INTRODUCTION
Introduction
In today's digital economy, cash usage is declining as electronic payment methods like ATM cards and e-wallets gain popularity The increasing CASA (Current Account Savings Account) deposits represent a significant shift in capital mobilization, benefiting not only banks but also securities companies that leverage these accounts for profitable ventures CASA offers low mobilization costs and high profit margins, prompting banks to prioritize this funding source, which in turn allows them to lower lending rates, attract more borrowers, and minimize credit risks A high CASA ratio indicates strong payment services and customer satisfaction, reflecting the bank's positive reputation and user preference, ultimately giving it a competitive edge in the financial sector.
In response to the Covid-19 pandemic, commercial banks in 2020 and 2021 were mandated by the Government and the State Bank to lower lending interest rates to support affected businesses, which consequently led to a decrease in profits This prompted intense competition among banks to mobilize CASA (Current Account Savings Account) deposits, as they aimed to lower capital costs and enhance profit margins The pandemic also shifted consumer behavior towards online shopping and payment services, presenting banks with significant opportunities to attract payment deposits However, this increased potential has intensified competition, with many banks introducing preferential policies, particularly regarding fees, to entice customers and bolster their CASA holdings.
ACB Bank has consistently focused on innovation and self-improvement, enhancing its mobilization efficiency over the years Nevertheless, the bank still faces several challenges that require effective solutions for resolution Thus, the topic of “Evaluating the Status of ACB Bank” is crucial for identifying these issues and fostering strategic improvements.
CASA mobilization at Asia Commercial Joint Stock Bank” has been chosen.
Background of the study
Asia Commercial Joint Stock Bank (ACB), established on April 24, 1993, and operational since June 4, 1993, is a leading commercial bank in Vietnam known for its diverse products and extensive branch network With nearly 30 years of development, ACB aims to be the top retail bank in Vietnam, consistently expanding its retail product distribution in urban areas The bank is committed to meeting the needs of individuals, small businesses, and enterprises across various sectors, while also focusing on innovative products and services for emerging markets ACB's fundraising activities have demonstrated steady growth over the years, driven by flexible and practical policies.
In recent years, CASA (Current Account Savings Account) has emerged as a low-cost capital mobilization channel, gaining significant attention from commercial banks It has become a critical target for bank employees, alongside traditional methods like savings deposits and the issuance of valuable papers With its low-cost advantage, CASA contributes to expanding profit margins, leading to fierce competition among banks, including ACB As digital transformation accelerates across various sectors, CASA is viewed as a highly potential source of capital for commercial banks ACB has made notable achievements in CASA mobilization, underscoring its importance in the banking landscape.
ACB is striving to establish itself among the top banks, but it is still in the early stages of mobilizing its CASA (Current Account Savings Account) deposits To successfully attract CASA, ACB must implement effective strategies that enhance efficiency and provide a competitive edge over rival banks.
Objectives of the study
This study aims to assess the status of CASA mobilization at ACB and compare it with other banks, ultimately providing solutions to address existing limitations The specific objectives of the research focus on evaluating current performance and identifying areas for improvement in CASA mobilization strategies.
- Investigating business operations at ACB in the period 2019 – 2021
- Assessing current situation of CASA mobilization at ACB
- Comparing CASA to other sources of capital mobilization
- Investigating factors affecting CASA mobilization
- Proposing solutions to overcome the remaining shortcomings related to CASA
Significance of the study
The research aims to enhance the efficiency of CASA mobilization at ACB, addressing ongoing challenges in demand deposit management By implementing the study's findings, ACB is expected to improve its ability to attract and utilize demand deposits, leading to an increase in new customers and overall deposit growth Additionally, the research offers valuable insights for the State Bank of Vietnam, enabling it to review and refine existing regulations concerning demand deposits This will facilitate better business operations and boost CASA mobilization efficiency across commercial banks in the country.
The study aims to enhance understanding of CASA activities and their vital role in a bank's capital structure Upon completion, it will serve as a trustworthy resource for students, providing an objective perspective on CASA-related topics for their research and writing.
Scope and limitation of the study
The research investigates the status of CASA mobilization at ACB in the period of 2019-
The study conducted in 2021 examines a specific aspect of the bank's capital structure, providing a limited perspective on its overall capital mobilization methods Additionally, while the research is grounded in the general context of ACB, it acknowledges that individual branches may experience unique circumstances Consequently, the proposed solutions may vary in applicability across different units within the system.
Definition of terms
Bad debt refers to debt which is overdue for more than 90 days (taichinh24h.com, 2021)
The term BIG4 designates the four largest banks in Vietnam—Agribank, Vietcombank, Vietinbank, and BIDV—recognized for their establishment history, financial strength, and revenue Originally derived from the four largest auditing firms globally, this terminology has since been adopted across various sectors, including accounting, manufacturing, and banking (nganhangaz.com, 2021).
A Current Account Savings Account (CASA) is a bank savings deposit that allows customers to frequently deposit and withdraw cash while earning daily interest rates.
Cashback is an incentive that provides buyers with a cash refund after their purchases, commonly offered by banks through credit and payment cards to encourage consumer spending This refund model originated in the United States, later expanding to the UK and subsequently spreading to various European and Asian countries, including Vietnam.
Collateral refers to an asset that a lender accepts as security for a loan
Collateral can include real estate or various types of assets, serving as a safeguard for lenders based on the loan's purpose.
Digital Banking transforms traditional banking by digitizing all services and activities, enhancing convenience and accessibility (Alex Malyshev, 2021) A key component of this evolution is eKYC (Electronic Know Your Customer), which utilizes biometric data and artificial intelligence to verify customer identities entirely online, eliminating the need for in-person interactions (ekyc.efy.com, 2021).
Eligible debt refers to debt which is paid in due date or overdue for less than 10 days
A limited loan is an agreement between credit institutions and customers that establishes a maximum loan balance to be maintained for a specified period Within this limit, the credit institution provides disbursements to customers At least annually, the credit institution reviews and adjusts the maximum loan balance and the duration for maintaining this outstanding balance, as outlined in Circular 39/2016 of the State Bank of Vietnam.
Retail Customers refer to end use customers including individual customers and corporate customers (luatduonggia.vn, 2022)
Secured loans are financial products that require borrowers to provide an asset as collateral, which can include various items such as property, equipment, or personal belongings like cars and homes This collateral serves as a security for the lender, granting them a temporary right over the asset If the borrower fails to repay the loan or its interest, the lender has the authority to sell and liquidate the asset to recover the owed amount.
SMEs (Small and Medium Enterprises) refer to enterpriseswith total capital of less than 100 billion VND and have less than 300 employees (startupland.vn, 2021)
Unsecured loans refer to loans where there is no requirement of any collateral
Loans are primarily based on the borrower's creditworthiness and the mutual trust established between the lender and the borrower These loans offer flexibility, allowing borrowers to use the funds for any purpose without restrictions Additionally, borrowers are not required to disclose how they will utilize the loan money to the lender.
Chapter one highlights the significance of CASA (Current Account Savings Account) in the banking sector, emphasizing the growing trend of non-cash payments and digital transformation As a result, competition among commercial banks for CASA is expected to intensify due to its unique advantages Additionally, this chapter outlines the study's objectives, scope, and limitations.
LITERATURE REVIEW
Literature review
In recent years, the capital structure of banks has evolved to include current account saving accounts (CASA), also known as demand deposits, as a significant source of mobilization alongside traditional savings deposits and loans With their extremely low mobilization costs, CASA has emerged as a vital component in the capital structure of commercial banks Recognizing its importance, numerous articles and research studies have been published, focusing on CASA and exploring strategies to enhance the efficiency of CASA mobilization for commercial banks.
To effectively mobilize deposits, banks must offer a diverse range of deposit schemes tailored to meet the varied needs of customers, as highlighted by Richard, Florence, and Zenon (2015) Factors such as gender, age, profession, income level, and business size contribute to the differing preferences of customers when choosing where to deposit their money Consequently, banks need to adopt more attractive and strategic approaches to successfully attract and retain these deposits (Hemachandra, 2009).
Deposit mobilization, as defined by Richard et al (2015), is a crucial function of financial institutions that involves channeling funds from surplus economic agents to those in deficit, ultimately contributing to economic growth In the banking sector, this process encourages customers to increase their deposits, which banks then utilize to issue more loans, thereby generating additional revenue The profitability of banks is closely tied to the volume of loans they provide; hence, effective deposit mobilization is essential The success of this process is influenced by the overall development of the financial system and the strategic practices implemented by banks (Richard, 2015).
Tuyishine, Florence and Zenon in 2015, indicated that deposit interest rates affect the level of deposits and later on the profitability of the bank In contrast, the study on
A study by Girgan Garo (2015) on the determinants of deposit mobilization and associated costs of commercial banks in Ethiopia found a negative correlation between deposit interest rates and deposit volume This finding is supported by similar research conducted by Siyambola (2012) and Wubitu (2012), which also demonstrated an inverse relationship between deposit interest rates and deposit growth through regression analysis.
The master's thesis "Enhancing the Efficiency of Demand Deposit Mobilization at Eximbank" by Pham Kim Thoa (2014) provides a comprehensive theoretical overview of demand deposits, identifies the challenges faced in their mobilization at Eximbank, and proposes effective solutions to address these issues The author highlights the critical role of demand deposits for commercial banks and discusses strategies to optimize their mobilization, underscoring their significance in the banking sector.
In his 2013 research, Tran Van Bien highlighted the significance of demand deposits as a key strategy for commercial banks, particularly Dong A Bank, in enhancing capital acquisition due to their low cost and straightforward processes However, he also identified existing challenges in the mobilization and utilization of these deposits at Dong A Bank To address these issues and boost the bank's operational efficiency, the author proposed several recommendations and solutions.
In the thesis "Status of Deposit Mobilization at Bank for Agriculture and Rural Development of Vietnam – Soc Trang Branch" by Nguyen Hoang Thuy (2017), the author emphasizes the urgent need to enhance the quality of demand deposit services amid rising competition among commercial banks The study outlines specific policies and strategies that banks can implement to attract demand deposits, including the removal of certain payment service fees and the increase of interest rates on demand deposits.
CASA is crucial for commercial banks and is a significant area of interest for researchers While each researcher approaches the topic differently, they typically provide a foundation of theoretical insights.
Current studies primarily focus on general deposits, often overlooking the distinct characteristics of CASA (Current Account Savings Account) in relation to term deposits As the economy evolves rapidly, challenges associated with CASA frequently emerge, highlighting the need for ongoing research in this area This thesis aims to examine both existing and potential future issues related to CASA and to propose effective solutions to address these shortcomings.
Theoretical and Conceptual Framework
This research evaluates the efficiency of CASA mobilization at ACB by analyzing its volume and growth rate in comparison to other banks It will also compare CASA with alternative mobilization sources in terms of their ratio to total capital and mobilization costs Based on these comparisons, the advantages and disadvantages of CASA will be identified Finally, the study will analyze the factors that influence the efficiency of CASA mobilization.
Before exploring the concept of CASA accounts, it's essential to grasp the meaning of deposits, which are integral to this topic While the Law on Credit Institutions 2017 does not define a deposit, the earlier 2004 legislation provided a clear definition, establishing a foundation for understanding financial transactions in banking.
A deposit refers to the money placed by individuals or organizations in a credit institution, which can take the form of demand deposits, savings deposits, or other types These deposits may either earn interest or be non-interest-bearing, with the obligation for the institution to return the funds to the depositors Furthermore, in accordance with Government Decree No 70/2000/ND-CP, there are regulations in place to ensure the confidentiality of information related to customers' deposits and assets held at credit institutions.
“Customers' deposits include those in VND and foreign currencies of organizations and individuals in the form of demand deposits, term deposits and other forms.”
Deposits in banking refer to money placed in commercial banks and non-banking credit institutions, aimed at earning interest or making payments Depositors have the flexibility to select different types of deposits based on their financial goals, allowing them to benefit from interest earnings and various banking services In return, depositors agree to permit the bank to utilize their funds for business purposes, with a commitment to repay the deposits either at the maturity date for term deposits or upon request for demand deposits.
CASA, or Current Account Savings Account, refers to the funds held in a payment account at a bank, intended for immediate use in payment services Unlike savings accounts, CASA deposits are not interest-bearing or offer minimal interest, allowing customers to withdraw or utilize their funds at any time for business or personal expenses Managed through commercial banks, CASA accounts enable the use of various payment instruments such as checks and payment orders While customers can also deposit funds for asset preservation without specific time constraints, CASA is recognized as a highly volatile capital source, making it challenging for banks to predict its mobilization Consequently, banks can only allocate a limited portion of CASA for business activities due to its inherent instability.
Depending on the purpose of use, CASA is divided into payment deposits and demand savings deposits
Payment deposit is a deposit of organizations and individuals deposited in commercial banks for the purpose of payment for goods and services or other expenses incurred while
A CASA account primarily facilitates payment services for customers of commercial banks, accommodating large volumes of deposit transactions When these funds are not in active use, banks can strategically leverage them for business purposes, enhancing their operational efficiency.
A demand savings deposit is an individual account held at commercial banks, designed primarily for storing funds rather than for making payments This type of deposit allows customers to earn a modest interest while providing the flexibility to withdraw money without prior notice.
A demand savings deposit differs from a payment deposit as it cannot be used for check issuance or non-cash payment instruments The only exceptions are when the deposit is utilized to repay a loan at the same bank or to transfer funds to another account owned by the customer within that bank Such transactions are documented in the passbook and verified by the account owner.
CASA accounts are highly liquid deposits, allowing customers to withdraw funds or make payments at any moment without advance notice However, these accounts typically offer little to no interest, making them the most volatile option for depositors.
CASA subjects include individuals and organizations seeking to deposit money for payments Commercial banks serve as deposit-receiving entities, engaging in business activities aimed at generating profits from these deposits.
Depositors have varying reasons for making bank deposits, primarily utilizing commercial banks for payment services or to securely store their idle funds, even if the interest rates are low.
CASA can be held in Vietnam Dong or foreign currencies like USD and EUR, with Vietnam Dong being the most crucial for banks This reliance on domestic income highlights the significant role of CASA, which constitutes a substantial portion of total demand deposits, exceeding 50%.
12 than 90% CASA in foreign currencies are also important for banking activities such as foreign currency trading and international payment activities
This thesis utilizes the IPO model for clarity and ease of understanding Data is gathered from secondary sources, including ACB’s financial and annual reports from 2020 and 2021, along with information from reputable financial and banking websites The collected figures will be transformed into charts and tables for comparative analysis with other banks over three years Following the identification of new findings that highlight both achievements and shortcomings, practical solutions will be proposed to address existing limitations.
This chapter reviews previous research related to the thesis, highlighting effective research models that offer valuable guidance for its development It also establishes the theoretical foundations of CASA, covering its concepts, types, and characteristics The thesis employs an IPO process framework to analyze secondary data, assessing the current state of CASA mobilization at ACB and suggesting recommendations to address existing challenges.
• Financial and banking information websites
• Comparing figures in the period of 2019-2021
• Proposing solutions to enhance the efficiency of CASA mobilization at ACB
RESEARCH METHODOLOGY
Locale of the Study
The research subject is Asia Commercial Joint Stock Bank (ACB) of which head office is at 442 Nguyen Thi Minh Khai Street, District 3, Ho Chi Minh City, Vietnam.
Research Design
This study primarily employs a data collection method utilizing secondary data from financial statements of ACB for the years 2019-2021, alongside information from other banks and online sources The collected data will be formatted as figures and subsequently aggregated, sorted, and represented in tables and charts for thorough analysis and comparison The main sources of data include ACB's financial reports and publicly available online resources.
Data Gathering Procedure
Step 1: Determining the objectives of the study
In the first phase, the objectives of the study will be determined After that, the sets of data needed for the research objectives will be identified
The data for the study are mostly gathered from ACB’s financial and annual reports from
Between 2019 and 2021, we analyzed and clarified the differences in data trends over these years Additionally, we gathered figures from various commercial banks and online sources to facilitate comparisons with ACB.
The gathered data will undergo a filtering process to eliminate any irrelevant information Subsequently, the refined data can be utilized as original figures or transformed into percentages, allowing for the creation of tables and charts for effective analysis and comparison.
Sources of Secondary Data
The secondary data utilized in this study is sourced from reliable platforms, including ACB's official website and reputable financial and banking information sites Focusing on the period from 2019 to 2021, this data provides the most current insights into the relevant issues To enhance readability and accessibility, tools like Microsoft Word and Excel are employed for data processing, ensuring that the information is easily identifiable for readers.
Categories of Secondary Data for the study
The study utilizes quantifiable data in the form of numbers and percentages, which can be found in financial reports or on company websites The data is categorized into four main sets for analysis.
Business results of ACB including deposits, profit and outstanding loans
CASA mobilization and CASA growth rate of ACB and other commercial banks
Mobilization cost of CASA and other channels
CASA interest rate and payment account fees of ACB
Validity and Reliability
The thesis presents comprehensive data on CASA and deposit mobilization, including CASA ratios, business outcomes, pre-tax profits, and various fee types All figures are sourced directly from ACB's financial statements for 2020 and 2021, published on their official website, ensuring originality and accuracy This data is processed and analyzed through tables and charts Additionally, information is supplemented from reputable financial and banking websites such as CafeF, Vietstock, and Business Insider To facilitate comparative analysis, CASA figures from the financial statements of other banks, including MB, TCB, VIB, and VPB, are also included.
The mentioned websites are highly valued by readers for delivering clear and unbiased information, free from subjective opinions that may exaggerate or downplay the significance of individuals and organizations Additionally, the financial and annual reports of ACB and others contribute to this transparency.
Fifteen banks involved in data collection underwent audits by the four largest global auditing firms: KPMG, EY, Deloitte, and PwC As a result, the secondary data gathered is deemed highly accurate and reliable.
Self Reflection on Secondary Data Collection Analysis
Valuable data from reputable sources is essential for evaluating the business activities of commercial banks and macroeconomic purposes, ensuring research reliability and objectivity This data can be utilized to create informative tables and charts for comparison and analysis While some data can be aggregated and processed in Excel for deeper insights, certain secondary data, particularly regarding customer evaluations of ACB payment accounts, remains unavailable online, leaving gaps in analysis and customer satisfaction assessments Consequently, there may be undiscovered limitations in the research findings.
Chapter three outlines the research methodology utilized in this thesis, emphasizing the data collection methods employed Additionally, the evaluations and comparisons presented are primarily grounded in secondary data sourced from highly credible references.
FINDINGS AND DISCUSSIONS
Business operations at ACB in the period 2019 – 2021
Founded in 1993, ACB has grown significantly over nearly three decades, with total assets reaching approximately 528 trillion VND and a charter capital exceeding 27 trillion VND The bank's headquarters is situated at 442 Nguyen Thi Minh Khai Street, District 3.
In 2021, ACB employed 12,112 staff across 371 branches and transaction offices in 49 provinces and cities nationwide, with key markets in Ho Chi Minh City, Southeast regions, Hanoi, and the Mekong Delta The bank maintained a credit and deposit market share of 3.5%, as reported on ACB’s website.
4.1.1 Total deposits of the customers
Source: ACB’s Annual Report in 2021
Figure 4.1: Total deposits of the customers at ACB from 2019 to 2021
ACB's deposits have consistently been substantial over the past three years, with a notable increase to 353.2 trillion VND in 2020, reflecting a 15% growth from 2019 However, in 2021, both nationwide customer deposits and those at ACB experienced a slower growth rate, culminating in ACB's customer deposits reaching around 380 trillion VND.
At the end of 2021, ACB reported an 8% increase in total capital compared to 2020, achieving 99% of its planned goals The bank experienced an average annual growth rate of 13% from 2017 to 2021, establishing a strong presence in retail banking by focusing on individual customers and small to medium enterprises Notably, capital mobilization from individual customers accounted for 80% of total deposits In response to declining deposit interest rates, ACB introduced tailored lending products with competitive rates for various customer segments and enhanced its online deposit offerings, resulting in an impressive 27% growth in demand deposits.
Source: ACB’s Annual Report in 2021
Figure 4.2: Total outstanding loans of ACB from 2019 to 2021
In 2020 and 2021, ACB's total outstanding loans increased from 311.48 trillion VND to 361.91 trillion VND, reflecting a growth rate of 16%, surpassing the average increase of 13.61% among commercial banks while adhering to the State Bank's credit ceiling The bank has strategically focused on personal customers and small to medium enterprises, primarily accepting real estate as collateral, along with movable assets like cars and valuable papers for certain loans.
From the figure 4.1 and 4.2 it can be calculated that the ratio of loans to total deposits in
2019 and 2020 was 87% and 88% respectively Exceptionally, in 2021, ACB restructured the repayment term according to Circular No 01/03/14 for nearly 4,000 customers affected by the Covid-19 epidemic, which increased this rate up to 95%
Source: Financial reports of commercial banks in 2021
Figure 4.3: Outstanding loans and bad debt rate of nine commercial banks in 2021
In 2021, three banks significantly outpaced others in outstanding loans, with BIDV leading the pack at 1,355 trillion VND, followed closely by Vietinbank.
Outstanding loans Bad debt rate
As of 2021, the outstanding loans in Vietnam's banking sector revealed significant competition among commercial banks, with the top three banks, including Vietcombank at 961 trillion VND and others in the BIG4 group, leading with substantially higher amounts ACB ranked seventh with approximately 362 trillion VND in loans, while other banks had outstanding loans ranging from 347 trillion VND to 388 trillion VND Notably, ACB demonstrated strong credit risk management, with over 97% of its loans classified as eligible debts, indicating effective customer selection and diligent monitoring of fund usage.
Despite robust growth in credit activities amid the challenges posed by the Covid-19 pandemic, ACB maintained high credit quality, achieving a low bad debt rate of just 0.77%, one of the best among banks Renowned for its prudent risk management, ACB prioritizes secured loans, which constitute the majority of its portfolio, while unsecured loans represent only a small fraction Additionally, the collateral valuations for secured loans are relatively conservative compared to other banks, further minimizing risk.
The loan amount is reduced due to the asset's valuation, which lowers the risk for ACB, particularly when dealing with low liquidity collaterals However, undervaluing these collaterals may drive customers to seek alternative banks that offer higher valuations, allowing them to secure larger loans.
Ratio to total outstanding loans 62% 38%
Source: ACB’s annual report in 2021
Table 4.1: Personal and corporate loans of ACB in 2021
Personal loans have emerged as the primary catalyst for overall credit growth, totaling 223 trillion VND and representing 62% of total outstanding loans Within this customer segment, secured loans have been prioritized, constituting approximately 98% of the total outstanding loans, as highlighted in ACB’s annual report.
In 2021, unsecured loans represented a mere 2% of total outstanding loans, highlighting the dominance of secured lending ACB offers a diverse range of personal loan packages tailored to various customer needs, including business loans, home loans, and consumer loans Business loans cater to production needs, working capital, and fixed asset investments, while home loans cover purchases of land, houses, and apartments, as well as construction and repair financing Additionally, consumer loans are available for purchasing household equipment and addressing personal spending requirements.
In 2021, corporate loans, primarily from small and medium enterprises (SMEs), totaled 139 trillion VND, representing 38% of outstanding loans ACB strategically focuses on SMEs, selecting corporate clients carefully based on criteria such as transparent business plans, strong performance, reputable management, and a willingness to collaborate While corporate loans typically yield higher profits than personal loans, ACB enhances and diversifies its credit products to meet the specific borrowing needs of businesses These tailored financial solutions have played a crucial role in helping companies recover and grow post-pandemic, with offerings designed to cater to the unique requirements of various localities and SMEs.
In 2021, ACB launched the Business Application to empower business owners by enhancing cash flow management, reducing operational time, and boosting efficiency This innovative tool enables transactions anytime and anywhere, ultimately helping businesses save costs With these strategies, ACB aims to provide stable capital sources for investment and production, thereby increasing market competitiveness.
Profit from trading investment securities
Profit from other business activities 1,500 280 139
Net profit from business activities 7,790 10,537 15,334
Provision expenses for credit risks (274) (941) (3,336)
Source: ACB’s Financial Report in 2021
Table 4.2: Business results of ACB from 2019 to 2021
In 2020, ACB's pre-tax profit reached 9,596 billion VND, increasing 28% compared to
2019 In 2021, after deducting operating expenses, ACB's net profit from business
In 2021, ACB reported that its activities generated a revenue of 15,334 billion VND Despite this success, the bank allocated over 3,336 billion VND for credit risk provisions, which was 3.5 times higher than the previous year As a result, the pre-tax profit reached 11,998 billion VND, marking a 25% increase compared to 2020 and surpassing the planned target by 13%, as detailed in ACB's annual report.
In 2021, ACB's net interest income surged to 18,945 billion VND, marking a nearly 30% increase from the previous year, primarily driven by enhanced profit margins and significant growth in demand deposits Additionally, non-interest profits rose sharply by 29% to 4,619 billion VND, constituting 20% of total profit and mitigating reliance on credit activities Notably, service profits soared by 71% to nearly 2,894 billion VND, while foreign exchange and trading securities profits reached 872 billion VND and 450 billion VND, respectively Operating costs were effectively managed, with a modest 8% rise from 7,624 billion VND in 2020 to 8,230 billion VND in 2021, leading to an improved cost-to-income ratio that dropped from 42% to 35% However, profits from trading investment securities plummeted by 67% to 244 billion VND, and profits from other activities fell by 50% to 139 billion VND.
Assessing the CASA mobilization at ACB
4.2.1 CASA mobilization and CASA growth rate
In 2020 and 2021, ACB implemented a series of incentive offers for payment accounts to attract users and enhance CASA volume Despite facing intense competition in the banking sector, ACB adopted effective strategies that led to significant achievements.
Table 4.3 illustrates the CASA mobilized amounts for the years 2019, 2020, and 2021, derived from ACB's Financial Reports for 2020 and 2021 The growth rate of CASA is determined using a specific formula.
Source: Financial Report of ACB in 2020 and 2021
Table 4.3: CASA mobilized at ACB in 2019, 2020 and 2021
Between 2019 and 2021, CASA experienced significant growth, increasing from approximately 57.65 trillion VND in 2019.
2020 and 2021, the scales exceeded 75.89 trillion VND and 96.16 trillion VND respectively Specifically, in 2020, CASA reached an increase of about 18.24 trillion
CASA scales (year N) – CASA scales (year N-1)
VND (31.64%); while in 2021, the amount of CASA increased by roughly 20.27 trillion VND (26.71%)
From the results, it is obviously concluded that ACB's CASA growth rate was quite high
In 2021, ACB implemented effective strategies to boost customer engagement, including campaigns promoting payment accounts with incentives like free transfers and withdrawals at all ATMs The average monthly balance requirements were set at 2 million VND for eBIZ Accounts and 15 million VND for Business Accounts Amid the Covid pandemic, which limited direct banking transactions, ACB introduced an online payment account featuring eKYC integration, allowing customers to open accounts remotely without visiting a bank branch This innovation enabled users to conduct urgent transactions such as money transfers and bill payments conveniently By the end of 2021, over 300,000 new accounts were opened through eKYC, significantly contributing to a 26.71% increase in CASA balances.
ACB has demonstrated remarkable flexibility and responsiveness to the market's evolving needs, swiftly addressing the urgent demand for convenient at-home transactions Their focus on offering free products and services has resonated well with customers, leading to an impressive CASA mobilization volume of 96,163,873 million VND, setting them apart from typical commercial banks However, competitors have also taken similar initiatives to enhance their offerings.
Between 2019 and 2021, the growth rate of CASA and the amount mobilized by private commercial banks such as MB, TCB, VPB, TPB, and VIB will be analyzed through Figures 4.4 and 4.5 This analysis will provide a basis for comparing and assessing ACB's CASA mobilization performance against that of other banks.
Source: Self-synthesis based on Financial Report of MB, TCB, ACB, VPB, TPB, VIB in 2020 and 2021
Figure 4.4: CASA growth rate of ACB, MB, TCB, VPB, TPB, VIB in 2020 and 2021
In 2020, ACB achieved the second highest CASA growth rate at 31.64%, surpassing major banks in the BIG4, including Vietcombank, Vietinbank, and BIDV, and only trailing Techcombank's impressive 49.68% Following ACB, VIB and VPB recorded growth rates of 30.29% and 27.75%, respectively In contrast, MB experienced a low growth rate of 15.84%, attributed to a decline in demand deposits, as noted in its annual report TPB recorded the lowest growth rate at 11.11%, with similar reasons impacting its performance.
ACB TCB VIB MB TPB VPB
In 2021, banks that previously experienced low CASA growth rates in 2020 saw significant improvements, with notable increases from VPB (58.9%), TPB (57.16%), and VIB (55.36%) MB followed closely with a growth rate of 49.2%, while TCB reported a 23.62% increase, marking a decline compared to the previous year ACB demonstrated the most stable growth among these banks, achieving an impressive rate of 26.71% despite a slight decrease.
The growth rate is a key metric for assessing CASA mobilization, yet it does not provide a complete picture A thorough analysis of the total CASA mobilized over the years is essential for an accurate understanding For instance, in 2021, VIB, TPB, and VPB achieved growth rates exceeding 50%, significantly outpacing TCB, highlighting the importance of considering both growth rates and actual mobilized amounts.
CASA mobilized was very modest compared to TCB Therefore, analyzing the situation through more than one type of data will help to have a more accurate perspective
Source: Financial Report of MB, TCB, ACB, VPB, TPB, VIB in 2020 and 2021
Figure 4.5: CASA mobilized at ACB, MB, TCB, VPB, TPB, VIB in 2019, 2020 and 2021
MB TCB ACB VPB TPB VIB
In the years 2019 and 2021, MB led the banks in CASA mobilization, achieving 106.1 trillion VND and 183.3 trillion VND, respectively In 2020, however, MB's CASA volume of 122.9 trillion VND was slightly lower than TCB's 128.9 trillion VND TCB also demonstrated significant growth, with CASA amounts of 86.1 trillion VND in 2019 and 159.4 trillion VND in 2021 ACB ranked third, increasing its CASA from 57.7 trillion VND in 2019 to 96.2 trillion VND in 2021, nearly double the figures reported by VPB Meanwhile, TPB and VIB recorded the lowest CASA amounts among the banks analyzed.
During the pandemic, ACB and other commercial banks responded to customer challenges by lowering lending interest rates by 1-2%, necessitating a focus on low-cost capital mobilization, with CASA as the top priority The CASA ratio exemplifies modern banking trends, highlighting the efficiency of comprehensive banking and financial services, particularly in Digital Banking A higher CASA ratio provides banks with a competitive edge in lending interest rates and enhances opportunities for profit margin expansion, leading to an increasingly intense competition for CASA.
During the pandemic, social distancing measures led to a surge in the use of social networks like Facebook, YouTube, and TikTok, resulting in a heightened demand for advertising on these platforms This shift also boosted online selling through social media, significantly increasing the CASA (current account savings account) deposits at banks ACB successfully attracted numerous online sellers and advertising service providers by introducing the ACB DIGI payment card in 2021, which offers features such as issuing up to 10 cards per customer, a 98% approval rate for advertisements, and minimal payment errors The advertising market in 2021 emerged as a promising source of CASA for banks, although challenges like payment limitations on platforms such as Facebook, TikTok, and Instagram still persist.
Transaction errors like "payment fail" often occur due to a lack of credibility associated with the card Using a card from a reputable bank can facilitate smoother advertising campaigns and prevent delays The introduction of the ACB DIGI card, which boasts numerous outstanding features, has positioned ACB favorably in attracting advertisers Currently, the ACB DIGI card stands out as a leader among cards tailored for online platform advertisers, significantly boosting the bank's CASA.
ACB's e-banking system has faced significant challenges, particularly with its eKYC technology, which struggles with accurately identifying and authenticating customers' identity cards and faces During ACB's online account opening campaign in mid-2021, many customers reported issues completing the authentication process despite following instructions Additionally, the ACB One e-mobile banking application received numerous complaints about the inability to transfer or receive money, leading to financial losses for users This inconvenience prompted many customers to switch to other banks The failure to transfer funds directly resulted in borrowers missing repayment deadlines, risking their debts being classified as bad debts, which would be recorded in the CIC system, restricting future credit access Consequently, some customers resorted to borrowing from other sources at exorbitant interest rates to settle their bank obligations, exacerbating their financial strain if the re-disbursement from the bank was delayed.
ACB's digital banking application presents challenges as customers must visit branches for account and card registration, which is inconvenient for those with busy schedules or distant locations Currently, ACB employees deliver documents to customers for necessary signatures, highlighting the bank's focus on security over convenience This requirement can drive customers to seek services from competitors like VIB, BIDV, and MB, which offer online registration and card delivery without requiring in-person visits As a result, both debit and credit cards can now be obtained online, increasing the appeal of these alternative banking options.
4.2.2 CASA mobilization in terms of type of depositors
Based on the type of depositors, the CASA structure of ACB is divided into two parts: from credit institutions and from retail customers
Source: Financial Report of ACB in 2020 and 2021
Table 4.4: CASA mobilized based on type of depositors
Comparing CASA to other sources of capital mobilization
4.3.1 The ratio of CASA to total deposits
Source: ACB’s Annual Report in 2021
Figure 4.7: Ratio of CASA to total deposits
In general, the ratio of CASA to total deposits was quite high and had grown steadily over the past three years, at 19%, 22% and 25% respectively Shifting the mobilization
In recent years, a notable trend among commercial banks has been the shift towards low-cost capital sources, with ACB emerging as a leader in maintaining a high CASA ratio relative to total deposits In 2021, ACB achieved a CASA ratio of 25%, placing it among the top five banks in this regard Techcombank led the ranking with an impressive 50.5%, followed by MB at 48.7%, while MSB and Vietcombank both held a CASA ratio of 35.7%, according to CafeF.
In 2021, the CASA to total deposits ratio among commercial banks showed significant disparities, with VietBank and BacABank reporting ratios below 5% (CafeF, 2021) This ratio serves as a key indicator of a bank's ability and pace in digital banking transformation Many commercial banks continue to rely predominantly on traditional capital mobilization methods, indicating a lack of substantial transformation in their operations.
The chart indicates that while the percentage of term deposits relative to total deposits has decreased over the years, term deposits still represent a significant portion of the total This trend can be attributed to the traditional appeal of term deposits among depositors, who value the higher interest rates compared to CASA accounts In Vietnam, individuals often prefer to invest idle funds in gold or bank deposits, with term deposits serving as a safe and profitable investment option Consequently, commercial banks like ACB continue to see a substantial share of term deposits However, it is encouraging to note a gradual increase in the proportion of CASA deposits within the total.
ACB recognizes the critical role of CASA deposits in its capital structure and has implemented policies to enhance service quality and customer experience A high CASA-to-total deposits ratio reflects ACB's reputation and competitiveness in the banking sector, making it a preferred choice for customers This strong position also provides ACB with a significant advantage in the competitive landscape of lending interest rates.
4.3.2 The ratio of CASA to total mobilization
Source: ACB’s Annual Report in 2020 and 2021
Figure 4.8: The ratio of CASA to total mobilization in 2019, 2020 and 2021
ACB's capital structure is primarily composed of term deposits, which represent the largest share, followed by demand deposits, loans from other credit institutions, and funds raised through the issuance of valuable papers Notably, borrowing from other credit institutions contributed approximately 6% of the capital, while the issuance of valuable papers accounted for less than 3% over the past three years Additionally, there is a significant trend of capital mobilization shifting from term deposits to demand deposits; the percentage of term deposits fell from 76.72% in 2019 to under 70% in 2021, indicating a growing reliance on demand deposits.
CASA Loans from Credit Institutions Valuable papers issue Term deposits
35 deposits to total mobilization increased from 16.56% in 2019 to 20.69 % at the end of
In 2021, ACB emerged as a leading commercial bank in CASA (Current Account Savings Account) mobilization, with a notable ratio of 34.1%, closely following MBBank (35.86%) and Techcombank (34.58%) This performance highlights ACB's success in attracting low-cost capital amidst a competitive landscape In contrast, banks like BacABank, NamABank, VietBank, and Kienlongbank showed minimal interest in this CASA race, each reporting demand deposits below 5% Despite this, the overall CASA ratio in the banking system reached approximately 14%, reflecting a significant increase from previous years.
In 2021, ACB significantly boosted its total deposits by over 16%, driven by various customer-friendly initiatives, including debit cards offering up to 2% cashback on supermarket purchases and a notable 27% increase in CASA accounts Amid the Covid-19 pandemic, ACB adapted by transitioning from traditional transactions to online banking, promoting digital services to enhance customer convenience and experience.
4.3.3 CASA’s cost of fund compared to other channels
CASA Term deposit Loans from other credit institutions
Table 4.5: Cost of mobilization sources
CASA (Current Account Savings Account) offers significantly lower capital costs compared to other capital-raising methods, with expenses as low as 0.2% per year In contrast, the issuance of valuable papers such as bonds and certificates of deposit incurs the highest costs, reaching up to 6.8% annually For ACB and other commercial banks, savings deposits serve as the primary source of mobilization, but these come with considerable costs, currently ranging from 3.5% to 5.8% per year at ACB.
Despite the low mobilization cost of CASA (Current Account Savings Account), ACB and other commercial banks face challenges in relying solely on this capital source Attracting demand deposits is a lengthy process influenced by factors such as fees, service quality, and bank reputation, which often leads to low CASA levels in smaller banks Additionally, CASA deposits are primarily used for transactions rather than being a stable investment, making it risky for banks to utilize a significant portion of CASA for lending, especially in the case of medium and long-term loans, as customers can withdraw their funds unexpectedly.
The State Bank of Vietnam has implemented regulations to mitigate financial risks, capping the loan-to-total deposits ratio at 80% Additionally, Circular 08/2020, which amends Circular 22/2019, postpones the application of the maximum short-term capital used for medium and long-term loans This rate is set at 40% until September 30, 2021, decreasing to 37% from October 1, 2021, to September 30, 2022, then to 34% from October 1, 2022, to September 30, 2023, and finally dropping to 30% starting October 1, 2023 Consequently, ACB is required to diversify its funding sources to manage risks effectively, even with increased capital costs.
Factors affecting CASA mobilization
Table 4.6: CASA interest rate of ACB in 2022
At ACB, the interest rate for demand deposits varies between 0.0% and 0.2% per year, with monthly interest payments to customers The accounts that benefit from this interest include the Priority Account, Business Account, and Online Investment Account.
USD deposit accounts and other payment accounts earn an interest rate of 0.00% per year, which also applies if the average balance is below 5 million VND Business Accounts and Priority Accounts offer a slightly higher interest rate of 0.05% per year, while Online Investment Accounts, which function as a savings option, provide the highest interest rate of 0.2%.
Customers with high idle balances in other payment accounts can transfer funds to an Online Investment Account for better interest rates However, it's important to note that transfers to other beneficiary accounts are restricted, allowing only transfers to the owner's ACB payment account Outside of the Online Investment Account, the demand deposit interest rates for ACB current accounts are relatively low, with most commercial banks offering rates between 0.1% and 0.2% per year Vietinbank currently offers the highest rate at 0.2%, while a more common rate of 0.1% is provided by banks such as Agribank, BIDV, Vietcombank, and MBBank.
ACB has strategically leveraged its CASA advantage, benefiting from low mobilization costs, but this has come at the expense of service fee revenue The bank's no-fee policies have limited growth in payment earnings, while cashback incentives have led to rising payment costs Although ACB has not eliminated all service charges, it has removed essential fees to address customer concerns The bank offers a cashback rate of up to 2% with certain refund limits and provides tailored incentives for high CASA customers, such as priority service at branches, access to Dragon Pass lounges, and exclusive benefits at luxury resorts This approach is designed to attract customers and enhance their loyalty to ACB over the long term.
Free Free (if average balance >
500,000 VND); if not: 15,000 VND/ month
Notification of balance changes fee
VND/ month (Free for the first year)
No requirement No requirement No requirement No requirement
Table 4.7: Some basic fees of ACB payment accounts
ACB has significantly waived many basic fees to enhance customer satisfaction, notably eliminating the money transfer fees for internet and mobile banking across most account types without any conditions This fee waiver is crucial, as customers often consider transfer fees when selecting a bank, with some institutions charging up to 8,800 VND per interbank transaction Consequently, banks that offer fee waivers are increasingly favored by customers, prompting even major players like Agribank and Vietcombank to adapt their policies, with Agribank recently eliminating transfer fees starting from mid-year.
In late 2020, ACB began eliminating fees for certain transactions, particularly for customers with ACB Privilege Visa Signature or Platinum cards By the end of 2021, ACB expanded its incentives by offering free internal and interbank transfers and removing ATM withdrawal fees Additionally, ACB distinguished itself by abolishing the minimum account balance requirement, previously set at 50,000 VND, enhancing customer convenience and accessibility to their funds.
ACB's decision to eliminate certain service fees has been well-received as a strategic move to attract customers, aligning with the growing trend of increased e-banking usage However, this initiative came relatively late compared to other banks, as pioneers like Techcombank, which waived fees in late 2017, set the standard, followed by VIB and TPBank By forgoing minimal revenue from transaction fees, Techcombank effectively mobilized substantial low-cost capital (CASA), a strategy that has since been adopted by other banks.
Despite the abolition or reduction of basic service fees by ACB, such as account management and withdrawal fees, many additional charges remain, which customers find relatively high compared to competitors Notably, fees for SMS balance notifications, annual debit card fees, and advertising fees are of particular concern, with the advertising fee for the ACB DIGI card reaching 1% per transaction While the ACB DIGI card offers advantages like issuing up to 10 cards simultaneously and a daily payment limit of 100 million VND, the high transaction fees can be a significant drawback, especially when compared to competitors like Techcombank, VPBank, and VIB Furthermore, ACB's payment speed is considered average, with Techcombank recognized for having the fastest payment processing Delays in payment notifications can lead to customer discomfort and potential issues during transactions, highlighting the need for ACB to enhance its service offerings.
In addition to service fees, account utilities and incentives play a crucial role in influencing customer decisions, particularly regarding preferred account numbers Customers often gravitate towards numbers like 6666, 6688, and 8888, or those that mark significant milestones such as birthdays or wedding dates ACB has long permitted the selection of desirable account numbers, initially limited to Business Accounts, Priority Accounts, and Payroll Accounts tailored for higher-income segments These accounts typically require a substantial average balance and meet specific conditions Notably, ACB accounts generally feature seven-digit numbers, adding to their appeal.
ACB offers easily memorable account numbers, which can limit the selection of desirable options Consequently, this preference is restricted to customers with Business Accounts, Priority Accounts, and Corporate Payroll Accounts, potentially increasing CASA deposits This limitation has enabled competitors like MBBank to attract a significant number of new customers, as MBBank provides longer account numbers that offer more flexibility.
ACB currently offers only 7 free desired number accounts, compared to 13 from competitors, limiting customer choice and increasing the risk of number duplication To attract new customers, ACB must investigate and address this disadvantage promptly.
The rise of non-cash shopping has significantly increased bank card transactions, even in rural areas, as customers benefit from direct refunds and cashback points, leading to more affordable shopping experiences This trend has garnered considerable interest in cashback policies offered by banks and e-wallets, where the refund percentage varies based on product type, brand, business location, spending level, and payment method Popular electronic payment gateways and e-wallets like Momo, Zalopay, Vnpay, and Shopeepay provide cashback incentives linked to bank cards For instance, ACB offers its eBiz and Business Account holders a 2% cashback on supermarket and convenience store purchases, and 1% on other spending, capped at 300,000 VND monthly Additionally, Priority Account holders can earn up to 2 million VND cashback on golf course transactions and enjoy exclusive benefits like Premium Airport Lounge access While ACB's cashback offers provide valuable rewards, they are primarily limited to supermarket and convenience store purchases.
Techcombank stands out as the market leader in preferential fee and refund policies, offering customers unlimited 1% cashback on personal spending across various shopping categories To qualify, customers must spend over 5 million VND per month, encouraging them to use payment cards instead of cash to earn rewards This shift not only boosts customer spending but also increases the CASA (Current Account Savings Account) balance, contributing to Techcombank's position as the bank with the highest CASA ratio among commercial banks.
ACB has yet to introduce various preferential policies for refunds and discounts in travel, dining, car bookings, healthcare, and education services, unlike Techcombank With many integrated functions in its digital banking system, customers can meet their needs for online shopping, course purchases, food ordering, and booking cars and hotels through e-mobile banking Consequently, CASA balances are likely to remain in customers' accounts to facilitate diverse payment needs ACB must address these limitations in the near future to diversify its service offerings and attract more CASA from users.
Customers often select banks for payment services, savings, or loans based on appealing advertisements in mass media Many perceive state-owned banks as more trustworthy than private ones, while others value a bank's extensive branch network for convenient transactions Consequently, a bank's image significantly influences deposit mobilization, including CASA accounts, as customers prefer to deposit their money in commercial banks that project a positive reputation.
44 transaction offices are mainly located in urban areas; suburban and rural areas have not been concentrated by ACB
CONCLUSION AND RECOMMENDATION
Summary of findings
The study revealed that CASA mobilization efficiency has significantly improved over the years, positioning ACB as a leading competitor among banks However, challenges remain, including issues with the eKYC system and the ACB ONE digital banking application, which often face authentication problems and errors Additionally, ACB's digital banking offerings lack integration of essential online features to meet customer needs The bank also does not provide certain incentives, such as free account opening and preferred account number selection, while some fees, particularly for advertisements, remain high Furthermore, customer complaints regarding staff service indicate areas for improvement.
Conclusion
ACB has solidified its status as a leading bank, demonstrating effective CASA mobilization in both scale and growth rate CASA accounts offer a competitive edge over other capital sources due to lower interest rates, though they face challenges like instability To enhance mobilization efficiency, ACB must implement strategies such as reducing fees, providing incentives, integrating digital banking utilities, and improving service quality Despite these achievements, ACB still grapples with limitations, including a faulty system, low digital banking adoption, and high fees, which must be addressed to optimize CASA mobilization efficiency in the future.
Recommendation
5.3.1 To the State Bank of Vietnam
Since the onset of the Covid-19 pandemic in late 2019 and its impact on Vietnam in early 2020, there has been a significant surge in online shopping and cashless payment methods On October 28, 2021, the Prime Minister endorsed a project aimed at enhancing non-cash payment systems in Vietnam for the 2021-2025 period, presenting a valuable opportunity for commercial banks to expand their CASA mobilization market share.
To promote the digitization of banking services, the State Bank of Vietnam should issue Circulars that align with the current economic context and the status of commercial banks As one of the two key governmental agencies responsible for economic regulations, alongside the Ministry of Finance, the State Bank's accurate and relevant regulations are essential for ensuring that commercial banks comply effectively This approach will enhance business efficiency, particularly in the area of CASA mobilization, thereby supporting the overall digitization of the economy.
The State Bank must continuously refine the legal framework for digital transformation to promote the adoption of new payment methods alongside traditional ones A key focus should be on establishing regulations that enhance confidentiality and security, addressing a critical concern in the banking sector Many companies still struggle with cybersecurity, making it imperative to prioritize ongoing research and discussions aimed at safeguarding customers from scams and hackers.
The State Bank must effectively communicate information about non-cash payments to the public in a clear and precise manner This will enable individuals to grasp the benefits and risks associated with digital services, as well as the security measures in place to protect users.
The State Bank of Vietnam aims to enhance public awareness and adoption of new payment methods by collaborating closely with media organizations This partnership will focus on regularly disseminating news about digital transformation and promoting the benefits of digital services to encourage widespread usage among the population.
To effectively evaluate the level of digital transformation in commercial banks, a comprehensive rating scale should be implemented, allowing banks like ACB to benchmark against competitors and identify areas for improvement This initiative is crucial as the digital banking landscape continues to evolve For instance, Bank of America has successfully integrated fully automated digital banking services, utilizing Chatbot Eric for customer support via mobile apps and establishing robotic branches equipped with tablets, enabling customers to perform basic transactions independently.
The State Bank should establish regulations for the utilization of CASA mobilization, particularly tightening short-term capital provisions for medium and long-term loans While international practices dictate that banks manage short-term capital and the financial market supports medium and long-term financing, Vietnam's banks still predominantly provide these funds Given the robust development of Vietnam's financial market, the State Bank must gradually separate short-term capital sources for banks from medium and long-term capital sources for the financial market Reducing the ratio of short-term capital allocated to medium and long-term loans will help achieve this objective, ensuring that short-term mobilized capital, including CASA, is dedicated solely to short-term credit needs, thereby minimizing risks for banks Additionally, the State Bank should enforce stricter regulations on the issuance and purchase of corporate bonds to prevent banks from using short-term capital to circumvent laws and extend credit to corporations.
There are some solutions that need taking into consideration by ACB to overcome aforementioned limitations compared to competitors, thereby promoting the efficiency of CASA mobilization
In terms of attracting new customers using ACB’s payment accounts:
ACB should initiate a campaign to offer free favorable-number accounts to all individual customers, not just those with Business or Priority Accounts, as Vietnamese customers highly value aesthetically pleasing and meaningful numbers This interest extends to selecting license plates and phone numbers, with many willing to invest significantly for their preferred choices By allowing customers to open bank accounts with desirable numbers, ACB can capture considerable attention and potentially attract future CASA deposits, even from those who may not have an immediate need However, ACB's current 7-digit account numbers limit the availability of attractive options To broaden the appeal, ACB should consider expanding account numbers to 13 digits, aligning with industry standards, and could also adopt a strategy where customers' phone numbers serve as their bank account numbers, similar to offerings from MBBank, TPBank, Vietcombank, and BIDV.
ACB may contemplate waiving or reducing additional fees for customers, such as card delivery and annual fees, based on the efficiency of CASA's mobilization and indirect capital costs Currently, only the ACB Privilege Visa Platinum Debit card is exempt from these fees, while new account holders face charges of approximately 100,000 VND for PIN issuance and card delivery By eliminating these fees and offering incentives for desired-number accounts, ACB could enhance customer satisfaction and attract more clients.
The 50 account opening campaign is likely to attract numerous customers, as many banks typically waive the annual fee only for the first year, including ACB Currently, annual fees for standard cards range from 50,000 to 100,000 VND per year If ACB eliminates this fee, it would lead the way in annual fee waivers, but given the significance of this revenue stream, banks are generally hesitant to forgo it Therefore, ACB must carefully weigh the trade-off between revenue and increasing its CASA (Current Account Savings Account).
To enhance awareness of the convenience and economic benefits of ACB bank cards and accounts, it is essential for ACB to implement targeted marketing strategies across both traditional and social media platforms, including TV, newspapers, Facebook, TikTok, and YouTube Given the significant costs associated with advertising, ACB should tailor campaigns to specific customer segments to avoid wasteful mass advertising Additionally, organizing outdoor activities such as roadshows, running tournaments, and charity events can effectively engage the community, foster cohesion among ACB members, and enhance the bank's image as friendly and dynamic Furthermore, expanding the network of branches and transaction offices into suburban and newly established districts is crucial for improving accessibility and reaching a broader customer base.
In terms of retaining existing ACB’s payment accounts users:
ACB must prioritize upgrading its ACB ONE digital banking system to address the high frequency of system errors, such as login failures and unexpected application closures Users expect a seamless experience, and improving the application's performance is crucial for customer satisfaction Additionally, enhancing the eKYC system for quicker identification and authentication will significantly reduce registration times Rapidly identifying and resolving these issues is essential for ACB to retain its customer base.
ACB must prioritize the development of comprehensive digital services to meet the evolving needs of customers, especially in the wake of changing habits due to the COVID-19 pandemic, which has significantly increased the demand for online transactions With CASA accounts being volatile and allowing for immediate withdrawals, ACB risks losing customers to competitors with superior digital offerings if it fails to enhance its Internet and E-mobile banking services The 24/7 availability of digital banking is a key advantage, shifting the focus from traditional branch expansion to cost-effective digital channels Currently, ACB's digital banking capabilities are limited, necessitating the integration of additional features such as online loans, booking services, and shopping directly through the ACB ONE app Furthermore, ACB should consider partnerships with popular online shopping platforms like Shopee, Tiki, and Lazada, as well as ride-hailing and food delivery services like Grab and Beamin, to provide discounts and vouchers, thereby enhancing customer engagement and retention.
To enhance service quality and foster strong customer relationships, ACB must prioritize employee training and satisfaction, as staff interactions significantly impact customer contentment ACB is committed to maintaining a transparent and positive environment, ensuring prompt service without unethical practices, unlike some competitors that may require bribes for swift transactions Regular evaluations of employee performance, including situational assessments by control department staff posing as customers, will provide more accurate insights into service quality Additionally, promoting teamwork and a unified corporate culture across all levels, from management to support staff, is essential for continuous improvement Creating a motivating work atmosphere will encourage employees to deliver exceptional service, benefiting both customers and the bank.
To maintain strong customer relationships, ACB must engage with customers proactively, not just during transactions Employees should consistently reach out through calls, texts, and social media interactions It is crucial to respond to customer inquiries with enthusiasm and sincerity Additionally, ACB staff should send personalized greetings on special occasions such as birthdays, anniversaries, and the New Year, particularly for valued customers.