(Luận văn) bad training skill of debt collection center and verification department at vp bank

t to UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ng hi ep w n lo ad ju y th yi Phan Ngoc Thuy Duong pl n ua al n va fu ll BAD TRAINING SKILL OF DEBT COLLECTION CENTER AND VERIFICATION DEPARTMENT AT VP BANK oi m at nh z z ht vb k jm om l.c gm n a Lu MASTER OF BUSINESS (HONOURS) n va y te re Ho Chi Minh City – Year 2019 t to UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ng hi ep w n lo ad ju y th yi Phan Ngoc Thuy Duong pl n ua al n va fu ll BAD TRAINING SKILL OF DEBT COLLECTION CENTER AND VERIFICATION DEPARTMENT AT VP BANK oi m at nh z z ht vb k jm om l.c gm MASTER OF BUSINESS (HONOURS) n a Lu SUPERVISOR: Dr Doan Anh Tuan n va te re y Ho Chi Minh City – Year 2019 t to ng TABLE OF CONTENTS hi ep Executive summary Company overview w Viet Nam Prosperity Joint Stock Commercial Bank (VP Bank) n 1.1 Organizational chart ad y th Risk Management Department ju 1.3 lo 1.2 Symptoms: High bad debt (NPL) ratio in Retail segment Problem indentification yi pl ua al Potential problem n 3.1 va Problem finding process 10 3.1.2 Poor credit risk management policy 10 3.1.3 Bad training skill in debt recovery and verification 11 n 3.1.1 ll fu oi m at nh Problem validation 13 3.3 The importance of main problem 14 z 3.2 ht vb jm Cause justification 15 Possible causes 15 k 4.1 gm Lack of training document 15 4.1.2 No department specializing in training 15 4.1.3 Uneven knowledge of instructors 16 4.1.4 Lack of cost for training 16 om l.c 4.1.1 department 19 y Solution 1: Propose to establish training team for Verification and Collection te re 5.1 n Alternative solution and action plan 18 va Validating causes 16 n a Lu 4.2 z 5.2 Solution 2: Build internal training program 25 5.3 Solution 3: Hire external partners to train staffs of Collection and Verification t to department 28 ng Supporting information 34 hi ep REFERENCES 41 w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re LIST OF FIGURES Figure 1: VP Bank’s organization chart Figure 2: Risk Management Department’s organization chart t to Figure 3: NPL ratio of banks at the end of the third quarter of 2018 ng hi Figure 4: % New NPL by month from 2017 to 2018 ep Figure 5: Accumulated New NPL by product in 2018 w LIST OF DIAGRAMS n lo ad Diagram 1: Initial Cause-effect map of Risk Management Department y th Diagram 2: Updated Cause-effect map of Risk Management Department ju Diagram 3: Final Cause-effect map of Risk Management Department yi pl LIST OF TABLES ua al n Table 1: Reasons for delinquency of NPLs n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re LIST OF ABBREVIATIONS t to ng hi Non performing loan UPL Unsecured personal loan KPI Key performance indicator CI Credit institution ep NPL w Viet Nam Prosperity Joint Stock Commercial Bank (VP Bank) n VPB lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re Executive summary Bad debt is considered a big problem for the banking system in Vietnam in particular and the economy in general In recent years, the bad debt ratio in Vietnam has been constantly t to rising This is a consequence of many internal and external causes But in it, the outstanding ng hi problem is the limited risk management of commercial banks but directly Recognizing that, ep the state bank as well as commercial banks have focused on completing the management of bad debts This is the basis for controlling and minimizing losses in credit activities, ensuring w n banking operation efficiency and promoting the country's economic development lo ad Vietnam Prosperity Joint Stock Commercial Bank is one of the joint stock commercial y th banks established early and developing steadily in Vietnam VP Bank is constantly expanding ju credit activities and many other products and services In parallel with this development yi pl orientation, risks arising from credit activities increased significantly, reflected in the annual ua al bad debt ratio of the bank Based on the symptom is high NPL rate in retail segment, after n verifying potential problems, the main problem of bad training skill in debt recovery and n va verification is revealed with two main causes are pointed out which are fu Since then, by using internal reports and conducting in depth interview with some staffs ll to understand the main problem, the thesis would like to propose some solutions to improve m oi the management of bad debts in credit activities of VP Bank at nh z z ht vb k jm om l.c gm n a Lu n va y te re Company overview 1.1 Viet Nam Prosperity Joint Stock Commercial Bank (VP Bank) t to Vietnam Prosperity Joint Stock Commercial Bank (VP Bank) was established on ng hi August 12, 1993 After nearly 25 years of operation, VP Bank has developed its network to ep 219 transaction points with a staff of nearly 24,000 employees By the end of 2017, VP Bank's charter capital has increased to VND 15,706 billion w n VP Bank is gradually asserting the reputation of a dynamic bank with stable and lo ad responsible financial capacity to the community In 2017, VP Bank closed its 5-year journey y th (2012-2017) with great achievements in scale and profitability, making VP Bank one of the ju leading commercial joint stock banks in Vietnam yi pl Especially, 2017 is a historic milestone for the bank when nearly 1.5 billion shares were ua al officially listed on HOSE, attracting great attention of domestic and international investors n With constant efforts, VP Bank's brand has become more and more strong and confirmed n va through many prestigious awards Particularly in 2017, VP Bank received 20 domestic and ll m Bank's impressive growth in brand value fu international awards continuously, showing the recognition of prestigious organizations for VP oi VP Bank's new brand with the motto "Act for dreams" is built from the following nh at elements: Professional, Dedicated, Different, and Simple Towards a long-term vision, VP z Bank is determined to promote the image of a bank that always strives to serve customers with z vb the friendly attitude and the fastest speed ht VP Bank is ranked by Brand Finance, the world's leading brand valuation consultancy, jm k as one of the four banks with the highest brand value and one of the 22 most valuable brands om l.c 1.2 Organizational chart gm in Vietnam in 2017 n a Lu n va y te re t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z vb Source: VP Bank’s website (www.vpbank.com.vn) ht Figure 1: VP Bank’s organization chart k jm 1.3 Risk Management Department om l.c gm n a Lu n va y te re Figure 2: Risk Management Department’s organization chart As in organization structure of Risk Management Department in figure 2, the department divided into many teams In this thesis’ scope there is three teams in retail segment, namely: Debt Collection Center (include Debt Collection Strategy and Retail Debt t to Collection), Retail Risk and Verification Department should be focused on Each team has ng hi specific responsibility: ep Debt Collection Strategy - Develop management and debt recovery strategies; w Build and manage automatic debt reminder system; n - lo Set up training programs to train debt recovery officers; - Control the quality of debt recovery through the reporting system; - Make plans for debt recovery in each period based on the strategy of the bank's ad - ju y th yi ua al Retail Debt Collection pl leadership Remind pre-due debts and overdue debts by SMS message system based on the list of fu loans due in the month; n va - n Responsible for recovering loans from individual customers, including: Call overdue customer to collect debt according to the available scenario; - Field visit to meet customers directly; - List out loans with signs of fraud then sent to the in charge department for further ll - oi at nh z z List out customers having difficulties in repaying debts to implement financial k jm Verification Department ht solutions vb - m actions; Analyze and assess customer's risk level when making a loan decision; - Assessing risks with disbursed loans: determining the financial situation of loan Develop and implement a credit risk strategy based on VPB's credit risk appetite - Give opinions on credit risk aspects for the deployment of new credit products and te re - n Develop and implement a credit risk management framework va - n a Lu Retail risk om applicants l.c gm - credit activities in the new market y - Prepare annual debt collection plan - Evaluate debt recovery strategies that are being applied - Evaluate the quality of debt collection activities compared to the plan ad ju y th yi pl ua al implement and measure, include: n n va + Content of training; + Cost for training; + Resources; oi m ll fu + Ability of trainers; nh at + Timeline; vb staffs ht program base on plan Managers, z Implement training z + Training methods Implement Compare the performance Collect feedback from all and of employees before and stakeholders to determine the modify after training to determine effectiveness of the program training whether the training and what the trainer has program program meets the training conveyed (including k an Lu va employees have received) om knowledge or skills that l.c gm objectives Managers jm Review n y te re ac th si eg cd jg 27 hg 5.3 Solution 3: Hire external partners to train staffs of Collection and Verification department The level of trainers also affects the effectiveness of training and development of t to human resources Hence, the company should choose trainers carefully in different sources ng hi such as external organizations or invite training experts The trainee needs to have extensive ep knowledge, experience, knowledge of the situation of organizational, strategies and training methods w n Currently, Verification and Collection Department is applying on-board training which lo ad is sending experienced staff to guide those who are new staffs The advantage of this kind of y th training is that training is carried out regularly, maintained continuously, without interruption; ju company take advantage of internal resources; training conditions can be flexible in case yi pl strategy of department is changed… This kind of training is also the simple way to organize ua al and minimize associated cost Arranging a highly qualified staff to guide a weak employee to n help this person, on the one hand, learn many skills from colleagues, on the other hand, he n va could being confident about being advised if there is a problem For experienced employees, fu mentoring others is an affirmation of their work, giving them a sense of management role ll However, for this kind of training, instructors often not have pedagogical knowledge, so the m oi instruction is not scientific and it is difficult for new staffs to absorb or learn both the bad habits nh at of the instructor New staffs will perform their own tasks when encountering problems will ask z the instructor, this will limit their chance of learning Sometimes new staffs are afraid to ask, z vb instructors not actively train, lead to the effectiveness of this kind of training is not high ht Besides, the instructor may feel the new staff as a "threat" to their job or position so they are jm k not enthusiastic to guide Also the training can interrupt the daily tasks of instructors gm Verification and Collection Department can organize focused training programs l.c through professional training vendor This kind of training gives businesses a team of qualified om trainers in training In addition, the trained employees are equipped the same quality, which there are more opportunities for them to the same Training courses will help employees before and after the training process, discover errors that need to be supplemented and y te re The evaluation of training helps the Bank assess the ability, professional skills of staff n va work consistently and centrally; strengthen the spirit of working with the team n a Lu can form standards in the work process If all employees have been trained in the same way, improved in training courses, serving the objectives and business strategies of the Bank Therefore, in the training progress, the stage of evaluating the effectiveness of training and development is important and necessary 28 ad ju y th yi pl ua al Time schedule Process Objectives Actions Responsibilities Jan, n the The first step of a - Firstly, analysis of fu of training process is to Apr, May, Jun, accurately identify the Managers workers: The main content of employee analysis oi m ll training of n need Mar, 2020 2020 2020 2020 2020 2020 va Analyze Feb, nh includes: analysis of at needs of human records individuals to get trained The their information and determination of human qualifications, abilities, z resources that need to be z jm ht vb k resource training needs is skills to see if they can guarantee the minimum direct decision to requirements of the job implement the next steps Next is analyzing the of a training process performance results to see Training needs are the level of their work usually determined from completion, what skills are the company's business missing? What skills plans and human should be added to them resource plans, based on - Second, organizational which determine the analysis: determine whether om l.c gm a relevant factor and an Lu va n y te re ac th si eg cd jg 29 hg ad ju y th yi pl the level of development of development needs for the organization: the n ua al training and development goal of the n va company to meet job business in the future, the implementation of the performance of the plan business in a certain period oi m ll fu requirements and nh at of time From there, show z us the overall view of the z vb business, the strengths and jm ht weaknesses from which to improve by training k requirements of the job: ac th really needs training y te the business can know who re version does the job so that n the job, the standard va For the person who does an standard version Lu on the job description, the om Analyzing the work based l.c gm Third, analyze the si eg cd jg 30 hg ad ju y th yi pl about Learn about skills and ua al Learn capabilities of knowledge needed n companies objectives strategic n of training m ll program to fu achieve va outsource Managers, HR Managers, HR oi Choose proper Select companies that of department z In this step, partners and vb Cooperate z company at match goals and budget nh outsource training material and si it to the Director and Head ac th develop a plan and submits y te Verification Department to re Collection n of va level manager in cooperate with Managers an higher Head of the HR department Lu Seek approval om program l.c study and structure of training gm program, exercises, cases k to situations used in the develop from jm company ht with outsource trainers develop practical eg cd jg 31 hg ad ju y th yi pl ua al of the Training Department Implement training program n va After each training Monitoring and evaluating training course, it is necessary to the training program program evaluate the oi m ll fu Evaluate n Implement for approval and signing va n y te re ac th before training The an efficiency compared to Lu quality and labor om change in productivity, l.c effectiveness include: used to evaluate training gm main criteria that can be k evaluation criteria The jm conducted based on the ht effectiveness is vb evaluation of training z and quality The z achieved both quantity at training program has nh effectiveness of the si eg cd jg 32 hg ad ju y th yi pl ua al change of knowledge and skills of staffs after n n va training is often shown oi m ll performance fu in the results of work at nh z z k jm ht vb om l.c gm an Lu va n y te re ac th si eg cd jg 33 hg ad ju y th yi pl n ua al n va Supporting information Gender Position oi Name m ll fu No Working experience experience at (year) VPB 10 Interview Place of date interview Mar-2019 VPB Le Viet Thu Female Collection Manager Vo Thi Sa Mi Female Senior Debt Collection Officer Mar-2019 VPB Pham Thi Hoang Anh Female Debt Collection Officer Mar-2019 VPB Nguyen Hong Ngoc Female Retail Risk Team Leader Mar-2019 VPB Hoang Ho Nhu Quynh Female Senior Retail Risk Officer 2 Mar-2019 VPB Tran Thi Lien Oanh Female Verification Team Leader 5 Mar-2019 VPB Pham Dinh Le Dong Male Verification Officer 1 Mar-2019 VPB z at nh Working z k jm ht vb om l.c an Lu va Introduction gm INTERVIEW GUIDE n re Hello, my name is Phan Ngoc Thuy Duong from Retail Risk Management Department of VP Bank Firstly, I want to say thank you for your time y te This interview might take you about 15-20 minutes After reviewing financial reports of retail department, I found that NPL rate in retail segment ac th of 2018 is higher than previous months and also higher than the target Therefore, I would like to ask you some questions to deeply understand eg cd and supporting si about this situation By the way, I will take some note because I don’t want to miss any information that you shared Thanks for your understanding jg 34 hg ad ju y th yi pl ua al Warm-up questions What is your name and your job position? - How long have you worked at VP Bank? - What’s your main responsibility in work? n - n va m ll fu Main body In your opinion, which factors that might affect to high NPL rate in retail segment? - What is the main factor? Why you think so? - Do your department have team specializing in training? - Do you think your job should require training or not? - Do you think skill training will impact to the performance of staff in your team? oi - at nh z z Coding Category Job Position l.c gm Questions and answers What is your name and your job position? k jm ht vb Thanks and close Collection Manager Ms Mi: My name is Vo Thi Sa Mi - Senior Debt Collection Officer Senior Debt Collection Officer Ms Anh: My name is Pham Thi Hoang Anh - Debt Collection Officer Debt Collection Officer Ms Ngoc: My name is Nguyen Hong Ngoc - Retail Risk Team Leader Retail Risk Team Leader om Ms Thu: My name is Le Viet Thu - Collection Manager an Lu va n Ms Quynh: My name is Hoang Ho Nhu Quynh - Senior Retail Risk Officer Senior Retail Risk Officer Verification Officer How long have you worked at VP Bank? Employees’ tenure si Ms Thu: years ac th Mr Dong: My name is Pham Dinh Le Dong -Verification Officer y te Senior Verification Officer re Ms Oanh: My name is Tran Thi Lien Oanh - Senior Verification Officer eg cd jg 35 hg ad ju y th yi pl Ms Anh: year n va nh Job description at What’s your main responsibility in work? oi Mr Dong: year m ll Ms Oanh: years fu Ms Quynh: years n Ms Ngoc: years ua al Ms Mi: years z Ms Thu: Generally, my job is management overdue loan portfolio z vb Ms Mi: I’m in charge in allocation new overdue loans to each staff in my k new staff to guide them how to work efficiently jm ht team, support my staffs to call customers having bad attitude and attach y te ac th approve or reject a retail loan re Mr Dong: My task is verifying customers’ application to make decision of n also have to provide training for new staffs and guide them in work va approval or rejection of lines of credit or personal loans Like Ms Mi, I an Ms Oanh: My main responsibility is approve, reject, or coordinate the Lu credit policies om Ms Quynh: My task is answering questions for business units in terms of l.c the strategic objectives of the organization are fulfilled Ms Ngoc: My task is setting credit policy for retail segment, ensures that gm Ms Anh: My daily task is call overdue customers for their payment si eg cd jg 36 hg ad ju y th yi pl Factors affect to NPL retail segment? rate in retail segment n ua al In your opinion, which factors that might affect to high NPL rate in n va Ms Thu: Within my scope of work, high NPL rate is due to unresponsive Unresponsive debt recovery skills fu debt recovery skills Otherwise, partly due to the nature of the loan, for oi recovered m ll example, there’re cases that customer is confirmed fraud so that cannot be nh at Ms Ngoc: In my opinion, high NPL rate in retail segment partly due to the Excessive credit expansion z excessive credit expansion, which means poorly selected customers, the Compliance with the credit process is z vb ability to monitor the use of weak loans But, the compliance with the credit loose that lead to increasing of credit risk k jm ht process is loose, in addition with the weakness of staff that is the main reason The weakness of staff gm Ms Oanh: I think poor verification skill and lacking of skill in handle Poor verification skill and lacking of Main factor affect to Lu What is the main factor? Why you think so? om become bad debt l.c overdue loan in early stage that make the loan move to higher cycles and skill in handle overdue loan NPL rate an Ms Thu: I think skill of collection staffs is the main factor that make overdue Skill of collection staffs n re big impact to NPL rate va loan become NPLs The ratio of fraud customer is not too much to cause the y te Ms Ngoc: Like I mentioned before, our policy is aligned with bank’s Skill of verification and collection which is very important to help the bank identify problem loans and can ac th strategy so the remained problem is skill of verification and collection staffs staffs si eg cd jg 37 hg ad ju y th yi pl ua al negotiate with customers in order to avoid transferring debt groups Also, as I observed in my previous business trip to these departments, there’re many Don’t have training team n n va new staffs start to work after 2-3 days being trained, how can they work with m ll new staff and coaching current staffs fu that such few knowledge! They even don’t have training team to train for Skill of verification staffs oi Ms Oanh: Within my scope of work, I think the main factor that caused nh at high NPL rate is the skill of verification staffs With the weak in loan z justification, they easily approve for a risky loan which leads to an increase vb Team specializing in Ms Mi: No, currently we don’t have For new staff, senior staff will spend No training team, senior staffs attach k jm ht Do your department have team specializing in training? z in credit risk om Lu Quality Control (QC) team evaluate collectors’ performance in order to l.c different therefore also affect the quality of training Besides, we don’t have overdue customers However, skill and knowledge of these staffs are and guide new staffs gm 2-3 days to attach them and guide them basic knowledge and skill to handle training Assigned senior staffs to train for Ms Oanh: No, we assigned senior staffs to train for junior one junior one an give prompt feedback on their performance and conduct coaching va n ac th ago, my manager assigned a senior staff to become my mentor to support me y te Ms Anh: No, when I started work at Collection Center of VP Bank, year re Assigned a senior staff to guide si eg cd jg 38 hg ad ju y th yi pl handling overdue customers n ua al in work, guided me how to use system and answer my questions in terms of The need of having n va Do you think your job should require training or not? training fu Ms Mi: Yes, with the nature of work that usually interact with customer to Should have training oi have m ll convince them pay their debt, if funding condition allow, I think we should nh If staff have not had the training, will suffer from poorer performance both staff and the bank will suffer at Ms Oanh: Yes, If staff have not had the training, both staff and the bank z z jm ht vb from poorer performance k Ms Anh: Yes, personally I had a lot of difficulties when I started to work Training is very important l.c very important for my job gm and my performance was very bad in several months So I think training is impact to va your team? And how? Training and its an Do you think skill training will impact to the performance of staff in staffs more confident in work Lu very first steps make staffs more confident in work om Mr Dong: I have the same idea with Ms Anh Besides, I think training in Training in very first steps make n performance of staff re Ms Mi: Definitely yes! With strong skills, collectors can resolve overdue With strong skills, achieve their y te loans in early stages, prevent accounts move to higher buckets that cause bad target and also save the bank from ac th debt, then achieve their target and also save the bank from loss of bad loans loss of bad loans si eg cd jg 39 hg ad ju y th yi pl ua al Ms Oanh: Obviously! If verification staffs is trained professionally, they If staffs is trained professionally, will be able to identify loans with signs of fraud or high risk then reject these prevent the loan from becoming bad n debt which causing loss to the bank n va applications fu then avoid the difficulty of debt recovery in the future, even prevent the loan oi m ll from becoming bad debt which causing loss to the bank at nh z z k jm ht vb om l.c gm an Lu va n y te re ac th si eg cd jg 40 hg REFERENCES t to ng hi To MT Credit risk management and bad debt controlling 2013 Boffey R, Robson GN Bank Credit Risk Management 1995 Kihuro JM, Iraya CM Credit Risk Management and Bank Performance: A Critical ep Literature Review 2018 Timsal A, Awais M, Shoaib O On job Training and Its Effectiveness: An Employee w n lo Perspective 2016 ad Chen T-Y, Chang P-L, Yeh C-W The study of career needs, career development y th Orokov B, Durning D, Pushkarev S Employee Training And Development In yi ju programmes and job satisfaction levels of R&D personnel: the case of Taiwan 2010 pl Kyrgyzstan: Leninskoye Village Government al Jr WA, Jr WB, Edens PS, Bell ST Effectiveness of Training in Organizations: A ua n Meta-Analysis of Design and Evaluation Features 2003 va Sahinidis AG, Bouris J Employee perceived training effectiveness relationship to n ll m Raheja DG Dynamic Manufacturing, R H Hayes, S C Wheelwright and K B Clark, Ahmad A, Jehanzeb K, Alkelabi DSAH Role of Learning Theories in Training While at 10 z z Training the Trainers 2012 vb Truc X Cắt giảm chi phí đào tạo nguồn nhân lực, khó hay dễ? 2016 [Available from: ht 11 nh The Free Press, A Division of Macmillan 1991 oi fu employee attitudes 2008 k jm https://kynabiz.vn/bai-viet/giam-chi-phi-dao-tao-nguon-nhan-luc.html om l.c gm n a Lu n va y te re 41