Developing digital banking at tien phong joint stock commercial bank

STATE BANK OF VIETNAM BANKING ACADEMY FACULTY OF FOREIGN LANGUAGE - - GRADUATION THESIS DEVELOPING DIGITAL BANKING SERVICES AT TIEN PHONG COMMERCIAL JOINT STOCK BANK Supervisor: Assoc.Prof.Dr Pham Thi Hoang Anh Student: Luong Ho Yen Thanh Student ID: 20A7510156 Class: K20ATCC Academic year: 2017- 2021 Hanoi, May 2021 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014126223811000000 CERTIFICATE OF ORIGINALITY I am committed to the research topic: "Developing digital banking at Tien Phong joint-stock commercial bank" is conducted publicly based on my effort without copying from any previous research The collected data is truthful and fully cited in the reference section If it is found that there is a copy of other research, I will assume full responsibility Hanoi, May 2021 Luong Ho Yen Thanh i ACKNOWLEDGEMENTS With the assignment of the teachers of the Foreign Language Department at Banking Academy, I completed the graduation thesis " Developing digital banking servcies at Tien Phong commercial joint- stock bank" after nearly three months of internship time There is no doubt that the dedicated guidance of teachers contributed to complete the study successfully So, I sincerely thank the teacher - Associate Professor Dr Pham Thi Hoang Anh, who guided me during my thesis writing time Despite being busy, she wholeheartedly instructs me to complete my research well Thank you to all my friends and teachers for helping and mentoring me during the past time However, due to limited professional knowledge and lacking practical experience, the report cannot avoid shortcomings I am willing to receive instructive comments on my thesis more completely Once again, I would like to send my sincere and best thanks to teachers, friends, and family! ii LIST OF ABBREVIATION VIB Vietnam International Bank AI Artificial Intelligence MB Military Commercial Joint Stock Bank OCTO OctoShield IFC International Finance Corporation TPBank Tien Phong Commercial Joint Stock Bank EBITDA Earnings Before Interest, Taxes, Depreciation, and Amortization ATM Automated teller machine iii LIST OF FIGURES Figure 2.1: Main contents of Digital Banking Figure 4.1: TPBank's financial indicators 26 Figure 4.2: TPBank’s capital mobilization from 2016 to 2020 27 Figure 4.3: Age of participants 32 Figure 4.4: Barriers when using TPBank's digital banking services 33 Figure 4.5: Utilities that customer usually use 36 Figure 4.6: TPBank's digital banking services 37 Figure 4.7: The reason why customers use TPBank's digital banking services .38 Figure 4.8: The effectiveness of Digital banking 40 Figure 4.9: Percentage of the urban population only using cash for payment 43 Figure 5.1: A business plan for 2021 45 LIST OF TABLES Table 2.1: Digital Product service .8 Table 3.1: Basic anthropological information of the participant 22 Table 3.2: Data collection procedure 23 Table 4.1: Level of satisfaction 34 iv TABLE OF CONTENTS CERTIFICATE OF ORIGINALITY i ACKNOWLEDGEMENTS ii LIST OF ABBREVIATION iii LIST OF FIGURES iv LIST OF TABLES iv ABSTRACT .1 CHAPTER 1: INTRODUCTION 1.1 Introduction 1.2 Background of the study .2 1.3 Objective of the study 1.4 Signification of the study 1.5 Scope and Limitation of the study 1.6 Definition of term 1.7 Structural organization of the study CHAPTER 2: A LITERATURE REVIEW OF DIGITAL BANKING SERVICES IN THE BANKING SECTOR 2.1 Literature review 2.2 Overview of digital banking services 2.3 Benefits and Costs of digital banking 10 2.4 Indicators reflect the development of digital banking services 12 2.4.1 Expanding digital banking scale .12 2.4.2 The quality of digital banking services 13 2.4.3 Safety and risk control in the digital banking business .14 2.5 Factors affecting the development of Digital Banking 14 2.6 The reality of digital banking services in VietNam 16 2.6.1 Opportunities of digital banking services in Vietnam banking system 19 2.6.2 Barrier of digital banking services in the Vietnamese banking system 19 CHAPTER 3: RESEARCH METHODOLOGY 21 3.1 Locale of the study 21 3.2 Research design 21 3.3 Data .21 3.4 Population and Sample description .21 v 3.5 Research instrument 22 3.6 Data collection procedure 23 3.7 Data analysis procedure 24 3.8 Reliability and validity 24 CHAPTER 4: FINDINGS AND DISCUSSION 25 4.1 The reality of digital banking services in TPBank 25 4.1.1 Brief history and development of Tp Bank 25 4.1.2 Business performance 26 4.1.3 TP Bank's digital banking services 28 4.2 Analysis of the development of digital banking services at TPBank 31 4.2.1 TPBank's digital banking services scale 31 4.2.2 The quality of digital banking services 33 4.2.3 Security safety and risk control 38 Evaluation of digital banking development at TP Bank 39 4.3.1 Achievement of digital banking services at TP Bank 39 4.3.2 Drawbacks of digital banking services at TP Bank 41 4.3.3 The causes of these problems 41 CHAPTER 5: SOLUTIONS AND RECOMMENDATIONS FOR ENHANCING DIGITAL BANKING SERVICES AT TPBANK 45 5.1 Strategy and development orientation of TP bank in the period 2021-2025 45 5.2 Solutions to enhance the importance of social media marketing in TP Bank 46 5.2.1 Upgrading transmission lines and building automatic operating systems .46 5.2.2 Building an ecosystem of digital banking services linked together 47 5.2.3 Developing a team of technology experts .48 5.2.4 Building attractive marketing strategies and compelling advertisements .49 5.3 Recommendations 50 5.3.1 Recommendation for the Government .51 5.3.2 Recommendation for the State Bank 51 CONCLUSION 52 BIBLIOGRAPHY .53 APPENDICES 55 APPENDIX 1: Questionaire 55 vi ABSTRACT Developing digital banking services at Tien Phong commercial joint stock bank Author: Luong Ho Yen Thanh Supervisor: Assoc.Prof.Dr Pham Thi Hoang Anh The development of information technology is now shaping digital banking - a new trend for the future of retail banking, bringing new opportunities for commercial banks and posing challenges This is an inevitable trend in the future of commercial banks Besides, TPbank is developing to become the leading digital bank in Vietnam That is a reason why the author has conducted research: "Developing digital banking services at Tien Phong commercial joint stock bank." The study provides basic knowledge about digital banking - the future trend Through quantitative and qualitative research methods, the author has an objective view of developing digital banking products at TPBank Moreover, based on the real status of using digital banking, the author has given the drawbacks and achievements and pointed out the causes Additionally, to develop digital banking services at TP Bank, the author has proposed short-term and long-term measures such as improving the quality of human resources, upgrading transmission lines and security systems Keyword: Digital Banking Services CHAPTER 1: INTRODUCTION 1.1 Introduction The rapid development of science and technology, especially the Internet and smart mobile devices, has pushed digital banking to develop dramatically With changes in customer behavior, this is both an opportunity and a challenge for banks The introduction of digital services has had a significant impact on corporate operations (52% of Fortune 500 firms have gone bankrupt or have been purchased since 2000) (State Bank, 2019) Furthermore, it was reported that using the digital banking system would result in income of 43 percent to 48 percent (State Bank, 2019).Digital banking is an effective alternative to traditional distribution channels The financial potential of banks has limited the development of physical transaction networks, regulations of state management agencies, so digital banking will be an advantage to overcome these weaknesses by using and combining different distribution channels In Vietnam, A few banks have fully developed digital banks Although many banks have implemented Internet Banking and Mobile Banking systems, this system only meets customers' transaction needs There are still many stages in the business process, especially sales, and the product creation process has not been digitized Digital banking is an essential service for rising bank customer loyalty According to a study, approximately 20% of consumers are likely to move to financial institutions if their current bank does not offer online banking (Guru, Shanmugam, Alam, & Perera, 2003) Therefore, Digital Banking is an opportunity and a challenge for each bank to create breakthroughs in technology and increase competition in the market and attract the customer experience to the bank 1.2 Background of the study Nowadays, the economic boom and the strong influence of the banking system have brought many benefits to countries Still, economic integration has challenged banks to find good campaigns for their products and services Furthermore, the banking market in Vietnam currently has seven state-owned commercial banks (including joint-stock banks in which the state holds a majority share), 37 joint-stock commercial banks, and five banks with 100% foreign capital, Vietnam - foreign joint-venture banks, and 48 foreign bank branches This is why the competition is always currently fierce; banks that want to develop steadily must have a competitive position in the banking system The 4.0 technology revolution has pushed the economy to develop in the direction of digitalization More and more products and services have been applied with new technologies so that the banking industry is not out of trend Due to the extraordinary development of technology, banks improve their operating systems and process customer transactions quickly In addition, it also increases employee productivity, minimizes operating costs, and accesses a large number of customers, thereby increasing the bank's income However, with the changes in customer behavior, this is both an opportunity and a challenge for banks Therefore, Digital banking is a long-term strategy and core values Tien Phong Commercial Bank ( TP Bank) is established in 2008 with the vision to become the top of advanced commercial banks As a small bank, its operations are still limited and must be restructured before the advent of digital banking There were still many shortcomings of TP Bank, such as low- transaction, lack of customers, and failed systems But according to the State Bank, Tp Bank's total operating income in 2020 was recorded at VND 10.368 billion, an increase of 22.4% compared to 2019 regardless of the booming of Covid 19 after pushing digital banking strategy So, Digital banking is one of the leading strategies of TP Bank and the development trend of banks in the world For those reasons, the author has carried out the topic: "Developing digital banking products at Tien Phong Commercial Joint Stock Bank" to identify the factors affecting the development of banking products, thereby proposing solutions to help TP Bank build better digital banking services and develop more sustainably 1.3 Objective of the study The first thing this research provides overall knowledge about digital banking services The second thing the thesis concentrates on evaluating the actual status of digital banking services and analyzing indicators of digital banking services at TP Bank The last thing is the solutions suggested to promote digital banking services more effectively in TP Bank