Determinants affecting the e banking service quality in vietnamese commercial banks during covid 19 epidemic

Dissertation submitted in partial fulfillment of the Requirement for the MSc in Finance FINANCE DISSERTATION ON DETERMINANTS AFFECTING THE E-BANKING SERVICE QUALITY IN VIETNAMESE COMMERCIAL BANKS DURING COVID-19 EPIDEMIC NGUYEN QUANG HUY ID No: 21071814 Intake Supervisor: Dr Chu Khanh Lan September 2022 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014126176421000000 Acknowledge First of all, I hereby declare that the thesis “DETERMINANTS AFFECTING THE EBANKING SERVICE QUALITY IN VIETNAMESE COMMERCIAL BANKS DURING COVID-19 EPIDEMIC” is my independent scientific research under the guidance of Dr Chu Khanh Lan I would like to thank the teachers of the International School of Banking Academy (ISBA) and the Banking Academy of Vietnam, and a special thanks to Dr Chu Khanh Lan, who directly guided and helped me in the process of writing my thesis I would also like to thank the friends, the brothers and sisters working at the Bank's branches for their comments, and the customers of the Banks who completed the survey Due to the lack of experience as well as the limitations of knowledge, the essay will inevitably have shortcomings I look forward to receiving comment and suggestions teachers to improve the essay Finally, I respectfully wish teachers good health, success and happiness Signature of Student and date Signature of Supervisor and date 18/09/2022 Nguyễn Quang Huy Lists of Figure No Figure/Table Description Page Figure 2.1 Gronroos’ Technical-Functional Quality Model Figure 2.2 Research Model 13 Figure 3.1 Core Banking system meets the needs of digital transformation 17 Figure 3.2 Transaction fluctuations in the electronic banking system over the years 2010 - 2021 18 Figure 3.3 McKinsey survey of personal financial services in 15 countries in the Asia-Pacific region (2015-2021) 18 Figure 5.1.1 Gender 28 Figure 5.1.2 Age 28 Figure 5.1.3 Education Level 29 Figure 5.1.4 Monthly Income 29 10 Figure 5.1.5 Frequency of using E-banking service 30 11 Figure 5.1.6 Banks where the participants are using the E-banking service 31 Lists of Table No Table Description Page Table 5.1.1 Gender 28 Table 5.1.2 Age 28 Table 5.1.3 Education Level 29 Table 5.1.4 Monthly Income 29 Table 5.1.5 Frequency of using E-banking service 30 Table 5.1.6 Banks where the participants are using the E-banking service 31 Table 5.1.7 Tangibles 31 Table 5.1.8 Reliability 32 Table 5.1.9 Responsiveness 32 10 Table 5.1.10 Assurance 33 11 Table 5.1.11 Empathy 33 12 Table 5.1.12 Customer Satisfaction 34 13 Table 5.2.1 Measurement Model (Outer Loading, VIF, Cronbach’s α, CR AVE) 35 14 Table 5.2.2 HTMT 36 15 Table 5.2.3 Relationship Test Result (Path Coefficient, Coefficient of Determination and Total Effects) 36 Table of Contents CHAPTER I – INTRODUCTION 1.1 Research Rationale 1.2 Research Objectives 1.3 Research Scope 1.4 Research Methodology 1.5 Research Structure CHAPTER II – LITERATURE REVIEW 2.1 Theoretical overview of Electronic Banking (E-banking) 2.1.1 E-banking Definition 2.1.2 E-banking services of Vietnamese commercial banks 2.2 Service Quality of E-banking 2.3 Customer Satisfaction 2.4 Theoretical Models 2.4.1 Gronroos’ Technical-Functional Quality Model 2.4.2 Five Service Quality Gap Model 2.4.3 SERQUAL Model 10 2.4.4 SERVPERF Model 12 CHAPTER III – VIETNAM COMMERCIAL BANKS' STATE OF ELECTRONIC BANKING SERVICES UNDER COVID-19 – “DIGITAL TRANSFORMATION” 14 3.1 Policies and Solutions to facilitate Digital Transformation of Banking Services in the Context of the Economy and Banking Environment affected by the Covid-19 Epidemic 14 3.2 Providing E-banking services and Improving Customer Experience in the context of spreading Covid-19 16 3.3 Challenges and Difficulties in Converting the Arguments of Vietnamese Commercial Banks during Covid-19 epidemic 20 CHAPTER IV – DATA AND RESEARCH METHODOLOGY 21 4.1 Research Design 21 4.2 Sampling Method 21 4.3 Data Collection 21 4.4 Descriptive Analytics 22 4.5 Variables Definition 22 4.6 Regression 24 4.6.1 Measurement Model 24 4.6.2 Strucutral Model Evaluation 26 4.6.3 Model Type and Support Tool 27 CHAPTER V – FINDINGS 28 5.1 Descriptive Analysis 28 5.1.1 Demographics 28 5.1.2 Variables 31 5.2 PLS 34 5.2.1 Data Processing 34 5.2.2 Indicator of Reliability and Validity 35 5.2.3 Relationship test 36 CHAP VI – DISCUSSION 38 6.1 Descriptive Analytics 38 6.1.1 Demographics 38 6.1.2 Tangibles 38 6.1.3 Reliability 39 6.1.4 Responsiveness 39 6.1.5 Assurance 39 6.1.6 Empathy 40 6.1.7 Customer Satisfaction 40 6.2 Relationship Test 40 6.2.1 Tangibles and Customer Satisfaction 40 6.2.2 Reliability and Customer Satisfaction 41 6.2.3 Responsiveness and Customer Satisfaction 42 6.2.4 Assurance and Customer Satisfaction 42 6.2.5 Empathy and Customer Satisfaction 42 CHAPTER VII – CONCLUSION, RECOMMENDATION AND LIMITATIONS 44 7.1 Conclusion 44 7.2 Recommendation 44 7.3 Limitations 45 REFERENCE 46 APPENDIX 54 APPENDIX A – QUESTIONNAIRE 54 Appendix A.1 – English Version 54 Appendix A.2 – Vietnamese Version 58 APPENDIX B – FREQUENCY DISTRIBUTION 62 Appendix B.1 – Tangibles 62 Appendix B.2 – Reliability 65 Appendix B.3 – Responsiveness 68 Appendix B.4 – Assurance 70 Appendix B.5 – Empathy 73 Appendix B.6 – Customer Satisfaction 75 APPENDIX C – CODED SURVEY 77 CHAPTER I – INTRODUCTION 1.1 Research Rationale Digital transformation is a common orientation in all socio-economic activities, and the banking system is no exception Changing consumer behavior and new technology platforms promote the development of digital banking The development of modern digital technologies such as artificial intelligence, cloud computing, social networking and mobile applications gradually changes the way people find information, transact and interact with each other The percentage of the population accessing the internet, using mobile applications, and social networks is increasing, and new consumption trends are born such as sharing economy, etc Those are the foundations that promote change in Vietnam is also not an exception to this trend when terms such as "e-banking", "online transactions", etc., which are better known to everyone, also become an indispensable part of the competition and development of commercial banks in Vietnam E-banking is a service that allows you to make transactions or check information without going to ATMs or transaction offices, just having an Internet or telecommunications network This brings many benefits not only to customers but also to banks and the economy as a whole The attention in Digital Transformation, e-Banking of the Party, the Government and the State Bank is shown through legal documents such as: Resolution No.52NQ/TW dated September 27, 2019 of the Politburo on a number of guidelines and policies to actively participate in the Fourth Industrial Revolution (Industry 4.0); Resolution of the 13th Party Congress defining the country's development goals and orientation for the period 2021-2030 is to develop the digital economy on the basis of science and technology, innovate and promote national digital transformation; Decision No.749/QĐ-TTg dated June 3, 2020 of the Prime Minister approving the Program "National digital transformation to 2025, orientation to 2030" and Decision No.810/QĐNHNN of the SBV dated 11/5/2021 on the Banking Sector Digital Transformation Plan to 2025, with orientation to 2030 with an approach “putting people and customers at the center” Therefore, it is more necessary for banks to constantly improve and develop ebanking services One of the important factors that commercial banks care about and constantly improve E-banking is service quality With the attention of the Party, Government and SBV, Vietnamese commercial banks have launched digital banking applications for use on smartphones and computers such as: VCB Digibank, VietinBank iPay, BIDV SmartBanking, VPBank Online, eBank X of TPBank, Ebanking of HDBank, Mobile banking of Eximbank, Agribank E-Mobile Banking, Omni-Channel of OCB, SCB Mobile Banking, etc The COVID-19 pandemic has altered how individuals behave, interact, and make decisions about purchases For most people worldwide, COVID-19 anxiety poses a lifethreatening threat These days, kids are specifically banned from taking classes online, officials and teachers are required to hold meetings online, and buyers and sellers are focusing on electronic channels as well Similar to how account holders are already heavily skewed toward online banking, digital means are becoming more and more prevalent in the banking business Unpredictably, where COVID-19 has closed enterprises across the globe and driven a significant portion of the population below the poverty line, there are many opportunities created, for example, for information technology businesses, telehealth care providers, and security firms As a result of the COVID-19's drop in traditional banking, more e-banking platforms are now available During pandemic times in Vietnam as well, there has been a considerable increase in ebanking activities Specifically, in the first quarter of 2022, Vietnam has more than million new online consumers, with more than 55% of them coming from non-urban areas, the proportion of e-commerce consumers tends to increased, with 97% of consumers still using the service and 99% intending to continue using it in the future (Tu, 2022; Tran and Huynh, 2022) Vietnamese citizens are more inclined to handle their banking requirements online as they were not permitted to visit banks or their locations As a result, commercial banks now have an important objective: assuring the service quality of E-banking, particularly in a country with intense competition like Vietnam, to increase the satisfaction of their customers 1.2 Research Objectives Overall Objective: The main objective of this research is to identify and measure the determinants that influence the E-banking service quality of Vietnamese commercial banks during COVID-19 epidemic Specific Objectives:  To present the situation and status of e-banking services at Vietnamese commercial banks during the COVID-19 period or the process of "digital transformation"  Systematizing the theoretical basis and building a foundation of theoretical concepts related to service quality and customer satisfaction about e-banking services, thereby giving a suitable model in this research  Proposing some solutions and recommendations to improve and enhance the quality of E-banking services and customer satisfaction about these services at Vietnamese commercial banks 1.3 Research Scope This paper focuses on all the factors that affect the service quality of E-banking in Vietnamese commercial banks during the COVID-19 The study period for this issue took place around 3-4 months starting from June, 2022, and the data will be collected from customers using e-banking services of many Vietnamese commercial banks such as Vietcombank, BIDV, Vietinbank, etc 1.4 Research Methodology The formal study was conducted by means of quantitative research using survey method which here is via a detailed questionnaire The questionnaire contained 27 statements about satisfaction and the factors that affected customer satisfaction including tagibles, reliability, responsiveness, assurance and empathy Each statement is measured on a 5point Likert scale Sampling is a method of stratified random After around three months of data collection, 200 useful questionnaires were processed and analyzed Besides, using SmartPLS software to assist in data processing and output data results to perform analysis based on the criteria of validity and reliability 1.5 Research Structure The remainder of this dissertation is divided into six chapters Chapter contains a review of existing literature, while Chapter describes the situation of digital banking services at Vietnamese commercial banks during the COVID-19 epidemic The methodology adopted to complete the study is explored in Chapter The empirical results are presented and discussed in Chapter and Chapter Finally, the study is concluded in Chapter 7, when its limitations are highlighted and some recommendations are made for future study in this field