting the reason and solution s for future experiences Collecting regular feedback feed about the service quality 38 In summary, customers will highly satisfy with customer support function of the service if it has fast, free hot-line line available for query, collection of regular feedback from customers and consulting the reason and solution for future experiences 4.4.5 Determinants of promotion Dimension Code PROMOTION PRM Subvariable PRM1 PRM2 PRM3 PRM4 Statement Higher saving interest rate Discount for eating, shopping, tourism at some specific partnership stores Raincoat, pull or helmet as a gift Prizes in lucky draw Figure 4.4.5: Determinants of promotion Higher saving interest rate 93 Discount for eating, shopping, tourism at some specific partnership stores 88 Raincoat, pull or helmet as a gift 79 Prizes in lucky draw 80 Table 4.4.5: T-test test for determinants of promotion 20 40 60 80 100 39 Because values of Sig (2-tailed) (2 are less than 0.05, there are statistically significant signi groups: (PRM1, PRM2); ); (PRM3, ( PRM4) From above figure and T-test, T key determinants of promotion are (PRM1, PRM2): Higher saving interest rate rate Discount for eating, shopping, tourism at some specific partnership stores stores In summary, customers will highly satisfy with promotion of the service if it offers higher saving interest rate and discount for eating, shopping, tourism at some specific partnership stores 4.4.6 Determinants of image Dimension Code IMAGE IMG Subvariable IMG1 IMG2 IMG3 IMG4 Statement Modern Dynamic Efficient Professional Figure 4.4.6: Determinants of image Modern 85 Dynamic 78 Efficient 65 Professional 59 20 40 60 80 100 40 Table 4.4.6: T-test for determinants of image Because value of Sig (2-tailed) is less than 0.05, there are statistically significant groups: (IMG1, IMG2); (IMG3, IMG4) From above figure and T-test analysis, key determinants of image (psychological satisfaction) are (IMG1, IMG2): Modern Dynamic In summary, customers will highly satisfy with image of the service if it is communicated as symbols of “modern” and “dynamic” 41 CHAPTER 5: CONCLUSION AND RECOMMENDATION This chapter is to make conclusion on the research questions made for this study in chapter one based on data findings from chapter four and to propose recommendation for banks to improve the level of customer satisfaction In addition, limitation of this study and future suggestion are reviewed 5.1 Conclusion The key determinants of customer satisfaction of Internet banking in Vietnam are found as following: The top three most important satisfaction factors are (1) convenience, (2) image, (3) security and website content The less important factors are customer support and promotion The key determinants of each satisfaction factor of Internet banking in Vietnam are found as following: In terms of convenience, key determinants are (1) enabling customers to make their transaction at anytime and (2) anywhere In terms of security, key determinants are (1) certification from a famous international institution and (2) available 24/24 hot-line for any queries In terms of website content, key determinants are (1) be accessible at anytime, (2) each transaction performs fast and (3) having confirmation notice In terms of customer support, key determinants are (1) fast, free hot-line available for any queries, (2) collection of regular feedback from customers and (3) consulting the reason and solution for future experiences 42 In terms of promotion, key determinants are (1) higher saving interest rate and (2) discount for eating, shopping, tourism at some specific partnership stores In terms of image, key determinants are (1) modern and (2) dynamic 5.2 Recommendation for banks to improve their customer satisfaction The recommendation is to improve as far as possible the most influential satisfaction factors Based on the findings, the top three factors are chosen: convenience, image, security and website content (security and website content have the same important level) In turn, to improve each satisfaction factor, key determinants of each are selected appropriately Based on this philosophy and research findings, two strategic recommendations are proposed: Image building The image of Internet banking should be “modern” and “dynamic” in order to get highest satisfaction from customers Banks should build their branding as modern and dynamic coherently Banks should have plans to communicate and cherish customers with this desired image Banks should put effort on advertising to increase the awareness of Internet banking as a new, modern and dynamic channel of banking services Product development To get highest customer satisfaction, banks should make sure that “the transactional website and telephone hotline must be accessible 24/24” and “transactions must be performed fast and with confirmation notice” Banks should add “confirmation notice” feature to each service of Internet banking and put more efforts to software enhancement such as algorithm, software engineering models and performance measurement tools In addition, banks should upgrade current telephone line to broader bandwidth, higher voicetransmitted quality and several backup telephone lines Moreover, banks should present security certification of Internet banking from a famous international institution in their transactional websites Last but not least, banks should take care and have backup plan of 43 electricity system and Internet network devices such as servers, routers, switches, hubs, databases, domain names… 5.3 Limitation of the study and future suggestion The number of respondents in this research might not be large enough to represent the whole research population Therefore, it could cause some deviations in the result The research variables are chosen from foreign previous research and current situation of Internet banking in Vietnam Hence, there is possibility that the research might not cover all customer satisfaction factors of Internet banking usage Future research should be conducted in larger scale with more specific variables to Vietnamese environment It would be interesting to investigate customers’ behaviors and satisfaction of only one bank and propose more specialized strategy for that bank 44 REFERENCES A.Parasuraman, Valarie A Zeithaml, Leonard L Berry (1985), “A conceptual model of Service quality and its implications for future research”, Journal of Marketing A Parasuraman, V.A Zeithaml, and L.L Berry (1988), “SERVQUAL: A multiple-item scale for measuring consumer perceptions of service quality”, Journal of Marketing Minjoon J and Shaohan C (2009), “The key determinants of Internet banking service quality: a content analysis”, International Journal of Bank Marketing Fornell, C., M D Johnson, E W Anderson, J Cha and B E Bryant (1996), “The American Customer Satisfaction Index: Nature, Purpose and Findings”, Journal of Marketing Zeithaml Parasuraman & Berry (1990), “Delivering Quality Service, Balancing Customer Perceptions and Expectations”, Free Press Kotler P, Amstrong G, Saunders J, Won V (2001), “Principle of Marketing” Philip Kotler, Eleventh Edition (2003), “Marketing Management”, Pearson education, Inc., Uper Saddle River, New Jersey Hunt, H Keith (1977), "Overview and Future Research Directions in Conceptualization and Measurement of Consumer Satisfaction and Dissatisfaction”, Marketing Science Institute Rust, R.T and Oliver, R.T (1994), “Service Quality; New directions in 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multivariate statistics (4th ed.)”, Needham Heights, MA: Allyn & Bacon Cimigo (2010), “Net-citizens report 2010 - Internet Usage and Development in Vietnam” Hoang Trong & Chu Nguyen Mong Ngoc (2008), “Statistical data analysis with SPSS”, Statistics Publisher 46 APPENDICES Appendix 1: Questionnaire Form Welcome you to our survey about Internet banking! This survey will take around 5-10 minutes SR: single response (respondents can choose choice only) MR: multiple response (respondents can choose or more choices) You are… SR Male Female 2 How old are you? SR 18-24 25-34 35-45 Above 45 How is your level of education? SR High school College University Master Doctor 4 Do you use Internet banking service (also be called e-banking) of a bank? SR Yes No FINISH 47 How often you use Internet banking? SR everyday once per 2-3 days once a week once per month once per months once per months once per months Which products are you using of Internet banking? MR 7 Domestic transfers Term deposit E-statement Water, electric, telephone payment Do you wish to use more Internet banking products as following? MR Termination of term deposit before maturity date Credit loan Revolving credit loan None of above How you feel when using Internet banking? MR Strongly disagree Internet banking is very convenient (able to make transactions at any time, any where as long as you have Internet access like at home, company, café ) Internet banking assures transactional security (security device or one-time password besides your own private password) The transactional website is professional, fast, sufficient information Be supported carefully when facing troubles Be promoted (eating coupon, lucky draw, higher saving interest rate…) Internet banking usage gives me a feeling of professional, dynamic and efficient Strongly agree 5 5 5 48 According to you, website quality is… MR 10 According to you, good customer support is… MR 11 Having support from free hot-line and fast for any troubles Communicating politely and gentle Consulting the reason and solution for customers in order not to face the same trouble in future Notify new Internet banking products and their benefits that a customer would care about Update feedbacks and wishes of customers about service quality on a regular basis Which kinds of promotion you prefer from Internet banking? MR 12 Accessible at any time, 24/24 Easy to use Having friendly, nice and professional design Sufficient in data content Having continuously updated information Fast in transaction accomplishment Having confirmation notice for each done transaction Higher saving interest rate Discount for eating, shopping, tourism at some specific partnership stores Raincoat, pull or helmet as a gift Prizes in lucky draw How you feel when using Internet banking? MR Modern Dynamic Efficient Professional 49 13 According to you, convenience of Internet banking is presented at… MR 14 You can make transactions at any time you like, 24/24 You can make transactions at any where as long as you have Internet access to the transactional website Transactions are finished fast, correctly and clearly You can easily check your past activities in a month by a summary statement sent automatically Hot-line is available 24/24 for your any query You not have to waste time for coming to bank counter and queuing According to you, security of Internet banking is presented at… MR Besides your private password, a transaction requires one other password to increase confidentiality A famous international institution about security certifies your Internet banking service You are supported anytime from available hot-line for any troubles You are updated frequently about best practices on transactional security and are warned with recent frauds THANK YOU FOR PARTICIPATING IN THE SURVEY! Appendix 2: Advanced comparison of determinants of Convenience 50 Appendix 3: Advanced comparison of determinants of Security Appendix 4: Advanced comparison of determinants of Website Content 51 Appendix 5: Advanced comparison of determinants of Customer Support Appendix 6: Advanced comparison of determinants of Promotion Appendix 7: Advanced comparison of determinants of Image