Adoption of Mobile Banking in Vietnamese urban areas

Adoption of Mobile Banking in Vietnamese urban areas

NEU BUSINESS SCHOOL NEU BUSINESS SCHOOL

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NGUYEN THI HUONG AN

adoption of Mobile Banking

in Vietnamese urban areas

Supervisor : Dr LE THI BICH NGOC

Hanoi - 2013

ACKNOWLEDGEMENT

I would like to thank Dr Le Thi Bich Ngoc, my instructor, who has provided

me very valued guidance throughout the course of my thesis Her every specific advice and promptness, despite her busy schedule was instrumental in getting my research work organized in its final shape I offer my sincere thanks to her

Any research of this nature cannot be successful without the active involvement of people who participate in the survey I would like to thank all of respondents My colleagues and friends in banking industry were very co-operative and provided me valuable inputs I would like to express my gratitude to them

I would like to give my thanks to the family members who sustained my grumpiness and moods during the process of compiling this research work In fact, they went beyond that and motivated me immensely throughout

Sincerethanksalsogo to the Business School of Hanoi National Economics University where I got a good chance to attend the very useful MBA course

Hanoi, September 2013

TABLE OF CONTENTS

ACKNOWLEDGEMENT i

TABLE OF CONTENTS ii

ABRIVIATION iv

LIST OF TABLES v

LIST OF FIGURES vi

EXECUTIVE SUMMARY 1

CHAPTER 1: INTRODUCTION 3

1.1 Rationale 3

1.2 R esearch objectives& research questions 4

1.3 The research targets are: 4

1.4 Research methodology 6

1.4.1 Data collection 6

1.4.2 Research process 6

1.5 Scope of study 6

1.6 Limitations of study 7

1.7 Thesis structure 7

CHAPTER 2: THEORETICAL BACKGROUND 9

2.1 Fundamentals of mobile banking 9

2.2 U taut model 13

2.3 The factors affecting adoption of mobile bankingin vietnam 16

2.3.1Performance Expectation 16

2.3.2 Effort Expectance 17

2.3.3 Social influence 18

2.3.4 Perceived financial cost 18

2.3.5 Perceived credibility 19

CHAPTER 3: CURRENT SITUATIONS OF USING MOBILE BANKING IN

VIETNAM 21

3.1 Global mobile banking trends 21

3.2 Current situations of using mobile banking in vietnam 22

CHAPTER 4: FINDINGS ABOUT VIETNAMESE CUSTOMERS’ ADOPTION OF MOBILE BANKING 29

4.1 Research methodology 29

4.1.1 Methodology 29

4.1.2 Research process 29

4.1.3 Sample selection 30

4.1.4 Questionnaire design 30

4.2 Data analysis 32

CHAPTER 5: RECOMMENDATIONS TO ATTRACT MORE VIETNAMESE CUSTOMERS USING MOBILE BANKING 40

5.1 Increase perceived usefulness 40

5.2 Promoting marketing and customers relationship 40

5.3 Increase the level of security 41

5.3.1 Risk based authentication 42

5.3.2 Mobile Application 42

5.3.3 One – time passwords 43

5.3.4 Biometric authentication 44

5.3.5 Educating people on how to protect their information 45

5.3.6 Digital signature 46

5.4 Increasing perceived ease of use for older people 47

5.5 Building policy 47

REFERENCES 49

ABRIVIATION

DTPB The Decomposed Theory of Planned Behavior

HTTP Hypertext Transfer Protocol

IDT Diffusion of Innovation Theory

UTAUT Unified Theory of Acceptance and Use of Technology

LIST OF TABLES

Table 2.1: Summary of Research findings on factors affecting technology adoption 14 Table 4.1: Dimensions and factors affecting using of Mobile Banking in Vietnam 31 Table 4.2: Demographic profiles of respondents 32 Table 4.3: Mean score and standard deviation of survey on Mobile Banking 35

LIST OF FIGURES

Figure 2.1: The Unified Theory of Acceptance and Use of Technology (UTAUT) 16 Figure 2.2: The proposed research structure 20 Figure 4.1: How survey customers interact with banks 34

EXECUTIVE SUMMARY

Fast advances in the wireless technology and the intensive penetration of cell phones have motivated banks to spend large budget on building Mobile Banking systems.In many countries, Mobile Banking has gained wide acceptance and Vietnam is no onlooker to this phenomena Banks in Vietnam started embracing technology in a massive way in the 2000’s, led in particular

by the new private banks and multinational banks However, the adoption rate

of Mobile Banking in Vietnamese urban areas is still underused than expected.Therefore, research to enrich current knowledge about what affects individuals to use Mobile Banking is required

Consequently, this study employs the Unified Theory of Acceptance and Use

of Technology (UTAUT) to investigate what impacts people to adopt Mobile Banking.A research was carried out to see what factors affecting adoption of Mobile Banking in Vietnam The data is organized using Likert seven – point scale to access each response of the participants Quantitative methodology is used to analyze the collated numeric data The questions are grouped and mapped to each of the identified factor groups The average score for each issue has been worked out based on this grouping

Through sampling 309 respondents, this study empirically concluded that individual intention to adopt Mobile Banking was significantly influenced by performance expectancy, social influence, perceived credibility and perceived financial cost On the other hand, effort expectancy was proved that it was not a significant factors that affecting adoption of Mobile Banking

Based on the finding result above, there are a number of recommendation that has been suggested to improve the quality of Mobile Banking service in Vietnam and in order to attract more customers to use the services The bank should increase the perceived usefulness of Mobile Banking, promote marketing and

customer relationship, increase the level of securities by using risk based authentications, mobile application, one – time password, biometric authentication such as finger print or iris scan and educate people how to protect their own information or use digital signature Then the bank should focus on increasing the perceived ease of use for old people and building policy to fulfill the quality of the Mobile Banking services for customers

CHAPTER 1: INTRODUCTION

1.1 Rationale

Mobile Banking is creating dramatic changes for the banking industry Mobile Banking is a system that allows customers of a financial institution to conduct a number of financial transactions through a mobile device such as

a mobile phone or Personal Digital Assistant (PDA) Mobile Bankinghelps consumers in conducting fast and convenient financial transaction activities

In many countries, Mobile Banking has gained wide acceptance and Vietnam

is no onlooker to this phenomena Banks in Vietnam started embracing technology

in a massive way in the 2000’s, led in particular by the new private banks and multinational banks The growing competition andgrowing expectations led to increased awareness amongst banks on the role and importance of technology in banking, forcing banks to go in for the latest technologies so as to meet the threat of competition and retain their customer base

There are a lot of benefits through adoption of Mobile Banking for the banks and their customers, those benefits would be mentioned in more detail in chapter 2

of this study Not only that, Mobile Banking also help the economic to develop, so that it also has benefits for the society It created a new mode of operation, contributing to the economic and commercial activities, services and tourism development, facilitating open extensive trade and economic cooperation with other regions in the world

Vietnamese commercial banks realize the huge advantages of Mobile Banking for them as well as the customers, they had spent large budget on building Mobile Banking systems, but the adoption rate of Mobile Banking is still underused than expected Although in recent year, the number of Mobile Banking users has

grown rapidly, there is some evidence supporting that Mobile Banking acceptance

is faced with problems,the evitable result is that the huge number of people who tried Mobile Banking services had not become active users The possible reason could be the customer still doubt about the benefits of Mobile financial services and the level of securities provided along with such services Therefore, the purpose of this report is to investigate the factors that affecting the adoption of Mobile Banking

in Vietnamese urban areas

This study could be of special interest and value to the banking sector and other commercial sectors linked to banking The findings and recommendations to banks could help them to analyze and restructure their strategy to attract customers The banking industry can attract potential customers towards Mobile Banking by taking into account the factors influencing user decisions or preferences Other researchers and allied industries may use the results by analyzing the behavior and resistance patterns of customers leading to innovations

1.2 R esearch objectives& research questions

1.3 The research targets are:

• To review the theoretical framework in Mobile Banking

• To assess the current situation of using Mobile Banking in Vietnamese urban areas in recent years

• To study factors influencing on the customers’ adoption of using Mobile Banking in Vietnam

• To recommend solutions for improve the number of customers using Mobile Banking in Vietnam

Hence, the questions for this research would be:

• What theories could be applied in study of Mobile Banking adoption?

• How Mobile Banking is applied now in Vietnam?

• What factors influencing the customers’ adoption of using Mobile Banking

in Vietnam?

• What could be done to increase the number of Vietnamese customers using Mobile Banking?

∗ Primary data

After collecting and reading secondary data, the author also investigates to collect primary data form the survey with 300 online questionnaires and 200 questionnaires deliver physically The process of conducting survey and collecting data would be described carefully in chapter 4

1.4.2 Research process

A research was carried out to see what factors affecting adoption of Mobile Banking in Vietnam The data is organized using likert seven – point scale to access each response of the participants Quantitative methodology is used to analyze the collated numeric data The questions are grouped and mapped to each of the identified factor groups The average score for each issue has

been worked out based on this grouping

1.5 Scope of study

The population of the study should be every Vietnamese people, however, due to the limitation of time and budget, the study just collect the sample of 309 Vietnamese people lives in urban areas where they have more chance to use smart phones and access to the Internet

1.6 Limitations of study

The aim of this study was to look at the reasons that currently impact the growth of Mobile Bankingin Vietnam and identifying the factors that influence its adoption The structure of this study was to empirically test the multiple factors identified with Performance Expectation, Effort Expectance, Social Influence, Perceived Financial Cost, Perceived Credibility of Mobile Bankingthat affect the customer’s adoption ofMobile Banking in Vietnamese urban area However, any research inevitably has limitations associated with it, and this study is not an exception

In the current study, the sample used had a skew towards an urbanite, especially in Hanoi area rather than Ho Chi Minh City and other big city like Da Nang, HaiPhong; the sample also has the bias of Internet savvy customer base These findings therefore may not be construed representative of the entire population of potential Mobile Banking users

The data for the study was collected using the same survey instrument and constricted to a limited time frame Avolio et al (1991) suggests that there is a potential of variance for the data collected from the same mode and not spatially distributed in time Perceptions of users are subject to change over time and are dependent on situational paradigms Investigations spread over time can have a moderating impact on such variances, leading to more reliable data Future research could adopt multi – modal channels such as field studies, interviews of stakeholders dispersed over different time frames to improve the accuracy and reliability of the collated data It will also help differentiate behavioral patterns of user groups and their influences based on varying socio – economic and technology exposures

1.7 Thesis structure

The report is presented as follows:

 Chapter 1: Introduction

This first chapter provides background information and rationale for the research

 Chapter 2: Theoretical background

The second chapter synthesizes the theories on Mobile Banking, which had been studied all over the world

 Chapter 3: Current situation of using Mobile Banking in Vietnam

The third chapter analyses the trends of using Mobile Banking all over the world and the actual situation of using Mobile Banking in Vietnam in the recent years

 Chapter 4: Findings about Vietnamese customers’ attitude toward

using Mobile Banking

The fourth chapter gives out the findings about Vietnamese customers’ attitude toward using Mobile Banking

 Chapter 5: Solutions to attract more Vietnamese customers using

Mobile Banking

This chapter suggests some solutions to attract more Vietnamese customers using Mobile Banking in the future

CHAPTER 2: THEORETICAL BACKGROUND

2.1 Fundamentals of mobile banking

In the broadest sense, Mobile Banking can be considered traditional banking services accomplished by portable devices In a stricter sense, Mobile Banking is a channel for customers to interact with a bank via mobile device with the emphasis being on data communication Mobile Banking precludes voice or telephony banking that forms part of call center operations (Barnes and Corbitt, 2003) Currently, the three most popular channels of mobile banking are data – centric services (Infogile, 2007):

• Short Message Service (SMS): SMS is a popular text – messaging standard using a push or pull methodology In the push form, the bank transmits alerts and messages, while pull recovers information at the customer’s behest

• Wireless Access Protocol (WAP): The function of WAP is similar to Internet Banking using Hypertext Transfer Protocol (http) The mobile device has a WAP enabled browser, which interfaces the banking applications to the customers

• Standalone Mobile Client Application: These are specialized banking applications, which allow customers to execute more complex functionalities like equity or foreign currency trading It also allows the banks to enable high-level securities implementations through application clients

Interactive Voice Response (IVR) was introduced for Mobile Banking services, but had limited success being expensive and inefficient (Narendiran, 2011)

The scope of this study is therefore restricted to the use of mobile devices for data and does not include voice, either in its traditional form of voice dial – up or through a service based on touch – tone phones The study focuses in mobile data technologies around three widely accepted and distinctive paradigms: messaging, browsing, and applications

There are a lot of benefits through adoption of Mobile Banking for the banks and their customers The business benefit of Mobile Banking for the banks is to generate additional revenue, improve customer service, extend marketing and increase cost savings However, the biggest advantage is eliminating the need for physical branch offices results in the reduction of overhead expenses Banks can then use the resulting savings to reduce their loan interest rates or increase their deposit interest rates, attracting new customers without the costs of acquiring existing banks or starting up new branches, further growth potential

The success of Mobile Banking is determined not only by banks or government support, but also by customers’ acceptance of it The customers are enjoying the convenience and the control over their money that Mobile Banking gives them, such as good security, easy access and plentiful applications for smart phones Moreover, the customers have great influence on the adoption of Mobile Banking as they ultimately decide on whether they would use Mobile Banking or not, based on their individual needs If the service can clearly show the benefits and how they address customers’ need, then customers are more likely to use it Indeed there are many advantages to doing Mobile Banking

message or call the mobile banking center to register Mobile Banking account Moreover, Mobile Banking is user friendly as the interface is also very simple Customers just need to follow the instructions to make the transaction and it also saves the record of any transactions made

They customers do not have to wait for the bank to open its doors or they do not have to drive to get there If they are using Mobile Banking at home or at the office

or anywhere else, the customers will not have to waste valuable time going to the bank The customers can manage your funds anywhere, any time For example, they can make transactions or pay bills anytime which save a lot of time Customers will

get an SMS whenever there is an activity in your account, which includes deposits, cash withdrawals, funds transfer etc Customers will get a notice as soon as any amount is deducted or deposited in your account Another benefit is that customers can transfer money instantly to another account in the same or different bank using Mobile Banking

physical structure to keep up, virtual banks have low overhead They can afford to cut the customers a break by offering higher interest rates on your savings They will also offer lower overdraft fees Even banks that are backed by physical buildings encourage mobile banking with free bill paying services

customers can look at what is going on in their account any day or time to check their balance They can find out if a particular check has cleared their account or see when automatic deposits are made All these services make check bouncing nearly a thing of the past

fraud of bringing money Furthermore, customers have a better chance to catch fraudulent use if they have a Mobile Banking account When they check their debits and deposits, they will most likely notice if something is there that they did not do

If someone withdraws money from their account, they will know it as soon as they log on and look over your account Then, they can work on correcting the situation long before they would even notice it with conventional banking

There are a lot of benefits through adoption of Mobile Banking for the banks also The business benefit of Mobile Banking for the banks is to generate additional revenue, improve customer service, extend marketing and increase cost savings However, the biggest advantage is eliminating the need for physical branch offices results in the reduction of overhead expenses Banks can then use the resulting savings to reduce their loan interest rates or increase their deposit interest rates,

attracting new customers without the costs of acquiring existing banks or starting up new branches, further growth potential

Not only that, Mobile Banking also help the economic to develop, so that it also has benefits for the society It created a new mode of operation and jobs, contributing to the economic and commercial activities, services and tourism development, facilitating open extensive trade and economic cooperation with other regions in the world as well as reduce cash in circulation, in the result of reduce inflation

The conditions for a customer to access Mobile Banking are very simple; this customer just needs to have a smart phone and a banking account However, the banks need more complexity conditions to generate an Mobile Banking system They need to invest in capital, technology and infrastructure technology as the foundation elements Banks need to optimize the field of different technologies such

as server systems, storage systems, data centers, hardware equipment; software has the ability to link between the banking system as well as domestic banking system and other foreign banking system In addition, the upgrade path to expa

nd broadband, high – capacity, high – speed is a necessary move to prevent the case of simultaneous access network congestion caused overcrowding

Moreover, for both banks and customers, privacy factor is very important This is one of the elements that make up the psychological barrier of customers access to mobile banking services This requires banks to invest a total solution from infrastructure to security software solutions and teams of security professionals and qualified banking

Furthermore, to be well run in the market, the government needs to build a complete legal framework for Mobile Banking as the same as other methods of banking systems The law would help the market more stable and prevent from fraud as well as defend the benefits for the customers

2.2 U taut model

There are various models that could be applied to analyses the adoption of technology However, this study employed the Unified Theory of Acceptance and Use of Technology (UTAUT) to elaborately investigate what affecting individuals

to adopt Mobile Banking in Vietnamese urban areas, as it was built by unified eight other famous models

To understand technology adoption, Venkatesh et al (2003) empirically compared eight competing models named the Theory of Reasoned Theory (TRA) and its extension, the Theory of Planned Behavior (TPB); Technology Acceptance Model (TAM) and Extended TAM (or TAM 2); the Motivational Model (MM); the combination of TAM and TPB model, or the Decomposed Theory of Planned Behavior (DTPB); the Model of Personal Computer Utilization (MPCU); the Innovation Diffusion Theory (IDT) and the Social Cognitive Theory (SCT) by surveying 215 respondents from four organizations

Based on their longitudinal studies, Venkatesh et al (2003) further integrated and refined the above eight models into a new model named UTAUT which captures the essential elements of different models Because UTAUT has been empirically tested and proven superior to other prevailing competing models (Venkatesh et al 2003; Park et al 2007; Venkatesh& Zhang 2010), this study chooses UTAUT as a theoretical foundation to analyze the factors affecting customers’ adoption of using Mobile Banking in Vietnamese urban areas

However, before get closer look to UTAUT model; this part will present some background information about eight major based models, which are stated above

Table 2.1: Summary of Research findings on factors affecting technology adoption

Combined TAM & TPB/

The Decomposed Theory

of Planned Behavior (DTPB)

• Job – fit

• Complexity

• Long – term consequences

• Affect towards use

• Social factors

• Facilitating conditions

Roger (1995) The Innovation Diffusion

• Performance expectancy: as “the degree to which the user expects that

using the system will help him or her attain gains in job performance” This new construct has five root constructs: perceived usefulness (from TAM/TAM2, Combined TAM and TPB), extrinsic motivation (from the Motivational Model), relative advantage (from the Innovation Diffusion Theory), and outcome expectations (from the Social Cognitive Theory)

• Effort expectancy:as“the degree of ease associated with the use of the

system” This new construct have the root constructs from perceived ease of use (from TAM/TAM2)

• Social influence:as “the degree to which an individual perceives that

important others believe that he or she should use the new system”

• Facilitating condition:Venkatesh et al (2003) also find that the influence

of facilitating conditions on usage is moderated by age and experience of the individual They define facilitating conditions as “the degree to which an individual believes that an organizational and technical infrastructure exists to support use of the system”

Figure 2.1: The Unified Theory of Acceptance and Use of Technology (UTAUT)

Source: Venkatesh, 2003

Although factors including gender, age, experience, and voluntariness of use are posited to moderate the impact of the four key constructs on usage intention and behavior However, due to the limitation of this study, the impact of moderate (gender, age, experience and voluntaries of use) would not be tested

2.3 The factors affecting adoption of mobile bankingin vietnam

The following dimensions have been identified as common determinants of predicting the adoption of and Mobile Banking in Vietnamese urban areas Therefore, they have been selected for closer investigation through the UTAUT model, which provides the conceptual model for this research However, this research just employed the factors of performance expectation, effort expectation and social influence of the UTAUT model, as those factors affecting directly to the customers adoption This research excludes the factor of facilitating control

as it directly affects the actual user behavior Moreover, the research also employs two more factors which is perceived credibility and perceived financial cost as explained below

2.3.1 Performance Expectation

In UTAUT model, performance expectance is driven from perceived

Brown et al (2003) empirically demonstrated that the greater the perceived relative advantage, the more likely Mobile Banking would be adopted Similarly, Luarn and Lin (2005) identified perceived usefulness as a crucial factor, while Yang (2009) concluded that relative advantages significantly influence individual’s intention to adopt MobileBanking

Although focusing on the adoption of technology instead of Mobile Banking, Park

et al (2007) concluded that performance expectance significantly influenced people

to adopt mobile technologies via 221 samples Taken the above together, this research wants to know that whether or not performance expectance could be a significant factor that affecting adopting of Mobile Banking in Vietnam

2.3.2 Effort Expectance

Drawing upon other competing models, Venkatesh et al (2003) captured the

concept of perceived ease of use (TAM & TAM2), complexity (MPCU), and easy of

use (IDT) to define effort expectation as the degree of ease associated with technology use Prior empirical studies of Mobile Banking adoption (Luarn& Lin, 2005) supported perceived ease of use as a determinant impacting people to use Mobile Banking

Grounded in UTAUT model, Park et al (2007) employed three constructs of performance expectancy, effort expectancy, and social influence to explore what influences individual intention to accept mobile technology and data service, respectively Both studies supported that effort expectance significantly influenced human intention to use mobile technology or service As a result, rooted in UTAUT model, this study wants to test whether or not effort expectance could be significant factors affecting adoption of Mobile Banking in Vietnam

2.3.3 Social influence

Venkatesh et al (2003) used social influence to represent subjective norm in TRA, TAM2, TPB & DTPB, and Combined TAM and TPB, social factors in MPCU, and image in IDT They defined social influence as the degree to which an

individual perceives that important others believe he or she should use the technology

In a survey of 158 customers from a major bank in Malaysia, Amin et al (2008) empirically found that individual intention to use Mobile Banking was significantly affected by people surrounding them Like a manner, Singh et al (2010) discovered that individual decisions to adopt mobile commerce services were influenced by friends and family members Empirical evidence from Puschel

et al (2010) observed that perceived image was a significant factor for people willingness to adopt Mobile Banking

The above might explains why Singh et al (2010) argued that Mobile commerce users are not just technology users, but also part of social network Accordingly, the study wants to test that whether or not social influence could be significant factors affecting Mobile Banking adoption in Vietnam

2.3.4 Perceived financial cost

Academics generally investigate consumer adoption of Mobile Banking from psychological and sociological theories, but empirical evidence has also revealed that Mobile Banking adoption is highly encouraged by economic factors such as advantageous transaction service fees (Yang, 2009) or discouraged by economic considerations such as concerns on basic fees for connecting Mobile Banking (Yang, 2009), cost burden for using Mobile Banking (Cruze et al., 2010), and high payment for using Mobile Banking (Huili&Chunfang, 2011)

By interviewing consumers in person, Luarn and Lin (2005) empirically identified perceived financial cost as a negative effect on behavioral intention to use

mobile banking Through analyzing 196 respondents in the Sultanate of Oman, Sadi

et al (2010) noted that high cost was crucial for unwilling to use mobile banking Similarly, via collecting 195 surveys from bank customers in the Bangkok metropolitan area, Sripalawat et al (2011) recently supported that perceived financial cost was a salient factor influencing consumers to adopt Mobile Banking

2.3.5 Perceived credibility

Several Mobile Banking adoption studies have supported that people refuse

or are unwilling to use Mobile Banking mainly because of perceived risk (Brown et

al 2003) or perceived credibility (Luarn& Lin 2005) Through investigating customer attitudes toward Mobile Banking, Laforet and Li (2005) used confidential and security to express perceived risk and detected that perceived risk was the most significant factor influencing the adoption of Mobile Banking

Following the concept of Wang et al (2003), who distinguished perceived credibility from perceived risks and trust, Luarn and Lin (2005) and Amin et al (2008) supported security and privacy as two important dimensions under the construct of perceived credibility Also, Luarn and Lin (2005) and Amin et al (2008) empirically concluded that perceived credibility significantly affected human intention to use Mobile Banking

As the literature reveals that different scholars employ different perspectives

to assess the concern of security, risk, trust, and credibility, the concern has been conceptualized and assessed from a variety of ways that fully depends on which discipline researchers interpret the concern Given that perceived credibility has been empirically supported and used not only in Mobile Banking adoption studies (Luarn& Lin 2005; Amin et al 2008) but also in many other studies as discussed in Wang et al (2003), and Yuen et al (2010), the present study uses perceived credibility to represent individual security, privacy, risk, and trust concerns about Mobile Banking adoption Accordingly, this study wants to test whether or not perceived credibility could be a significant factors that affecting Mobile Banking

adoption in Vietnam

Hence, the research proposal model could be demonstrated as follow:

Figure 2.2: The proposed research structure

CHAPTER 3: CURRENT SITUATIONS OF USING MOBILE

BANKING IN VIETNAM

3.1 Global mobile banking trends

Mobile Banking has experienced a fast growth globally According to Telecom Trends International Inc., in 2011 there are 1.3 billion mobile phones around the world which have emerged in the past 20 years, compared to the more than the 2.5 billion landlines built over the last century The numbers of mobile phones and Personal Digital Assistance (PDA) is expected to be 4.1 billion by 2014, compared to 1.5 billion TV sets in worldwide use today Furthermore, mobile technology is poised to have an even further – reaching impact on the banking and payment industry across the world By 2015, over 900 million people are expected

to transact $1 trillion in the global mobile payment market Almost everyone in the developed countries has a mobile phone and some consumers have multiple mobile subscriptions Mobile penetration is 105% in the U.S and France and it is even higher in the U.K and Germany at 130% However, Mobile Banking is relatively new in many of these markets and its usage is still low in most countries

This is not surprising given the ever – growing ubiquity of the mobile phone Out of a world population of 7 billion, over 5 billion or 70% have a mobile phone, whereas only 2 billion or 30% have a bank account Take India as an example: on a population of 1.2 billion over 800 million have a mobile phone and only 250 million have a bank account.Consumers are increasingly using their mobile phones

to make payments A global inventory lists over 130 live mobile money deployments and nearly 100 more are planned several new initiatives are announced every week.This is a growing market Mobile is the payment technology that will have the greatest growth over the next five years Growth predictions for mobile payments vary from 350 to 900 million users generating USD 430 billion to 1 trillion in transaction value by 2015

Not only in the developed countries, had Mobile Banking also made a revolution in emerging market The 7 billion people in the world have 6 billion mobile phones but only 2 billion bank accounts Emerging markets are in a unique situation with low penetration of bank accounts but high adoption of mobile phones

In Bangladesh, 57% of its 150 million inhabitants have a mobile phone, but only 13% have a bank account India has a population of 1.2 billion with 900 million mobile phones but only 250 million bank accounts

Governments see mobile technology as a vehicle to achieve financial inclusion, especially among the rural and poorpopulation of their countries; and forprofit firms view this as an opportunity to grow and reach new customers New services typically involve using a mobile phone and its SIM card to store money, make transfers to friends and family, and mobile payments to small merchants

3.2 Current situations of using mobile banking in vietnam

The productivity services of the banks have never been active like today with the participant of many banks including both domestic and foreign banks In recent years, especially in Vietnam, the mobile payment market has experienced a rapid acceleration

The popularity of the mobile phones, especially smart phone in recent years has opened up a potential market for the provision of electronic banking services in Vietnam Thus, a population of about 90million people with one in four people usingInternet and each person using 2 mobile subscribers at the time are positive signs of great potential for development of Mobile Banking services in Vietnam

In addition, the Government and the State Bank of Vietnam has promulgated laws, circulars, decrees, and decisions to create a legal framework to encourage the development of electronic banking services In particular, the enactment of Law on Electronic Transaction was a notable event in 2005 On 29 November 2005, the National Assembly of the Socialist Republic of Vietnam has approved the Law on Electronic Transaction in degree No.51/2005/QH11 and applied officially on 03 January 2006 The introduction of Law on Electronic Transaction created the basic

legal framework for electronic transactions Law consists of 8 chapters, with 54 actscover most of elements related to electronic transactions such as electronic signatures, organizations that provide certification services electronic signatures, the legal validity of electronic signatures, validity of contracts signed by electronic signature, responsible stakeholders to information security, settling disputes relating

to electronic transactions as well as regulations on electronic trading operations of state agencies

Mobile Banking service has been applied firstly in Asia Commercial Bank too since 2003, on the basic of cooperation with the VASC Software and Media Company and two mobile phone service providers MobiFone and VinaPhone Until

2012, most banks have its own Mobile Banking as one of online banking service However, according to a large number of customers, these services still be criticized as poor types of services, slow transaction – processing, not secured and still do not satisfied customers’ need Around the 2000s, to use a smartphone as a Mobile Banking, customers have come to the staff to be guided to install the program, or on the bank's website to download software to customers’ computer Many bankers also said at that time, the number of customers using Mobile Banking very low, mostly they are afraid of complex operations on the device Thus, although the bank efforts to bring additional utility services, but also failed to attract many users using Mobile Banking.Although introduced early in Vietnam, Mobile Banking has not much gained huge success since 2010

• In the year 2010

Before 2010, although Mobile Banking services are relatively not new in Vietnam, the features are still simple services, the customers could only doing simple transactions such as checking account and primarily information; or transfers within the bank

The local banks had the cooperation with international partners, solution providers for mobile banking applications (mobile application), but only applied for

a limited number of smartphones

• In the year 2011

However, over time, banks increasingly aware of the benefits of providing a channel for banking convenience, flexibility, bring good opportunities for job satisfaction and retaining existing customers In addition, the transaction channel will attract more new customers and favorite high – techservices

Therefore from 2011, many banks have implemented Mobile Banking and service testing and upgrades and adjust accordingly The Mobile Banking service of the bank has become more diverse, more features, such as increased utility bill payment, information inquiry, interest rates, exchange rates, promotions

According to the Vietnam Electronic Commerce Survey 2011 of Electronic Commerce and Information Technology Department,at the end of December 2011,

45 of 50 banks operating in Vietnam market (excluding foreign bank branches) have implemented mobile transaction system at different levels The popular electronic banking services were offer broadly, which may include Mobile Banking services provided by 38 banks (account for 82%)

• In the year 2012

The bank is constantly increasing utility for customers to use With the application of Mobile Banking, Vietnamese customers now can perform various types of transactions such as:

• Accessing accounts information (balance, listing transactions)

• Doing bank transfer (at a number of commercial banks, the limited credit can be up to 500 million VND per day)

• Making payment online via website

• Prepaid cards of mobile, Internet; or make payment of bills: electricity, water, telephone, Internet, tuition

• Paying income tax; withdraw cash at ATMs

• Disbursement and debt collection

According to a report made by IDG in August 2012, the most favorite ways for the customers to connect with the banks are Mobile Banking, with 32% of asked