Introduction
Background
As Vietnam transitions from a command economy to a market-oriented one, companies are increasingly competing to attract customers by enhancing their goods and services Recognizing the significance of prioritizing customer care, many businesses in Vietnam are adopting this strategy to succeed in a competitive landscape Consequently, customer relationship management (CRM) activities have become essential for the survival and growth of companies in this evolving market.
The year 2010 marked a significant turning point in retail banking services, driven by intense competition and the rapid advancement of information technology This period is characterized by a heightened focus on catering to personal customers and small enterprises, reflecting the industry's shift towards more personalized banking solutions.
Vietnam's trade banks are prioritizing modernization by integrating new technologies into their systems to enhance the retail market This shift towards retail banking not only expands their market reach but also creates new development opportunities while diversifying business risks.
Vietnam's population is projected to reach 88 million this year, accompanied by rising income levels Currently, the bank service usage rate in Vietnam stands at approximately 15-16%, with urban areas seeing higher rates of around 32% In contrast, Thailand and Malaysia boast usage rates of 70-80% Over the next decade, Vietnam's retail banking sector is expected to grow at a rate of 30-40%, highlighting its potential as a lucrative market for commercial banks.
Financial experts indicate that competition among local trade banks in Vietnam is intensifying as they strive to capture market share and attract customers Additionally, Vietnam's accession to the WTO requires the government to open its banking sector to foreign institutions, leading to an influx of foreign banks with robust financial capabilities, diverse services, innovative technologies, and effective management As a result, local banks are gradually losing their competitive edge.
Tiểu luận Tư tưởng HCM 8 scale, customers and distribution channels, especially after 2010, when most limitation for foreign banks are removed.
In today's evolving financial landscape, local banks are shifting away from their traditional advantages and recognizing the development of retail banking services as a crucial component of their strategic focus.
This study focuses on Techcombank, a local bank established in 1993, with the vision of becoming Vietnam's leading retail bank Currently, Techcombank serves approximately 600,000 individual customers and 25,000 Small and Medium Enterprises (SMEs), offering a diverse range of products and services tailored to meet their specific needs at various life stages However, the bank faces challenges and threats due to its business structure and changes in the global economy and industry environment, which will be elaborated upon in the "Problem Statement."
Problems Statement
Techcombank offers two primary banking services: personal (retail) banking and corporate banking The bank's management aims to position retail banking as its key product; however, the current customer base is limited to approximately 600,000, contributing only 20% to total revenue Despite their intention to enhance retail banking services, Techcombank faces several challenges in expanding this segment.
Retail banking services are under many pressures from external environment forces as well as inside bank
Macroeconomic challenges, including political, economic, social, and technological factors, hinder the growth of Retail Banking Despite being a WTO member with numerous advantages, the sector faces significant obstacles such as outdated technology, insufficient legal frameworks, a limited range of services, and a critical shortage of skilled human resources.
Tiểu luận Tư tưởng HCM 9 management capacity, world economic turmoil in 2008, it is obvious that Retail Banking service in Vietnam in general also in Techcombank is facing many issues.
Micro economic forces inside the Retail Banking sector also impact to the bank business.
The bank business structures still cumbersome and inflexible to adapt with the unstable economy environment and operate effectively
The human resource increase in quantity but not much in quality The employees working skill, knowledge, professional are not fully meet the new requirements.
Between 2006 and 2009, the workforce expanded significantly from 1,584 to 5,028 employees; however, the percentage of staff with a bachelor's degree or higher only rose from 78% to 82% This indicates a lack of effective policies aimed at attracting skilled talent to the banking sector.
Human resource structure is not rational and backward in compare with foreign bank’s standards.
Figure 1: Breakdown of staff graduate
The risk management and internal audit activities still very weak and ineffective. Financial report, accounting system and information management systems are not
Tiểu luận Tư tưởng HCM 10 comply with International standards Irrecoverable debt ratio still high despite of many effort to recover.
To enhance its performance in the retail banking sector, Techcombank must undertake a comprehensive review of its business strategy Although the bank aimed to be the leading retail bank between 2008 and 2009, it lacks a clear strategic direction for this sector since then Given the short-term impacts of global economic changes and the long-term effects of rising competition, it is crucial for Techcombank to formulate a robust retail banking strategy for the period from 2010 to 2015.
Research Objectives
Below are objectives of the study:
- Identify current missions, objectives, strategies of Techcombank retail banking
- Analyze external & internal environment of Techcombank influence on its Retail Banking service
- Base on the result of above researches, the study will suggest a suitable strategy for Techcombank retail banking service in the period 2010-2015.
Research Questions
Below are the research questions that the study aims at answering
1 What is the current mission, objectives, strategies of Techcombank?
2 What is the status of external & internal environment of Techcombank? Base on the environment analysis, point out what is the strong, weakness, opportunities, threats for the company?
3 What should be the suitable strategy for Techcombank retail banking?
The importance of the research
Bank is growing too fast, the Bank’s Board of Management seem to ignore serious problems at the strategy level to flow target of growth as fast as
The findings of this study serve to alert companies to potential future risks while also providing guidance for adjusting their strategies to ensure a safer and more stable position in an ever-changing environment.
Scope of Limitation
Because of the limitation of time and ability to get updated company’s information, this study just only focus on business activities of Techcombank in duration from
Bank services encompass a wide range of offerings, primarily divided into personal (retail) banking and corporate banking This study focuses specifically on retail banking services, which are essential to individual consumers and their financial needs.
Structure of Thesis
This thesis consist of five chapters:
Chapter 1 describes the background, operational definitions, statement of problems, the objectives and scope of the study, research questions, and research framework.
Chapter 2 presents the theoretical model, overview of Bank industry in the world and in Vietnam, the related literature to understand the value chain of banks in Vietnam
Chapter 3 presents research methodology with conceptual framework, sources of data, sampling
Chapter 4 presents data analysis in with main parts are response rate, demographic of firms and value chain management analysis, experts’ opinions summary and secondary data analysis
Chapter 5 recommendations, Chapter 6 conclusions, discussions
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Literature Review
Theoretical framework
The concept of strategy, rooted in ancient history and originally associated with warfare, has evolved to encompass various fields, including economics, politics, and society In the context of business, strategy plays a crucial role in helping organizations navigate challenges, achieve competitive advantages, and drive growth.
II.1.1 Corporate strategy & role of corporate strategy in organization
Corporate strategy focuses on overarching decisions regarding an organization's scope and direction Managers must evaluate necessary changes in growth objectives and strategies, the business lines to be pursued, and their interrelationships This strategy comprises three key components: growth or directional strategy, which defines growth objectives from retrenchment to expansion; portfolio strategy, which assesses the balance between concentration and diversification of business lines; and parenting strategy, which determines resource allocation and integration across various business areas.
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Roles of corporate strategy in organization
Many entrepreneurs begin their ventures with limited capital and achieve success through effective strategies Conversely, numerous large companies have faced bankruptcy due to poor strategic decisions Clearly, the importance of strategy in today's organizations cannot be overstated.
Corporate strategy serves as the long-term direction for an organization, providing a solid foundation for all its activities Without a clear corporate strategy, firms risk losing their way, struggling to connect current challenges with their long-term vision, and viewing their business from a narrow perspective rather than considering the overall enterprise.
- Corporate strategy helps the organization to see and utilize the opportunities as well as prepare to deal with threats in business environment.
- Corporate strategy is the key for organization to best employ the resources, enhance the position of enterprise and sustain development.
- Corporate strategy assists the board of managers to make decisions in accordance with the move of market It will be the basis for RD & D, human resource, product development…
Strategic management involves a continuous process of developing and refining future-oriented strategies that enable organizations to meet their objectives while taking into account their capabilities, constraints, and environmental factors This process can be divided into three key phases: diagnosis, formulation, and implementation However, this thesis will focus specifically on the Diagnosis and Formulation phases, which are outlined in Table 3.1 below.
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Table 1: Corporate strategy formulation process
Basic question Where are we? Where do we want to be?
Output Understanding of the organization & its environment, therefore, address the critical issues
Corporate strategy recommendations to ensure success & address the critical issues
Process 1 Identify current mission, objectives and (especially) strategies
2 Analyze data about external & internal environment to evaluate performance and identify SWOT
(5-force model), societal environment (political/legal, technological, economic, socio-cultural) -> identify opportunitie s and threats
* Internal: financial, marketing, production/operations, technology, organizational -> identify strengths and weakness
3 Address critical issues: SWOT analysis
1 Identifying directional strategy (grand strategy) for the company
2 Identifying portfolio strategy for the company.
3 Define new mission, goals for the company
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- Reviewing the current key objectives and strategies of the organization.
- Performing analysis of the internal environment of the organization including financial resources, physical resources, human resources, technological resources… to identify major strengths and weaknesses;
Analyzing an organization's external environment involves examining macro factors such as political, economic, social, and technological influences, alongside micro factors like the level of rivalry, threat of substitutes, buyer and supplier power, and barriers to entry This comprehensive analysis is essential for identifying significant opportunities and threats that can impact the organization's strategic decisions and overall success.
- Identifying the major critical issues, which are a small set, typically two to five, of major problems, threats, weaknesses, and/or opportunities that require particularly high priority attention by managers.
Reviewing current missions, goal and strategy of bank
Before developing a new business strategy, it is essential to assess whether the company currently has an existing strategy If a strategy is in place, it is important to evaluate its strengths and weaknesses to determine the need for a new approach.
An analysis of the external environment in which a firm operates encompasses both societal and industry factors This includes evaluating political, economic, social, and technological influences, as well as assessing industry dynamics such as the level of rivalry, the threat of substitutes, buyer and supplier power, and barriers to entry.
The societal environment encompasses various forces that significantly impact the long-term decisions of organizations, including economic, technological, political-legal, and socio-cultural factors In the context of the Online Banking sector, these forces specifically reflect the economic, technological, social, and political landscape in Vietnam.
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Political factors, such as government regulations and legal issues, significantly shape the operational landscape for businesses, particularly in the banking sector Key elements include online trading procedures, labor laws, environmental regulations, trade restrictions, tariffs, and political stability These factors exert a strong influence on a company's operations and growth potential.
Economic factors significantly influence both the purchasing power of potential customers and the cost of capital for firms Key elements such as economic growth, interest rates, exchange rates, and inflation rates must be carefully considered by managers when developing strategies With the global economic recovery in 2010, the banking sector in Vietnam anticipated a rise in turnover.
Social factors, encompassing demographic and cultural elements of the external macro environment, significantly influence customer needs and the potential market size Key aspects include health consciousness, population growth rate, age distribution, career attitudes, and a focus on safety These factors shape how management executes its responsibilities, as shifts in the social environment can profoundly affect managerial decision-making.
Technological factors play a crucial role in shaping the competitive landscape of the Internet Banking sector by lowering entry barriers, minimizing efficient service levels, and impacting outsourcing strategies Key elements such as research and development activities, security measures, and technology incentives must be carefully considered Management is tasked with determining the optimal level of technology for the organization and strategizing the effective introduction of new technological advancements.
* Business Analysis: Analyzing Task environment
According to Porter (1985), a corporation's focus should primarily be on the intensity of competition within its industry This intensity is influenced by key competitive forces, including the threat of new entrants, the level of rivalry among existing competitors, the threat posed by substitute products, and the bargaining power of both suppliers and buyers.
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Rivalry is the intensity of the competitive environment consists of those whom an organization must "compete" in order to obtain resources Hamel,
Understanding competitors is essential for developing effective strategies, as highlighted by (1993) Analyzing the competitive landscape presents a fundamental challenge for management In traditional economic models, competition among firms tends to erode profits to zero However, the degree of rivalry varies across industries In the Internet Banking sector, the intensity of competition is shaped by specific characteristics unique to the market.
Research Methodology
Research background
Techcombank operates through two main divisions: retail banking and corporate banking In recent years, the bank has restructured its organization and developed a strategy aimed at enhancing its retail banking services.
It is foreseeable that bank should concentrate its activities within current section retail banking
With the underlined assumption that the scope of activities of bank is limited in retail banking both external and internal analysis should concentrate on this sector.
Research objective
This research aims to identify the current missions, objectives, and strategies of Techcombank while analyzing both the external and internal environments The goal is to determine the most suitable corporate strategy for the bank within the retail banking sector.
Research methods
This research is implemented qualitative method
Qualitative research tends to deal with small samples and uniqueness, combined with open-ended interviews, as well as appropriate for the understanding of the problem than quantifying it.
Data collection
The information of this research will be generated in from the following sources:
The information of this research will be generated in from the following sources:
Primary data was obtained through interview in order to get information about banking industry, especially on the customer side As the research is exploratory,
The use of unstructured and in-depth interviews is ideal for gathering rich and detailed data in the context of Tiểu luận Tư tưởng HCM 25 These interviews enable researchers to explore customer needs and expectations regarding services and pricing Additionally, they serve as a valuable tool, in conjunction with secondary data such as company reports, to analyze the internal environment of the company.
Interviews conducted between June 6 and June 18, 2009, averaged 60 minutes each As a researcher at Techcombank, I was able to conveniently gather both primary and secondary data from colleagues and various departments For customer data, personal customers were chosen for interviews alongside a retail banking manager.
Through interviews, key phrases were transformed into coherent sentences and subsequently reviewed by the participants The data gathered from written interviews was meticulously analyzed, reconstructed, and categorized This information was developed into meaningful sentences and examined alongside a comprehensive literature review.
Secondary data refers to information that has already been collected for different purposes, encompassing both raw and published data Researchers can leverage secondary data from online newspapers to access a vast array of information that might otherwise be challenging to obtain due to constraints in time and budget.
This study utilized secondary data obtained from Techcombank reports and various other sources The desk research involved a comprehensive literature review, including relevant books, articles, journals, and magazines aligned with the research objectives Additionally, Internet research provided valuable secondary data, featuring information from e-newspapers, reports, and websites of organizations such as the State Bank of Vietnam, HSBC, and the Ministry of Trade of Vietnam (MOT).
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Research analysis
Environment analysis
IV.1.1 The societal environment (PEST Analysis)
The PEST model analysis is utilized to examine the macro environment and identify key factors that significantly impact the future growth of the banking industry This analysis relies on secondary data sources.
Since 1990, Vietnam's economy has experienced remarkable growth, averaging 7.5 percent annually Notably, during the Asian economic crisis of 1997-1998, Vietnam continued to thrive, achieving a growth rate of 4.5 percent in 1999, while neighboring countries like Thailand and Indonesia faced significant downturns.
Vietnam's impressive growth rate is largely due to its steady economic policy focused on gradual integration into the global economy Over the past 20 years, the country has successfully maintained macroeconomic stability by reducing public debt and inflation, ensuring a balanced budget, and effectively controlling the money supply.
Political stability has been a crucial element in Vietnam's economic development strategy Since 1990, while many regional countries have faced political crises, Vietnam has maintained a stable political environment This stability has facilitated the country's ongoing renewal process, allowing it to advance economically.
The banking industry in Vietnam is significantly shaped by political forces, including bank reserve requirements, currency controls, and exchange rates Key influences on this sector include Vietnam's accession to the World Trade Organization (WTO) and policies implemented by the State Bank.
Since joining the World Trade Organization (WTO), Vietnam has gained equal standing with other member countries, allowing its businesses to engage freely with international companies This membership has eliminated barriers, fostering a more competitive environment for international trade.
Tiểu luận Tư tưởng HCM 27 have chance to increase quickly which will bring many opportunities for bank business.
As a member of the World Trade Organization (WTO), Vietnam enhances its ability to attract both foreign direct and indirect investments, especially in the banking sector and infrastructure development This membership also opens doors for access to advanced technologies and improvements in management capabilities.
Membership in the WTO presents significant opportunities for the banking sector; however, it also brings challenges due to intensified competition Alongside domestic banks, foreign banks are increasingly competing in Vietnam's local market as the country fulfills its WTO commitments to open up banking activities.
The State Bank of Vietnam (SBV) is tasked with managing monetary policy, credit, foreign exchange, and banking operations, functioning as the central bank and the sole issuer of currency However, many of its policies do not align with international regulations, leading to inadequate banking laws and discriminatory practices among financial institutions, which create unfair competition This necessitates reforms in banking legislation to foster an equitable competitive environment in accordance with WTO standards Additionally, while opening the financial market presents risks to the domestic economy from global financial fluctuations, the SBV's capacity for monetary control and supervision remains limited The enforcement of Circular No 13, introduced on May 20, 2010, aimed to align with international standards but imposed strict deadlines and unreasonable terms, including a cap of 80% on total deposits available for commercial lending.
Firstly, there are no international regulations on such a restriction of loan proportion of total capital raised Other countries do not have such a restriction
The banks have the autonomy to determine their own business policies and strategies, allowing them to maintain varying proportions of deposits, including the option to lend up to 100% of total deposits in low-profit scenarios Consequently, the stringent regulations imposed by the State Bank of Vietnam (SBV) on all commercial banks are often seen as unreasonable and create significant challenges for lenders.
The regulation will significantly restrict credit supply and complicate asset and liability management for commercial banks, as they are prohibited from lending 15% of their total funds raised from non-term deposits in addition to the 20% of total deposits This results in a total of 35% of idle funds allocated for risk provision, which is excessive and unnecessary.
Increasing the Capital Adequacy Ratio (CAR) to 9% aligns Vietnam more closely with international standards Since 2008, the State Bank of Vietnam has implemented Basel I, which mandates a minimum CAR of 8% Plans to adopt Basel II, which requires a 12% CAR, were set for 2012 Currently, Basel II is widely practiced among banks globally, and some local banks in Vietnam have already achieved compliance with these requirements.
Increasing the Capital Adequacy Ratio (CAR) to 9% poses a significant challenge for large banks, while smaller banks face different hurdles Smaller banks are required to raise their charter capital to a minimum of VND 3 trillion this year, as mandated by regulations However, their risky assets cannot be adjusted immediately, which inadvertently aids them in improving their CAR.
State-owned and partially private banks face significant challenges in meeting international accounting standards, as these regulations often reveal a higher bad debt ratio Consequently, these banks will need to allocate more funds for provisions to cover potential losses.
After 4 months from the enforcing date, with these insufficient terms and facing many protests were raised again this Circular, the State Bank of Vietnam (SBV) decided to adjust the contents of the Circular No.13 conforming with the international regulation in 27 September 2010 by the Circular No.19
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Techcombank internal environment analysis
Founded on September 27, 1993, Techcombank is a joint-stock commercial bank with a charter capital of VND 107,910 billion as of June 2010 The bank has a 20% foreign ownership stake from HSBC and, by the end of 2009, operated nearly 230 branches and sales outlets across more than 40 cities and provinces in Vietnam.
As Techcombank undergoes its development process, it experiences a significant increase in share capital, leading to impressive growth in both the number of branches and employees This expansion reflects Techcombank's strong financial position and commitment to enhancing its market presence and workforce.
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Table 5: Charter Capital of Techcombank
Figure 4: Organizational Chart of Techcombank
Techcombank aims to be the leading retail bank in Vietnam by enhancing its operational structure for improved customer service To cater to the diverse financial needs of individual clients, the bank has introduced a comprehensive range of innovative and customized products and services.
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Special attention was given to the diversity and convenience of products and service quality as well as enhanced delivery channels aimed at increasing customer accessibility to these services
As of December 31, 2009, the Bank managed over 617,000 personal accounts, boasting a total outstanding balance of VND 2,352 billion Retail banking now accounts for more than 20% of the Bank's total revenue and is projected to experience significant growth in the near future.
Retail banking is evolving with enhanced structures through the establishment of specialized centers within the Head Office's Personal Financial Services Division (PFS), enabling us to effectively address customer needs.
The Bank has significantly expanded its presence, now operating 188 branches and sales outlets nationwide Additionally, the Head Office's Contact Center has been enhanced to serve as a reliable resource, offering 24/7 information, consultancy, and support to customers, with the capability to assist nearly 50 customers simultaneously.
Techcombank continues to lead the internet banking sector in Vietnam by offering real web-based services that meet international standards The F@st I-bank package for individuals and the F@st E-bank package for corporate clients enable customers to easily check their account balances and transfer funds to both Techcombank and other banks Additionally, customers can manage credit card payments, set up regular deposits, establish automatic payment schedules, and conduct various other transactions seamlessly.
Techcombank has analyzed the investment and saving behaviors of individual customers across various regions in the country, leading to the introduction of a diverse range of flexible savings and deposit products These offerings include installment savings, options for interest payment before or at maturity, and regular interest payments, as well as savings accounts with both fixed and flexible interest rates Additionally, Techcombank provides short-term savings solutions to meet varying customer needs.
The article discusses 41 investment products inspired by Ho Chi Minh's ideology, designed for significant capital These products help customers maximize returns on idle funds and facilitate proactive financial planning for various life stages.
In 2009, amidst financial market fluctuations, Techcombank strategically monitored market trends and customer preferences to implement a tailored interest rate policy that catered to customer needs while attracting new deposits The bank launched several promotional savings programs, including Lucky Spring Deposit and Super Lucky Savings, offering a total prize pool of approximately VND10 billion, rewarding numerous fortunate customers These initiatives not only reinforced Techcombank's reputation as a secure and effective banking option but also successfully expanded its customer base, ensuring a stable funding source for lending and investment activities, ultimately earning the trust of an increasing number of clients.
In late 2009, individual deposits at the Bank surged to VND29,779 billion, marking a remarkable 110.91% increase from 2008 and representing 71.99% of the Bank’s total mobilized funds This growth rate was one of the highest among local commercial banks that year Additionally, a significant 95.13% of these deposits were in term deposits, with 22.41% held in foreign currencies, enhancing the Bank's ability to manage its funds effectively.
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Figure 5: personal customer deposits (BLN VND)
Figure 6: Breakdown of personal customer deposits
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In 2009, Techcombank provided financial support to individuals for various needs, including living expenses, consumption, and investment plans for private businesses However, due to significant market challenges, the bank decided to reduce the growth rate of total outstanding loans for personal customers.
Figure 7: Retail outstanding loans (BLN VND)
The bank's strategic offerings, including home loans and consumer loans, have shown consistent growth, while other products like overdrafts, gold trading loans, stock trading loans, overseas study loans, and valuable paper mortgage loans have also performed well Notably, overdraft loans allow customers to access unsecured credit equivalent to 10 months' salary.
Total consumer lending as of late 2009 was VND3,386 billion, an increase of 124.83% against 2008, while home loans remained high at VND3,521 billion.
On average, each home loan amounted to VND500 million.
In 2005, Techcombank was known as the first bank in Vietnam to successfully connect its card system with Vietcombank to form the first card alliance in
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In Vietnam, Techcombank made significant strides last year by becoming the first bank to integrate its card system with Smart Link and Banknet, the two largest card alliances in the country, as well as its strategic partner HSBC Vietnam This integration allows Techcombank cardholders to access their cards at over 7,000 ATMs and 14,000 points of sale nationwide, including 360 ATMs and 2,000 POS terminals owned by the bank.
In 2008, Techcombank became a full member of the Visa International group, enabling Visa cardholders to access over one million ATMs and millions of Visa POS locations worldwide Additionally, Techcombank has partnered with MasterCard and is set to launch Techcombank MasterCard soon.
Figure 8: Number of issued card in 2009
SWOT analysis
Table 8: SWOT/TOWS matrix of Techcombank
1 Has a share holder with good financial and management skill 2.Skillful, educated, young staffs
3 Technology is strong and an advantage in compare with local banks
4 Good reputation in banking market
5 Continued to sustain rapid growth despite the financial crisis
1.Organization structure still complex and not suitable with the business.
2 Employees fluctuation make the level of skill of staffs reduce
3 Conflict in business benefit while main shareholder also be the competitor
4 The products haven’t got the advance difference with other banks
5 Rapid growth makes threatens increase in bad debts
6 Branch network still small in compare with state own banks and some trade banks
1 The country joining WTO, have chance to access new technologies and managerial skills.
2 Low threat of entry in banking sector
1 Increase the portion of retail banking in the company’s business portfolio
2 Increase margin rate of retail banking products by developing a strategy in order selection (select the styles with better margin
1 Improve the fluctuation of employees by increasing wage and improving human resource policies, especially for staffs who work in retail banking lines
2 Restructure business structure to support retail banking direction of the bank
Tiểu luận Tư tưởng HCM 56 low rate).
3 Low technology level in compare with international standard
4 High rivalry level in retail banking
5 Power of buyer is high
1 Focus on the stable products and services that bring revenue but aren’t impacted much by polices
2 Improve technology capacity by applying International standards step by step.
3 Reduce the power of retail banking customers by creating the competitive advantage in different, modern and multi-features products and services
1 Reducing the portion of high risk products in the bank business portfolio
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Recommendations
Strategy selection
Techcombank aims to establish itself as the leading retail bank in Vietnam by realigning its vision, mission, and goals to support this new strategy However, the specifics of its retail banking strategy remain vague and ineffective This chapter will provide detailed recommendations for enhancing Techcombank's retail banking sector.
Vision, Mission and Goals
To enhance the bank's growth, it is essential to establish a new strategy that includes a clear vision, mission, and goals after thoroughly analyzing all aspects of the business and selecting the most promising areas for development Researchers recommend focusing on these foundational elements to ensure a cohesive and effective approach to the bank's future.
Techcombank’s vision is to be the best retail bank in Vietnam
To be a leader in retail banking, Techcombank must offer high-quality products and services that cater to diverse customer needs With an established reputation in the banking sector, it is crucial for the bank to sustain its service quality while simultaneously enhancing profit margins to ensure long-term business success.
The new mission statement is the company's new vision translated into written form Below is the suggested mission statement for Techcombank:
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- Strive to be the best bank in services and modern products
- Provide modern, different, diversified and convenience products to customers
- Provide work environments and HR policies which meet the employee’s potential and provide an atmosphere of excellence so that they can perform their best.
- Improve branch name recognition in the market
- Expand sale network to gain potential market
Strategic road mapping and planning culminate in establishing organizational goals aligned with the vision and mission statement These goals serve as long-term objectives for a defined timeframe, requiring specificity and realism The long-range goals identified through strategic planning are then transformed into actionable activities within operational planning to facilitate their achievement.
- Technology: (1) Continue to improve innovation in technology to introduce new modern product to customers with high convenience, many features Increase the number of modern products about 40%
- Profit: Keep current profit level in Corporate banking service (25-30%) and increase profit level in Retail banking from 20-25% to 30-35%
- Customers: Keep maintaining good relationship with current customers and increasing new customers about 50%
Recommendations in Detail
Below are some solutions for the retail banking service
In order to enlarge the portion of retail banking, it needs a lot of changes in human resources
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To enhance the quality of its workforce, banks must focus on improving staff professionalism, work ethic, communication skills, and sales abilities, while recognizing the critical importance of retail banking services Additionally, fostering teamwork and ethical coordination is essential Given the rapid technological advancements, it is crucial for employees to continually update their knowledge of the banking sector Therefore, banks should aim to raise the percentage of university and postgraduate graduates among employees from 82% to 99% and increase in-house training programs by 50%, offering well-structured courses to enhance operational proficiency.
To motivate employees in their training efforts, Techcombank should enhance and broaden its reward policy by increasing salaries for staff who contribute valuable initiatives and research that significantly improve bank operations, as well as for those who successfully complete bank-sponsored or personal training courses.
Banks should regularly evaluate their ranking systems to identify outstanding individuals and teams Based on these assessments, they can implement effective reward and promotion policies that motivate all staff to actively contribute to the bank's growth and success.
Training activities should be intensified through expanding and co-ordinating with famous Universities like National Economic University, Foreign Trade University,
To enhance their operations, banks should select promising employees for overseas training to acquire and implement new technologies in their business practices Additionally, adopting an online training system can significantly lower training costs while maintaining high effectiveness.
Enhancing the quality of human resources, particularly in high management, can be effectively achieved through collaboration with key shareholders at HSBC The bank employs numerous staff members who hold significant positions and possess extensive knowledge and experience in international working standards These employees can receive on-the-job training by collaborating with HSBC personnel or be sent to the bank for specialized training in accordance with shareholder agreements.
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Technical resource is the critical point for bank if it wants to be successful
The bank must persist in implementing its Information Technology system based on service-oriented architecture, initiated in 2008, to ensure long-term business support Leveraging this technology, the bank should enhance its retail banking services and products, focusing on optimizing business efficiency and quality in areas such as mortgages, trust loans, and digital procedures.
To enhance the security of customer and bank data, it is crucial to improve information security measures, especially as the global economy opens up to new threats A significant risk lies in the confidentiality, availability, and integrity of information systems; any compromise can lead to unpredictable losses for both banks and their customers Therefore, Techcombank must invest in specialized security systems and provide employee training on potential threats to minimize risks effectively.
To enhance customer engagement and stay competitive, Techcombank should focus on developing innovative online products and refining existing services such as online saving, internet banking, and telephone banking By leveraging these key channels, the bank can reduce operational costs while providing customers with convenient and valuable features, ultimately attracting a larger customer base and differentiating itself from competitors.
International standards for information system management should be applied to the management process to make bank’s systems comply with global standards For ex Corbit, ITIL, ISO 27001, …
Effective risk management is crucial for a bank's success, as the banking sector is constantly exposed to various risks To achieve the goal of becoming a leading retail bank, financial institutions heavily depend on credit services While these services generate significant revenue, they also come with considerable risks Consequently, it is essential to integrate risk management strategies from the initial stages of product development.
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Banks should establish a streamlined and consistent loan approval process that balances risk and opportunity, as well as interest income and potential losses Key factors to consider include the borrower's profile, such as income, age, and location, along with the type of loan, whether it is fixed-term or credit limit-based, and whether it is secured by collateral.
To enhance efficiency in processing loan applications, a reliable credit administration system is essential for serving a large customer base and making timely decisions This credit ranking system swiftly determines approval or rejection, with only exceptional cases referred to credit staff for manual review The foundation of this system relies on a thorough analysis of internal credit applications, which are meticulously reviewed to establish a general standard Additionally, implementing an early warning system for poor applications can significantly mitigate risk.
Centralize and standardize the owe recover procedure:
Establish the owe recover team and implement the owe age determine system to inform the owe recover team about owe items so that they can process accordingly.
Identify the owe recover plan in every phase for the not on time owes and the priority for high value owe with possible recover ability.
Many banks make the mistake of imitating products from their competitors without assessing their true impact on customers and their own operations To effectively develop products and services that meet customer needs, Techcombank must first identify its target audience This approach will enable the design of tailored offerings that optimize the bank's business performance.
First, bank should define customer need and characteristic In order to define the target customers, Techcombank should categorize customers base on customer’s behaviour, location, age, sex, education level, income,…
Customer age significantly influences behavior in the Vietnamese market, with research from McKinsey in March 2008 indicating that individuals aged 21 to 29 are poised to make substantial contributions to the retail banking sector in Vietnam.
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According to the study on 400 customers in many banks, the ones who are from 21-
Younger individuals utilize bank services significantly more than older generations, with 91% of those under 30 having savings accounts compared to just 55% of those over 30 Additionally, 89% of younger people possess credit cards, while only 40% of older adults do Furthermore, younger consumers show a greater interest in modern banking options such as mobile and internet banking, surpassing their parents' engagement with these services.
According to McKinsey research, attitudes toward banking services vary geographically, with residents of Ho Chi Minh City in the south exhibiting a more open-minded approach compared to those in the northern region Specifically, 42% of people in Ho Chi Minh City are willing to try automated banking services, whereas only 24% of individuals in Hanoi share this sentiment.
Timeline
Table 9: Timeline for Recommendations of Techcombank retail banking
- Increase the no of employees with University graduates & post- graduates from 82% to 90%
-Increase the no of employees with University graduates & post-graduates from 90% to 95%
- Implement Online training system integrate with Appraisal system
-Increase the no of employees with University graduates & post- graduates from 95% to 98%
-Increase the no of employees with University graduates & post- graduates from 98% to 99%
- Applying Marketing Mix into the selected niche
- Improve modern products: Internet Banking, phone banking
- Focus on Northern market by increasing the branches in Northern
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- Set up R&D Department to focus on research T24 Core banking functions
- Finish training for all technician
- Keep update the Core banking T24 to gain the best functions
- Start applying the International standard on risk management
- Implement Centralize credit admin system
Improve current Call Centre system with 24x7 service and increase 30%
Upgrade to Customer Relationship Management system
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Conclusion, limitation and further researches
Conclusion
This study addresses the research questions outlined in Chapter 1, revealing that Techcombank lacks a defined corporate strategy for retail banking, as it has only recently established a new direction in this sector over the past two years Consequently, the bank's retail banking operations continue to progress without a clear strategic focus.
The research highlights the evolving societal environment and the current state of Vietnam's retail banking sector, particularly in light of the country's accession to the WTO This membership has opened up numerous opportunities, including increased investment and access to advanced technology and management skills However, it also presents challenges for the banking industry, such as reduced barriers for foreign banks, which can impact Techcombank Additionally, various factors, including political, economic, and socio-cultural influences, significantly affect Techcombank's retail banking operations.
Techcombank faces significant limitations in its retail banking sector, primarily due to the absence of a clear retail banking strategy Despite recognizing the higher profitability of certain business segments, the bank continues to focus on less lucrative areas Additionally, Techcombank has not fully leveraged its advanced technology systems and extensive network to enhance its retail banking operations.
After conducting analysis, SWOT analysis was performed, the result and recommendations for Techcombank on formulating its strategy for retail banking was presented.
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Contribution
This study seeks to assist Techcombank's Board of Management in developing effective strategies for its retail banking services It highlights potential threats arising from the evolving market landscape and offers solutions to mitigate these risks Additionally, the research provides a comprehensive overview of corporate strategy and underscores its critical importance in driving business success.
Further researches
Corporate strategy is a vast subject that may overwhelm non-marketers, suggesting that future research should concentrate on specific aspects of business or functional strategy for better clarity The author intends to explore the implementation and evaluation of corporate, business, and functional strategies in upcoming studies.
Limitations
Even though the research has shown some findings but due to time constraints and real situation, it also has several limitations.
Corporate strategy encompasses a wide range of topics, and while the author aims to conduct in-depth research on customer needs and expectations, as well as competitor analysis for Techcombank's retail banking services, the limitations of this thesis prevent the realization of these goals.
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