VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL *************** HOANG THI NGOC NHUNG BUSINESS STRATEGY DEVELOPMENT FOR RETAIL BANKING SERVICES IN BIDV HAI BA TRUNG MASTER THESIS HA NOI 2021 VI[.]
VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL *************** HOANG THI NGOC NHUNG BUSINESS STRATEGY DEVELOPMENT FOR RETAIL BANKING SERVICES IN BIDV HAI BA TRUNG MASTER THESIS HA NOI - 2021 VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL *************** HOANG THI NGOC NHUNG BUSINESS STRATEGY DEVELOPMENT FOR RETAIL BANKING SERVICES IN BIDV HAI BA TRUNG XÂY DỰNG CHIẾN LƯỢC KINH DOANH DỊCH VỤ NGÂN HÀNG BÁN LẺ BIDV HAI BÀ TRƯNG Major: Master in Financial Management Code: 8340202.01QTD MASTER THESIS Supervisor: Dr Nguyen, Thi Huong Lien HA NOI - 2021 ABSTRACT Thesis Title: Business strategy development for retail banking services in BIDV Hai Ba Trung Pages: 70 University: Vietnam National University Graduate School: International School Date: October, 2020 Degree: Master Graduate Student: Hoang Thi Ngoc Nhung Supervisor: Dr Nguyen Thi Huong Lien Keywords: business strategy development, retail banking services, BIDV This thesis focuses on analyzing retail banking services at BIDV Hai Ba Trung in the period from 2014 to 2018 The thesis will analyze the competitive situation in retail banking services under the perspective of the Porter Five model Besides, the thesis will analyze the limitations of BIDV Hai Ba Trung and propose solutions ACKNOWLEDGEMENT First of all, I want to thank my supervisor, Dr Nguyen Thi Huong Lien During my master's thesis, I received a lot of help and new knowledge from my supervisor It can be said that, with the help of Dr Nguyen Thi Huong Lien, I have reached a new milestone in my research journey Besides, I would also like to thank all lecturers at VNU – International School These lecturers did not stop sharing their knowledge as well as motivated me to try hard during this thesis Finally, I also want to thank my friends in the MFM1 class, who always assist me in the process of studying and implementing this thesis Thank you! Author Hoang Thi Ngoc Nhung TABLE OF CONTENTS ABSTRACT ACKNOWLEDGEMENT TABLE OF CONTENTS LIST OF FIGURES AND TABLES CHAPTER 1: INTRODUCTION 1.1 BACKGROUND OF THE STUDY 1.2 RESEARCH PROBLEMS 1.3 RESEARCH OBJECTIVES AND QUESTIONS 1.4 SCOPE OF THE STUDY 10 1.5 SIGNIFICANT OF THE STUDY 10 1.6 STRUCTURE OF THE STUDY 10 CHAPTER 2: LITERATURE REVIEW 12 2.1 FRAMEWORK OF BUSINESS STRATEGY 12 2.2 CONCEPT OF RETAIL BANKING 13 2.3 DEVELOPMENT FOR RETAIL BANKING SERVICES 22 2.4 MAIN FEATURES OF RETAIL BANKING SERVICES 24 CHAPTER 3: METHODOLOGY 27 3.1 FRAMEWORK OF QUALITATIVE RESEARCH METHOD 27 3.2 ANALYZING TOOLS 32 3.2.1 Porter’s Five Forces Model 32 3.2.2 Competition Analysis 34 3.3 RESEARCH PROCESS 35 CHAPTER 4: DATA ANALYSIS AND FINDINGS 36 4.1 CURRENT SITUATION OF BIDV HAI BA TRUNG 36 4.2 CURRENT SITUATION OF BIDV HAI BA TRUNG RETAIL BANKING STRATEGY 38 4.2.1 BIDV Hai Ba Trung level of strategy 38 4.2.2 BIDV Hai Ba Trung shift of retail banking 40 4.3 EVALUATION ON BIDV HAI BA TRUNG RETAIL BANKING SERVICE STRATEGY BY PORTER’S FIVE FORCES MODEL 41 4.3.1 Customer banking focus 42 4.3.2 Internal Promotions to Cross-Sell Services 47 4.3.3 Customer Relationship Management (CRM) 59 4.3.4 Extended Hours, Services and Locations 62 4.3.5 New customer incentives 63 CHAPTER 5: RECOMMENDATIONS 67 5.1 RECOMMENDATIONS FOR BIDV HAI BA TRUNG 67 5.1.2 Recommendations for products specialization 68 5.1.3 Recommendations for competitive advantages 69 5.1.4 Developing distribution networks and channels, especially modern distribution channels 69 5.1.4 Recommendations for marketing strategy 70 5.2 LIMITATIONS OF RESEARCH 71 5.3 RECOMMENDATIONS FOR FUTURE RESEARCH 71 CONCLUSION 72 BIBLIOGRAPHY 73 LIST OF FIGURES AND TABLES Figure BIDV Hai Ba Trung Structure 39 Figure Credit cards usage in Hanoi from 2017 to 2019 48 Figure International credit card growth from 2017 to 2019 (Unit: Billions Dongs) 50 Table Increase of new credit cards from 12/2014 to 12/2018 47 Table New international credit cards promulgation from 2014 to 2019 49 Table Number of new card issuance from 2014 to 2019 54 Table Capital mobilization of BIDV Hai Ba Trung .56 Table Credit performance of BIDV Hai Ba Trung (Unit: Billion VND) .58 LIST OF ABERRATION ATM Automated Teller Machine BIDV Bank for Investment and Development of Vietnam MBbank Military Commercial Joint Stock Bank HSBC Hongkong and Shanghai Banking Corporation Limited POS Point of sale Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam CHAPTER 1: INTRODUCTION 1.1 Background of the study Since the economic bailout package during the 2008 economic crisis, Vietnam banking industry has been accelerating for more than a decade Anh (2018, p 1) identifies a steady growth of credit growth rate from October 2016 to October 2019 Specifically, credit growth of the economy reached 9.89% in October 2019, which is close to the average of the same period three years ago, 11.2% in detail (Appendix A) By the growth rate of credit, more players have joined in Vietnam banking industry According to the report of State Bank of Vietnam (SBV) (SBV, 2019, pp 5–7), there are five state-owned and thirty-five joint-stock commercial banks Besides, foreign banks and financial groups have also started to exploit the market through branches or representative offices since 2008 Along with the increase in the number of players, the government equalization policy of the banking system has also directly risen the competition The focus on developing retail banking services is an inevitable result due to the increased competitiveness of the market Omarini (2016, pp 26–28) argues that retail banking has played as an important core role of local commercial banks since post-financial crisis period in 2008 With high population and GPD per capita of US$2,700 in 2019 (World Bank, 2020), the financial inclusion in Vietnam has not met the expectation as its potential, since only 31% of population own bank accounts (World Bank, 2019, pp 160–161) Debit card and credit card ownership also stayed at low rate in 2019, which were 27% and 4% of total population respectively (World Bank, 2019, pp 160–161) The development of retail banking services has become a banking-businessphenomena, since many commercial banks target developing retail banking business models However, it is asserted that local commercial banks not deploy sustainable development model since there is high non-performing loans (NPL) across banking sector Anh (2018, pp 10–11) reported that NPL ratio in Vietnamese banking industry is exceed 5% In addition, the banks are more focusing on retail credit growth rather than developing good retail banking services quality in which customers‘ needs and demands are placed in the central of their retail banking business models Moreover, when Vietnam joined Word Trade Organization since late 2006, it is expected that the country‘s banking system must be opened for foreign financial institutions to presence and to business in Vietnam These players have high experiences in retail banking services and they have qualified system to support the delivery of the services Therefore, it is expected that local commercial banks will face up with higher competition in retail banking services BIDV Hai Ba Trung is one of the biggest branches of Bank for Investment and Development of Vietnam (BIDV) The branch was established since 2009 and its objective is to deliver qualified banking services to the customers located in Hai Ba Trung District, Hanoi City The banking services of BIDV Hai Ba Trung consists of banking solutions to both retail and corporate customers and traditional services are lending, savings, international payments, money transfer, card services, etc After more than 10 years of doing business, sales revenues and profit of BIDV Hai Ba Trung have been dropped significantly in 2018 and mostly coming from retail lending portfolio In more detail, total retail lending portfolio has been decreased from VND625 billion in the end of 2017 to VND543 billion in the end of 2018 The branch cannot attract higher number of new customers and most of credit are sourced from existing customers In this context, the branch‘s managers perceive that the branch need to improve the current business strategy related to retail banking services Thus, the researcher selects "Business strategy ... does BIDV Hai Ba Trung improve the business strategy for retail banking services? ‘ Thus, the two main objective is as following: i Analyzing current business strategy for retail banking services. .. improve the current business strategy related to retail banking services Thus, the researcher selects "Business strategy development for retail banking services in BIDV Hai Ba Trung" as master''s... SITUATION OF BIDV HAI BA TRUNG 36 4.2 CURRENT SITUATION OF BIDV HAI BA TRUNG RETAIL BANKING STRATEGY 38 4.2.1 BIDV Hai Ba Trung level of strategy 38 4.2.2 BIDV Hai Ba Trung