Individual lending service quality case study of lienvietpostbank

Paris Graduate School of Management Thai Nguyen University INTERNATIONAL EXECUTIVE MASTER OF BUSINESS ADMINISTRATION PROGRAM DISSERTATION INDIVIDUAL LENDING SERVICE QUALITY – CASE STUDY OF LIENVIETPOSTBANK Nguyen Thanh Trung VN1001567 Class: IEMBA K6A September, 2015 DECLARATION I hereby assure that the Economic Master Dissertation “Individual lending service quality - Case study of LienVietPostBank” is of my own research and implementation The data were collected in the dissertation is derived from the clear and credible sources which are handled honestly and objectively I am solely responsible for the accuracy and referred documents Hanoi, 30th September 2015 Nguyen Thanh Trung i TABLE OF CONTENTS DECLARATION i TABLE OF CONTENTS ii LIST OF TABLES AND GRAPHS viii LIST OF FIGURES .x LIST OF FIGURES .x INTRODUCTION CHAPTER 1: THEORETICAL FRAMEWORK OF INDIVIDUAL LENDING SERVICE QUALITY AND CUSTOMER SATISFACTION 1.1 The common issues of service quality, lending service quality and customer satisfaction 1.1.1 Service and service quality .4 1.1.2 Individual lending service quality 1.1.3 Factors affecting quality of individual lending service 1.1.4 Customer satisfaction 1.2 Model of service quality assessment .10 1.2.1 The basis for service standardization and quality assessment 11 1.2.2 RATER model application process in service quality evaluation 16 1.2.3 Verification model of relationship between lending service quality and customers’ satisfaction 19 1.3 International experience on improvement of individual lending service quality and learned lesson for commercial banks in Vietnam 21 1.3.1 International experience on improvement of individual lending service quality .21 1.3.2 Lessions on individual lending service quality improvement for commercial banks in Vietnam 24 ii CONCLUSION OF CHAPTER 25 CHAPTER 2: THE INDIVIDUAL LENDING SERVICE QUALITY SITUATION IN LIEN VIET POST COMMERCIAL JOINT STOCK BANK – LIENVIETPOSTBANK 26 2.1 Overview of LienVietPostBank 26 2.1.1 History and development 26 2.1.2 Organization chart 28 2.1.3 Business results over the years 30 2.1.4 Network operation and development trend of LienVietPostBank 34 2.1.5 Overview of individual lending service operation of LienVietPostBank .35 2.2 Design and develop the scale of measurement 40 2.2.1 The survey design 40 2.2.2 Study sampling 41 2.2.3 Developing the lending service quality scale and customer satisfaction scale .41 2.3 The results of the study on individual lending service quality at LienVietPostBank 42 2.3.1 Descriptive Statistics 42 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) 45 2.3.3 Analysis of the reliability of the scale 50 2.3.4 Exploratory factor analysis (EFA) 53 2.4 Testing of theoretical model 54 2.4.1 Vicariate relationships among service quality components (Reliability, Assurance, Responsiveness, Empathy, and Approach (Tangible)) 54 2.4.2 The impact of personal characteristics (age, experience, and income) of customers on their perception of individual lending service quality 55 2.4.3 The impact of individual lending service quality on customer satisfaction 59 2.5 Assessment of the lending service quality of LienVietPostBank 61 iii 2.5.1 Achievements .61 2.5.2 Limitations 62 CONCLUSION OF CHAPTER 66 CHAPTER 3: SOME MAIN SOLUTIONS TO PROMOTING INDIVIDUAL LENDING SERVICE QUALITY IN LIEN VIET POST JOINT STOCK COMMERCIAL BANK 68 3.1 Service development orientation in Lien Viet Post Joint Stock Commercial Bank in the near future .68 3.1.1 General development orientations of Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank) .68 3.1.2 Service quality development orientation in Lien Viet Post Joint Stock Commercial Bank 69 3.2 Some main solutions to improve credit service quality in Lien Viet Post Joint Stock Commercial Bank 69 3.2.1 Human resource development solution .70 3.2.2 Product development solution 73 3.2.3 Operation equipment developing solution 77 3.2.4 Banking technology development solution .77 3.2.5 Solutions on customer process and policy 78 3.2.6 Some other solutions 79 CONCLUSION OF CHAPTER 82 CONCLUSION 83 LIST OF REFERENCE 85 APPENDIX 86 iv LIST OF ABBREVIATIONS TMCP ANZ ATM CIC CN CNTT EFA HSBC KH LienVietPostBank NH NHNN NHTM PGD PGDBĐ POS Vietnam Post QLRR ROA ROE Sacombank SPSS TCKT TCTD TP TT1 USD KHKT VN VND WTO : Commercial Joint Stock Bank : Australia and New Zealand Banking Group Limited : Automated Teller Machine : Credit Information Center : Branch : Information Technology : Exploratory Factor Analysis : The Hongkong and Shanghai Banking Corporation : Customer : Lien Viet Post Commercial Joint Stock Bank : Banking : State Bank : Commercial bank : Transaction Office : Post Transaction Office : Point of settlement : Vietnam Post Corporation : Risk Management : Rate of return / total assets : Return on common/ equity : Sai Gon Thuong Tin commercial joint stock bank : Statistical Package for the Social Sciences : Economic Organizations : Credit Institution : City : Market : US Dollar : Vietnam Science-technology : Vietnam Dong : World Trade Organization LIST OF TABLES AND GRAPHS TABLES Table 2.1: Table 2.2: Table 2.3: Table 2.4: General operation of LienVietPostBank .31 Individual lending result of LienVietPostBank 39 The scales of the variables in this research 41 Descriptive statistics of the number of the customers currently v Table 2.5: Table 2.6: Table 2.7: Table 2.8: Table 2.9: Table 2.10: Table 2.11: Table 2.12: Table 2.13: Table 2.14: Table 2.15: Table 2.16: Table 2.17: Table 2.18: Table 2.19: using lending service 44 Descriptive statistics of age range of the respondents in the sample 44 Descriptive statistics of the usage experience of the customers in the sample 45 Means and Standard Deviation of the Reliability component 47 Means and Standard Deviation of the Responsiveness component 47 Means and Standard Deviation of the Assurance component .48 Means and Standard Deviation of the Empathy component .49 Means and Standard Deviation of the Tangibles component 50 The factor analysis results by using Cronbach Alpha coefficient 52 The results of exploratory factor analysis (EFA) 54 Pearson product-moment correlations between quality components (Reliability, Assurance, Responsiveness, Empathy, and Approach (Tangible)) 55 One-way ANOVA among age groups in the sample 56 One-way ANOVA among customers with different usage experience in the sample 57 One-way ANOVA among customers with different incomes in the sample 58 The research model based on standard multiple regression 60 Coefficients in the research model .60 GRAPHS Graph 1.1: Service quality model 12 Graph 1.2: Model of service quality and customers’ satisfaction 19 vi LIST OF FIGURES FIGURES Figure 2.1: LienVietPostBank Organization Chart 30 Figure 2.2: Deposit through the years .32 Figure 2.3: Lending through the years .33 Figure 2.4: Pre-tax profit over the year 34 Figure 2.5: Individual lending process in LienVietPostBank 38 Figure 2.6: Individual lending situation in LienVietPostBank 40 Figure 2.7: Income of the respondents in the sample 45 vii INTRODUCTION The rationale Individual lending market in our country is currently facing vibrant competition in banking field Potential development of this market is huge The advantage here is the size of the market with a large population, over 90 million people; most of them are young with constantly improving income, modern lifestyles and shopping needs This business is bringing great opportunities to the bank credit development Becoming the 150th member of the WTO is an important achievement in the process of renewal Vietnamese economy, opening up more opportunities for us to access the leading financial markets, but also posing challenges when foreign banks have been authorized to deal equally with local commercial banks Individual lending has long ceased to be a strange concept in Vietnam financial market However, individual lending quality is an issue that not all commercial banks in Vietnam can be also performed well Facing the current competition, besides the foreign banks which have been providing relatively perfect individual lending services to customers, the effort to improving individual lending service of the local commercial banks is essential In the banking field of Vietnam, Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank) has become a familiar name to many customers With the strategic vision, LienVietPostBank is striving to become a leading retail and universal bank in Vietnam - “A bank for everyone”; operating focused on retail under the best international practices with modern technology, capable of competing with local and foreign banks in the country With more than 150,000 individual customers nationwide, including 50,000 outstanding clients, the lending business activity is extremely important for the whole banking system However, in recent years, the personal lending field, especially individual lending service quality which has been considered as "the competitive weapon" of the banks is still limited Also the macroeconomic situation in the future is predicted to be more difficult for credit operations, requires solutions to maintain, improve and develop Therefore, I have decided on the theme: “Individual lending service quality - Case study of LienVietPostBank” for my dissertation The purpose of dissertation - Systemize the theoretical basis of banking credit services in general and individual lending service of commercial bank in particular; - Analysis of the operational status of LienVietPostBank since then assessing the achievement as well as the limitations exist in the lending quality of individual services - Propose primarily solutions to promote the lending quality of individual service at LienVietPostBank; Object and scope of research 3.1 Object Individual lending service quality in commercial joint stock bank 3.2 Scope The research focused mainly on individual lending service quality of Lien Viet Post Commercial Joint Stock Bank - LienVietPostBank for the period 2012 - 2014 Research Methodology 4.1 Methodology During the research, methods used are qualitative and quantitative Specifically, the methods of analysis, comparison, synthesis and Statistical Package for the Social Sciences (SPSS) have been used in this study 4.2 Data collection method: Secondary data: will be collected from publication as well as the current report Primary data: will be collected directly from the respondent through questionnaires and direct interviews