Development of digital banking services at joint stock commercial bank for investment and development of vietnam (bidv)

MINISTRY OF EDUCATION AND TRAINING BANKING ACADEMY BANKING FACULTY - - GRADUATION THESIS DEVELOPING DIGITAL BANKING IN JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM (BIDV) Student name : TRUONG HUY HOANG Class : K20CLCA Course : Finance - Banking Student ID : 20A4010246 Supervisor : PhD Bui Huy Trung Ha Noi, May of 2021 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014126226531000000 DECLARATION My name is Truong Huy Hoang, a student of the Banking Academy, majoring in Banking and Finance, student code 20A4010246 with Graduration's thesis topic: "Development of digital banking services at Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)", hereby declares: - This master's thesis is my independent scientific research work conducted under the guidance of PhD Bui Huy Trung - The information and data used in the topic are collected and synthesised from a reliable source, fully cited and adequately regulated - The research content of the thesis has never been published Ha Noi, 14 May 2021 Student TRUONG HUY HOANG i ACKNOWLEDGEMENTS This thesis topic is the result of independent and serious scientific research of the author During implementing the thesis, the author encountered many difficulties in collecting and processing data, orienting and arranging content, and the pressure of research time and limitation of expertise To overcome these difficulties, the author was fortunate to receive the enthusiastic support of PhD Bui Huy Trung Through the topic, the author would like to express sincere thanks and deep gratitude to the teachers of Banking Academy for having given valuable knowledge to the author through the subjects in the program Especially, PhD Bui Huy Trung has spent precious time enthusiastically guiding and giving suggestions to the author while completing this thesis However, due to limited knowledge and time to conduct research, this thesis cannot avoid shortcomings Therefore, the author would like to receive comments from teachers and readers to improve the thesis Student TRUONG HUY HOANG ii TABLE OF CONTENTS DECLARATION i ACKNOWLEDGEMENTS ii LIST OF ABBREVIATIONS v LIST OF FIGURES vi LIST OF TABLES vii ABSTRACT viii CHAPTER 1: THEORETICAL ISSUES OF DIGITAL BANKING AND DEVELOPMENT OF DIGITAL BANKING OF COMMERCIAL BANKING 1.1, Digital banking concept 1.2, Digital bank structure 1.3, Commercial banking with digital banking services 1.4, Criteria for evaluating the development of digital banking 1.5, Experience in developing digital banking services CHAPTER CONCLUSION 14 CHAPTER 2: DEVELOPMENT STATUS OF DIGITAL BANKING SERVICES AT JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM 15 2.1 An overview of the Joint Stock Commercial Bank for Investment and Development of Vietnam 15 2.1.1 General information 15 2.1.2 Business performance of BIDV in recent years 16 2.2 Digital banking development in BIDV 19 2.2.1 Introduction about IT system at BIDV 19 2.2.2, BIDV Digital Banking sector missions 23 2.2.3 Current status of distribution channels and digital banking services in BIDV 24 2.2.4 Current digitalisation of some major processes 32 2.2.5 Current situation of digital activities risk management 35 2.2.6 Current big data analysis for decision making 36 2.2.7, Assessment of the present status of DB services at BIDV: 38 2.2.8, Evaluate the development of digital banking in BIDV 39 CHAPTER CONCLUSION 42 iii CHAPTER 3: SOLUTIONS TO CONTRIBUTE THE DEVELOPMENT OF DIGITAL BANKING SERVICES AT JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM 43 3.1 Development orientation of banking IT in 2021 43 3.1.1 About orientation 43 3.1.2 On the target 44 3.2 Development orientation of BIDV 46 3.3 Opportunities and challenges for BIDV in developing Digital banking services in the near future 48 3.3.1 Opportunities 48 3.3.2 Challenge 52 3.4 Solutions to develop digital banking services at BIDV 54 3.4.1 Investment and development of modern IT infrastructure 54 3.4.2 Diversifying and developing digital banking services 57 3.4.3 Diversity of distribution channels 60 3.4.4 Enhance data collection and analysis to support decision-making 61 3.4.5 Process automation 63 3.4.6 Human resource development 65 3.4.7 Cooperation with Fintech companies and payment intermediaries 65 3.4.8 A few suggestions to BIDV 66 3.4.9 Ensuring security and safety for digital banking services 67 3.5 Some recommendations to the Government and management agencies 69 3.5.1 Completing a legal corridor in several new areas 69 3.5.2 Organize the implementation of monitoring payment systems in Vietnam71 3.5.3 Studying and applying various types of standards and ISO according to international practices 71 3.5.4 To upgrade and develop internal payment systems of commercial banks72 3.5.5 Promote information propaganda 72 CHAPTER CONCLUSION 73 REFERENCE iv LIST OF ABBREVIATIONS No Acronyms English meaning ATM Automatic Teller Machine BIDV DB Digital Baking POS Card payment machine IT Information Technology BI Business Intelligent CCC Customer Care Center Joint-stock Commercial Bank for Investment and Development v LIST OF FIGURES Figures Pages Figure 1.1, Digital Bank Structure Figure 1.2, Commercial bank products and services Figure 1.3 A roadmap for conversion and completion of digital banking model Figure 1.4, Theory of the determinants of perceived quality Figure 2.1 Core values of BIDV 16 Figure 2.2, ROA and ROE of BIDV 2018 -2020 19 Figure 2.3, BIDV’s Software Systems 20 Figure 2.4, Core banking system model of BIDV 21 Figure 2.5, Number of BIDV’s Personal Customer 2018 – 2020 25 Figure 2.6, Number of SME Using BIDV 2018 – 2020 26 Figure 2.7, The amount of ATM and POS machine of BIG 27 Figure 2.8, Number of customers using Internet Banking in major 28 banks - 2019 Figure 3.1 Vietnam Population and Social Networks 48 Figure 3.2 Time spent with media in Vietnam 49 Figure 3.3 Time to reach 50 million users 51 Figure 3.4, The Comparison of Customer Traditional and Digital 59 Journey Figure 3.5, Criteria are most interested in customers when choosing a bank's service vi 67 LIST OF TABLES Tables Pages Table 1.1, The operating differences between traditional and digital banking Table 2.1, Table of business performance of BIDV 2018 – 2020 vii 17 ABSTRACT The necessity of the topic The world is transforming in the Fourth Industrial Revolution (Industry 4.0) This is considered a leap after every 100 years of the world (since the industrial revolution in the early 20th century) and will fundamentally change the production model around the world today As an essential sector in the economy, the banking industry is always at the forefront of trends and the industry's success is always associated with the application of technological advances Examples include the use of computer systems in business operations in the 60s, the introduction of credit cards and ATM networks in the 70s, and the early transition to online banking in the 90s of the last century In the 21st century, the banking industry is also actively promoting major reforms and landmark programs focusing on the infrastructure system to develop new technologies and solutions to serve customers In addition, the development process of the banking industry is currently under the pull of companies outside the industry with new technology platforms that are attacking the financial banking sector and can fundamentally change the way they operate - the traditional activities of the industry It can be said that the banking industry is changing at an unprecedented rate under the impact of Industry 4.0, and this presents both opportunities and challenges for existing banks Technology trends impacting the bank's distribution channels include Wireless and Mobile Technology, Self-Service Counters Technology, Biometric Technology, Media and Multimedia, Networks Social, Usage/Voice Recognition Technology, Cloud Computing, Big Data In addition, social networks have been a necessary channel for advertising and sales, thanks to the advantage of developing services associated with building customer relationships On the contrary, the role of the traditional (physical) distribution channel is decreasing due to rapidly changing customer behaviour In addition, due to huge operating costs, many banks around the world are tending to shrink or restructure and upgrade their traditional channels in parallel with the development of digital viii channels Digital Banking - a new trend has been implemented in many countries worldwide and is also the choice of many Vietnamese banks With a modern technology platform, plus advantages in helping traders save time, suitable for young people's tastes, Digital banking will be popular in the near future in Vietnam If BIDV does not keep pace with this trend, it will lag behind and quickly fail in the race to find customers Stemming from the above reasons, the author has chosen to research the topic "Development of digital banking services at the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)" as the graduation thesis topic Literature review Abroad Studies A Research article from Prof Galazova, Assoc Prof Magomaeva (2019), “The Transformation of Traditional Banking Activity in Digital”, The main contribution of this article is to determine the main direction of technology development in the domestic banking sector and provide further information to transform traditional banking to digital banking Competition in the banking sector is toughening, and without the introduction of new technologies into the service mechanism, even the strongest banks with a conservative strategy will lose a significant part of customers, according to Belous and Lyalkov (2017), “A vector of business development in the flow of digital revolution” Domestic Studies The article from PhD Nguyen Thi Kim Thanh (2011), “Expanding access to banking services through information technology solutions" has presented the current situation of accessing banking services in Vietnam, compared with other countries globally, thereby offering solutions to expand access to banking services for the State Bank in general and commercial banks, mainly related to the application of information technology Mai Thi Nhu Hiep (2012), “Developing digital banking services at 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