THEORETICAL FRAMEWORK OF INDIVIDUAL LENDING
The common issues of service quality, lending service quality and customer satisfaction
Service includes all activities during which customers and service providers contact with each other to satisfy customer needs that have been previously expected, as well as to create customer value
According to the theory of service marketing, service has three basic characteristics:
Therefore, service has specific characteristics compared to other sectors:
- Customer is a member in the service process;
- The production and consumption of products take place simultaneously;
- The production capability will be lost if not used because service cannot be stored and therefore it will be lost if not used;
- The selection of service location is bound by customers: Customers and personnel of service providers must meet for a service to be performed, so the business location must be close to customers;
- Invisibility: customers cannot see, touch and try before buying;
- Difficulties in the measurement, evaluation of products; the number of customers served is not a measure to assess the quality of services performed.
The characteristics of service have created a lot of differences in the definition of product quality and service quality While consumers can assess the quality of the tangible products easily through forms, styles, products, packaging, brand reputation by touching the products, smelling, holding, watching directly for evaluation, this would not be done for intangible products and services because they are not consistent with each other but inseparable Quality of service will be shown during the use of service, the interaction between customers and service providers.
1.1.1.2 The concept of service quality
Therefore, for the definition of service quality, Parasuraman, Zeithaml and Berry said that service quality is the gap between customer expectations on utilities that the service will bring to them and their sensory perceptions on the results they get after using that service This can be considered as the most general concept, which covers the full meaning of service quality, as well as the most accurate concept when considering the quality of service in view of the customers, taking customers as the focus.
Individual lending service quality is the ability of lending services to meet the expectations of borrowers, in other words, it is the gap between the expectations of borrowers with their feelings about the results they get after dealing with the loan banks.
1.1.3 Factors affecting quality of individual lending service
Factors affecting quality of individual lending service throughout the process before, during and after funding are as follows:
Lending products (excluding interest and costs) are the strategic tools of banks in business The required products should have the diversity and flexibility which will meet a wide range of customers; or in the same types of customers, diverse and flexible lending products will meet the needs of customers at maximum.
The support services include advisory services, asset valuation services,guaranteed asset management services, notary services, registration services for guaranteed transactions and other services and transactions of customers These are the services to help customers complete loan application, minimizing the operational time of customers when processing loan applications and performing transactions other than the demand for bank loans.
Banking services should have simple, convenient and highly applicable procedures, to avoid loss of time and create a good feeling to customers As customers have demand for bank transactions, they always expect the bank to have all the necessary services for them to achieve their demand, reducing their time and effort Today, customers want banking services to have a high level of utility (services using high technology content), then they can easily use the banking services, products at anywhere, anytime and not necessarily coming to the bank for transaction, while ensuring their security and safety.
- The professional skills and soft skills of credit officers
The quality of bank staff is the decisive factor in the success or failure of the business of the bank in general and of lending operations in particular It is because that credit officers are directly involved in all stages of the lending process, from the first step to the last step.
Credit officers, who lack a sense of responsibility, will affect the lending service quality Professional qualification also determines the success of lending activities Credit officers who are good at professional knowledge, skilled and experienced will be able to provide advice to customers, reduce the operational time and build up a solid customer foundation At the same time, customers always want the officers to be cheerful, enthusiastic to create comfort and confidence to customers, creating them the feeling of wanting to continue using products and services of the bank.
The technological content in products and services is now the element of competition between the banks in terms of the utility, application of products and services, shortening the transaction processing time Moreover, banking technology helps credit staff process information to meet the requirements of customers accurately, reducing the manual operational time, helping credit staff focus on handling work and support the customers Technological requirements must ensure the security and safety of transactions for customers.
Lending process is a combination of contents, basic operations, the steps taken in the process of lending, debt collection to ensure the lending capital adequacy It includes steps starting from preparation of loans, delivering loans, checking in the process of lending until the debt is recovered.
The lending process of bank is not rigid For each different customer, the bank can take the initiative, flexibility to perform the steps in the lending process accordingly For example, for large projects, the analysis step is very important. There are even cases that are so complex that the bank had to establish a separate appraisal group For consumer loans, the supervision of capital use purposes should be more focused.
Organization of banks should be concretized and arranged scientifically, with flexibility on the basis of respecting the principles stated A bank which is organized in a scientific way will ensure the close, rhythmic coordination between departments, banks in the whole system as well as with other relevant agencies. Through that it will facilitate multi-dimensional response to the requirements of customers, effectively managing credit accounts, reducing the operational time leading to fast and effective transactions with customers.
Customer policy is one of the business strategy policies of bank Customer policy aims to delimit the target customer market and the preferential regimes in the associated credit granting corresponding to the customer classification levels The incentives include interest, fees, trust level and loan conditions as well as conditions on collaterals Customer policy may change from time to time depending on the business orientation of the bank and the business market.
Model of service quality assessment
RATER model is one of the main tools in Service Marketing used to evaluate the quality of service, developed by professors Valarie Zeithaml, A Parasuraman and Leonard Berry (1990) who have repeatedly tested the scale and considered various theories, and said that RATER is the model that reaches the reliability and value This model can be applied in different types of services such as restaurants, hotels, hospitals, schools, airlines, tourism
Parasuraman's study suggests that service quality is the gap between customer expectations of the service they are using with the realistic feel about the service they enjoy The author has set up a model of the gaps in the service quality as a basis for the service standardization and service quality evaluation From that, it will be the basis for offering solutions to improve the quality of service.
The purpose of the model: to develop a method to perform the service quality assessment; through which it can confirm the service, processor system that provides services meeting customer requirements in accordance with the prescribed standards.
Benefits of the model: the assessment of conformity to voluntary standards is becoming increasingly important due to the trend of globalization and the expansion of international markets The evaluation of service quality through customer satisfaction allows banks to recognize the gaps in service quality, creating opportunities to overcome immediately, standardize the process, capture customer needs At the same time, the assessment process of customers itself is an activity which contributes to the effective communication with the bank during the service provision The author asserted because of these benefits / features that he chose this model for the topic
1.2.1 The basis for service standardization and quality assessment
Parasuraman gave theory on the model of gaps and ten service quality components; as a basis for modeling.
The model of five gaps in service quality
To evaluate the service quality of the service industry, Parasuraman, Zeithaml
& Berry have made the studies of service quality in marketing and given the model of 5 gaps in service quality and based on the model of 5 gaps the authors have built the service quality scale SERQUAL to shorten the gaps in the process of service provision for the quality of the provided service to meet customer expectations.For the 5-gap-model (see diagram 1.1), the 5 th gap is the target that needs to be studied because it determines the level of customer satisfaction when they recognize different levels between expectations and the service they receive This difference is created by the 4 gaps from 1 to 4.
(Source: Nguyen Dinh Tho &ctg.2003, excerpted from Parasuraman &ctg)
- Gap 1: when there is a difference between customer expectations for service quality and service managers feel about the customer expectations The basis point of this difference is because the service company does not fully understand the characteristics that make up the quality of services as well as the method to transfer them to customers to satisfy their needs
- Gap 2: when the service company has difficulty in shifting its perception of the customer's expectations into quality properties In many cases, companies can realize the customer expectations, but they are not always able to convert the expectations into the specific criteria of quality and transfer them in accordance with the customer expectations on the characteristics of service quality The main cause of this problem is the professional competence of service staff as well as too many fluctuations in service demands There are times when service demands are too high for companies to timely meet.
- Gap 3: When service employees do not transfer the service to customers under the identified criteria During the service, employees have direct contact with customers and play an important role in the process of creating quality However, they are not always able to complete the task under the criteria set out.
- Gap 4: Means of advertising and information also have an impact on customer expectations of service quality The promises in promotional and advertising programs can increase customer expectations but it will also reduce the quality that customers feel when they are not done as promised.
- Gap 5: when there is a difference between the quality and customer expectations and the quality they perceive Service quality depends on this 5th gap Once customers find no difference between the quality they expect and the quality they perceive when using a service, the quality of service is considered perfect Parasuraman
& ctg (1985) suggested that service quality is a function of the 5th gap The 5th gap depends on the previous gaps That is the gaps 1, 2, 3 and 4 Therefore, in order to shorten the 5th gap and increase the service quality, service managers must strive to shorten these gaps.
The theory on components of service quality
Parasuraman & ctg (1985) has built up the SERVQUAL scale to assess the quality of services, he said that SERVQUAL is the scale that achieves the reliability and value SERVQUAL scale measures the quality of services based on perception by the customers using the service and any service, quality of service perceived by customers can be modeled into 10 components, which are:
(1)Reliability: expressing the ability to perform services appropriately and timely right from the first time;
(2)Responsiveness: expressing the desire and willingness of service staff to provide services to customers;
(3)Competence: expressing the professional qualifications to perform the services The ability to serve is expressed when employees contact with customers, directly perform the service, research ability to capture relevant information needed to serve customers.
(4)Access: related to creating all conditions for customers to easily access services such as shortening the waiting time of customers, service locations and opening hours to be convenient to the customers;
(5)Courtesy: expressing the affable, respectful and friendly personality to customers;
(6)Communication: related to the communication, transmitting to customers in a language that they understand easily and listening to their issues such as explaining the services, costs, resolving complaints and inquiries.
(7)Credibility: expressing the ability to create confidence for customers, make customers rely on the company This ability is reflected in the company's reputation and personality of the service personnel communicating directly with customers.
(8)Security: related to the ability to ensure the safety of customers, expressed through physical, financial safety as well as information security
(9)Understanding: demonstrated by the ability of understanding the needs of customers through the learning of customer requirements, attention to customers and identification of regular customers.
(10) Tangibles: expressed through the appearance, attire of service personnel, equipment serving for the services.
International experience on improvement of individual lending service
1.3.1 International experience on improvement of individual lending service quality
The individual lending has appeared long ago in the world and developed in the countries with economic potential and vibrant banking competition but only just developed some recent years in Vietnam Before, with traditional banking operations in our country, the customers can only borrow for production or business needs Currently, in the international integration trend, the foreign bank branches, joint venture banks, state banks, joint-stock commercial banks, financial firms are competing strongly with each other to develop individual lending In the individual lending development, the individual lending service quality is the key factor deciding the success or failure of the individual lending development.
According to the roadmap laid out from 01/04/2007 to commit joining theWorld Trade Organization (WTO) and in accordance with the Circular No.
03/2007 /TT-NHNN dated June 05 th , 2007, the operation of the branches of foreign banks, joint venture banks, banks with 100% foreign capital will "follow the principle of non-discrimination" (allowed to perform professional activities such as Vietnamese banks with activities of respective type of bank) So with the experience accumulated in the major markets, the foreign banks have had the right and appropriate strategies to interject gaps of the Vietnamese market, which reaped success in the retail banking market that domestic banks haven’t made.
According to the information from the website of The Asian Banker Journal, among the commercial banks operating in Vietnam, there are very few domestic banks winning the best service quality bank during the past years Meanwhile, ANZ was awarded by this Journal the best service quality bank in Vietnam in 2003, 2004, 2007 and 2008; ACB won this award in 2005, HSBC won it in 2006 and Sacombank won this award in 2009 The Asian Banker gives this award based on the criteria that the bank has created the soaring retail sales and has the lead in all the banks in Vietnam (including international and domestic banks) on profits from operations and growth of number of customers, capable of sustainable high lending So, from which reason did the foreign banks such as ANZ and HSBC achieve such success?
ANZ Vietnam has been bringing to the customers with products and services really different from other banks with evidence that many consumers are turning to use the services of ANZ and they really believed that not all banks were the same Particularly, ANZ offers the individual customers the diverse lending products, utilities with attractive interest rate with improved service quality, rapid evaluation of dossiers, and detailed advice for customer which helps ANZ judged to be capable of handling more preeminently the jobs than the other international and domestic banks.
In March 2011, ANZ Vietnam was given by The Asian Banker the Award for
"Excellence in Best Mortgage Business in Asia" due to the strong growth of this product and focus on customer needs and diverse service packages This product is a form of "re-loan" - this form allows the customers who may re-borrow the amount that the customers have previously paid to the bank in its home loan package through the implementation of simple and quick procedures within 4 hours.
Meanwhile, ANZ also has successfully built the risk control system and sees it as an index to measure the working ability of its employees ANZ Vietnam has developed a team of personal finance advice to support ANZ to become the leading bank in the market in some areas, especially for mortgages and credit cards.
The Asian Banker selected HSBC as “Best retail bank in Vietnam in 2006” The success of HSBC Vietnam is in shifting of served beneficiaries from foreigners into Vietnamese customers with the message of "Global bank global expert in locality." With target customer change strategy and establishment of team of professional financial advisors, HSBC was preeminently rated in sales capability and ability for introduction of new banking products and services to the Vietnamese market, in particular provision of personal financial services, including outstanding services as personal loan and credit card.
HSBC has launched HSBC Premier Product only for the high-end customers of the bank The customers enjoy intensive investment advisory service, globally applied financial source management banking service, and previously accepted Premier Master Cards and exclusive Premier centers in the world In the fierce market competition, HSBC’s credit card has won the hearts of customers with these unique elements Also in March 2011, HSBC launched a Red - Weekend program for credit card holders. Accordingly, the customers can enjoy preferential treatment from 30- 50% of bills in shops and top brands in Hanoi and Ho Chi Minh City.
With prudent lending policy applied to the individual customers and households,HSBC gave to the customers a choice of flexible repayment methods on the basis of interest calculated on the original principal outstanding balance or on gradually decreased outstanding HSBC Group is operated by five core business principles to support to the maximum the lending policy: Qualified and efficient operation, strong and mobile capital source, prudent lending policy and strict discipline.
1.3.2 Lessions on individual lending service quality improvement for commercial banks in Vietnam
The individual lending activities of foreign banks in the developed countries have accompanied the life of people for long time to meet the basic needs of housing, vehicle, study but in Vietnam, it is too small Vietnam has the advantage of a large population and an increasingly high per capita income; it is very potential market for banks to develop the individual lending.
Now, in the context of participation of foreign banks in Vietnam, Vietnamese commercial banks cannot still sit to enjoy home advantage as before, many banks identify to improve individual lending quality service as an important component in retail banking service development strategy, especially in lending service quality development.
By considering the manner that the foreign banks have done in the retail banking sector in the Vietnamese market, we can draw some learned lessons for Vietnamese commercial banks to improve the lending service quality service as follows:
To study and develop the lending product associated to the actual situation and real needs of the individual customers.
The commercial banks should update information on financial – banking market, real estate market , macroeconomic regulation policies of the Government to timely adjust the operation direction.
To invest in equipment, material facilities, information technology system to serve the customers in the best way.
To have a training policy of credit staff fluent in law, expertise in the financial – banking sector to advise the customer records carefully and intelligently. Besides, it is necessary to focus on improving soft skills of staff to provide the customers with the best service quality, to help the customers to feel satisfied at the best level when dealing with the bank.
Up to their financial capacity, the commercial banks must know themselves to balance the capital source to meet the individual lending activity to ensure the price competitiveness (interest rate + fees)
The Chapter 1 outlines some concepts as a rational basis for evaluating the service quality in general and lending service quality in particular and also gives a theoretical model of lending service quality and customer’s satisfaction.
THE INDIVIDUAL LENDING SERVICE QUALITY
Overview of LienVietPostBank
- Transaction name: Lien Viet Post Commercial Joint Stock Bank
- English name: Lien Viet Post Commercial Joint Stock Bank
- Certificate of business registration number: 6300048638
- Address: No 32 Nguyen Cong Tru Street, Ward 1, Vi Thanh City, Hau Giang Province, Vietnam
-Website: www.lienvietpostbank.com.vn
- Lien Viet Post Joint Stock Commercial Bank or LienVietPostBank, formerly known as LienVietBank, was established under Operation License No 91/GP- NHNN on 28th March 2008 issued by the Governor of the State Bank of Vietnam. LienVietPostBank is a private Vietnamese retail bank providing banking products and services through its own transaction offices across 51 cities and provinces and 1,029 postal transaction offices nationwide.
- LienVietPostBank is considered to be in the top 10 biggest private banks in terms of assets and equity, in the list of Top 100 Vietnam strong brands 2014 (for 4 years consecutively) and ranked 45th in VNR500 - Top 500 largest private companies in Vietnam in 2014.
- In July 2011, Vietnam Post Corporation (VNPost) became the Bank’s biggest shareholder by contributing capital to the Bank equal to the value of the
Vietnam Postal Saving Service Company (VPSC) and in cash This merger was one of the most notable M&A events in Vietnam at that time and was a milestone in the development of the Bank The Bank then changed its name to Lien Viet Post Joint Stock Commercial Bank and became the first Postal Bank in Vietnam.
- The founding shareholder of LienVietPostBank is Him Lam Corporation, Saigon Trading Company (SATRA) and Southern Airports Services Joint Stock Company (SASCO) Currently, with the charter capital of 6460 billion, LienVietPostBank become one of ten biggest commercial banks in Vietnam.
- The shareholders and strategic partners of LienVietPostBank are large finance - banking corporation operating in Vietnam such as Bank for Agriculture and Rural Development of Vietnam (Agribank), Wells Fargo Bank (USA), Credit Suisse (Switzerland), Oracle Financial Services Software company Limited
- The Bank is striving to become a leading retail and universal bank in Vietnam -“A bank for everyone”- by focusing on providing banking products and services for individuals, households and small and medium enterprises (SMEs) especially in the agriculture sector, and expanding its activities to rural and remote areas via the post office network.
- Strong brand Award (2013) by Vietnam Economic Times and Commercial Promotion Department (MOIT) awarded;
- Award for M & A typical period 2009 - 2013 due to Investment newspaper and AVM Vietnam company co-organized;
- Certificate of Excellent international payments by Wells Fargo Bank NA, based in the United States awarded;
- VNR - Top 500 Private Enterprises in Vietnam by the Ministry of Information and Communications awarded;
- Quality reputation products - service by consumers newspaper poll in 2013;
- Merit for outstanding achievements in the work of social security in Northwest 2013 by Northwest Steering Committee awarded;
- "Best CSR bank in Vietnam 2014” and "Best Savings Bank in Vietnam" by
Global Banking and Finance Review (UK) awarded in 2014
- Central Authority of LienVietPostBank is the Head Office Through professional investors, Head Office manages the entire network including the Operation department, branches and transaction offices nationwide.
-To offer customers and society a wide range of products and services with excellent quality; to create maximum benefits for the Bank and the Society.
-To become a leading retail bank in Vietnam - A bank for everyone.
- To be a retail and universal bank.
- Without People, the project is meaningless;
- Without Client, the Bank is purposeless;
- Without Conscience, Reputation, Talent and Vision, LienVietPostBank is useless.
Shareholders: are the foundations of the Bank.
Customers: are the benefactors of the Bank.
Employees: Is the strength of the Bank.
Partners: are the companions of the Bank
Products and services: continuously to be innovated to offer what customers need instead of what the Bank has
Business awareness: fully comply with laws and regulations; integrate business and society.
Source: LietVietPostBank’s website (www.lienvietpostbank.com.vn)
2.1.3 Business results over the years
Table 2.1: General operation of LienVietPostBank
(Source: LienVietPostBank Annual Report 2014, accessing on September,
15 th 2015, from http://www.lienvietpostbank.com.vn/nha-dau-tu-va-co-dong/bao- cao-thuong-nien/noi-dung/bao-cao-thuong-nien-nam-2014-cua-lienvietpostbank)
- Growth in the scale of operation: As of 31/12/2014, the total asset of LienVietPostBank reached 100,802 billion dongs, up 26.6% compared with 2013 and by 106% compared with the assigned plan;
- Deposit activity: Deposit in market 1 through the year relatively strong growth and stability As of 31/12/2014, total deposit of market 1 reached 77,820 billion dongs, up 10% compared to 2013, with 104% of the assigned plan;
- Lending activity: In the context of surplus capital and difficulty in lending growth, LienVietPostBank were classified as the bank which has good credit operation The lending activity of market 1 reached 46.399 billion dongs, up 26% compared to 2013;
- Profit: Due to the global context of the banking industry in 2014 was in trouble so profit did not achieve as expected Pre-tax profit in 2014 reached 535 billion, aimed 49% of the plan.
Figure 2.2: Deposit through the years
(Source: LienVietPostBank Annual Report 2014, accessing on September, 15 th
2015, from http://www.lienvietpostbank.com.vn/nha-dau-tu-va-co-dong/bao-cao- thuong-nien/noi-dung/bao-cao-thuong-nien-nam-2014-cua-lienvietpostbank )
In spite of great pressures from the competitors, LienVietPostBank’s total deposits still reached an impressive growth (10% compared to 2013) better than the industry’s average (around 15%) Deposit growth is one of LienVietPostBank’s strategies to improve its liquidity and safe operation, to create a premise for a remarkable breakthrough in the upcoming years
With the strategy to be a leading retail bank, the structure ofLienVietPostBank’s total deposits was largely contributed by individual customers segment This contribution is projected to increase rapidly in the next few years once LienVietPostBank finishes its infrastructure building process and PostalTransaction Offices upgrade and provides full retail banking products and services at all transaction points nationwide
Beside exploiting all of its existing resources to provide qualified service, LienVietPostBank continues approaching domestic and international corporate customers and attracting more funds in order to improve its brandname and reputation.
Figure 2.3: Lending through the years
(Source: LienVietPostBank Annual Report 2014, accessing on September, 15 th
2015, from http://www.lienvietpostbank.com.vn/nha-dau-tu-va-co-dong/bao-cao- thuong-nien/noi-dung/bao-cao-thuong-nien-nam-2014-cua-lienvietpostbank )Having anticipated the difficulties from the slow credits growth,LienVietPostBank adopted flexible approach in providing different credit packages with favorable interest rates and focused on prioritized sector following theGovernment’s direction As a result, LienVietPostBank’s total loans increased by
26% in 2014 compared to 2013, ahead of the industry’s average (12%)
Regardless of adverse market condition which negatively affected lending activities, LienVietPostBank shared difficulties with its customers through a variety of financing products with favorable interest rates and terms.
Figure 2.4: Pre-tax profit over the year
(Source: LienVietPostBank Annual Report 2014, accessing on September, 15 th
2015, from http://www.lienvietpostbank.com.vn/nha-dau-tu-va-co-dong/bao-cao- thuong-nien/noi-dung/bao-cao-thuong-nien-nam-2014-cua-lienvietpostbank )
2014 was an extremely difficult year for the economy as well as the banking industry The business operation of LienVietPostBank also encountered many difficulties and challenges With the network expansion strategy, LienVietPostBank invested heavily in its network system which, in turn, increased costs and lowered profit
However, the decline in short-term profitability is being compensated by a strong capital - asset structure and a more secure operating system This is also aligned with the orientation of the Board of Directors and the Board of Management in 2013, which aims to improve the safety of operation, expand network, and build a system to strengthen the internal governance, create a foundation for a breakthrough in the upcoming years and fulfill long-term development strategy
2.1.4 Network operation and development trend of LienVietPostBank
As of 31/12/2014, LienVietPostBank has 91 outlets including 56 branches and
The results of the study on individual lending service quality at LienVietPostBank
2.3 The results of the study on individual lending service quality at LienVietPostBank
Through a formal quantitative study by using indirect techniques, the author has collected 229 questionnaire sheets filled by the customers Of which, 220 respondents are using the individual lending services of LienVietPostBank (accounting for 96.1%) and 9 respondents have not used the bank's services yet (accounting for 3.9%) For customers who have yet to use the personal lending services, 66.7% of them answered that they had intended to use these services of the bank in the future During the data screening process, the author removed 9 cases of customers do not use services from the database in order to ensure that the quality of data for evaluating personal lending service quality
Table 2.4: Descriptive statistics of the number of the customers currently using lending service
Using personal lending service Frequency Percentage Significant percentage
Results from the descriptive statistics have shown that the age ranges of the respondents are unevenly distributed, which most concentrated in the age range from
31 to 40, accounted for 36.8%, the age from 41 to 50 accounted for 35.9%, from 18 to
30 accounted for 20.5% and the age from 51 to 60 accounted for the lowest proportion of 6.8% This fact is appropriate for the characteristics of personal lending service because the young and the middle-age are the customers who have the greater demand for using personal lending services than other age ranges
Table 2.5: Descriptive statistics of age range of the respondents in the sample
Age Frequency Percentage Significant percentage
Regarding the income criteria, the income of the interviewees focuses mainly on the level of from VND 7 million to 15 million which accounts for 41.8%, the income of below VND 7 million and above 15 million accounts for 29.5% and 28.6% respectively in the overall study
Figure 2.7: Income of the respondents in the sample
When conducting the survey on the behaviors of using personal lending services, most of the respondents have used the personal lending services of the bank for from 3 to 5 years, accounting for 40.5%, the proportion of respondents who have used the services for from 1 to 3 years is 28.6% Meanwhile, only 19.1% of respondents have used the services for above 5 years and 11.8% of them has used the services for less than 1 year In general, most of the respondents have got the experience in using personal lending services for a quite long time.
Table 2.6: Descriptive statistics of the usage experience of the customers in the sample
Usage experience Frequency Percentage Significant percentage
2.3.2 Data description in the scale to evaluate the personal lending service quality of in scale to assess the lending quality of personal service of the Lien Viet
Post Joint Stock Commercial Bank (LienVietPostBank)
The results of the survey on LienVietPostBank's lending service quality are conducted by the scale of 5 components and 29 observable variables The scale is divided into 5 levels, specifically: Number 1: totally disagree, number 2: disagree, number 3: no comments, number 4: agree and number 5: totally agree The results of average score analysis show that all the components of service quality gain the average score of above 3 and approximately 4.
It means that all components of service quality of LienVietPostBank have exceeded the average level and initially achieve the customer's satisfaction However, the bank needs to focus on developing its factors of advantages to improve the competitiveness in the market.
Of which, the component of Reliability receives the highest level of customer's satisfaction with the average score of 3.89, the next is the Empathy component with the average score of 3.74, the assurance gains the average score of 3.73, the component of Responsiveness achieves the lowest average score of 3.63 However, the customers have not really satisfied with the bank in terms of Approach component, so its average score is only 3.41 The details of each component are mentioned in the Appendix 6
The Reliability Component includes 5 observable variables, they are TINCAY_1; TINCAY_2; TINCAY_3; TINCAY_4; TINCAY_5 The average score of the Reliability Component is 3.89 According the analysis results from the SPSS software, the average scores of all observable variables are from 3.66 to 4.22 Of which, the variables: TINCAY_1 (the bank always comply with what has been introduced, committed), and TINCAY_4 (a reputable bank) have been evaluated with the average score of 4, showing that the bank has performed very well what they have committed with the customers and gained a high reputation
In the Reliability component, the variable TINCAY_5 (the bank always resolves satisfactorily all customers' questions or complaints) has gained the lowest average score Therefore, the bank should focus on solving all customers' questions or complaints at the most satisfactory and timely manner.The bank should avoid to waste the time of customers as well as the times they have to come to bank because it make customers feel inconvenient, unsatisfied, and unreliable.
Table 2.7: Means and Standard Deviation of the Reliability component
The responsiveness component includes 7 observable variables; they are DAPUNG_1, DAPUNG_2, DAPUNG_3, DAPUNG_4, DAPUNG_5, DAPUNG_6, DAPUNG_7 The average score of the Responsiveness Component is 3.63.
Table 2.8: Means and Standard Deviation of the Responsiveness component
Statistic Statistic Std Error Statistic
In the observable variables, the client feels most satisfied with the variable DAPUNG_3 (the bank's interest rates and fees are reasonable and acceptable) with the highest average score of 3.72, this level has exceeded the average but has not fully achieved the satisfaction of the customer This also proves that the bank's interest rates and fees are quite competitive compared to those of other banks and this is an advantage the bank needs to maintain and improve in order to create a competitive advantage in lending
The observable variable DAPUNG_1 (the bank's lending products are diversified) and DAPUNG_4 (the bank's lending procedures are simple, easy to access and suitable with the customers' capabilities) has gained the lowest average scores of 3.53 and 3.53 respectively In order to improve the quality of the Responsiveness component, the bank needs to launch new and diversified product packages as well as makes necessary adjustment to simplify the lending lending procedures applicable to individual customers
This component consists of 6 observable variables; they are NANGLUC_1, NANGLUC_2, NANGLUC_3, NANGLUC_4, NANGLUC_5, NANGLUC _6 The average score of the Serving capability component is 3.73.
Table 2.9: Means and Standard Deviation of the Assurance component
Statistic Statistic Std Error Statistic
In this component, the observable variable NANGLUC_4 (the bank's loan and collateral appraisal ability is good) has been evaluated as the best among other variables with the average score of 3.82 The observable variables: NANGLUC_2(Credit officers have professional ethics); and NANGLUC_5 (The instruction of the lending officers make customers feel assured); NANGLUC_6 (the bank's waiting time and the time for handling procedures and documents have reached the similar average scores of 3.73, 3.76 and 3.77 respectively The observable variable:NANGLUC_1 (credit staffs bring the reliability to customers) has gained the lowest average score (3.48) Hence, it can be seen that the serving ability of bank staffs is just above average Therefore, the bank needs to train and educate more capability for its staffs in order to improve the service quality and build up the customers' confidence in the bank
The Empathy component includes 5 observable variables; they are DONGCAM_1, DONGCAM_2, DONGCAM_3, DONGCAM_4, DONGCAM_5. The average score of the Empathy component is 3.74.
Table 2.10: Means and Standard Deviation of the Empathy component
The average scores of the above observable variables all are similar and above 3.5 Of which, the variable DONGCAM_2 (the bank always presents as the companion of customers) has achieved the highest average score of 4.02 The following is the variable DONGCAM_3 (the bank can understand the special needs of customers) with the average score of 3.78, both DONGCAM_1 (the bank shows its attention to customers) and DONGCAM_5 (the bank actively gives supports and solutions to customers when they are in trouble) has gained the lowest average score of 3.60 Thus, we can see that the bank have paid attention to the Empathy component This is a very important factor for traditional customers and VIP customers because when the needs of customers are satisfied and the customers feel that the bank really cares for them by financing their business plan and demand for consumption in their lives, they will be loyal to the bank for a long-time.
This component consists of 6 observable variables; they are TIEPCAN_1,
TIEPCAN_2, TIEPCAN_3, TIEPCAN_4, TIEPCAN_5, TIEPCAN_6 The average score of this component is 3.41 - the lowest average score in the 5 components of lending service quality
Table 2.11: Means and Standard Deviation of the Tangibles component
Deviation Statistic Statistic Std Error Statistic
The average scores of the observable variables in this component range from3.18 to 3.64, only above average level Of which, the observable variableTIEPCAN_5 (The work-flow of the lending related units is scientific, transparent and clear) has achieved the highest evaluation with the average score of 3.64; the followings are the variable TIEPCAN_3 (The bank staffs' clothes are clean, neat and polite) and TIEPCAN_4 (The bank's location is convenient for customers to do transactions) with the similar average scores of 3.46 and 3.43 respectively The observable variable TIEPCAN_1 (it is easy for customers to access and identify the advertisement notice about the bank's lending services) has obtained the lowest average score of 3.18 The remaining variables TIEPCAN_2 (The bank's facilities are modern) and TIEPCAN_6 (The supporting means meet the customers' requirements (such as auto debt reminding, SMS, customer warning ) have achieved the same evaluation.Hence, we can see that customers evaluate the bank's working procedures, facilities,and supporting quite good, the staffs always wear neat uniforms They are the strengths which make an impression of a professional bank in the eyes of customers However,the bank should find solutions to help customers access and identify easily the advertisement items for its lending services in order to bring more customers to the bank.
2.3.3 Analysis of the reliability of the scale
The scale is acceptable when the Cronbach's Alpha values from 0.6 and above to ensure the reliability and quality of the scale The higher value of the Corrected Item- Total Correlation coefficient indicates the higher correlation between some variables with the other variables in one component/group The Corrected Item-Total Correlation coefficient must be higher than 0.3 (Nunnally and Burnstein, 1994) The author will test the reliability of 5 components of the scale: Reliability, Responsiveness, Serving Capability, Empathy and Approach
The results of analyzing the Cronbach Alpha reliability coefficient in the Appendix 06 are as follows:
+ The variables of Reliability component: TINCAY_1; TINCAY_2; TINCAY_3; TINCAY_4; TINCAY_5
+ The Cronbach Alpha coefficient is 0.853; all the indicators have got the Corrected Item -Total Correlation coefficient > 0.3.
=> As the results, the variables of the Reliability Component after being evaluated by Cronbach Alpha include: TINCAY_1; TINCAY_2; TINCAY_3; TINCAY_4; TINCAY_5
+ The variables of the Responsiveness component DAPUNG_1, DAPUNG_2, DAPUNG_3, DAPUNG_4, DAPUNG_5, DAPUNG_6, DAPUNG_7
+ The Cronbach Alpha coefficient is 0.945; all the indicators have got the Corrected Item -Total Correlation coefficient > 0.3, so all above variables are satisfactory.
=> As the results, the variables of the Responsiveness Component after being evaluated by Cronbach Alpha include: DAPUNG_1, DAPUNG_2, DAPUNG_3, DAPUNG_4, DAPUNG_5, DAPUNG_6, DAPUNG_7
+ The variables of the Serving Capability component: NANGLUC_1, NANGLUC_2, NANGLUC_3, NANGLUC_4, NANGLUC_5, NANGLUC_6
+ The Cronbach Alpha coefficient is 0.748; all the indicators have got the Corrected
Item -Total Correlation coefficient > 0.3, so all above variables are satisfactory
=> As the results, the variables of the Serving Capability component after being evaluated by Cronbach Alpha include: NANGLUC_1, NANGLUC_2, NANGLUC_3, NANGLUC_4, NANGLUC_5, NANGLUC_6
+The variables of the Empathy component: DONGCAM_1, DONGCAM_2, DONGCAM_3, DONGCAM_4, DONGCAM_5
+ The Cronbach Alpha coefficient is 0.887, and all the variables have got the
"Corrected Item -Total Correlation" coefficient > 0.3, so all above variables are satisfactory
=> As the results, the variables of the Empathy component after being evaluated by Cronbach Alpha include: DONGCAM_1, DONGCAM_2, DONGCAM_3, DONGCAM_4, DONGCAM_5
(5) The component of approach (Tangible)
+The variables of the Approach component: TIEPCAN_1, TIEPCAN_2, TIEPCAN_3, TIEPCAN_4, TIEPCAN_5, TIEPCAN_6;
+ The Cronbach Alpha coefficient is 0.901; all the variables have got the Corrected Item -Total Correlation coefficient > 0.3, so all above variables are satisfactory
=> As the results, the variables of the Approach component after being evaluated by Cronbach Alpha include: TIEPCAN_1, TIEPCAN_2, TIEPCAN_3, TIEPCAN_4, TIEPCAN_5, TIEPCAN_6.
Testing of theoretical model
2.4.1 Vicariate relationships among service quality components (Reliability, Assurance, Responsiveness, Empathy, and Approach (Tangible))
Based on the assumptions given in Chapter 1, the author has conducted the testing of correlation relationship between quality components including: Reliability, Assurance, Responsiveness, Empathy, and Approach (Tangible) by testing Pearson Correlation
Table 2.14: Pearson product-moment correlations between quality components (Reliability, Assurance, Responsiveness, Empathy, and Approach
Based on the results of correlation analysis from SPSS, the 2 components: Reliability and Approach (Tangible) have the negative correlation (r = - 0282, p 0.000