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

LITERATURE FRAMEWORK ABOUT MOBILE BANKING 4

Definition of mobile banking

Is mobile banking a subset of Internet banking (Muller - Veerse (1999)?

While this definition captures certain elements, it fails to encompass the full range of mobile banking features This paper defines mobile banking as a subset of mobile commerce, which itself is part of the larger electronic commerce category.

Electronic commerce encompasses more than just online buying and selling; it involves conducting business electronically within and between organizations through computer networks and mobile communications (Mitchell, 2001) This broad definition serves as a foundational reference for understanding the evolving landscape of electronic commerce, which includes areas like mobile commerce and mobile banking.

The phrase mobile commerce was originally coined in 1997 by Kevin

Mobile commerce, often referred to as m-commerce, signifies the ability to deliver electronic commerce capabilities directly to consumers through wireless technology This concept is frequently interpreted as having a retail outlet conveniently accessible in the customer's pocket, allowing for seamless shopping experiences anytime and anywhere.

Mobile Commerce bears the unique characteristics not found in any traditional forms of commerce as follows:

Ubiquity refers to the ability of users to access services and perform transactions regardless of their geographic location, allowing for an "anywhere" feature This capability is particularly beneficial in various scenarios, such as comparing prices while shopping in a supermarket or conducting transactions while on the go.

Immediacy, closely linked to ubiquity, enables real-time access to services, making it especially appealing for time-sensitive needs such as stock market updates for brokers This feature allows consumers to purchase goods and services whenever they choose, effectively capturing their intent at the moment it arises By facilitating immediate transactions, businesses can prevent potential sales losses that occur between the initial intention to buy and the actual purchase.

Localization: Positioning technologies, such as the Global Positioning

Location-based services leverage GPS technology to enable businesses to provide goods and services tailored to a user's current location This approach effectively addresses consumers' demands for localized content and services, enhancing their overall experience.

Instant connectivity: Ever since the introduction of the General Packet Radio

GPRS-enabled mobile devices maintain a constant connection to the network, offering an "always-on" feature that enhances user convenience by eliminating the need for time-consuming dial-up or boot processes.

M-Commerce enhances push-marketing through its immediate, local, and personal capabilities, enabling services like "Opt-in advertising" that allow users to select the products and companies they wish to receive updates from Utilizing Short Message Service (SMS), businesses can send targeted text messages to consumers about relevant local offers tailored to their needs This ensures that users receive pertinent information at the optimal time and location, alleviating concerns about missing important updates or receiving them too late.

Mobile telecommunication devices utilize a Subscriber Identity Module (SIM) chip, which is registered with the network operator, ensuring that the owner is distinctly identifiable This clear user identification, paired with a unique identifier, enhances the security and integrity of mobile communications.

Personal Identification Number (PIN) makes any further time-consuming, complicated and potentially inefficient authentication process redundant.

The combination of the two fields and mobile commerce and banking has introduced a new concept "Mobile banking" So what is mobile banking?

Mobile banking refers to the capability of performing banking transactions through mobile devices, encompassing a wide range of financial activities This includes essential services like checking bank account statements and transferring funds, along with electronic payment solutions and information-based financial services such as account balance alerts and access to stock broking.

Developmental fundamentals of Mobile Banking

For half a century, financial institutions have aimed to enhance customer convenience, beginning with the introduction of the automated teller machine (ATM) by New York's Chemical Bank in 1969 Initially limited to cash dispensing, ATMs have significantly evolved, now offering a comprehensive range of financial services that allow customers to conduct various transactions without visiting a bank branch.

Then came Internet banking in the mid-1990s, which enabled consumers to access their financial accounts using a home computer with an Internet connection.

Despite its promise of ultimate convenience, online banking saw slow and tentative growth as banks worked out technology issues and built consumer trust Today,

Internet banking has reached a critical mass According a research report on trend in electronic banking spring 2010 (Source: www.theraddonreport.com), online banking penetration now exceeds 50 percent of U.S households

While online banking offers numerous advantages, it also faces notable limitations, particularly in terms of flexibility Staying connected for transactions can be challenging, even with a laptop, in many locations worldwide In response to these challenges, banks and telecommunications companies have collaborated to create mobile device-based banking services.

With the advantages of compact, convenient, users can easily carry mobile phone to everywhere, it has become increasingly popular around the world.

As of now, there are approximately five billion mobile users globally, with 1.08 billion of them using smartphones In Vietnam, the Ministry of Information and Communications reported that as of May 6, 2013, there are over 137 million mobile phone subscribers, representing around 70% of the country's population.

Mobile phones have evolved beyond voice communication, now offering text messaging and web access, which positions them as an ideal platform for banking services This advancement has paved the way for the emergence of mobile banking, allowing banks to deliver a diverse range of electronic banking services efficiently.

In the early 2000s, banks faced challenge caused by mobile banking.

Customers felt too difficult to see the financial information on the small screen of mobile phone, which is very popular at that time.

The advancement in mobile device size and features has significantly enhanced the efficiency of mobile banking services, leading to increased consumer interest Mobile banking not only allows banks to retain existing customers but also helps attract tech-savvy clients by offering value-added services, ultimately expanding their customer base.

Features and utilities of mobile banking services

Features and utilities of mobile banking services that banks can provide depend on the development of mobile and telecommunication technologies.

Mobile banking services initially emerged as SMS Banking, allowing users to access and manage account information despite privacy limitations and restricted data volume However, advancements in communication technologies like GPRS, UMTS, and 3G have paved the way for a new platform, significantly enhancing mobile banking capabilities Today, these services offer a diverse range of features, including financial transactions such as money transfers and bill payments, transforming the banking experience for users.

Mobile banking services provided can be categorized in two ways:

1.3.1 Classification depends on how information flows

One way to classify these services depending on how information flows is the

The 'Push/Pull' nature of banking interactions defines how information is exchanged between banks and customers 'Push' refers to the bank proactively sending alerts or notifications, such as when an account balance falls below a certain level, based on predefined rules In contrast, 'Pull' occurs when customers actively request specific information or services, like retrieving their last five transactions While 'push transactions' involve one-way communication from the bank to the customer, 'pull transactions' create a two-way interaction, enhancing customer engagement and control over their banking experience.

The other way to categorize the mobile banking services, by the nature of the service, gives us two kind of services – Transaction based and Enquiry Based.

So a request for your bank statement is an enquiry based service and a request for your fund's transfer to some other account is a transaction-based service.

Transaction-based services necessitate enhanced security measures throughout the communication channel from mobile devices to bank data servers, distinguishing them from inquiry-based services.

Based upon the above classifications, we arrive at the following taxonomy of the services listed before:

Table 1.1: Classification MB services based on how information flows

 Other financial services like share trading.

Enquiry Based  Credit/Debit Alerts.

Mobile Accounting is sometimes characterized as transaction-based banking services that revolve around a bank account and are availed using mobile devices.

Not all Mobile Accounting services are however necessarily transaction-based A more precise definition of Mobile Accounting would therefore characterize it as

“availment of account-specific banking services of non-informational nature”.

Mobile Accounting services may be divided in two categories to differentiate between services that are essential to operate an account and services that are essential to administer an account

Table 1.2 : Services in Mobile Accounting

Mobile accounting Account Operation Account Administration

Money remittances & transfers Access administration

Standing orders for bill payments Changing operative accounts

Money transfer to sub-accounts Blocking lost cards

Subscribing insurance policies Cheque book requests

Brokerage, in the context of banking- and financial services, refers to intermediary services related to the bourse, e.g selling and purchasing of stocks.

Mobile Brokerage can be thus defined as transaction based, mobile financial services of non-informational nature that revolve around a securities account.

Mobile Brokerage, too, may be divided in two categories to differentiate between services that are essential to operate a securities account and services that are essential to administer that account.

Table 1.3: Services in Mobile Brokerage

Mobile Brokerage Account Operation Account Administration

Selling & purchasing financial Access administration instruments (e.g. securities) Order book administration

Mobile Financial Information encompasses non-transactional banking and financial services that deliver informational content to customers These services offer users anytime, anywhere access to vital information related to their bank and securities accounts, as well as relevant market developments Information can be personalized based on customer preferences and delivered at a frequency chosen by the user Ideally, these services provide information through both push and pull mechanisms, making them an essential component of modern financial management.

Mobile Accounting and Mobile Brokerage but they may also be offered as a stand-alone, independent module, i.e Mobile Financial

Information can be offered without offering Mobile Accounting or Mobile

Brokerage but vice versa is not feasible.

Table 1.4: Services in Mobile Financial Information

Balance inquiries / Latest transactions Foreign exchange rates

Statement requests Market and bank-specific interest rates

Returned cheques / cheque status Stock market quotes and reports

Credit card information Product information & offers

Information on the completion status

Technology options of Mobile Banking

This section addresses the front-end component or consumer-facing Mobile

Banking technologies play a crucial role in the mobile banking value chain, often provided or tailored by mobile banking vendors or dedicated technology units within banks.

These Mobile Banking Technologies can be categorized into two environments:

Server-side applications utilize data to facilitate transactions, often relying on detailed account and card information securely stored on bank servers.

A browser is an application software designed to display web pages, serving as a crucial tool for accessing online content Browser-based applications generate user interfaces on a server, which are then transmitted to mobile devices for seamless interaction This process allows users to experience a vivid and engaging interface through their browsers Common examples of browser-based applications include web-based email services, online banking platforms, and social media sites.

Wireless Application Protocol (WAP) and Web - based The main benefit of browser-based applications is the data processing is done only by the server.

Browser-based applications do not require users to install any software or devices, making them ideal for mobile devices with slow processing speeds and low memory capacity Despite these limitations, they can still efficiently handle most types of transactions.

1.4.1.2 Wireless Application Protocol (WAP) Banking

WAP banking is a type of electronic banking that allows users to interact with their bank using a GSM mobile phone equipped with WAP service This method of banking offers a user-friendly experience similar to Internet banking Customers with GPRS handsets and connectivity can easily access WAP banking services.

Easily navigate the user-friendly mobile banking portal to perform various transactions on the go Mobile banking (WAP) offers a suite of electronic banking services via mobile networks, enabling users to check account balances, transfer funds, pay bills, manage company accounts, and process financial instructions efficiently.

WAP banking has been adopted by many banks around the world, such as

Deutsche Postbank AG, comdirect Bank, Stadtsparkasse München (Germany),

Nordea Bank (Finland), Credit Suisse (Switzerland), Maybank (Singapore), Bank of

WAP banking was once a popular mobile banking solution due to the limitations of early mobile phones, including small screens and low processing speeds However, advancements in the telecommunications industry have significantly enhanced mobile devices, improving their features, processing capabilities, and overall performance As a result, WAP banking is gradually being replaced by more sophisticated web-based mobile banking solutions.

Basically, web browser-based mobile banking service is also distributed through the internet access on mobile phones However, the difference compared to

WAP banking operates through a web page interface, utilizing web browsers that are built with Hypertext Markup Language (HTML) This markup language is specifically designed to create and display web pages, ensuring that information is presented effectively.

The user interface of standard web services is adapted for mobile devices with smaller screens, ensuring that mobile banking services offer a similar look and feel to internet banking on personal computers This design allows users to enjoy a consistent and familiar experience across different platforms.

In message-based banking applications, communication between banks and customers occurs through automated text messages triggered by specific events, such as account transactions These messages serve as confirmations or feedback for customer requests, while customer messages may include transaction details or inquiries directed at the bank.

SMS banking is a user-friendly method that allows individuals to conduct banking transactions through messaging applications To register, users must send a standard message to a designated bank number The server then receives and decodes the SMS, executing the necessary actions The primary benefit of SMS banking lies in its simplicity, making it easy for users to manage their banking needs efficiently.

14.1.5 USSD (Unstructured Supplementary Service Data)

Mobile banking services utilizing USSD represent a collaboration between banks and telecom companies, leveraging a high-speed protocol for efficient user interaction via the GSM network The key advantage of USSD is its ability to integrate multiple services under a single access number, allowing users to navigate menus and interact up to seven times faster than SMS due to its session-based mechanism Globally, USSD serves as a vital channel for value-added services, offering simplicity and convenience Unlike SMS, USSD provides instant communication with service providers, eliminating long wait times and enabling users to access various utilities within a single session without needing to memorize complex syntax Furthermore, USSD is universally compatible with all mobile phones, from high-end to mid-range devices.

Client-side technologies refer to applications and services integrated into a consumer's SIM card or mobile device These applications often store consumer data locally, either inputted by the user or held within the app itself, and ensure security through encryption on the SIM or handset.

Once all required information is inputted and a connection to the server is established, data transmission occurs Prior to this transmission, a safety inspection is conducted through PIN identification, enhancing security This emphasis on safety is a key advantage of client-side technology over server-side technology.

The SIM Application Toolkit (SAT) allows for the service provider or bank to house the consumer’s mobile banking menu within the SIM card The SIM

The SIM Application Toolkit (STK) is a GSM standard that empowers the SIM card to initiate actions for various value-added services It comprises a series of commands programmed into the SIM, allowing it to interact directly with external applications, independent of the handset and network This functionality facilitates an interactive exchange between network applications and users, enabling the SIM to manage access to the network effectively.

Benefits of development of electronic banking services through Mobile Banking.15

This paper analyzes the inevitable trend of mobile banking services, highlighting the benefits they provide to banks, customers, and telecommunication companies, as assessed by economic experts.

Banks can enhance operational efficiency by implementing an integrated channel strategy that incorporates mobile banking Data indicates that processing transactions through mobile devices can reduce costs significantly, with mobile transactions being up to 10 times cheaper than those conducted at ATMs and up to 50 times less expensive than branch transactions.

As banks increase mobile transactions, they can potentially close underperforming branches and enhance operational efficiency This shift allows branch employees to transition from handling transactions to providing advisory services, ultimately boosting sales and cross-selling opportunities.

Mobile banking offers banks several opportunities for increasing revenues.

Banks can enhance their profitability by monetizing customer analytics, providing real-time access to products and services, and executing targeted marketing campaigns based on insights into consumer preferences.

+ Expanding distribution and coverage models

Mobile banking gives banks the potential to expand beyond their geographical footprint as well as ability to cross-sell and up-sell products to existing customers.

Banks that harness these additional mobile financial services capabilities can see a profound impact on the nature of the banking relationship

+ Monetizing the value of customer analytics

Banks possess a unique advantage over supermarkets and department stores by having a comprehensive understanding of consumer spending habits, allowing them to develop data analytics services for retailers seeking customer insights while ensuring individual privacy By leveraging aggregated data, merchants can more effectively target customers, and banks can enhance their customer acquisition strategies, cross-selling efforts, decision-making processes, and overall customer service, leading to substantial value creation.

+ Delivering greater real-time access to products and services

Mobile banking empowers customers to compare financial options conveniently at the point of purchase, enhancing their decision-making process Simultaneously, banks can leverage this opportunity to provide additional services, including financing, leasing options, and insurance quotes through strategic partnerships.

+ Offering discounts and purchasing incentives to bank customers

Banks can enhance their mobile channels by forming partnerships with manufacturers and retailers to provide customers with exclusive discounts during product research at the point of sale, transforming the mobile experience from merely a payment method to a valuable shopping tool.

Banks can enhance customer engagement through targeted marketing campaigns aimed at mobile banking users By identifying customers' physical locations, banks can present relevant offers, such as temporary line increases Furthermore, utilizing the mobile banking interface as a real-time advertising platform allows banks to leverage behavioral analytics, enabling them to create personalized campaigns that align with customers' shopping preferences.

Banks could enhance the shopping experience by providing customers with "smart" coupons while they shop for items like flat-screen televisions or digital cameras These coupons would be generated through partnerships between banks and product manufacturers or retailers, allowing banks to earn a fee for each coupon redeemed.

Mobile banking services offer customers the convenience of performing financial transactions from anywhere with a mobile connection, unlike Internet banking, which restricts access to locations with internet availability.

Mobile banking services have revolutionized the way customers manage their finances, offering unparalleled convenience by allowing access anytime and anywhere With the extensive reach of mobile networks, users can easily perform banking transactions without being constrained by location or time, making mobile banking the ultimate solution for modern financial needs.

Mobile banking services allow customers to conduct all their transactions conveniently from any location, eliminating the need to visit a bank and wait in line This not only saves significant time but also reduces travel costs, enabling customers to allocate their resources towards more profitable ventures, such as investing in education Furthermore, mobile banking ensures standardized services, regardless of the varying attitudes of bank staff.

Wet transactions, helping customers avoid psychological discomfort due to poor service attitudes - factors may lead to the decision to leave the bank.

Mobile banking not only brings benefits to customers, banks, but it also benefits telecommunications companies, which cooperate with bank to adopt mobile banking services

In the competitive landscape of market share, telecommunications companies are increasingly collaborating with banks to adopt mobile banking services This partnership enables them to offer high-value financial services to customers, supported by banks' financial solutions and transaction management capabilities, while minimizing risks By diversifying their service offerings, telecommunications companies not only boost their revenue growth but also strengthen their competitive edge Furthermore, alliances with reputable banks enhance the brand image and reputation of these telecom firms.

Factors affect the development of mobile banking services

The advancement of science and technology significantly influences the evolution of modern banking services, serving as the technical foundation for the implementation of innovative banking solutions This progress enables the development of high-tech products, including mobile banking services, which enhance business operations and customer experiences.

- Core banking system of banks:

Core banking refers to a centralized online real-time banking environment that integrates various computer applications to manage banking operations effectively This system encompasses essential modules such as bank deposits, loans, customer information, accounting, budgeting, and cash management It is designed to record transactions, manage bookkeeping, calculate interest, handle deposits, and maintain comprehensive customer records, ensuring efficient banking services.

Core banking represents a crucial evolution in banking technology, serving as a fundamental driver for the modernization of banking systems It enables banks to gain a competitive edge by integrating multiple modules and facilitating simultaneous data processing As a result, core banking technology acts as a robust platform for the development of innovative banking services.

The effectiveness of product development, design, and management heavily relies on the capabilities of the core banking system A more advanced and efficient core banking system enhances the ability to create, design, and oversee financial products.

- The development of telecommunications network:

The launch of mobile banking services represents a collaboration between banks and network service providers, highlighting that the effectiveness and advancement of these services rely not only on the banks themselves but also on the growth of telecommunications networks.

To evaluate the development of telecommunications networks, key factors include the number of service users, the quantity of distributors offering network services, the technology used for data transmission, the reliability of the system in delivering these services, and the overall quality and availability of the supply network.

-The development of the mobile industry

In 2013, we celebrated 40 years since the launch of the world's first mobile phone, highlighting four decades of remarkable advancements Today, mobile phones have evolved into essential devices that play a crucial role in the daily lives of millions.

The evolution of mobile technology has significantly advanced mobile banking services, ensuring that each adoption mode aligns seamlessly with the capabilities of mobile devices.

The current legal framework for mobile banking services in Vietnam lacks a comprehensive official document from the State Bank that clearly defines the concept of mobile banking, as well as the rights, roles, and responsibilities of all stakeholders involved This absence of uniformity and transparency complicates coordination among banks, network operators, and service providers, hindering the construction, development, and management of mobile banking services Disputes often arise between banks, service providers, and customers regarding the protection of rights, leading to a lack of confidence among customers Consequently, when customer benefits are not assured, the adoption of mobile banking services becomes increasingly challenging.

The economic environment significantly influences modern banking services and their impact on financial markets As the quantity and quality of banks increase, they face heightened competition within these markets.

Mobile banking services offer significant benefits, including enhanced customer attraction, improved competitiveness, and a strengthened bank image amidst the technology revolution Consequently, the adoption of mobile banking services is a natural response to the evolving economic landscape.

Social trends and demographic factors, including age, income, education level, and consumption habits, significantly influence the evolution of banking products and services These elements play a crucial role in shaping modern banking services, reflecting the changing needs and preferences of consumers.

Mobile banking services necessitate users to have a solid understanding of electronic payment technology and proficiency in using mobile devices, given the unique characteristics of these services.

Thus, educational level is one of the primary factors affecting the level of development of Mobile banking services.

Age significantly influences the adoption of mobile banking services, as it impacts users' preferences and their ability to embrace new technologies Younger customers, particularly those aged 18-35, tend to be more tech-savvy and open to innovative services that offer substantial benefits In contrast, older clients often exhibit loyalty to traditional services they are accustomed to, making it more challenging and costly to engage this demographic effectively.

Customer income significantly influences their affordability, impacting their decisions on whether to adopt new products from competing banks This is primarily due to the additional expenses associated with bank transactions that customers must consider.

Model and business trends in electronic banking services via mobile in the world

Currently, to adopt mobile banking services in the world, partnership model can be divided into two major categories: Bank-led model and Non Bank-led model.

Both models share a common feature: the collaboration between banks, network providers, and mobile commerce companies to deliver financial and banking services accessible anytime and anywhere via mobile phones However, the roles and responsibilities of these parties differ based on each country's infrastructure, cultural policies, and social habits.

The bank-led model is prevalent in developed countries, where banking services are highly advanced and accessible In regions like Europe and America, a significant portion of the population holds bank accounts or regularly utilizes banking services, highlighting the strong integration of financial systems in these economies.

The management model emphasizes a collaborative relationship between banks and network providers, where banks leverage telecommunications networks to deliver content and services This approach enhances customer access to the banking system, showcasing the importance of technology in facilitating financial services.

+ Advantages: Banks have long years of experience in the banking and finance sector will design, supply services as well as perform billing management and risk management

The model requires customers to open a bank account to access services, which can be a significant barrier Additionally, it necessitates a certain level of education for users to navigate the services effectively In developing countries, where cash transactions are prevalent and many individuals lack access to banking, the widespread implementation of this model faces substantial challenges.

Characteristics of market: Non bank – led model (possibly mobile company or a third independent party, often mobile commerce company), especially develops in markets with the following characteristics:

+ The majority of the population has no or little access to banking and financial services.

+ The custom of consumption is mainly cash, no payment habits by means of non-cash.

+ There is a large proportion of mobile service users in society.

+ The people demand payment, money transfer with small amount of value and volume.

A mobile company or independent third-party provider plays a crucial role in the service by supplying and operating the necessary technology infrastructure, developing the entire feature set, and overseeing the recruitment and management of agents in models that involve their participation.

+ Banks: manage cash flow, ensure security surplus funds, provide services, authorize agents to collect and make payment for customer using services (for the model with the participation of agents )

+ Agent (if any) be authorized to collect and make payment for the customer.

Customers can easily access the service as mobile subscribers without needing a bank account This is particularly significant given that the global average bank account penetration among the population remains low.

As of 2011, mobile phone coverage reached approximately 85% of the global population, projected to rise to 90% by 2014, highlighting the potential for large-scale deployment in areas with limited banking access This model offers clients a simple, convenient, and time-saving service, making financial solutions more accessible to underserved communities.

The service, managed by an independent third party rather than a bank or telecom company, enables simultaneous deployment across multiple banks and diverse networks This offers significant convenience for customers with various bank accounts.

Chart 1.1: Account penetration in the world by area

(Source: Demirguc – Kunt and Klapper 2012)

Chart 1.2: Proportion of mobile phone penetration in comparison with banking services

(Source: GSMA Mobile Money for the Unbanked , Cira , Citi GTS )

In general, the model is not led by banks but it provides banking and financial services, which will result in difficulty in designing, building, adopting services.

Telecommunications companies lack the extensive experience in payment and risk management that banks possess Additionally, varying policies and specific regulations on payments in each country lead managers to approach the implementation of this model with caution.

To effectively develop services within an agent-based model, establishing a robust cash collection and payment network is crucial, as it serves as the bank's extended arm The process of investigating, selecting, and training agents requires significant time and resources Furthermore, once agents commence operations, ongoing inspection and monitoring are essential to ensure regulatory compliance and mitigate potential risks.

CURRENT SITUATION OF MOBILE BANKING

Current situation of mobile banking deployment in Vietnam

Among models used for mobile banking development, bank – led model was introduced first and has played the vital role in Vietnam

Banks are recognizing the importance of offering convenient, flexible, and portable banking channels This focus on enhancing customer satisfaction not only helps retain existing clients but also attracts a younger, tech-savvy demographic eager for modern banking solutions.

The rapid growth of the mobile market, alongside the rise of 3G technology and smartphone usage, has modernized mobile banking services As of July 2012, 26 Vietnamese commercial banks offered mobile banking through SMS, making it a popular choice among customers due to its ease of use, straightforward operation, affordability, and the lack of need for application installation.

Several banks, including Maritime Bank and ACB, adopt a web-based approach to expand their range of banking services This method enables customers with internet access to conveniently utilize banking services through the banks' websites.

Many banks are increasingly investing in mobile banking services through application settings, offering enhanced security and user-friendly interface designs optimized for mobile screens Dong A Bank was the pioneer in this field, launching its mobile banking product on January 23, 2008, through the DongA Mobile Internet application Since then, the number of banks adopting mobile banking services via applications has surged, with notable institutions such as VCB, VP, VIB, and MB joining the trend.

Another method of providing mobile banking services is quite common across

SIM applications and USSD services are developed through partnerships between banks and telecommunications companies In Vietnam, a prominent example is BankPlus, which is provided by Viettel in collaboration with various banks, including VCB.

VietinBank, VIB, BIDV, An Binh Bank, HD Bank, MB,

Table 2.1: Methods Launch Mobile Banking

Web-based VIB, MSB, ACB

Application VCB, BIDV, Đông Á, MSB, HSBC

Sim-tool-kit VCB, VietinBank, VIB, BIDV, An Bình Bank, HDBank, MB,

Over the past five years, Vietnam has evolved from basic mobile banking services to a variety of comprehensive methods for service provision While some of these methods remain in their early stages, the future of mobile banking services in the country looks promising and is expected to strengthen significantly.

SMS banking services are generally limited, with most banks offering only basic features such as balance inquiries, information on ATM locations, interest and exchange rates, phone recharges, and notifications about account balances and credit card changes Notable exceptions include banks like Dong A, which may provide additional services.

Techcombank, MSB, ACB, and Vietinbank offer convenient services like bill payments, wire transfers, and e-recharges via standard message syntax However, the effectiveness of these services is limited due to their complexity, as customers often struggle to remember the required message formats.

The lack of robust security measures is a significant concern, as message content is typically stored in the phone's outgoing box Additionally, data transmitted from the phone to the bank is neither encrypted nor digitally signed, resulting in inadequate safety for sensitive information.

VietinBank offers an SMS money transfer feature that utilizes a static password for registered customers, enhancing security through complex message syntax However, despite this increased security, it does not fully guarantee transaction safety Consequently, banks limit financial transactions via messaging methods to low-risk operations to better manage potential risks.

Table 2.2: The features are implemented through SMS Banking

Money transfer in different systems x

III Get balance fluctuation notification x x x x x

(Source: Websites of many commercial banks)

Mobile banking applications offer superior safety and a user-friendly interface compared to SMS banking, providing customers with a wide range of features such as information inquiries, fund transfers, bill payments, electronic recharges, and online savings management However, as many banks are still in the early stages of implementing this method, the available features remain basic Additionally, this approach is primarily designed for smartphones and requires users to install applications, limiting its target audience mainly to tech-savvy office workers.

Table 2.3: The features implemented by means of downloading applications, web-based Criteria VCB VietinBank BIDV VIB SCB TCB MSB ACB

Money transfer in different systems x

ATM, interest rate, exchange rate, etc.) x x x x

(Source: Websites of many commercial banks)

Many banks are adopting WAP mobile banking to enhance user engagement and expedite the delivery of various services to customers Despite these advancements, customer adoption rates have not met expectations.

As of May 7, 2012, Vietnam lacks a centralized and transparent database for electronic banking services, resulting in limited quantitative data on the development of mobile banking At that time, 26 commercial banks offered SMS Banking services, catering to more than 4.1 million customers.

2.2 million transactions , and 19 commercial banks providing mobile banking services to over 2.9 million customers, performed 11.9 million transactions (as shared at the Banking Vietnam 2013 conference of Payment Department, State

Bank of Vietnam) Accordingly, the number of users and transactions via Mobile

Banking is too small compared to the potential of the 90 million people of our country.

The BankPlus service model, developed by Viettel, represents the typical telco-led approach to mobile payments in Vietnam As the first network provider to integrate mobile payment services with banking, BankPlus allows Viettel subscribers to access these services through a pre-installed application on their phone SIM To participate, users must be Viettel subscribers and have accounts with partner banks.

Viettel is set to launch its services, which currently include essential utilities like balance inquiries, transaction history, fund transfers, and bill payments Initially introduced in collaboration with Military Bank in 2011, Viettel BankPlus has since expanded to seven additional banks: Vietcombank, Vietinbank, BIDV, HD Bank, and ABBANK.

Current situation of mobile banking deployment at Vietcombank

JSC Bank for Foreign Trade of Vietnam, formerly known as Bank for Foreign trade of Vietnam, was established on 01/04/1963 from the Foreign Exchange

Bureau (of the State Bank of Vietnam) Being the first state commercial bank chosen for pilot privatization by the Government, Joint Stock Commercial Bank for

Vietnam's foreign trade operations commenced on June 2, 2008, following the successful implementation of its equitization plan via an initial public offering (IPO) Vietcombank, identified by the stock code VCB, was subsequently listed on the Ho Chi Minh Stock Exchange (HOSE).

Over its 50 years of development, Vietcombank has played a crucial role in stabilizing and enhancing the national economy, serving as a leading foreign trade bank that promotes efficient domestic growth while significantly impacting the regional and global financial landscape.

Originally established as a specialized bank for foreign trade, Vietcombank has evolved into a leading financial institution offering a comprehensive array of services These include traditional services like capital trading, mobilization, credit, and project financing, alongside modern banking solutions such as forex trading, derivatives, card services, and e-banking.

Vietcombank leverages advanced technology to enhance its automatic banking system and develop innovative products, including Internet Banking, VCB Money, and SMS services, all built on a strong technological foundation.

Banking, Phone Banking have always attracted a great deal of customers by its convenience, promptness, safety, efficiency, creating the habit of non-cash payments amongst the mass

With over 50 years of experience in the banking sector, Vietcombank employs nearly 14,000 staff and operates more than 400 branches, transaction offices, and representative offices both domestically and internationally Its extensive network includes the Head Office in Hanoi, an Operation Center, a Training Center, 79 branches, and over 330 transaction offices across Vietnam, along with 2 subsidiaries and 1 representative office abroad, and 6 joint ventures Additionally, Vietcombank has established an Autobank system featuring approximately 2,000 ATMs, enhancing its service accessibility.

43,500 Points of Sale nationwide Bank’s operations are supported by a network of more than 1,700 correspondent banks in 120 countries and territories.

Vietcombank boasts a team of highly skilled professionals in banking and finance, adept at navigating the modern integrated business landscape Their expertise has solidified Vietcombank's status as the preferred banking partner for large corporations, both domestic and international, as well as for millions of individual customers.

For more than a decade, Vietcombank has continuously rated as "Best Bank in

Vietnam" by prestigious institutions around the world on many important operation fields.

Vietcombank's dedicated employees, fueled by wisdom and enthusiasm, are committed to achieving sustainable growth and aspire to become a bank with extensive reach and exceptional administrative capabilities, aiming to make a significant impact both regionally and internationally in the near future.

2.2.2 Overview of electronic banking services of Vietcombank

Vietcombank, a pioneer in electronic banking services, launched VCB-iB@nking in 2001, showcasing its commitment to innovation After a brief pause to finalize legal documentation, the bank expanded its offerings in 2006, enhancing VCB-iB@nking with new features to better meet customer needs That same year, Vietcombank introduced VCB-SMS B@nking, enabling customers to access information via mobile messaging through the switchboard 8170 By 2012, the bank continued to innovate with the launch of VCB-Mobile B@nking, further advancing its mobile platform services.

Figure 2.1: Development timeline of Mobile Banking at VCB

(Source: Retail banking Department of VCB)

Being defined as the service platform for the group of electronic banking services, VCB - SMS B @ nking services have the highest penetration rate with

By the end of 2013, 35% of individual customers at Vietcombank had registered for online banking services The penetration rate for VCB-iB@nking services remained steady at 50%, while VCB-SMS B@nking continued to see regular use However, since their launch in 2012, the combined total of customers utilizing Mobile B@nking and the new BankPlus service accounted for only 2% of the bank's individual customer base.

Chart 2.2: Penetration rate of E-bank services

(Source: Retail banking Department of VCB)

Vietcombank's VCB-iB@anking stands out as the most popular electronic service among customers, despite having a smaller user base compared to VCB-SMS Banking However, VCB-iB@anking leads in both the number of transactions and transaction volume, highlighting its significance in Vietcombank's electronic services portfolio.

VCB - SMS Banking lacks a payment feature, leading to lower user appreciation In contrast, VCB-iB Banking offers a user-friendly interface, widespread internet access, and enhanced security, along with a range of payment options, making it the preferred choice for most customers.

Chart 2.3: Number of transactions and average transaction value/month year 2003

(Source: Retail banking Department of VCB)

If we only take into account for payment transactions on Internet Banking and

In 2013, VCB-iBanking recorded an impressive monthly average of 909,950 customer transactions, with an average transaction value of around 6,694 billion VND Concurrently, the mobile banking channel, VCB-Mobile Banking, also saw significant transaction volumes, highlighting the growing trend of mobile banking usage among customers.

BankPlus) only averaged 156.289 transactions / month, and transaction value only made up for 1/40 of VCB -iB @ nking.

Chart 2.4: Net income proportion of E – banking 2003

(Source: Retail banking Department of VCB)

The net income from VCB-iB banking, which encompasses both fees and interest, constitutes 77% of the total net income generated by electronic banking services Additionally, the revenue from VCB-SMS banking services primarily contributes to this financial performance.

SMS service and actively contributed 22% Meanwhile, only about 1% of the profit is due to two service VCB - Mobile B @ nking and BankPlus

2.2.3.Current situation of mobile banking deployment at Vietcombank

In order to supply mobile banking services to a variety of different customer segments, Vietcombank is implementing both models as the bank - led and

Cooperation between Banks and telecommunications companies Like other banks in Vietnam, Vietcombank initially introduced to the customer VCB - SMS B @ nking services Subsequently, Vietcombank cooperated with Viettel to launch

BankPlus services for customers of Viettel mobile subscribers Most recently, VCB

- Mobile B @ nking services as the bank – led model was officially launched in late 2012.

- Internal documents subjected to services:

Currently, with the exception of VCB - SMS B @ nking adjusted for interim regulation for providing information inquiry services through the mobile channel of

Vietcombank Bank coming with the decision 264/QD-NHNT 06/11/2006 of

The General Director of Vietcombank announced the deployment of VCB-Mobile Banking and BankPlus through guidance documents Looking ahead, there is a pressing need for standardized regulations to be uniformly adjusted across all services on mobile device platforms.

The deployment process has highlighted challenges regarding the transfer and sale of phone numbers among customers Many branches face difficulties when customers seek to register for mobile banking services.

Empirical assessment of customer acceptance of mobile banking

A survey was organized to examine the degree of customer acceptance for various

Mobile Banking services and the customer’s willingness to pay for them.

The customer acceptance of mobile banking was surveyed between March and

In April 2014, a survey conducted in Hanoi gathered responses from 488 individuals aged 18 to 65, exploring their preferences and willingness to pay for various financial services available through Mobile Banking.

The survey collected data on participants' personal attributes, including sex, age, profession, and income, to identify potential customer characteristics Additionally, respondents provided insights into their online and home banking usage, preferred bank groups, mobile device ownership, and familiarity with mobile banking.

Banking They were also requested to give their perception of advantages and disadvantages of Mobile Banking Finally, they were asked to give their favorite mobile banking transactions

Altogether 452 valid samples were collected 282 of them were from male and

The survey comprised 170 participants, with a gender distribution of 62% male and 38% female Among the respondents, students represented the largest professional group at 42%, while the salaried class accounted for 29% In terms of age, the predominant demographic was individuals aged 22-30 years, making up 68% of the participants.

Judging by net monthly income, the largest group of survey participants earned up to 5 million VND a month (56%), followed by those earning up to 5 to 10 million VND a month (18%)

Chart 2.12: Overview of Survey Participants’ Net Monthly Income in VND

Familiarity with Mobile Banking: 53% of the participants replied in affirmative to the question, whether their bank offered Mobile Banking services;

47% was not aware of such offers by their bank

A recent survey revealed that 12% of participants, totaling 55 out of 452, have utilized mobile financial services at least once Among these users, 42% identified as regular users, while 36% reported occasional use Notably, 11% of respondents indicated they had stopped using these services Additionally, the survey found that 60% of mobile banking users were male.

2.3.3 Customer Perception of Mobile Banking

In this section we present the customer perception of general issues concerning Mobile Banking.

Customer perception of mobile banking advantages is highly favorable, with key features such as ubiquity and comprehensive account overviews being particularly valued The following chart illustrates responses from three distinct groups: a) all 445 respondents, b) 55 existing users, and c) 390 non-users.

Chart 2.13: Advantages of Mobile Banking

Participants were asked about their perception of disadvantages of Mobile

Security concerns in banking are prevalent among users, leading to varied opinions on the subject Nearly 50% of non-users perceive mobile banking as costly, while an overwhelming 93% of current users disagree with this perception, highlighting a significant divide in attitudes towards mobile banking services.

Chart 2.14: Disadvantages of Mobile Banking

Interestingly, as many as 20% of existing Mobile Banking users did not see any disadvantage in it.

The following chart shows responses, which of the services participants could conceive to use.

Chart 2.15: Preferred Mobile Banking Applications

Mobile Accounting is highly popular, with 96% of current users actively utilizing Mobile Banking services Additionally, 64% of 390 non-users express a willingness to adopt this technology In contrast, Brokerage services are the least favored application, despite common perceptions of their appeal within Mobile Banking.

SUGGESTIONS AND RECOMMENDATIONS TO

Diversify products and services of mobile banking

With mobile usage reaching 87% of the population in Vietnam and strong cellular coverage, the potential for widespread Mobile Banking adoption is significant The country's young demographic serves as a key advantage for successfully implementing Mobile Banking solutions However, it is essential to engage customers effectively to fully leverage the benefits of this innovative financial service.

Mobile banking, Banks must have developmental strategy and cooperate with other related parties in long time

The deployment of Mobile Banking services highlights the necessity of diversification to meet customer demands Furthermore, offering unique products is a key factor for customers when selecting banks for Mobile Banking services.

With bank – led model, banks can develop Mobile Banking services’ features actively, creating a service that is closed to customers, friendly and modern

Mobile Banking services will develop as a multi utilities service, including a system of features as follows:

+ Checking balances, transaction history lookup for each type of account: current account, savings account, card account and loan account

+ Notification on account fluctuation, card payment, card spending

+ Create and manage pension plans

+ Check status lookup, check stop payment request.

+ Managing periodic payments (stop, change or cancel payments).

+ Locking credit cards, local cards.

- Payment, deposit, cash withdrawal, money transfer:

Domestic money transfer, international money transfers

Recharge: Recharge phone, recharge games card, recharge electronic wallet.

Payment of low-value bills: Extending payment for the majority of providers of essential services with small value such as tuition, electricity bill, water bill,

Payable TV fees, and electric train ticket, bus ticket, taxi, etc.

The increasing globalization and enhanced lifestyles in Southeast Asia are driving deeper trade, economic, and cultural exchanges among countries As a result, the popularity of credit card usage is on the rise, leading to a growing demand for credit card payments, including for account openings at Vietcombank and other financial institutions.

The automatic periodic payment service enables customers to effortlessly schedule regular transfers of a specified amount to a designated account, whether for accumulating savings or sending funds to a beneficiary.

Withdrawal from the authorized dealer bank

+ Notification Alert on stock price volatility.

+ Notification of the status of the loan application

+ Check the requirements of check, credit card

+ Send email checking and complaints

+ Lookup ATM or branch, offices, interest rates

+ General information: weather, economic news, financial / foreign

+ Information facilities, shops cooperate with VCB.

3.1.2 Partnership model of bank and telecommunications company

Leveraging its extensive telecommunications network, VCB aims to enhance Mobile Banking services, including a partnership with Viettel for BankPlus, to effectively reach customers in remote areas lacking bank branches.

Through Mobile Banking application linked between Bank and

Telecommunications companies, officials in the area of telecommunication companies will make payment operation for VCB

Specifically, the payment operation of telecommunication company instead of

- The sender operates on the phone with BankPlus/ Money Transfer/

- Time to send money to recipients: 04h-72h After 72 hours, the transaction will be automatically canceled for a refund to the sender

- Receive money via local officers of telecommunication company.

- Receive money at Viettel stores.

Step 4: Make payment for local officers

Besides the development of diversified forms of mobile banking services, the management of services quality assurance also needs attention.

Improve management and supervision capacity to ensure mobile banking

Many new banks are prioritizing the rapid development and launch of innovative services to increase their market share However, a critical challenge emerges once these services are introduced: ensuring their smooth operation in the market.

3.2.1 Steps in management activity of mobile banking

Modern mobile banking services leverage advanced technology to connect banks with various entities, enabling customers to perform multiple payment services through their mobile devices To ensure high service quality and timely adjustments, banks must implement a comprehensive process to address errors and discrepancies effectively This article outlines recommended strategies to overcome these challenges.

The process to overcome and prevent inappropriate problems has 7 steps:

Step 1: Detection and classification of inappropriate problems in the process of mobile banking deployment

Step 3: Identify the causes and propose remidies, and prevention of the inappropriate.

Step 7: Report and save the record

3.2.2 Enhance the sale management activity of mobile banking

For an electronic service as Mobile Banking service, creating an simple and easy access to services for customers is the successful key to attract customers.

Especially, in the situation of fierce competition in banking area, VCB need appropriate cross sale strategies to enhance the sale management activity

The thesis suggests several cross sale methods for Mobile Banking service products

3.2.2.1 Set out clear objectives for cross-selling staffs:

To enhance market exploration and client acquisition, VCB mandates that all staff remain proactive in seeking new customers through diverse sources and methods Monthly reports must be generated to detail the quantity and characteristics of newly acquired clients.

VCB emphasizes the importance of accurate information sharing among employees regarding cross-selling products, aiming to address and resolve customer issues effectively The bank strives to ensure that customers have a seamless experience during consultations and transactions, with no complaints regarding staff interactions.

- On sale: Let customers know the products, believe in the VCB and salesman then decide to use the products and services

Ensuring customer satisfaction and trust in VCB is paramount following the transaction, with a focus on delivering exceptional service It is essential that no complaints arise regarding the product quality or staff attitude, as this reinforces a positive customer experience and loyalty.

To enhance cross-selling efforts, all employees must compile monthly statistics on existing and potential customers, as well as market insights, and submit this information to the heads of transaction offices Additionally, they are required to report on current products, new offerings, and competitive business practices, particularly focusing on Joint Stock Commercial Banks, to department heads or branch directors.

- The contribution of strategies: Staffs must be enthusiastic at work, have a high sense of responsibility, contribute to the cross-selling strategy

3.2.2.2 Develop strategies for cross-selling force

For the issue of resource allocation, VCB allocate staff in team or individual depending on each situation to have suitable approaching to customers.

- Sales Representative with a client: sales representatives discuss issues with a prospective client directly or indirectly.

- Sales Representative with customer groups: VCB assign one or a group of employees to meet, consult and do transaction with a customer group wishing to use the financial services of bank.

- Sales conference: the sale conference is organized monthly by staffs in cross- selling force.

- Sales workshop: the organization of workshops with clients quarterly about information of VCB, the existing products, new product and possible products in the near future

3.2.2.3 Develop cross-selling force structure:

-People who work full time for VCB are official staffs All of them are allocated in branches, transaction offices in economic zones that VCB chose through Vietnam.

Employees in branches, transaction offices of VCB are divided according to their specialization, responsible for one products or a group of products

Cross-selling staff who are not official VCB employees play a crucial role in the success of cross-selling initiatives Positioned at the transaction points of the bank's partners, these staff members actively introduce and consult customers about VCB products, enhancing customer engagement and driving sales.

(Source: Marketing Management - Philip Kotler)

The initial phase involves exploration and refinement, focusing on identifying potential customers and partners for cross-selling initiatives A cross-selling representative should create a targeted customer list, which can be developed through various methods.

+ Ask existing clients about the prospective customers

+ Take advantage of other reference sources, such as bank‘s partners, associations of industries,

+ Do research on the data sources (newspapers, directories) to find customers.

+ Use communication tools such as phone call, email, invitation via the

+ Direct contact with customers and target customer groups.

Cross selling staffs need skills in refining bad customer, basing on their financial

Exploration and refinement Approach Preliminary

Monitor and maintain End of transaction capability, demand, wishes,…

The preliminary approach is the second step in the cross-selling process, where staff must conduct thorough research on individual customers and corporations within VCB's target market This involves understanding customer needs, identifying decision-makers, and clarifying the timing and objectives for meetings Additionally, a well-defined meeting strategy should be established for engaging with selected customers effectively.

The third step in the sales process is the approach, where sales staff must establish rapport with customers during the initial meeting This involves paying attention to their appearance, choosing the right opening words, and effectively using gestures and verbal communication to create a positive connection.

The fourth step involves introducing and demonstrating products and services for cross-selling, following the AIDA model, which encompasses attention, interest, desire, and action During meetings, cross-selling staff can utilize various supporting tools, including brochures, product catalogs, and statistical tables, to effectively engage potential customers.

The fifth step involves effectively addressing customer feedback, as clients frequently compare different banks when utilizing financial services To enhance customer satisfaction and drive sales, it is essential to train cross-selling staff in transaction handling and negotiation skills.

In the final step of a transaction, it's crucial for cross-selling staff to recognize customer and partner signals of agreement Understanding these cues allows them to effectively encourage decision-making, ensuring a successful conclusion to the transaction.

Communication and listening skills are very important in this step VCB should train these 2 skills carefully for staffs

The seventh step involves ongoing monitoring and nurturing of customer relationships Once customers select service products, cross-selling staff should actively engage with them, offering solutions and advice to encourage the utilization of additional services.

3.2.2.4 Target customers of Telco Led model – Mobile BankPlus

Mobile BankPlus service is the service cooperated between VCB and Viettel, hence, in order to develop services, it is necessary to take advantage of both VCB and telecommunication companies

The thesis suggests several solutions to develop the target customers using

Mobile BankPlus deriving from sale activities as follows:

- Focusing on customer group, who are staffs of businesses paying wages through VCB:

+ Mobile BankPlus services are considered suitable for mass customer segment, which is lower than the Mobile Banking services (Bank Led Model).

Those are not familiar with high technology, customers, middle-aged people, workers in the industrial zone, the low-income workers, students, farmers, etc.

To effectively expand the reach of Mobile BankPlus, the initial focus should be on customers who receive payments through VCB This strategy aims to provide a suitable and efficient method for increasing the user base while minimizing costs.

+ Thanks to the strength of sales staff working directly to customers of Viettel,

Viettel and Vietcombank branch will work together to coordinate to sell services, at which staffs of Viettel will approach customers on behalf of VCB.

- Focusing on student group of customers:

Increase product promotion and advertisement

Despite the prevalent cash payment habits among Vietnamese consumers, promoting and advertising modern banking services, particularly mobile banking, is crucial for their adoption and growth.

To effectively promote mobile banking services, it is essential to target customers who frequently utilize the internet and mobile applications for information updates and social networking Implementing a strategic approach to enhance mobile banking service visibility on mobile devices is crucial for attracting this tech-savvy audience.

3.3.1.1 Preferred conditions for mobile phone advertisement

In recent years, Vietnam has witnessed a significant surge in smartphone adoption, characterized by a diverse array of models and price points catering to various market segments The influx of affordable smartphones has particularly transformed the landscape, making advanced technology accessible to a broader audience.

Samsung, Nokia, LG… has been sold in Vietnam, which makes it easy to possess a smart phone

According to the latest statistic of Vietnam e – commerce and information technology agency belonging to Ministry of Industrial and Trade

According to a report from Vecita, smartphone users make up 20% of the total population in Vietnam A survey by InMobile reveals that 35% of Vietnamese individuals prefer mobile devices as their primary media channel, indicating a significant trend towards mobile media consumption This shift is further accelerated by the decline of traditional media outlets, such as newspapers, radio, laptops, and television, which enhances the growth of mobile technology in the region.

- The target customers are those often use Facebook, newspaper application to update news

- Besides, customers are using mobile devices such as mobile phone or tablet, which use operation systems such as iOS and Android.

Facebook is the world's leading social network, boasting 1.2 billion active users In Vietnam, 38% of the population engages with social media, highlighting its significant presence Consequently, banks cannot overlook the rise of social networks, making Facebook advertising the top choice for mobile marketing strategies.

Ads allows you to filter the users by age, gender, geographic area, devices, operating system and each specific version

When users access Facebook application on the mobile device, tablet using iOS or Android, they will see ads with the "Install" or "Install Now" Mobile

Customers can easily access the mobile banking application by clicking on ads that direct them to the app page on the App Store or Google Play Store Once there, they can download the app and set it up with minimal effort.

3.3.3 Advertisement in application such as film, game, newspaper run in mobile phone

Companies managing Android and iOS operating systems offer services that enable advertisements within their applications While users engage in activities like watching movies, reading news, or playing games on their phones, they encounter ads for Mobile Banking services featuring an "Install" or "Install Now" button Clicking these buttons directs users to the application's download page.

Store or Google Play Store and download them

With these advertisements, the service will be introduced to customers proactively to help customer access and download the application to their devices.

Develop the security and privacy technology

Security concerns in electronic payments are crucial for banks when developing new services While mobile banking offers significant advantages, such as convenience and quick mobile transfers, prioritizing security is essential A sustainable development of mobile banking services can only be achieved by ensuring the safety of the payment system.

To improve security, banks must prioritize investments in IT infrastructure development Additionally, they should learn from the experiences of countries with advanced mobile banking and electronic payment services to enhance their security measures effectively.

Promote the cooperation relationship with mobile network providers

The cooperative relationship between banks and network supplier will help banks develop diversified mobile banking services, meeting the needs of the user.

The partnership between banks and mobile network operators offers significant advantages, allowing banks to leverage the extensive coverage of wireless networks to enhance their banking services This collaboration enables banks to expand their reach by utilizing mobile phone distribution networks, effectively transforming these outlets into agent banks.

Expanding customers network, improving customer service quality

To successfully expand their client network, banks must conduct thorough market research that goes beyond targeting high-income customers It is essential for banks to focus on a diverse range of customer segments, particularly potential groups such as young individuals and low to middle-income households, which represent a significant portion of the population.

In today's competitive banking landscape, financial institutions are actively seeking to develop innovative services that deliver significant benefits to customers Banks that prioritize high-quality service offerings are more likely to retain their market position, foster customer loyalty, and attract new clients.

To enhance service quality, banks must implement several key strategies alongside technological advancements, product diversification, and a skilled workforce These include investing in ongoing training for staff, fostering a culture of continuous improvement, and leveraging qualified expertise to meet customer needs effectively.

The first is to build a standard of customer service Secondly, customer policies must be prepared carefully Finally, bank should build channels to solve complaints and customer inquiries

Third, build channels resolve complaints and customer inquiries

Account penetration in the world by area

(Source: Demirguc – Kunt and Klapper 2012)

Proportion of mobile phone penetration in comparison with banking services

(Source: GSMA Mobile Money for the Unbanked , Cira , Citi GTS )

In general, the model is not led by banks but it provides banking and financial services, which will result in difficulty in designing, building, adopting services.

Telecommunications companies lack the extensive experience in payment and risk management that banks possess Additionally, varying policies and regulations on payments in different countries lead managers to exercise caution when adopting this model.

To effectively develop services within an agent-based model, a crucial factor is establishing a robust cash collection and payment network, serving as the bank's extended arm The processes of investigating, selecting, and training agents require significant time and resources Furthermore, once agents commence operations, ongoing inspection and monitoring are essential to ensure regulatory compliance and mitigate potential risks.

CHAPTER II: CURRENT SITUATION OF MOBILE

2.1 Current situation of mobile banking deployment in Vietnam

Among models used for mobile banking development, bank – led model was introduced first and has played the vital role in Vietnam

Banks are recognizing the importance of offering convenient and flexible banking channels that are portable, which enhances customer satisfaction This approach not only helps retain existing customers but also attracts a new generation of tech-savvy, young clients.

The rapid growth of the mobile market, along with advancements in 3G technology and the rising number of smartphone users, has modernized mobile banking services As of July 2012, 26 Vietnamese commercial banks offered mobile banking through SMS, capitalizing on its ease of use, straightforward operation, affordability, and the absence of required app installations Consequently, SMS banking has gained popularity among customers.

Maritime Bank and ACB have adopted a web-based approach to enhance their banking services, enabling customers with internet access to conveniently utilize a diverse range of banking options through their websites.

Many banks are increasingly investing in mobile banking services through application settings, offering enhanced security and user-friendly interface designs that are optimized for mobile screens Dong A Bank was the pioneer in this area, launching its mobile banking product on January 23, 2008, with transactions facilitated via the DongA Mobile Internet application Since then, a significant number of banks, including VCB, VP, VIB, and MB, have rapidly developed their own mobile banking services.

Another method of providing mobile banking services is quite common across

SIM applications and USSD services are developed through partnerships between banks and telecommunications companies In Vietnam, a prominent example of this collaboration is BankPlus, which is provided by Viettel in association with various banks, including VCB.

VietinBank, VIB, BIDV, An Binh Bank, HD Bank, MB,

Table 2.1: Methods Launch Mobile Banking

Web-based VIB, MSB, ACB

Application VCB, BIDV, Đông Á, MSB, HSBC

Sim-tool-kit VCB, VietinBank, VIB, BIDV, An Bình Bank, HDBank, MB,

Over the past five years, Vietnam has seen the evolution of mobile banking services from their most basic forms to a range of comprehensive offerings While some methods remain rudimentary, the future of mobile banking in Vietnam looks promising, with significant potential for growth and development.

SMS banking services are generally limited, with most banks offering only basic features such as balance inquiries, information on ATM locations, interest and exchange rates, phone recharge options, and proactive notifications regarding account balances and credit card fluctuations Notable examples include Dong A Bank, which provides these essential services to its customers.

Techcombank, MSB, ACB, and Vietinbank offer convenient features like bill payments, wire transfers, and e-recharges via standard message syntax However, the effectiveness of these services is limited due to their complexity, as customers often struggle to remember the required message formats.

The security of mobile banking is compromised due to the storage of message content in the phone's outgoing box, which poses a risk Additionally, the lack of encryption and digital signatures for data transmitted from the phone to the bank further diminishes safety, making it vulnerable to potential threats.

VietinBank offers a money transfer feature via SMS that utilizes a static password for registered customers to enhance security While this complex message syntax aims to protect transaction information, it does not fully guarantee transaction safety Consequently, banks limit the financial transactions conducted through messaging methods, only allowing for low-risk information sharing and basic financial operations.

Table 2.2: The features are implemented through SMS Banking

Money transfer in different systems x

III Get balance fluctuation notification x x x x x

(Source: Websites of many commercial banks)

Mobile banking applications offer superior safety and a user-friendly interface compared to SMS banking methods, providing customers with a wider range of features such as information inquiries, transfers, bill payments, electronic recharges, and online savings management However, as many banks are still in the early stages of implementing this method, the available features remain basic Additionally, this approach is only compatible with smartphones and requires users to install applications, limiting the target audience primarily to tech-savvy office workers.

Table 2.3: The features implemented by means of downloading applications, web-based Criteria VCB VietinBank BIDV VIB SCB TCB MSB ACB

Money transfer in different systems x

ATM, interest rate, exchange rate, etc.) x x x x

(Source: Websites of many commercial banks)

Many banks offer WAP mobile banking services to enhance user engagement and expedite access to a variety of utilities for customers Despite these advancements, the overall customer adoption rates have not met expectations.

Vietnam currently lacks a centralized and transparent database for electronic banking services, which limits access to precise quantitative information regarding the development of mobile banking As of May 7, 2012, there were 26 commercial banks offering SMS Banking services, serving over 4.1 million customers.

2.2 million transactions , and 19 commercial banks providing mobile banking services to over 2.9 million customers, performed 11.9 million transactions (as shared at the Banking Vietnam 2013 conference of Payment Department, State

Bank of Vietnam) Accordingly, the number of users and transactions via Mobile

Banking is too small compared to the potential of the 90 million people of our country.

Registered customers of BankPlus services

(Source: Retail banking Department of VCB)

MobiFone and VinaPhone, the two oldest mobile network providers, are entering the competitive landscape of mobile banking by launching payment services through USSD technology This innovative service is set to be available to customers in early 2014, enhancing the convenience of mobile payments.

The development of mobile banking services in Vietnam is still in its early stages, despite the country's advantages like robust economic growth, a youthful population, and widespread mobile communication However, challenges such as a limited legal framework, uneven economic growth across regions, varying literacy levels, and a lack of appealing mobile banking solutions hinder customer adoption To address these issues, some banks are ramping up their investment in research and development of mobile banking services.

Tienphong Bank, VIB, VietinBank, and Vietcombank are making significant strides in enhancing mobile banking services in Vietnam Experts predict that these efforts will lead to a prosperous growth of mobile banking in the near future.

2.2 Current situation of mobile banking deployment at Vietcombank

JSC Bank for Foreign Trade of Vietnam, formerly known as Bank for Foreign trade of Vietnam, was established on 01/04/1963 from the Foreign Exchange

Bureau (of the State Bank of Vietnam) Being the first state commercial bank chosen for pilot privatization by the Government, Joint Stock Commercial Bank for

Vietnam's foreign trade operations commenced on June 2, 2008, following the successful implementation of its equitization plan through an Initial Public Offering (IPO) Vietcombank, identified by its stock code VCB, was subsequently listed on the Ho Chi Minh Stock Exchange (HOSE).

For over 50 years, Vietcombank has played a crucial role in stabilizing and growing the national economy, establishing itself as a leading foreign trade bank Its contributions have not only supported effective domestic economic development but have also made a significant impact on the regional and global financial landscape.

Vietcombank, initially established as a specialized bank for foreign trade, has evolved into a comprehensive financial institution offering a diverse array of top-tier services in international trade Its offerings include traditional services like capital trading, mobilization, credit, and project financing, alongside modern banking solutions such as forex trading, derivatives, card services, and e-banking.

Vietcombank leverages advanced technology to enhance its automatic banking system and develop innovative products, including Internet Banking, VCB Money, and SMS services, all built on a robust technological foundation.

Banking, Phone Banking have always attracted a great deal of customers by its convenience, promptness, safety, efficiency, creating the habit of non-cash payments amongst the mass

Vietcombank, with over 50 years of experience in the banking sector, employs nearly 14,000 staff and operates more than 400 branches and offices both domestically and internationally Its extensive network includes a Head Office in Hanoi, an Operation Center, a Training Center, 79 branches, and over 330 transaction offices across Vietnam, along with 2 subsidiaries and 1 representative office abroad, as well as 6 joint ventures Additionally, Vietcombank has established an Autobank system featuring approximately 2,000 ATMs nationwide.

43,500 Points of Sale nationwide Bank’s operations are supported by a network of more than 1,700 correspondent banks in 120 countries and territories.

Vietcombank boasts a team of highly skilled professionals in banking and finance, adept at navigating the modern and integrated business landscape Their expertise has solidified Vietcombank's reputation as the preferred choice for large corporations, both domestic and international, as well as millions of individual customers.

For more than a decade, Vietcombank has continuously rated as "Best Bank in

Vietnam" by prestigious institutions around the world on many important operation fields.

Vietcombank's employees, driven by wisdom and enthusiasm, are committed to fostering sustainable growth and aspire to become a bank with extensive reach and strong administrative capabilities, aiming to make a significant impact both regionally and internationally in the near future.

2.2.2 Overview of electronic banking services of Vietcombank

Vietcombank, a pioneer in electronic banking services, launched VCB-iB@nking in 2001, showcasing its commitment to innovation After a brief suspension to finalize legal and database requirements, the bank expanded its offerings in 2006, introducing enhanced features to better meet customer needs That same year, Vietcombank also rolled out VCB-SMS B@nking, enabling customers to access information via mobile messaging through the number 8170 By 2012, the bank further advanced its mobile platform capabilities with the introduction of VCB-Mobile B@nking, solidifying its position in the digital banking landscape.

Figure 2.1: Development timeline of Mobile Banking at VCB

(Source: Retail banking Department of VCB)

Being defined as the service platform for the group of electronic banking services, VCB - SMS B @ nking services have the highest penetration rate with

By the end of 2013, 35% of individual customers at Vietcombank had registered for services, with VCB-iB@nking achieving a penetration rate of 50% and VCB - SMS B@nking being used regularly However, since their introduction in 2012, the combined usage of Mobile B@nking and BankPlus remained low, comprising only 2% of the bank's individual customer base.

Penetration rate of E-bank services

(Source: Retail banking Department of VCB)

Vietcombank's VCB-iB@anking is the most popular electronic service among customers, despite having a smaller user base compared to VCB-SMS Banking However, VCB-iB@anking leads in both the number and volume of transactions, showcasing its dominance in the digital banking sector.

VCB - SMS Banking lacks a payment feature, which diminishes its utility and user appreciation In contrast, VCB-iB Banking offers a user-friendly interface, widespread internet access, enhanced security, and timely deployment, making it a preferred choice among customers due to its extensive payment functionalities.

Number of transactions and average transaction value/month year 2003

(Source: Retail banking Department of VCB)

If we only take into account for payment transactions on Internet Banking and

In 2013, VCB-iBanking recorded an impressive monthly average of 909,950 customer transactions, with an average transaction value of around 6,694 billion VND In contrast, the mobile banking channel, VCB-Mobile Banking, also contributed significantly to the overall transaction volume.

BankPlus) only averaged 156.289 transactions / month, and transaction value only made up for 1/40 of VCB -iB @ nking.

Net income proportion of E – banking 2003

(Source: Retail banking Department of VCB)

VCB-iB banking generated 77% of the total net income from electronic banking services, which includes both fees and interest The primary source of net income for VCB - SMS banking services is derived from these transactions.

SMS service and actively contributed 22% Meanwhile, only about 1% of the profit is due to two service VCB - Mobile B @ nking and BankPlus

2.2.3.Current situation of mobile banking deployment at Vietcombank

In order to supply mobile banking services to a variety of different customer segments, Vietcombank is implementing both models as the bank - led and

Cooperation between Banks and telecommunications companies Like other banks in Vietnam, Vietcombank initially introduced to the customer VCB - SMS B @ nking services Subsequently, Vietcombank cooperated with Viettel to launch

BankPlus services for customers of Viettel mobile subscribers Most recently, VCB

- Mobile B @ nking services as the bank – led model was officially launched in late 2012.

- Internal documents subjected to services:

Currently, with the exception of VCB - SMS B @ nking adjusted for interim regulation for providing information inquiry services through the mobile channel of

Vietcombank Bank coming with the decision 264/QD-NHNT 06/11/2006 of

The General Director of Vietcombank emphasizes the implementation of VCB-Mobile Banking and BankPlus through guidance documents Moving forward, there is a necessity for early and uniform regulations that will govern all services on mobile device platforms.

The deployment process has encountered challenges regarding the transfer and sale of phone numbers among customers Many branches face difficulties when customers request registration for mobile banking services.

Vietcombank has identified that the phone number in question is already registered to another customer To verify the ownership of the phone number, the requesting client must provide proof of their right to use it However, this method is not the most efficient way to ascertain the current status of the subscriber.

Vietcombank also need specific guidance in this case to the branch soon.

2.2.3.1 Features of services offered and service charges

Despite being one of the earlier banking services introduced in Vietnam, VCB SMS Banking remains limited in its functionality Similar to many other banks in the country, concerns about the security of SMS banking have restricted its development and capabilities.

VCB has yet to introduce a payment feature for SMS banking Currently, customers can only use the service for information inquiries, receive notifications about account balance fluctuations, and check credit card spending Additionally, users can recharge their mobile phones through this platform.

Launched in late 2012, VCB Mobile Banking Services by Vietcombank cater to smartphone users, offering modern banking solutions Initially, the service includes essential features such as managing payment account information, transferring funds, paying bills, and recharging phones By early 2014, VCB Mobile Banking is set to expand its offerings with new functionalities, allowing customers to manage savings and loan account information, view credit card statements, and access additional services like cash payments, fast transfers, loan repayments, credit card payments, and periodic payments.

Table 2.4: Features and fees of mobile banking services at VCB

Looking up for account and transaction information

Fund transfer in VCB system Bills payment

(Source: Retail banking Department of VCB)

Launched in January 2012, BankPlus is a collaborative service between VCB and Viettel aimed at enhancing mobile payment solutions for Viettel subscribers While VCB's Mobile B@nking targets smartphone users with internet connectivity, BankPlus is designed to be accessible for all mobile phone models, offering payment utilities without the need for internet access.

The initial deployment of BankPlus services shares features with VCB - Mobile Banking In 2013, Vietcombank enhanced the BankPlus service by introducing fund transfers across different systems starting July 15, 2013, and further expanded its deployment through the USSD application.

Vietcombank Mobile Banking is currently in its early stages of deployment, offering basic features that do not significantly differentiate it from competitors To enhance its market presence and attract more customers, Vietcombank should focus on diversifying its features and providing additional utilities in the short term.

In Vietnam, electronic banking services are still a novel experience for many customers Therefore, promoting e-banking, particularly mobile banking services, should prioritize effective communication and customer education, offering guidance and support to help clients navigate these services confidently.

Vietcombank's media programs and sales promotions for mobile banking services have not been effectively implemented, resulting in limited customer engagement The communication about VCB-Mobile B@anking lacks impact due to restricted channels, primarily relying on traditional advertising methods The bank's media efforts have been confined to a brief two-month TV advertisement campaign, which has not sufficiently reached or resonated with potential customers.

The sale and sale promotion are deployed rarely and lack of attraction.Up to

Dec 2013, only a small number of promotions are made.

Table 2.5: Promotion programs of MB at VCB

No Services Program Content Deployment

1 VCB-SMS B@nking 4% discount of recharge value and have chance to get Ipad 2

2 VCB-SMS B@nking Free charge for proactive message service within 2 months for customer registering VCB SMS B@nking

Free charge for using service in first 3 months

From the official starting time

5% discount of Topup and get 30.000VND/billing transaction

(Source: Retail banking Department of VCB)

Vietcombank currently lacks a standardized sales process across its branches, leading to a reactive approach to sales that varies by location The absence of sales tools hampers proactive outreach, resulting in many branches merely fulfilling existing customer needs rather than actively pursuing potential clients Additionally, the consultancy, support, and post-sale customer care services are not adequately executed This lack of standardization, combined with the pressure to meet targets, contributes to various challenges within the branches.

A significant challenge faced by VCB - Mobile Banking is the low customer activation rate, with only 59% of registered clients actively using the service This issue arises primarily from a lack of awareness among customers regarding the activation process and how to effectively utilize the service.

To access Mobile Banking Services, customers must first register and then download the application on their smartphones Given the widespread use of iOS and Android operating systems, the app is typically downloaded from phone stores or service shops.

Therefore, customers generally do not have an account on the Apple store or

Results of VCB SMS banking

(Source: Retail banking Department of VCB)

The proactive SMS feature of VCB-SMS B @ nking is a significant revenue driver, contributing 97% of the service's income This feature generates an average of 2.06 billion monthly, representing 20% of the profits from electronic banking services.

In 2013, over 7 million proactive SMS messages were sent to customers each month, which is nearly ten times the volume of information query messages Additionally, phone recharge messages averaged only 93,716 monthly, representing a minimal share of Vietcombank's VCB-SMS Banking services.

Chart 2.6 : SMS banking profit and number of SMS

(Source: Retail banking Department of VCB)

Services were launched after two months of internal testing, officially introduced to customers on December 20, 2012 However, the initial four months saw a low registration rate, with only 2,146 customers per month This slow uptake was largely due to the timing of the service rollout, coinciding with the end of the calendar year and the approaching Lunar New Year Additionally, the requirement for customers to register at a physical counter made it less convenient for those seeking to access the service.

In the months following the initial launch, the branches focused on promoting VCB-iB banking services, leading to significant growth in customer registrations By May 2013, the number of clients surged to 4,126, marking a 91% increase compared to the average of the first four months This upward trend continued, with monthly registrations stabilizing at 4,428 by December 2013.

A year after its launch, VCB - Mobile Banking has seen limited adoption among individual bank customers, with a significant concentration in major cities such as Hanoi and Ho Chi Minh City Customers from these two cities make up 50.6% of the total users, alongside users from provinces like DakLak, Quang Ninh, and Hai Phong.

However, the sales result in these areas is still not commensurate with the potential.

The whole system reached only 65% of the sales target set for 2013.

Chart 2.7: Number of customers using services

(Source: Retail banking Department of VCB)

In May 2013, the destruction rate of lock services significantly increased, with an average of 1,320 customers either locking or canceling their services This surge can be attributed to the company's customer service policy, which offers free service charges for the first three months.

Vietcombank conduct maintenance service fee (the fee of 11,000 VND / month), customers have tendency to request cancellation of services However, this number has been decreasing in recent months.

Chart 2.8: Propotion of transactions of VCB - Mobile iB@nking

(Source: Retail banking Department of VCB)

In 2013, statistics revealed that fund transfer transactions dominated the VCB – Mobile B@nking channel, constituting 63% of total monthly transactions, with an average of 16,367 transfers In contrast, bill payment transactions were significantly lower, averaging only 625 per month, highlighting the limited engagement with linked service providers for bill settlements on this platform.

The banking channel remains limited, primarily due to traditional bill payment habits, resulting in an average of only 8,876 phone recharge transactions per month While the phone recharge feature on VCB - Mobile Banking offers advantages over VCB - SMS Banking, such as the ability to recharge for others and a 2% discount on each transaction, its penetration rate is significantly lower than that of SMS Banking Consequently, phone recharge transactions account for nearly 10% of the total transactions on VCB - SMS Banking.

The profitability of VCB-Mobile Banking remains modest, with revenues from services totaling only 170 million VND after nine months of operation In contrast, the costs associated with application provider partners, particularly Smartlink, are significant, amounting to 1.4 billion VND for initial deployment and a monthly subscription fee of 6,600 VND.

With the goal of 84% and 67% growth rate respectively for both 2014 and

2015, the service is expected to reach breakeven point in 2014 The investment cost for the initial launch is depreciated after 05 years expectedly.

Table 2.6: VCB Mobile – B@nking Bubgeting

(Source: Retail banking Department of VCB)

In January 2012, the partnership between Vietcombank and Viettel officially launched BankPlus services, aiming to enhance payment utilities for Viettel subscribers This collaboration facilitates sales activities at both Vietcombank branches and various transaction points.

Viettel Thus, in the first year of services implementation, the number of customers registered to use the the services was 68,735 customers.

Chart 2.9: Number of customers registing Bankplus services

(Source: Retail banking Department of VCB)

In 2013, the growth rate remained stable compared to 2012, with over 4,000 new service registrations per month, similar to VCB-Mobile B@nking services Notably, BankPlus at VCB introduced a fund transfer feature across different systems starting July 15, 2014, and launched its USSD application on the 23rd.

In August 2014, the number of customers registered for SMS Banking services was only 71,000, indicating significant growth potential among Viettel subscribers This low registration figure highlights the untapped opportunities for expanding mobile banking services in the region.

Up to May 9/2013, Vietcombank's market share among the 07 banks providing

BankPlus services is very modest, accounting for only 11% of the market Despite being the second bank offers BankPlus after Military Bank, VCB‘s growth rate is lower than other banks.

Chart 2.10: Market share of Bankplus service

(Source: Retail banking Department of VCB)

In 2013, statistics revealed that customers primarily utilized mobile platforms for small-value phone recharges and individual fund transfers, with the phone recharge feature being particularly favored for its convenience, ease of use, and attractive discounts—Mobile BankPlus currently offers a 5.5% discount on subscription-free payments and phone recharges, the highest among Viettel's recharge channels Despite Mobile BankPlus only supporting Viettel subscriber recharges, it averages 80,620 transactions per month, which is ten times higher than the transactions processed through VCB-Mobile B@nking services, attributed to its longer deployment period and accumulated user trust.

BankPlus customers, in general, Bill payment and fund transfer transactions through this service are higher than VCB-Mobile B@nking.

Chart 2.11: Types and number of transactions performed via BankPlus

(Source: Retail banking Department of VCB)

One significant advantage of Bankplus services is the absence of initial investment, allowing for immediate net earnings upon launch After sharing fees with Viettel, these services generated a net profit of 1.2 billion in just the first nine months of 2013.

In short, Information about real situation of Mobile banking at VCB shows that VCB has many advantages meanwhile there still exists limitations when developing Mobile banking services

Vietcombank, with 50 years of operational experience, boasts significant prestige and a modern, stable technical infrastructure Serving nearly 7 million individual clients, the bank effectively employs both a bank-led model and a partnership model, enabling it to reach a diverse customer base This approach not only facilitates cross-selling of retail services but also enhances management and sales expertise.

Number of customers using services

(Source: Retail banking Department of VCB)

In May 2013, the destruction rate for lock services increased significantly, with an average of 1,320 customers either locking or canceling their services This surge can be attributed to the customer service policy that offers free service charges for the first three months.

Vietcombank conduct maintenance service fee (the fee of 11,000 VND / month), customers have tendency to request cancellation of services However, this number has been decreasing in recent months.

Propotion of transactions of VCB - Mobile iB@nking

(Source: Retail banking Department of VCB)

In 2013, statistics revealed that fund transfer transactions dominated the VCB – Mobile B@nking channel, representing 63% of total monthly transactions, with an average of 16,367 transfers In contrast, bill payment transactions constituted a minor segment, averaging only 625 transactions per month Additionally, the number of linked service providers for bill payments on VCB – Mobile remains limited.

The banking channel remains limited, primarily due to traditional bill payment habits, resulting in an average of only 8,876 phone recharge transactions per month While the phone recharge feature on VCB - Mobile Banking offers advantages over the VCB - SMS Banking channel, such as the ability to recharge for others and a 2% discount per transaction, its penetration rate is still significantly lower Consequently, phone recharge transactions account for nearly 10% of the total transactions on VCB - SMS Banking.

The profitability of VCB-Mobile Banking remains modest, with service revenues from fees reaching only 170 million VND after nine months of official deployment In contrast, the costs associated with application provider partners, particularly Smartlink, are significant, amounting to 1.4 billion VND for initial deployment and a monthly subscription fee of 6,600 VND.

With the goal of 84% and 67% growth rate respectively for both 2014 and

2015, the service is expected to reach breakeven point in 2014 The investment cost for the initial launch is depreciated after 05 years expectedly.

Table 2.6: VCB Mobile – B@nking Bubgeting

(Source: Retail banking Department of VCB)

In January 2012, BankPlus, a collaborative service between Vietcombank and Viettel, was officially launched, aiming to enhance payment solutions for Viettel subscribers This partnership allows Vietcombank to offer a wider range of payment utilities, facilitating seamless transactions for customers at both Vietcombank branches and various transaction points.

Viettel Thus, in the first year of services implementation, the number of customers registered to use the the services was 68,735 customers.

Number of customers registing Bankplus services

(Source: Retail banking Department of VCB)

In 2013, the growth rate remained relatively stable compared to 2012, with over 4,000 new service registrations per month, matching the performance of VCB-Mobile B@nking services Notably, BankPlus services at VCB introduced fund transfer capabilities across various systems starting July 15, 2014, and these services became accessible via the USSD application on the 23rd.

In August 2014, the number of customers registered for SMS Banking services was only 71,000, indicating a significant growth opportunity within the Viettel subscriber base This low registration figure highlights the untapped potential for expanding mobile banking services among Viettel customers.

Up to May 9/2013, Vietcombank's market share among the 07 banks providing

BankPlus services is very modest, accounting for only 11% of the market Despite being the second bank offers BankPlus after Military Bank, VCB‘s growth rate is lower than other banks.

Market share of Bankplus service

(Source: Retail banking Department of VCB)

In 2013, statistics revealed that customers primarily utilized mobile services for small-value phone recharges and individual fund transfers, with the phone recharge feature being particularly popular due to its convenience, ease of use, and attractive discounts—currently at 5.5%, the highest among Viettel's recharge channels Despite Mobile BankPlus only supporting Viettel subscriber recharges, it averages 80,620 transactions monthly, significantly outpacing VCB-Mobile B@nking services by a factor of ten This trend can be attributed to Mobile BankPlus's longer deployment period and its accumulated advantages in the market.

BankPlus customers, in general, Bill payment and fund transfer transactions through this service are higher than VCB-Mobile B@nking.

Types and number of transactions performed via BankPlus

(Source: Retail banking Department of VCB)

One of the key advantages of Bankplus services is the absence of initial investment, allowing for immediate net earnings upon launch After sharing fees with Viettel, these services generated a net profit of 1.2 billion VND within the first nine months of 2013.

In short, Information about real situation of Mobile banking at VCB shows that VCB has many advantages meanwhile there still exists limitations when developing Mobile banking services

Vietcombank, with its 50 years of operational experience, boasts a prestigious reputation and a modern, stable technical infrastructure Serving nearly 7 million individual clients, VCB effectively utilizes both a bank-led model and a partnership model to diversify its customer base This strategic approach not only enhances cross-selling opportunities for retail services among partners but also fosters valuable management and sales expertise.

VCB faces several challenges, including incomplete internal documentation and a lack of diverse, competitive features and services Furthermore, the sales team has not been proactive in executing promotional programs, resulting in limited sales promotions and insufficient regulation of sales processes and tools If VCB can address these limitations promptly, it is poised for significant and effective growth in mobile banking.

2.3 Empirical assessment of customer acceptance of mobile banking

A survey was organized to examine the degree of customer acceptance for various

Mobile Banking services and the customer’s willingness to pay for them.

The customer acceptance of mobile banking was surveyed between March and

In April 2014, a survey conducted in Hanoi gathered responses from 488 individuals aged 18 to 65, focusing on their preferences and willingness to pay for various financial services available through Mobile Banking.

The survey gathered information on participants' personal attributes, including sex, age, profession, and income, to identify potential customer characteristics Additionally, respondents provided insights into their usage of online and home banking, their preferred bank group, ownership of mobile devices, and their familiarity with mobile banking services.

Banking They were also requested to give their perception of advantages and disadvantages of Mobile Banking Finally, they were asked to give their favorite mobile banking transactions

Altogether 452 valid samples were collected 282 of them were from male and

The survey comprised 170 participants, with a gender distribution of 62% male and 38% female The majority of respondents were students, accounting for 42%, while 29% identified as part of the salaried class Additionally, the predominant age group among participants was 22 to 30 years old, representing 68% of the total.

Judging by net monthly income, the largest group of survey participants earned up to 5 million VND a month (56%), followed by those earning up to 5 to 10 million VND a month (18%)

Overview of Survey Participants’ Net Monthly Income in VND

Familiarity with Mobile Banking: 53% of the participants replied in affirmative to the question, whether their bank offered Mobile Banking services;

47% was not aware of such offers by their bank

A recent survey revealed that 12% of participants, totaling 55 out of 452, have utilized mobile financial services at least once Among these users, 42% identified as regular users, while 36% engaged in mobile banking on an occasional basis Notably, 11% of respondents reported ceasing their usage of these services Additionally, it was found that 60% of mobile banking users were male.

2.3.3 Customer Perception of Mobile Banking

In this section we present the customer perception of general issues concerning Mobile Banking.

Customer perception of mobile banking advantages is highly favorable, with key features such as accessibility and account overview being particularly valued The accompanying chart illustrates responses from three distinct groups: a) all 445 respondents, b) 55 existing users, and c) 390 non-users.

Advantages of Mobile Banking

Participants were asked about their perception of disadvantages of Mobile

Widespread security concerns persist in the banking sector, leading to differing opinions on various issues Nearly 50% of non-users perceive mobile banking as costly, while an overwhelming 93% of current users disagree, highlighting a significant divide in perceptions about the affordability of mobile banking services.

Disadvantages of Mobile Banking

Interestingly, as many as 20% of existing Mobile Banking users did not see any disadvantage in it.

The following chart shows responses, which of the services participants could conceive to use.

Preferred Mobile Banking Applications

Mobile Accounting is highly popular, with 96% of current users actively utilizing it, while 64% of 390 non-users express interest in adopting the service In contrast, Brokerage services are the least favored application, despite common perceptions of their appeal within Mobile Banking.

CHAPTER III: SUGGESTIONS AND RECOMMENDATIONS

TO DEVELOP MOBILE BANKING SERVICES

3.1 Diversify products and services of mobile banking

With mobile usage reaching 87% of the population and robust cellular coverage in Vietnam, the potential for widespread Mobile Banking adoption is significant The country’s youthful demographic presents a unique advantage for the successful implementation of Mobile Banking services However, to encourage customers to fully utilize the benefits of these services, targeted strategies must be developed.

Mobile banking, Banks must have developmental strategy and cooperate with other related parties in long time

The implementation of diverse Mobile Banking services, as demonstrated by both models, is essential to satisfy customer demands Furthermore, differentiating product offerings is a key factor for customers when selecting banks for Mobile Banking services.

With bank – led model, banks can develop Mobile Banking services’ features actively, creating a service that is closed to customers, friendly and modern

Mobile Banking services will develop as a multi utilities service, including a system of features as follows:

+ Checking balances, transaction history lookup for each type of account: current account, savings account, card account and loan account

+ Notification on account fluctuation, card payment, card spending

+ Create and manage pension plans

+ Check status lookup, check stop payment request.

+ Managing periodic payments (stop, change or cancel payments).

+ Locking credit cards, local cards.

- Payment, deposit, cash withdrawal, money transfer:

Domestic money transfer, international money transfers

Recharge: Recharge phone, recharge games card, recharge electronic wallet.

Payment of low-value bills: Extending payment for the majority of providers of essential services with small value such as tuition, electricity bill, water bill,

Payable TV fees, and electric train ticket, bus ticket, taxi, etc.

The rise of advanced lifestyles has enhanced trade, economic, and cultural exchanges in Southeast Asia and globally, leading to a growing popularity of credit card usage Consequently, the demand for credit card payments, including for opening accounts at Vietcombank and other banks, is on the rise.

The automatic periodic payment service enables customers to set up scheduled transfers of a specified amount to a designated account This can be directed towards a cumulative savings account or sent to a chosen beneficiary, ensuring consistent and hassle-free financial management.

Withdrawal from the authorized dealer bank

+ Notification Alert on stock price volatility.

+ Notification of the status of the loan application

+ Check the requirements of check, credit card

+ Send email checking and complaints

+ Lookup ATM or branch, offices, interest rates

+ General information: weather, economic news, financial / foreign

+ Information facilities, shops cooperate with VCB.

3.1.2 Partnership model of bank and telecommunications company

Leveraging the extensive network of telecommunications companies, VCB aims to enhance its Mobile Banking services, including the Mobile BankPlus in collaboration with Viettel, to reach customers in remote areas lacking bank branches.

Through Mobile Banking application linked between Bank and

Telecommunications companies, officials in the area of telecommunication companies will make payment operation for VCB

Specifically, the payment operation of telecommunication company instead of

- The sender operates on the phone with BankPlus/ Money Transfer/

- Time to send money to recipients: 04h-72h After 72 hours, the transaction will be automatically canceled for a refund to the sender

- Receive money via local officers of telecommunication company.

- Receive money at Viettel stores.

Step 4: Make payment for local officers

Besides the development of diversified forms of mobile banking services, the management of services quality assurance also needs attention.

3.2 Improve management and supervision capacity to ensure mobile banking services quality

Many new banks are prioritizing the rapid development and launch of innovative services to increase their market share However, a critical challenge they face is ensuring the smooth operation of these services once they are introduced to the market.

3.2.1 Steps in management activity of mobile banking

In today's digital age, mobile banking services leverage advanced technology to connect banks with various entities, enabling customers to perform a wide range of payment services via their mobile phones To enhance service quality and promptly address issues, banks must implement a comprehensive process to tackle errors and discrepancies This article outlines effective strategies for overcoming such challenges in mobile banking.

The process to overcome and prevent inappropriate problems has 7 steps:

Step 1: Detection and classification of inappropriate problems in the process of mobile banking deployment

Step 3: Identify the causes and propose remidies, and prevention of the inappropriate.

Step 7: Report and save the record

3.2.2 Enhance the sale management activity of mobile banking

For an electronic service as Mobile Banking service, creating an simple and easy access to services for customers is the successful key to attract customers.

Especially, in the situation of fierce competition in banking area, VCB need appropriate cross sale strategies to enhance the sale management activity

The thesis suggests several cross sale methods for Mobile Banking service products

3.2.2.1 Set out clear objectives for cross-selling staffs:

To enhance market exploration and client acquisition, VCB mandates that all staff remain proactive in seeking new customers through diverse channels and methods Monthly reports must be generated to detail the quantity and characteristics of newly acquired clients.

VCB emphasizes the importance of accurate information sharing among employees regarding cross-selling products, ensuring that all customer issues are promptly addressed The goal is to eliminate any complaints from customers related to staff interactions during consultations and transactions.

- On sale: Let customers know the products, believe in the VCB and salesman then decide to use the products and services

Effective post-transaction service is crucial for ensuring customer satisfaction and fostering trust in VCB It is essential to address any concerns promptly, as a seamless experience can prevent complaints regarding both the product and staff interactions Prioritizing customer satisfaction will strengthen loyalty and enhance the overall reputation of VCB.

To enhance cross-selling efforts, all employees must compile monthly statistics on existing and potential customers, as well as market insights, to be submitted to the heads of transaction offices Additionally, monthly reports detailing current and new products, along with competitive analysis of rival banks, particularly Joint Stock Commercial Banks, should be provided to department heads or branch directors.

- The contribution of strategies: Staffs must be enthusiastic at work, have a high sense of responsibility, contribute to the cross-selling strategy

3.2.2.2 Develop strategies for cross-selling force

For the issue of resource allocation, VCB allocate staff in team or individual depending on each situation to have suitable approaching to customers.

- Sales Representative with a client: sales representatives discuss issues with a prospective client directly or indirectly.

- Sales Representative with customer groups: VCB assign one or a group of employees to meet, consult and do transaction with a customer group wishing to use the financial services of bank.

- Sales conference: the sale conference is organized monthly by staffs in cross- selling force.

- Sales workshop: the organization of workshops with clients quarterly about information of VCB, the existing products, new product and possible products in the near future

3.2.2.3 Develop cross-selling force structure:

-People who work full time for VCB are official staffs All of them are allocated in branches, transaction offices in economic zones that VCB chose through Vietnam.

Employees in branches, transaction offices of VCB are divided according to their specialization, responsible for one products or a group of products

Cross-selling staff who are not official VCB employees play a crucial role in the success of cross-selling initiatives Positioned at the transaction points of the bank's partners, these staff members are responsible for introducing and consulting customers about VCB products Their efforts significantly enhance customer engagement and drive sales.

(Source: Marketing Management - Philip Kotler)

The initial phase involves exploration and refinement, which focuses on identifying potential customers and partners for cross-selling initiatives A cross-selling representative is tasked with establishing a list of target customers, which can be compiled through various methods.

+ Ask existing clients about the prospective customers

+ Take advantage of other reference sources, such as bank‘s partners, associations of industries,

+ Do research on the data sources (newspapers, directories) to find customers.

+ Use communication tools such as phone call, email, invitation via the

+ Direct contact with customers and target customer groups.

Cross selling staffs need skills in refining bad customer, basing on their financial

Exploration and refinement Approach Preliminary

Monitor and maintain End of transaction capability, demand, wishes,…

The preliminary approach is the second step in cross-selling, where staff must conduct thorough research on individual and corporate target customers within VCB This involves understanding their needs and identifying key decision-makers Additionally, cross-selling teams should define the timing, objectives, and strategies for meetings with selected customers to ensure effective engagement.