Product and service development at agribank vinh tuong branch,graduation thesis

THE STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty - - GRADUATION THESIS PRODUCT AND SERVICE DEVELOPMENT AT AGRIBANK VINH TUONG BRANCH Lecturer: Can Thuy Lien (M.A) Student: Nguyen Thi Thu Huong Class: K15-ATCB Student code: 15A7510096 Hanoi, May 2016 ACKNOWLEDGEMENTS First of all, I deeply appreciated to my supervisor Can Thuy Lien (M.A) of the Foreign Language Faculty- Banking Academy for her great assistance and encouragement in the preparation of this thesis She offered me helpful comments and suggestions to accomplish the graduation thesis I also thank my supervisor for her precious comments on the draft research, which was of critical importance for this graduation thesis Secondly, I would like to express my sincere thanks to all lecturers in Faculty of Foreign Languages for their careful instruction and useful knowledge that I have been taught during the past four years Finally, it is important for me to show my great gratitude to my family They always encouraged me and kept me going, especially my mother, who greatly assisted me in finding relating data and documents for my graduation thesis as well as helping me in some explanations of banking products and services Ha Noi, May 2016 Student Nguyen Thi Thu Huong ~ ii ~ DEDICATION I dedicated my graduation thesis to my beloved family, especially my mother for her wholehearted support that helped me be able to achieve such success This humble thesis is also dedicated to Banking academy of Viet Nam and all the lecturers for their precious knowledge support I also dedicated the graduation thesis to my sincere friends for their helpful encouragement which creating motivation for me to complete the graduation thesis ~ iii ~ ABSTRACT Nowadays, banking products and services play a significant role in not only the economy but also banking system development This graduation thesis gives an insight into Agribank Vinh Tuong branch’s products and services by analyzing the branch’s statistics and data in the period of 2013 to 2015 and then proposing suggestions and recommendations to the sustainable development of the branch’s banking products and services in the future Materials came from both external and internal sources and have been used to meet the research objectives and research questions The research reveals that Agribank Vinh Tuong branch has witnessed a steady growth in terms of fund mobilization, number of bank cards, expansion of banking channels… However, there has still remained limitations such as lack of modern equipment, small number of services and products, low service’s quality… It is concluded in this research that Commercial banks in general and Agribank Vinh Tuong branch in particular should focus on finding some solutions to avoid these limitations In support of many measures, developing marketing and competitive strategies as well as modernizing technology and increasing professional staff are necessary and important for the branch Besides, some recommendations which are given to the State Bank of Vietnam and the Government to help Agribank Vinh Tuong branch develop its banking products and services such as improving the legal system, enhancing the project of reducing cash payment, and so on should be noticed ~ iv ~ TABLE OF CONTENTS ACKNOWLEDGEMENTS ii DEDICATION iii ABSTRACT iv TABLE OF CONTENTS v LIST OF TABLES ix LIST OF ABBREVIATIONS x CHAPTER 1: INTRODUCTION 1.1 Background 1.2 Research objectives and research questions 1.2.1 Objectives 1.2.2 Questions 1.3 Research methodology 1.4 Study scope 1.5 Thesis structure CHAPTER 2: THE OVERVIEW OF BANKING PRODUCTS AND SERVICES 2.1 Definition of banking products and services 2.2 Main banking products and services 2.2.1 Fund mobilization services 2.2.2 Lending services ~v~ 2.2.3 Card services 2.2.4 Settlement services 2.2.5 Electronic banking services 2.3 The roles of banking products and services 2.3.1 To the economy 2.3.2 To the bank 2.4 Criteria for assessing banking product and service development 2.4.1 The number of banking products and services 2.4.2 The quality of banking products and services 10 2.4.3 Bank’s competitiveness 10 2.4.4 Revenue from banking products and services 11 2.5 Factors affecting banking product and service development 11 2.5.1 Regulatory environment 11 2.5.2 Integration in the financial service sector 11 2.5.3 Providers of banking services 11 2.5.4 Customer’s demand for banking services 12 2.5.5 The price of financial services 13 SUMMARY FOR CHAPTER 14 CHAPTER 3: REAL SITUATION OF AGRIBANK VINH TUONG BRANCH’S PRODUCT AND SERVICE DEVELOPMENT 15 3.1 Background of Agribank Vinh Tuong branch 15 ~ vi ~ 3.1.1 Brief history of Agribank Vinh Tuong branch 15 3.1.2 The development of Agribank Vinh Tuong branch 16 3.1.3 Products and services of Agribank Vinh Tuong branch 17 3.2 Product and service development at Agribank Vinh Tuong branch 18 3.2.1 Reasons for banking service and product development 18 3.2.2 Analysis of activities of developing Agribank Vinh Tuong branch’s products and services over the period 2013-2015 21 3.2.2.1 Agribank Vinh Tuong branch’s product and service performance 21 3.2.2.2 Human resource management 29 3.2.2.3 Marketing activities 30 3.2.2.4 Technology renovation 31 3.2.2.5 Customer care 32 3.3 Evaluating products and services of Agribank Vinh Tuong branch 33 3.3.1 Achievements 33 3.3.2 Limitations 34 3.2.3 Causes of limitations 35 3.2.3.1 Objective causes 35 3.2.2.2 Subjective causes 37 SUMMARY FOR CHAPTER 39 CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS TO AGRIBANK VINH TUONG BRANCH ‘S PRODUCT AND SERVICE DEVELOPMENT 40 4.1 Solutions to Agribank Vinh Tuong branch 40 ~ vii ~ 4.1.1 Promoting research and development of banking products and services 40 4.1.1.1 Improving existing products and services 41 4.1.1.2 Promoting doing research on new banking products and services 42 4.1.1.3 Developing new banking products and services 43 4.1.2 Upgrading modern technology 45 4.1.3 Enhancing the human resource’s quality 46 4.1.3.1 Fulfilling the recruitment process 46 4.1.3.2 Raising the quality of staff training 47 4.1.3.3 Specializing in professional style of staff 48 4.1.3.4 Maintaining suitable staff reward policies 49 4.1.4 Strengthening the marketing strategy 50 4.1.5 Developing an effective competitive strategy 51 4.1.6 Focusing on the customer care 51 4.1.7 Diversifying distribution networks 52 4.2 Recommendations to the State Bank of Vietnam 53 4.3 Recommendations to the Government 54 SUMMARY FOR CHAPTER 55 CONCLUSION 56 REFERENCES 57 ~ viii ~ LIST OF TABLES List of tables Table 1: Agribank Vinh Tuong branch’s fund mobilization in the period 2013-2015 Table 2: Agribank Vinh Tuong branch’s credit investment from 2013 to 2015 Table 3: Agribank Vinh Tuong branch’s number of cards issued from 2013 to 2015 Table 4: Agribank Vinh Tuong branch’s settlement service from 2013 to 2015 Table 5: Agribank Vinh Tuong branch’s number of customer using Ebanking service from 2013 to 2015 ~ ix ~ page 22 25 26 27 28 LIST OF ABBREVIATIONS Agribank Bank for Agriculture and Rural Development E-banking Electronic banking ATM Automatic teller machine TV Television WTO World trade organization USD United States Dollar VND Vietnamese Dong PIN Personal identification number EDC Electronic Digital Computer POS Points of sales SMS Short message services IPCAS Interbank payment and customer accounting system WIFI Wireless Fidelity 3G Third-generation technology GPRS General packet radio service MIS Management information system VIP Very important person SBV The State Bank of Vietnam ~x~ market research in order to build their own multi-utility types of banking products and services in the competitive financial market 4.1.1.3 Developing new banking products and services Currently, in the financial environment, commercial banks compete with each other through the banking products and services Thus, the banks themselves must have their own different kind of products and services, thereby creating the advantage to attract customers and increasing profits It is undeniable that Agribank Vinh Tuong branch should develop and improve the efficiency and quality of modern products and traditional products a Fund mobilization services Fund mobilization service is an important type of service and the most popular service in the operation of commercial banks Agribank Vinh Tuong branch must find a solution to attract more customers and increase their capital mobilized from the population The group of personal saving products can be added some new forms of mobilization: “Saving for the future” product is applied to customers with regular and stable income Accumulated amount will serve for specific purposes in the future such as building a house or going to colleges, going on abroad Commercial banks will offer interest rates in accordance with the payment terms and maturity “Deposit once, withdraw multiple times” product is used by customers who have housing construction plans, students studying away from home needing for monthly costs “Life-saving” product is the combination of insurance companies and banks It provides customers with personal accumulated money management service to ensure the source of elder’s life or the loss of working capacity without requiring many procedures as insurance services ~ 43 ~ Besides, it will be more effective if the branch can apply different forms of interest payment in accordance with each customer b Lending services The lending products of the bank should be diversified in many different forms, for example, the form of discount commercial paper This type of service has high security for the bank, while also satisfying customer’s demand for capital in a timely manner Lending services which use insurance policy as collateral are also safe services for the bank because customer’s lending will be paid by insurance companies if customers are unable to repay The bank just needs to design the evaluation process of insurance policy to perform these services well It should be paid greater attention to develop consumer loans and research the products associating with the production of goods In addition, there is a need for the branch to cooperate with embassies and famous foreign universities to develop products for study oversea which are potential products at present For the time being, the branch should diversify the types of loan by offering multiple methods of debt repayment, the loan terms, the disbursement methods with many different interest rates c Card services Firstly, the branch should focus on solving some withdrawal problems at ATM, for example, shortage of money at ATM, ATM cards swallow and so on Secondly, Agribank Vinh Tuong branch should not only develop credit cards and debit cards but also focus on the development of linked card products Linked cards are popular products in the world which are issued through the cooperation between a bank and a commercial entity Cardholders will receive the value-added services through ~ 44 ~ policies like bonus points and discounts It is of necessity for the branch to develop linked cards by looking for domestic reputable partners in the market to enhance the benefits for both sides The sectors that the branch can have effective cooperation are supermarkets, airlines, insurance, telecommunications, petroleum… d E-banking services Electronic banking services requires bank to develop modern information technology It is suggested that Agribank Vinh Tuong branch research and provide new products and services directly using information technology achievements such as internet cash, electronic wallet, smart cards to enrich products of E-banking service group In addition, the branch must always pay attention to promote the development of products like home banking, internet banking, mobile banking through the creation of its website, which has given full information about these services and helps customers realize the benefits and attractiveness of the products Because these types of service require seriously the confidentiality of customer’s information, the branch needs to improve its security system as well as protect information of its customers 4.1.2 Upgrading modern technology Technological capability is considered the most important factor in deciding the competitiveness of commercial banks Technology has always been interested by banks to improve the quality of services provided for customers to create competitive advantages To meet the requirements of International Standards, information technology must constantly be improved and upgraded to really become an invaluable support tool for the bank staff It is common knowledge that developing modern technology is a key strategy of attracting customers In the trend of the global integration, Agribank Vinh Tuong ~ 45 ~ branch need to invest in modern technology to compete with other commercial banks and promote the banking system The branch should implement customer relationship management to help employees carefully take care of customers such as Call Center which predicts the customer’s needs of products and services to make timely advice It is essential for the branch to invest in technology and improve electronic banking products to avoid little congestion and improve transaction time Furthermore, Agribank Vinh Tuong branch has to strongly deploy online banking services on multiple devices such as IPad, IPhone and multiple browsers like internet explorer, safari, Firefox The branch also needs to develop improvement programs to upgrade the core system with large capacity transmission line and high speed 4.1.3 Enhancing the human resource’s quality Human resource is an important factor contributing to the banking product and service development Reasonable recruitment, professional training courses for staff, perfect staff transaction style and good staff policies help Agribank Vinh Tuong branch get the best labor force Therefore, enhancing human resource’s quality is a strategic mission for Agribank in general and the branch in particular 4.1.3.1 Fulfilling the recruitment process In the context of the globalization, in order to survive and develop, commercial banks must grasp the opportunity to obtain the necessary human resources for their organization The recruitment process is one of the important factors to ensure the quality of human resource for the banks because a good recruitment process will help banks get high-quality workforce in the future and create opportunities for employees to fulfill their capabilities ~ 46 ~ Agribank Vinh Tuong branch needs to take some measures to improve the recruitment process as follows: Firstly, the branch should improve the quality of recruitment advertising Investing more in designing, presenting recruitment information, clearly scheduling recruitment poster through websites are important missions that the branch needs to implement and take care of It is suggested that the branch pay attention to provide clear criteria for recruitment These criteria for bank’s positions need to be designed specifically and appropriately in order that the candidates can easily be in the selection of appropriate job positions, thereby helping bank avoid candidates who are not meet bank’s requirements Secondly, it is essential to make a good step of profile screening and preliminary interviews These steps allow the branch to avoid wasting resources and reduce costs for recruitment, create favorable conditions for the next steps of the recruitment It will be more effective if the branch focuses on recruitment, especially in the matter of interview Through interviews, the branch will see the working style, professional skills, and communication of its interviewees If the step is carried out carefully, it will help the branch remove candidates who not meet the job requirements Furthermore, the bank also needs to itself complete additional tests and quizzes as EQ, IQ for its candidates Thus, the bank can choose the suitable candidates with good working capacity 4.1.3.2 Raising the quality of staff training Currently, strengthening bank staff training is one of the important tasks to improve the quality of products and services of the bank In order to get a high quality human resource, Agribank Vinh Tuong branch should regularly organize training courses for its staff to be unanimous in the quality human resource for each business, continuously update the development of new products to ~ 47 ~ innovate personnel training programs accordingly Training subjects include new staff and senior staff By organizing training courses, the branch can help their staff grasp new knowledge It is necessary for the branch to open training courses for new employees to help them understand more about the banking organizational structure, the banking business strategy, the banking transaction skills In addition, the branch also needs to evaluate the results of the training through the assessment of learner’s process and effectiveness to be able to offer the appropriate training policy Agribank Vinh Tuong branch should focus on training, update the basic business knowledge for staff to meet the increasingly complex requirements and withstand the pressure of the increasing competitiveness of business environment Moreover, the branch needs to specialize in soft skills and management skills trainings for managers to create breakthrough in managerial skills Besides, it is suggested that the branch should carry out the training of professional skills for the team of tellers and customer relation specialists to build a modern business style to meet the requirements on staff’s quality of the bank The branch must also focus on soft skills training for staff and promote language training to expand transactions with foreign customers 4.1.3.3 Specializing in professional style of staff Professional style transaction in the bank is one of the decisive factors in attracting customers, thereby improving the efficiency of banking products and services Customers always want bank staff to deal with them with a professional style being expressed through communication skills and skills of handling customer’s complaints It is necessary for the bank to maintain a good image in the eyes of customers through the image of the bank employees The bank tellers are always wanted to be beautifully dressed, graceful, polite and attentive to customer needs Thus, Agribank Vinh Tuong ~ 48 ~ branch should make policy on staff’s clothes and standardize make up regulations to create friendly and professional image in the eyes of customers The branch also needs to improve the behavior of employees in doing transactions to meet customer’s satisfaction A ban employee who communicates and handles customer’s complaints in a professional manner will help the bank create a good image and credibility Therefore, Agribank Vinh Tuong branch should make requirements on professional skills for their employees in order that they can have self-improvement in dealing with customers Style innovation in communication, business culture promotion are urgent requirements for today's bank staff The branch should implement internal solidarity, oppose to all manifestations of corruption in business activities, and strictly handle cases of ethics violations that affect the reputation and performance of the bank 4.1.3.4 Maintaining suitable staff reward policies Agribank Vinh Tuong branch should maintain a policy of awards related to business performance in providing products and services to customers, including bonuses, awards for staff with technical skills, customer service, sales, staff having ideas to contribute to the development of banking products and services Thus, the bank will create incentives for the staff, improve their morale and creativity to work The branch must have encouraging policies for qualified human resource, appropriate remuneration policies, and good working environment so as not to fall into the loss of good employees to competitors and prevent employees from working without the help, support and share with each other in banking activities as well as working experiences The branch should also motivate the employees of both the physical dynamic and spirit Moreover, the branch should have the mechanisms to attract talent employees, regularly organize examinations to assess staff’s qualification Furthermore, it is important to ~ 49 ~ create a reasonable salary framework, strict sanctions to motivate employees to successfully complete their work 4.1.4 Strengthening the marketing strategy The task of banking operations is obtaining a large number of customers of all walks of life with different income and preferences Consequently, the application of marketing principles in the customer relationship management has a critical meaning In order to well carry out marketing strategies, Agribank Vinh Tuong branch needs to implement the following measures: Promoting propaganda, widely advertising on banking services to the majority of the population to help them know about the banking services The branch also should have pamphlets and brochures available in transaction desk for customers to read when they transactions The branch is suggested to organize the reception department to care for customers and create a customer’s sense of respect when coming to the bank This department has the function of guiding the customer with first-time transaction to declare information, answering customer inquiries, consulting, introducing banking products to customers Besides, the branch needs to promote transaction culture through style, attitude of staff, costumes of bank Last but not least, the branch should develop products and services advertisements to each customer via emails, telephones; adapting new information of the bank about services, products, special events, promotions to customers to provide them with the best services ~ 50 ~ 4.1.5 Developing an effective competitive strategy In order to survive and grow, it is important for the bank to improve its competitiveness by establishing a dynamic and effective competitive strategy Firstly, Agribank Vinh Tuong branch has to research its competitors This is an important work to implement the competitive strategy effectively Additionally, when researching competitors, the branch needs to focus on the contents: determining opponents, identifying strategies of the opponents and the opponent's goals, assessing the strengths and weaknesses of the opponents Secondly, the branch must establish competitive strategy This is the main task to strengthen the competitiveness of the branch Firstly, the branch needs to create high trust of customers through the quantity and quality of supply of products and services, qualification and communication capabilities of staff, high equipment and modern technology, financial capacity, especially efficiency and safety of deposits and loans In addition to creating trust of customers, the branch also needs to build a beautiful and courteous image through the branch’s location, office and logo Moreover, the branch has to create the differences That are the differences in the supply of products and services, interest rates, distribution channels, promotional activities, communication to create attention and attractiveness to customers, maintain and strengthen old customers, attract new customers 4.1.6 Focusing on the customer care Good customer care creates opportunity for Agribank bank as well as the branch to build the customer’s loyalty Customers often regard customer care as an important criterion when choosing a bank in all commercial banks in the market Therefore, developing customer care is essential mission for any bank ~ 51 ~ Customer care: on the basis of customers, bank should classify customers according to different groups, from which to build the customer care programs applied in business and outside business accordingly Customer care in business: The transaction’s process of customers who use the products of modern high-technical transactions can be in trouble Therefore, the bank needs to strengthen the support services such as information inquiry services, customer consultancy, customer instructions about how to use and handle the transaction troubles, customer’s complaints service Customer care outside business: the branch should regularly organize exchange activities in order to maintain long-term relationship with customers Besides, it is necessary for the branch to give bonus deposit interest rates and reduce lending rates for customers with a great number of transactions Furthermore, the branch should give flowers, gifts, or cards for customers on holidays, on their birthdays…Therefore, it will unexpectedly promote customer’s loyalty Moreover, it is suggested that Agribank Vinh Tuong branch establish a customer care department which is responsible for resolving customer’s questions, collecting feedback from users and evaluating their opinions timely, sending gifts to customers 4.1.7 Diversifying distribution networks At present, the branch mainly provides distribution services and products through traditional distribution channels So the development of distribution channels is also an uncompromising solution for developing products and services that the branch should pay attention The reorganization of distribution channels plays an important role in the success in providing products and services of the bank in the increasingly fierce competitiveness ~ 52 ~ In addition to the traditional distribution channels, it is essential to develop modern distribution channels and strengthen distribution management at the branch to maximize the role of each channel Firstly, the branch should improve the efficiency and convenience of the ATM, helping customers avoid the inconvenience when the ATM is defective Additionally, the branch must promote electronic banking distribution channels Because these distribution channels are transferred through the telephone line and computer, the security of customer information is essential The construction of secure and effective distribution channels will help customers save time and transaction costs 4.2 Recommendations to the State Bank of Vietnam Firstly, SBV should continue to improve the legal system in accordance with the need of integration It is necessary for the SBV to improve banking law, credit institutions law by checking, adding and modifying the mechanisms, policies and documents in order to be consistent with the international commitments in the field of finance Secondly, it is important for SBV to focus on monitoring and supervising commercial bank’s missions in order to assure the safety and soundness of banking activities Through monitoring and supervising, SBV can set up early risk alarming system to find out commercial banks which have difficulty in banking activities Moreover, SBV should enhance the project of reducing cash payment to stimulate the electronic payment in society, thereby developing modern banking products and services Last but not least, SBV needs to strengthen international cooperation with international financial institutions in order to expand relationship, promote the image of domestic commercial banks, utilize funds from other countries Besides, SBV has to motivate and ~ 53 ~ assists commercial banks to co-operate and borrow money to improve infrastructure and modernize technology 4.3 Recommendations to the Government Firstly, the Government should complete the legal system of banking services fully, clearly in order to be consistent with the requirements of integration Secondly, the Government should have policies to promote non cash payment method in all fields of the economy In recent years, although many commercial banks have made efforts to provide products and services to be able to expand the non-cash payment through the bank, there are many difficulties in changing habits of cash payment The habit of non-cash payment in population is limited That makes the modern payment methods such as cards, internet, accounts have not been really developed Last but not least, the Government is recommended to focus on the improvement of modern technology by having training courses for experts in technical fields Therefore, the improvement of modern information technology will help commercial banks easily develop their modern products and services ~ 54 ~ SUMMARY FOR CHAPTER It is believed that recent years are explosive moments of the type of banking services and products as well as banking channels, thereby increasing fierce competitiveness between domestic commercial banks, including Agribank Vinh Tuong branch The development of banking services and products is now facing many challenges Therefore, in order to develop banking services both in quantity and quality to promote the development of the bank, Agribank Vinh Tuong branch is suggested to some solutions such as new products and services research, distribution channels, technological improvement, human resources Customer care policies, staff reward policies, marketing activities, competitive strategies… These measures will help the branch to get over challenges and have opportunity to raise its competitiveness and its image as well as its reputation Moreover, some recommendations to the State Bank of Vietnam and the Government are given to help Commercial banks in general and Agribank Vinh Tuong branch in particular develop banking products and services ~ 55 ~ CONCLUSION Globalization and economic integration are the inevitable trends of development of each country in the world Integration in the banking sector brings opportunities and challenges for Vietnam commercial banks, Agribank Vinh Tuong branch is not out of these general trends Because the branch’s direction is to narrow the gap with other commercial banks, Agribank Vinh Tuong branch has been always trying to develop and improve the quality of banking services to meet the demands of customers In addition to the good results achieved, the branch has faced many difficulties which arise from the legal system of the Government, the operating mechanism of the State Bank of Vietnam and the branch itself In order to develop banking services to contribute to the improvement of its position in the domestic financial market and create the initiative in regional economic integration and in the world, the branch needs to make some important solutions It also requires the Government and the legal system must have some synchronized and measures to facilitate the bank in implementing such solutions By applying the academic knowledge as well as using on-line references, I would like to propose a number of measures to develop banking services at Agribank Vinh Tuong branch, thereby overcoming the limitations in the branch as well as improving banking services and products During the research process, there still has some certain limitations It is much necessary to study for better understanding of banking products and services in order to find the best directions for the banking product and service development ~ 56 ~ REFERENCES http://www.collinsdictionary.com/ investorwords.com http://www.agribank.com.vn/ luattaichinh.wordpress.com http://www.sbv.gov.vn/ Agribank Vinh Tuong branch’s annual report in 2013 Agribank Vinh Tuong branch’s annual report in 2014 Agribank Vinh Tuong branch’s annual report in 2015 Agribank Vinh Tuong branch’s questions of banking product and service development 10 Regulations on the organization and operation of Agribank Vinh Tuong branch 11 Peter S Rose & Sylvia C Hudgins, 2008 Bank management and financial services 7th edition The McGraw -Hill Companies, Inc 12 Nguyen Van Tien, 2009 Ngan hang thuong mai.3rd edition Statistical Publishing House 13 Nguyen Thi Minh Hien, 2002 Marketing ngan hang Statistical Publishing House 14 Trinh Ba Tuu, 2005 Can doi moi nhan thuc ve dich vu ngan hang hien dai Tap chi ngan hang, ~ 57 ~