Develop electronic banking services through mobile communication network – mobile banking at vietcombank

FOREIGN TRADE UNIVERSITY BANKING AND FINANCE FACULTY -*** - GRADUATION THESIS DEVELOP ELECTRONIC BANKING SERVICES THROUGH MOBILE COMMUNICATION NETWORK – MOBILE BANKING AT VIETCOMBANK Student Name: Nguyễn Hải Yến Student identity number: 1001030414 Class: A2 – High Quality Class – Banking and Finance Faculty Year: 49 Instructor: MSc Nguyễn Thị Hồng Nguyên Hanoi, April, 2014 INDEX Preface CHAPTER 1: LITERATURE FRAMEWORK ABOUT MOBILE BANKING4 1.1 Definition of mobile banking 1.2 Developmental fundamentals of Mobile Banking 1.3 Features and utilities of mobile banking services 1.3.1 Classification depends on how information flows .8 1.3.2 Classification depends on application 1.4 Technology options of Mobile Banking 11 1.4.1 Server-side Technologies 11 1.4.2 Client-side Technology 14 1.5 Benefits of development of electronic banking services through Mobile Banking.15 1.5.1 For banks 16 1.5.2 For customers 17 1.5.3 For telecommunications companies 18 1.6 Factors affect the development of mobile banking services 18 1.6.1 Macro factors .18 1.6.2 Micro factors .21 1.7 Model and business trends in electronic banking services via mobile in the world 22 1.7.1 Bank – led model .22 1.7.2 NonBank - led Model 23 CHAPTER II: CURRENT SITUATION OF MOBILE BANKING DEPLOYMENT AT VIETCOMBANK 26 2.1 Current situation of mobile banking deployment in Vietnam 26 2.1.1 Bank – led model .26 2.1.2 Telco – led model 30 2.2 Current situation of mobile banking deployment at Vietcombank 32 2.2.1 Overview of Vietcombank 32 2.2.2 Overview of electronic banking services of Vietcombank 33 2.2.3.Current situation of mobile banking deployment at Vietcombank .37 2.3 Empirical assessment of customer acceptance of mobile banking 49 2.3.1 Methodology of the survey 49 2.3.2 Composition of Survey Participants 49 2.3.3 Customer Perception of Mobile Banking 50 CHAPTER III: SUGGESTIONS AND RECOMMENDATIONS TO DEVELOP MOBILE BANKING SERVICES AT VIETCOMBANK 53 3.1 Diversify products and services of mobile banking 53 3.1.1 Bank – led model 53 3.1.2 Partnership model of bank and telecommunications company 55 3.2 Improve management and supervision capacity to ensure mobile banking services quality 55 3.2.1 Steps in management activity of mobile banking 56 3.2.2 Enhance the sale management activity of mobile banking 56 3.3 Increase product promotion and advertisement .62 3.3.1 Advertisement on mobile phone 62 3.3.2 Advertisement on Facebook 62 3.3.3 Advertisement in application such as film, game, newspaper run in mobile phone 63 3.4 Develop the security and privacy technology 63 3.5 Promote the cooperation relationship with mobile network providers .64 3.6 Expanding customers network, improving customer service quality .64 3.7 Recommendations 65 3.7.1 With State Bank of Vietnam and other authorities 65 3.7.2 With board of managers of VCB .67 CONCLUSION 68 REFERENCE APPENDIX LIST OF ABBREVIATIONS VCB: Joint stock commercial bank for foreign trade of Vietnam Vietcombank: Joint stock commercial Bank for Foreign Trade of Vietnam SBV: State Bank of Vietnam ATM: Automated Teller Machine WAP: Wireless Application Protocol LAN: Local Area Network SIM: Subscriber Identity Module GPRS: General packet radio service UMTS: Universal Mobile Telecommunications System 3G: Third-generation technology E- Commerce: Electronic commerce USSD: Unstructured Supplementary Service Data HTML: Hypertext Markup Language ACB: Asia Commercial Bank VIB: Vietnam international Bank HD Bank: Ho Chi Minh City development joint stock commercial Bank M-Commerce: Mobile commerce SMS: Short Message Service PIN: Personal Identification Number SAT: SIM Application Toolkit LIST OF TABLES AND FIGURES Table 1.1: Classification MB services based on how information flows Table 1.2: Services in Mobile Accounting Table 1.3: Services in Mobile Brokerage 10 Table 1.4: Services in Mobile Financial Information 11 Table 2.1: Methods Launch Mobile Banking 27 Table 2.2: The features are implemented through SMS Banking 28 Table 2.3: The features implemented by means of downloading applications, webbased 29 Table 2.4: Features and fees of mobile banking services at VCB 38 Table 2.5: Promotion programs of MB at VCB .40 Table 2.6: VCB Mobile – B@nking Bubgeting .46 Chart 1.1: Account penetration in the world by area .24 Chart 1.2: Proportion of mobile phone penetration in comparison with banking services 25 Chart 2.1: Registered customers of BankPlus services 31 Chart 2.2: Penetration rate of E-bank services .35 Chart 2.3: Number of transactions and average transaction value/month year 2003 .36 Chart 2.4: Net income proportion of E – banking 2003 36 Chart 2.5: Results of VCB SMS banking 42 Chart 2.6: SMS banking profit and number of SMS 43 Chart 2.7: Number of customers using services .44 Chart 2.8: Propotion of transactions of VCB - Mobile iB@nking 45 Chart 2.9: Number of customers registing Bankplus services .46 Chart 2.10: Market share of Bankplus service .47 Chart 2.11: Types and number of transactions performed via BankPlus .48 Chart 2.12: Overview of Survey Participants’ Net Monthly Income in VND .50 Chart 2.13: Advantages of Mobile Banking 51 Chart 2.14: Disadvantages of Mobile Banking 51 Chart 2.15: Preferred Mobile Banking Applications .52 Figure 2.1: Development timeline of Mobile Banking at VCB .34 Figure 3.1: Sales Process .58 PREFACE Study background Today, with the development of technology, mobile phone has become more and more popular than ever before On average, each person possesses a mobile phone Because of advantages such as portability, easy integration with high technology into, service providers have cooperated to introduce many modern services with superior features through mobile phone with a view to meeting the higher and higher demand of customers Besides, the number of people who have bank account increase more and more together with the higher demand for shopping, making payment, and the popularity of mobile phone create the modern payment method, which is Mobile Banking Mobile banking is a service that provides electronic banking solution through mobile phone channel allowing customers to conduct e-banking services including but not limited to financial and non – financial transtions on account, bank card These transactions are made very fast, convenient and safe by applications on mobile phone (Mobile Client) or browser on mobile phone (Mobile Web) Mobile banking application in banking section has been deployed widely around the world for many years, however, in Vietnam Mobile Banking has just started by commercial banks in the recent years Mobile banking transactions have just stopped at information inquiry, money transfer, recharge phone, game accounts, etc The other complicated transactions such as bill payment, air ticket buying, stock transactions, insurance premium payment, hotel booking, etc are just very primative In the strong development trend of e-commerce and mobile commerce, along with a legal framework to support this trend, it has shown that Mobile Banking is the right way of the development for banks, which want to develop modern distribution channels, increase utility, strengthen competitiveness and bank image for current customers and potential customers At VCB, electronic banking services via mobile phones have had fundamental services such as VCB-SMS B@nking, VCB-Mobile Banking, BankPlus Current needs of customers using other sophisticated features on mobile phones is very high Therefore, deriving from the practical demand for development of modern Mobile Banking at VCB, the author chose the topic “Develop electronic banking services through mobile communication network - Mobile banking at Vietcombank" , which will be significant in terms of theory and practice with a view to meeting the demand of the whole VCB systems in developing a new modern superior service distribution channel The objectives of study The thesis is subjected to the following objectives: - Analyze Mobile Banking models in the world - Analyze development situation of e-banking services through Mobile Banking of Vietnam - Suggest oriented development models of Mobile Banking at VCB Subjects and scope of research The research subjects of this thesis is the development models of Mobile Banking applications in retail banking section in the world and Vietnam Besides, the thesis also research on the real suitation of electronic banking services development through mobile communication in Vietnam and Vietcombank The content scope of this thesis is the Mobile Banking services activites and features of VCB The space scope is Vietcombank Finally, the time scope is from the year 2001 to the end of 2013 Methodology and sources of materials In order to obtain the objectives of thesis, the author applied these following research methods: - Data collection method: + Collect secondary data from tables, reports of retail banking department at VCB + Collect information from newspapers, magazines, internal news of banks, communication with staffs, who are directly working on Mobile Banking services + Collect primary data through a survey in order to examine the degree of customer acceptance for various Mobile Banking services and the customer’s willingness to pay for them - Data analyzing method: + Use a descriptive statistical methods, analysis, synthesis methods of measurement, description and presentation of the data from which to draw conclusions based on the data and information collected Descriptive statistics use the method of charts, graphs and data aggregation methods to summarize data, highlight important information Structure of the thesis In addition of preface, conclusion and reference, the thesis includes chapters as follows: Chapter 1: Literature framework about Mobile Banking Chapter 2: Current situation of Mobile Banking deployment at Vietcombank Chapter 3: Suggestions and recommendations to develop Mobile Banking services at Vietcombank CHAPTER 1: LITERATURE FRAMEWORK ABOUT MOBILE BANKING 1.1 Definition of mobile banking Is mobile banking a subset of Internet banking (Muller - Veerse (1999)? Whereas, it is true in some aspects, this definition is too narrow to include all features of mobile banking In this paper mobile banking definition is derived from the definition of the broader category of mobile commerce, which in turn is a subcategory of electronic commerce The definitions of electronic commerce, electronic business, and the related business models are constantly evolving Following both academic and industry based literature sources, Mitchell (2001) defines electronic commerce as “much more than buying and selling on the internet: electronic commerce is about doing business electronically, both within enterprises and externally, using computer networks and mobile communications” This definition is general enough to be used as a reference point Mobile commerce and mobile banking are discussed in the next two subsections - Mobile commerce The phrase mobile commerce was originally coined in 1997 by Kevin Duffey to mean “the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless technology” Many choose to think of mobile commerce as meaning "a retail outlet in your customer’s pocket." Mobile Commerce bears the unique characteristics not found in any traditional forms of commerce as follows: Ubiquity: Ubiquity means that the user can avail services and carry out transactions largely independent of his current geographic location (“anywhere” feature) This feature can be useful in many situations, e.g to cross-check prices while standing in a supermarket or while one the move Immediacy: Closely related to the feature of ubiquity is the possibility of real-time availment of services (“anytime” feature) This feature is particularly attractive for services that are time-critical and demand a fast reaction, e.g stock market information for a broker Additionally, the consumer can buy goods and services, as and when he feels the need The immediacy of transaction helps to capture consumers at the moment of intention so that sales are not lost in the discrepancy between the point of intention and that of the actual purchase Localization: Positioning technologies, such as the Global Positioning System (GPS), allow companies to offer goods and services to the user specific to his current location Location based services can be, thus, offered to meet consumers’ needs and wishes for localized content and services Instant connectivity: Ever since the introduction of the General Packet Radio Service (GPRS) mobile devices are constantly “online”, i.e in touch with the network (“always-on” feature) This feature brings convenience to the user, as timeconsuming dial-up or boot processes are not necessary Pro-active functionality: M-Commerce opens, by the virtue of its ability to be immediate, local and personal, new avenues for push-marketing, such as contentand product offers Services like “Opt-in advertising" can be offered, so that a user may choose the products, services and companies, which he wants to be kept informed about The Short Message Service (SMS) can be used to send brief text messages to consumers informing them of relevant local offerings that best suit their needs This feature ensures that the “right” (relevant) information can be provided to the user at the “right” place, at the “right” time The user too does not have to fear missing some potentially crucial information or getting it too late Simple authentication procedure: Mobile telecommunication devices function with an electronic chip called Subscriber Identity Module (SIM) The SIM is registered with the network operator and the owner is thus unambiguously identifiable The clear identification of the user in combination with an individual