INTRODUCTION
Background
As the market economy evolves, financial institutions face heightened competition and growing customer expectations, driving continuous enhancements in banking services, particularly through technological advancements.
In Vietnam, the financial service sector is increasingly open to foreign banks, which pose strong competition due to their substantial financial resources and expertise in modern banking products and services This shift provides customers with more opportunities to select high-quality services from superior providers, thereby enhancing the competitiveness of domestic commercial banks, including the Agriculture and Rural Development Bank.
Agribank is committed to maintaining its status as the leading bank by continuously developing innovative banking technology and modernizing its high-quality products and services to meet customer needs.
Vietnam, a developing country with a population exceeding 90 million, has a relatively low rate of banking product and service access However, it benefits from a stable political and legal environment, alongside a growing economy and opportunities from globalization and international integration This positions Vietnam as a promising market for commercial banking products and services In recent years, banks have been enhancing both the quantity and quality of their offerings to satisfy customer demands across various regions and to remain competitive in the banking sector.
Agribank Vinh Tuong branch is not excluded from the indispensable trend Recently, the bank has always focused on promoting modern technologies and diversifying
Agribank Vinh Tuong branch has made significant strides in enhancing customer satisfaction and improving domestic financial services Despite these achievements, the branch faces challenges, including a limited range of banking products and services that do not fully meet customer needs Additionally, the quality of service has been insufficient to ensure customer satisfaction, resulting in a restricted customer base utilizing the branch's offerings These factors highlight the need for further development of banking services at Agribank Vinh Tuong.
For this above reality, it is much necessary to evaluate Agribank’s products and services as well as recommend appropriate solutions to develop them to aim at satisfying customers.
Research objectives and research questions
This study aims to provide an overview of the services and products offered by Agribank Vinh Tuong branch Additionally, it identifies key factors influencing the development of these products and services while exploring their significance within the branch's operations.
The research analyzes the achievements of the branch in delivering products and services from 2013 to 2015, while also assessing its limitations and identifying the underlying causes of these challenges.
In conclusion, the graduation thesis presents actionable solutions and practical recommendations aimed at enhancing the quality and expanding the range of services and products offered by Agribank Vinh Tuong branch in the future.
The thesis aims at answering for the following questions:
What are banking services and products?
Why does Agribank Vinh Tuong branch need to develop its services and products?
What are the roles of banking product and service development?
What are the factors affecting banking product and service development?
What are achievements of Agribank Vinh Tuong branch in providing products and services?
What are the limitations in providing Agribank’s products and services?
What are the solutions to promote Agribank Vinh Tuong branch’s products and services?
Research methodology
The data from this graduation thesis is collected from secondary data sources:
The data is extracted from Agribank Vinh Tuong branch’s annual report in 2013, in 2014 and in 2015
Other helpful information in the study is collected from textbooks, articles and websites such as www.agribank.com.vn, www.collinsdictionary.com and investorwords.com
Data sources include internal documents from Agribank Vinh Tuong branch, specifically addressing inquiries about banking products and services, as well as regulations governing the organization and operations of the branch.
After collecting data, some research methods were applied:
Analysis and evaluation of information about Agribank Vinh Tuong branch’s products and services
Comparison data between each year
Study scope
The research mainly focuses on developing Agribank Vinh Tuong branch’s products and services and suggesting some solutions and recommendations to improve them to compete with other domestic commercial banks.
Thesis structure
The thesis consists of 4 main chapters:
Chapter 2: The overview of banking products and services
Chapter 3: Real situation of Agribank Vinh Tuong branch’s services and products Chapter 4: Solutions and recommendations to Agribank Vinh Tuong branch’s product and service development
THE OVERVIEW OF BANKING PRODUCTS AND SERVICES 5 2.1 Definition of banking products and services
Main banking products and services
Fund mobilization services are crucial banking functions that enable commercial banks to gather funds for investment and lending purposes By offering diverse deposit services, banks attract capital from individuals, small businesses, and households, thus establishing a significant and stable capital base These services benefit both those with surplus idle capital and those facing capital shortages, ultimately enhancing their income potential.
Banks categorize deposits based on the diverse needs of depositors, leading to various forms such as term deposits, non-term deposits, and savings accounts This segmentation aligns with tailored services and specific marketing strategies to meet customer demands.
~ 6 ~ deposits…The bank's fund mobilization services always meet the demand of customers with flexible payment terms and competitive interest rates
As the economy grows, bank lending services also expand, offering a variety of financial products Many commercial banks cater to individuals, businesses, and households by providing diverse loan options, including short-term, medium-term, and long-term loans.
Short-term loans, with terms under 12 months, are designed to fulfill immediate working capital needs and personal consumption Medium-term loans, spanning over one year, assist businesses in investing in fixed assets, upgrading equipment, and expanding operations Long-term loans, exceeding five years, cater to substantial needs such as housing construction and factory development.
Commercial banks offer both secured and unsecured loans to assist customers in borrowing money Secured loans are backed by collateral, providing a guarantee for the bank, while unsecured loans rely on the borrower's creditworthiness and reputation Typically, banks extend unsecured loans only to trustworthy customers with a solid financial standing.
The popularity of non-cash payment methods is on the rise globally, with Vietnam experiencing significant growth in this trend Among the various non-cash options available, bank cards stand out as the most recognized and widely utilized method for transactions.
Bank cards are financial and multifunctional products They are issued by banks to allow customers to make payment, withdraw cash, and deposit money There are two types of
Credit cards and debit cards serve distinct purposes in financial transactions A credit card enables users to make purchases upfront, with the option to pay later, as the bank guarantees payment to the merchant Popular international credit card brands include Visa and MasterCard In contrast, a debit card withdraws funds directly from the user's checking account to settle purchases, ensuring immediate payment.
The card services will help the bank earn fees such as: the issuing fee, the payment fee, while boosting the image of banks
Settlement services for customers with demand deposit accounts are offered in two forms: cash payments and non-cash payments The bank will utilize the most suitable, secure, and convenient payment method based on the specific needs of the customers.
Non-cash payments are increasingly popular due to their safety, convenience, and speed As the economy evolves, banks must continuously adopt modern technology to enhance payment operations and better serve customer needs.
Settlement services also include cheques, standing orders, trade bills…Banks will pay for goods, electricity or water bills through clearing system on behalf of customers
E-banking services are convenient instruments providing banking products and services through electronic media and other interactive media channels, including checking accounts, bill payments, account opening and card opening,
E-Banking services are effective solutions for customers to control their financial situation because they do not only take much time and effort but also be safe and effective Moreover, banks can also resolve the overload transactions and the cost issues for human resources because nowadays, customers can reduce face to face transactions
~ 8 ~ and be at home with a mobile or a personal computer with internet connection to perform all banking transactions
To meet the requirements of customers, at present, all the products and services of E-Banking exists in many different types, such as: ATM, telephone- banking, Internet- banking, Mobile-banking…
The roles of banking products and services
Banking services are crucial for economic development, as they enhance the overall quality of financial transactions while maintaining reasonable costs.
In today's business landscape, enterprises rely heavily on banking services such as payment solutions, lending options, and fund mobilization, while also seeking financial information to enhance their operations This reliance on improved banking services and products plays a crucial role in driving business growth, consumer spending, and the overall advancement of industrialization and modernization.
The advancement of products and services drives production and economic growth, while banking services are essential for supplying capital investment to businesses This capital enables enterprises to effectively implement technological innovations, reduce production costs, and enhance their competitiveness in the market.
The bank offers efficient settlement services that enhance economic activities by making them more convenient, swift, and secure This initiative also aims to reduce cash circulation in the economy, thereby lowering transportation and storage costs.
Moreover, developing banking products and services will facilitate the improvement of other service industries, for example, payment services and money transfer services play
~ 9 ~ an important role in service industries such as tourism, telecommunications, transportation, and so on
Firstly, the development of products and services will facilitate the competitiveness between commercial banks Therefore, they will make efforts in providing the best and suitable products for customers
Secondly, improving products and services allows banks to earn stable and sustainable income, reduce risks and errors in transactions
The development of products and services enhances the quality of service provided by commercial banks, enabling them to maintain the trust and interest of existing customers while attracting new potential clients.
Criteria for assessing banking product and service development
Like other products and services offered on the market, it is necessary to have a certain number of indicators to assess the development of banking services and products
2.4.1 The number of banking products and services
Diversifying the range of services and products is a key criterion for assessing the growth of banking services Beyond traditional offerings, modern services like electronic banking and brokerage services provide significant advantages for both customers and commercial banks A bank that offers a wide array of products and services enhances customer choice and boosts its competitiveness in the market.
2.4.2 The quality of banking products and services
The quality of banking services and products is a crucial metric for evaluating the progress of the banking sector To effectively measure this quality, commercial banks must analyze various factors that influence service delivery.
Customer satisfaction is the key criterion for assessing the quality of banking services and products, which cater to individuals, households, and businesses High-quality offerings not only attract a larger customer base but also foster long-term relationships Additionally, positive feedback and satisfaction from current customers serve as powerful endorsements to potential clients, enhancing the bank's reputation and appeal.
Technology renovation is crucial for evaluating the quality of banking services and products By leveraging modern technology, banks can enhance customer service while reducing risks and errors in transactions Additionally, the adoption of advanced technology demonstrates a bank's commitment to improving product quality, making its services more attractive to a diverse customer base.
In today's competitive banking landscape, banks are increasingly focused on enhancing their services and products to minimize transaction errors and risks By delivering high-quality financial solutions, commercial banks aim to build trust and foster long-term relationships with existing customers while attracting potential clients This necessitates a commitment to diversifying and improving their offerings to meet evolving customer needs.
2.4.4 Revenue from banking products and services
The evaluation of product development in the market is primarily based on sales performance Similarly, advancements in banking services are expected to boost revenue generation, ultimately enhancing the overall income of banks.
In recent years, commercial banks have significantly increased their revenue from banking products and services, demonstrating their commitment to diversifying and enhancing the quality and quantity of their offerings.
Factors affecting banking product and service development
The legal system, established by the government, is essential for regulating the fundamental principles of the financial service market A stable, clear, and transparent legal framework that adheres to common global standards enables commercial banks to compete effectively, fostering the development of innovative banking products and services.
2.5.2.Integration in the financial service sector
The gradual integration of financial services to foreign participation is enhancing market competitiveness and efficiency across the economy This openness allows customers the freedom to choose from a variety of quality suppliers and services at competitive prices, ultimately leading to improved and expanded financial services.
Nowadays, there are many financial institutions and consulting companies offering a plenty of financial products to customers
Deposit institutions such as commercial banks, savings associations, mutual savings banks, and credit unions play a crucial role in the financial landscape Financial leasing companies enable businesses to secure funding for investment in production lines, while financial consulting firms offer specialized services to assist enterprises in developing investment strategies and managing business operations Additionally, these firms provide essential capital to help businesses execute their projects effectively.
As competition intensifies among banks and financial institutions, commercial banks are driven to diversify their products and services while enhancing service quality This focus ensures they meet customer needs effectively and provide exceptional service.
2.5.4.Customer’s demand for banking services
The Government uses banking services when conducting mobilization of financial resources to serve the objective of social and economic development
Enterprises and economic organizations are key clients of financial services, driving both the supply and demand for financial resources In an era of global integration, these businesses increasingly rely on financial services, simultaneously acting as a catalyst for the growth of banking offerings.
Residents engage in the financial market by utilizing services such as deposit accounts, consumer loans, business startup loans, overseas study loans, and non-cash payment options Customer support plays a crucial role in enhancing commercial banks' confidence and refining their strategic plans for developing banking products.
2.5.5.The price of financial services
The pricing of financial services significantly influences market development and the performance of service providers When service prices are excessively high or low, it adversely affects the enhancement of financial services.
Setting service prices too high can hinder customer access and usage, while prices that are excessively low may lead financial service providers to face bankruptcy or struggle to maintain profitability.
In summary, both scenarios contribute to the contraction of the financial market, highlighting the necessity for financial service prices to align with the advancements in the social economy and the evolution of the financial market.
Banking services encompass a range of financial products such as mortgages, loans, insurance, and deposits, provided by commercial banks through various channels These services include fund mobilization, lending, card services, settlement, and e-banking, each offering tailored products to meet diverse customer needs The advancement of banking products and services not only enhances the growth of commercial banks but also contributes to the overall development of the economy.
In recent years, the competitive landscape of the banking system in Vietnam has prompted many commercial banks to enhance their product offerings and services This focus on improving both the quantity and quality of services aims to increase revenue and strengthen competitiveness in the market.
There are five main factors that banking product and service development can be influenced, namely: regulatory environment, integration, banking services providers, customer’s demands and financial service price
REAL SITUATION OF AGRIBANK VINH TUONG BRANCH’S
Background of Agribank Vinh Tuong branch
3.1.1 Brief history of Agribank Vinh Tuong branch
Full name: Vietnam Bank for Agriculture and Rural Development -Vinh Tuong branch Address: Ho Xuan Huong Street, Vinh Tuong District, Vinh Phuc Province
Agribank Vinh Tuong branch, established under the Vietnam Agriculture and Rural Development banking system, was officially founded on October 15, 1996, by Decision No 280 from the State Bank of Vietnam It received its Certificate Registration No 310 073 from the Vinh Phuc Department of Planning and Investment on October 4, 1998 The branch, which commenced operations on January 1, 1996, offers services in credit, currency, and payment, starting with a workforce of 55 employees, a capital of 45 billion VND, and outstanding loans totaling 240 billion VND.
The branch is providing some main products and services including:
Acceptance of deposits of enterprises, economic organizations and residents
Issuance of bonds, promissory notes by Vietnam Dong
Implementation of short-term credit operations, medium and long term loans for all economic sectors in the district
The guidance of project development, credit project appraisal to customers
Trading in foreign exchange services which are allowed by general manager of Agribank
Implementation of economic development related to activities of currency, credit
Proposal to improve business activities in accordance with the economic development plans of local community
3.1.2 The development of Agribank Vinh Tuong branch
Agribank Vinh Tuong branch operates under a market-driven mechanism, emphasizing self-control in its business practices The branch prioritizes competitiveness and service development to maximize profits while meeting customer demands Its organizational structure has been enhanced to align with the evolving financial market With two primary transaction offices located in Bo Sao and Chan Hung communes, the branch effectively leverages its capital mobilization and lending activities.
After 10 years of doing business, the branch along with functional departments and social organizations such as Farmer Association, woman Association…have closely followed the direction and orientation of the provincial bank to create important changes in the process of implementing government’s credit policies in Vinh Tuong district The branch not only plays an important role in mobilizing capital for lending and developing agricultural economy but also timely provides fund and credit to farmers to serve for production and expansion of scale of livestock, poultry, fish…
Business credit investment of Agribank Vinh Tuong branch in agricultural field for over
For the past decade, the branch has consistently adhered to government policies and objectives, ensuring sufficient capital is available to support the growth of production and economic development This commitment has primarily benefited agricultural producers, households, and small to medium-sized enterprises in rural areas.
Agribank Vinh Tuong branch plays a crucial role in promoting economic development by efficiently providing loans to various local models in the region Moving forward, the branch will prioritize lending services aimed at enhancing agricultural growth in rural areas Additionally, it plans to diversify capital mobilization services while improving the overall quality of its credit offerings The branch is committed to restructuring credit, addressing challenges in the lending process, and strategically assigning credit officers to communes, particularly those designated for new rural construction initiatives.
The branch operates in accordance with the laws governing Credit Institutions and the regulations set by the Bank for Agriculture and Rural Development of Vietnam Over its long-term operation, it has made significant contributions to the local economy by facilitating capital transfers to producers, thereby creating jobs and enhancing the quality of life for residents The bank has also expanded its capital mobilization services and credit activities while developing new products and services Throughout the years, the branch has received numerous accolades for its excellence in delivering banking products and services.
3.1.3 Products and services of Agribank Vinh Tuong branch
Agribank Vinh Tuong branch provides a comprehensive range of traditional and modern banking services, accessible through various channels including branches, ATMs, mobile phones, and the internet The bank offers two main types of services that cater to the diverse credit needs of households and individuals, supporting their requirements for production, business operations, investment projects, and everyday expenses.
Traditional banking services which have a long-term process of formation and development include: fund mobilization services, discount negotiable and valuable
Modern banking services have evolved significantly with technological advancements, encompassing a range of offerings such as bank cards, electronic banking, financial leasing, financial advisory services, credit swap contracts, and credit option contracts.
Agribank Vinh Tuong branch offers a diverse range of products and services categorized into ten distinct groups, including capital mobilization products, lending solutions, domestic payment services, card offerings, international payment products, foreign currency trading services, investment options, and E-banking solutions.
Besides, the branch also offers a number of new banking services which are widely applied in commercial banks such as retirement services, brokerage and securities investment services, electronic banking
Product and service development at Agribank Vinh Tuong branch
3.2.1 Reasons for banking service and product development
Agribank needs to promote the development of products and services in the current period due to the following reasons:
The inevitability of the development of the bank
The development of the economy and rising incomes have significantly increased customer demand for banking products and services Additionally, shifts in consumer habits and advancements in modern technology are driving the trend towards tech-based business solutions Alongside traditional banking offerings, customers are increasingly seeking modern banking products and comprehensive financial service packages.
~ 19 ~ commercial banks is to provide the perfect banking products and services including both traditional and modern banking services
The increasingly fierce competition in the banking system
Vietnam's accession to the WTO led to the gradual removal of protective barriers in the banking and finance sector, allowing domestic and foreign banks to compete equally in the financial market With a growing number of commercial banks, it has become essential for these institutions to enhance their network development and expand their operations into both rural and urban areas This push for growth has resulted in increased competitiveness within the financial services sector of the banking system.
The intrinsic requirements of Agribank
Amid the economic recession and global financial crisis, Agribank is encountering significant challenges in fund mobilization, liquidity, and credit expansion within Vietnam's struggling economy To address these issues, the bank must diversify its marketing and distribution efforts, enhance banking services to mitigate risks and costs, and boost revenue by offering a wider range of products and services, thereby reducing its reliance on credit operations.
Modern technology is evolving rapidly, facilitating convenient and swift transactions Mobile phones and computers serve as vital tools in mass media, enabling easy access to banking products and services for customers With over 100 million mobile and internet users today, there is a growing need for innovative products and services, including internet banking, core banking, and mobile banking, to meet customer demands.
Developing banking service is a sustainable path for commercial banks
Commercial banks primarily engage in three activities: credit operations, investment activities, and service activities While credit operations are traditional and extensively utilized, they can lead to negative income changes during market downturns Investment activities, though potentially profitable, carry significant risks due to market fluctuations In contrast, service activities, which involve controlled risks, can generate substantial earnings, particularly in populous markets like Vietnam To maintain a balanced financial position, banks must diversify their activities and invest more in service offerings, ensuring they are well-prepared to navigate challenges in credit operations Thus, it is crucial for banks to prioritize research and development in their service activities.
Agribank has many factors and favorable conditions to promote the development of products and services
Agribank is a prominent commercial bank characterized by its substantial chartered capital, extensive operational network, and a strong human resource base With a solid customer base and a well-established brand reputation, Agribank plays a crucial role in providing banking products and services tailored to the agricultural sector Furthermore, the bank makes significant investments in infrastructure and modern technology, creating favorable conditions for the development of its diverse range of products and services.
Developing banking services and products plays an important role in the business operations of the bank today
Developing innovative products and services enhances customer attraction and strengthens a bank's position in the competitive financial market This strategy not only increases market share but also generates stable and low-risk additional revenue streams.
The development of banking products and services bring a number of benefits to not only bank but also the economy
Modern banking products and services are transforming payment habits from cash to non-cash methods, leading to reduced costs associated with cash issuance and transactions The development of these innovative offerings is crucial for Agribank, enhancing product diversification, expanding market reach, and boosting competitiveness Ultimately, this shift not only mitigates risks in banking operations but also contributes positively to annual revenue and income growth.
3.2.2 Analysis of activities of developing Agribank Vinh Tuong branch’s products and services over the period 2013-2015
3.2.2.1 Agribank Vinh Tuong branch’s product and service performance a Fund mobilization services
Agribank Vinh Tuong branch offers a variety of deposit products to meet the diverse needs of customers One key option is the "flexible savings account," which provides numerous benefits, including the ability for customers to make partial or full withdrawals of their principal amount without incurring penalties This account features a non-term interest rate linked to real-time deposits, allowing for early withdrawals before maturity while ensuring that the remaining principal continues to earn interest at the original rate.
The branch acknowledges the critical role of capital mobilization, particularly from depositors As a result, the bank enhances its marketing efforts and diversifies its strategies for raising capital, benefiting both the institution and its customers.
Currently, the branch is implementing many effective measures in the work of raising capital in Vietnam Dong and foreign currencies in various forms:
Acceptance of customer deposits: non-term deposits, term deposits and other deposits
Acceptance of savings deposits: terms savings deposits, demand saving deposits…
Issuance of Short-term valuable paper: promissory notes, certificates of deposit
Issuance of Long-term valuable paper: bonds, long-term certificates of deposit
Borrowing money from the State bank and other credit institutions
From 2013 to 2015, the branch experienced positive changes in its deposit product activities, driven by enhancements in product offerings, service quality, and staff professionalism, which significantly contributed to its fund mobilization efforts.
Until 31 December, 2015, deposits of customers reached 720.1 billion VND, increased by 283.9 billion VND (equivalent to 65.1 %) compared to 2013
Proportion of individual in total fund mobilized (%)
Table 1 Agribank Vinh Tuong branch’s fund mobilization in the period 2013-2015
(Sources: Agribank Vinh Tuong branch’s annual report from 2013 to 2015)
It can be seen from the table that the fund mobilization of the branch had increased from
From 2013 to 2015, over 80% of the total funds mobilized were in VND, primarily due to the branch's location in a rural area This resulted in a customer base predominantly composed of farmers, individuals, and small to medium-sized enterprises.
The branch has progressively enhanced its capital mobilization strategy by focusing on a stable capital structure, resulting in an increase in the proportion of deposits, which now account for over 85% of the total individual mobilized funds throughout the year.
The growth of fund mobilization at Agribank Vinh Tuong branch can be attributed to attractive deposit interest rates, rising population incomes, and the bank's commitment to simplifying procedures and enhancing marketing efforts With 100% state-owned capital and a dominant presence in the region, the branch effectively drives fund mobilization Furthermore, Agribank Vinh Tuong focuses on improving corporate culture and engaging in social welfare activities, which boosts its brand visibility and customer service quality As a result, the branch has significantly strengthened its position in the Vinh Tuong financial market, facilitating capital raising and the development of banking products.
Capital raising efforts over the years have yielded positive outcomes, with the growth rate of fund mobilization increasing annually, indicating a favorable banking capital outlook for the future To ensure sustainable development, the bank must also diversify its product and service offerings related to fund mobilization, particularly by introducing innovative solutions that attract customers.
Evaluating products and services of Agribank Vinh Tuong branch
In a challenging economic landscape marked by volatile conditions and intense competition among credit institutions, the Agribank Vinh Tuong branch has successfully implemented strategies to navigate these difficulties, striving to achieve optimal business results year after year.
The branch has significantly enhanced its brand name, leading to the expansion and development of products and services tailored to the needs of customers in Vinh Tuong district Additionally, the branch's service activities have contributed to the economic growth of the province With a focus on diversified services, particularly in domestic payments and remittances, the branch has reduced reliance on cash transactions while addressing the capital and payment needs of small and medium-sized businesses and households Customers are increasingly familiar with modern banking services, further promoting financial accessibility in the region.
The expansion of products and services at local branches enhances household income and helps businesses reduce risks Rural families can swiftly access cash remittances from relatives, while customers with children attending universities or working away from home can conveniently transfer money at these branches.
As a subsidiary unit of Agribank, the branch's expansion of services not only enhances the Agribank brand but also effectively meets the needs of farmers, households, and small to medium enterprises in rural areas.
The branch has effectively developed its service activities by successfully implementing plans for modern banking services It excels in delivering banking services through enhanced credit channels and integrates the growth of lending services with fund management.
The development of mobilization services has significantly contributed to the bank's income, leading to a gradual restructuring of the branch's revenue streams As revenues from service activities increase, there is a noticeable decline in traditional credit operations, reflecting a shift towards a modern and safer banking revenue model.
The perception of branch employees regarding service expansion and development has significantly improved, thanks to enhanced training programs that elevate their expertise and professional knowledge Additionally, the branch has upgraded its technological capabilities, featuring modern and synchronized computer systems, network transactions, and software in transaction offices, ensuring convenience and efficiency.
Last but not least, the branch also introduced a number of new services such as foreign remittances, global money transference through Western Union, automated banking services IPCAS
Agribank Vinh Tuong branch is embracing modernization in its banking operations through advanced technology to enhance customer convenience Despite these efforts, the branch faces challenges in the development of its products and services.
Despite the branch's efforts to introduce new products and services, its overall success remains modest compared to competitors in the district The product portfolio primarily consists of basic offerings, including traditional deposits, lending, and money transfers The new lending options are limited to secured loans, such as those backed by savings books and land certificates, as well as unsecured loans, with little diversity in loan duration or repayment methods Additionally, the branch lacks a cross-selling strategy for financial products, resulting in a limited selection of credit and debit card offerings.
Non-cash payment methods remain underdeveloped in the district, with e-banking services facing several limitations These services are not widely adopted by individuals and households in rural areas of the province, resulting in a low number of users.
Secondly, the infrastructure and equipment which have affected the business market share expansion are limited The small number of ATM machines fails to meet the full needs of customers.
Procedures play a crucial role in determining transaction times and the overall quality of banking services Despite the branch's efforts to enhance processes by offering one-stop transactions and simplifying procedures, customer needs remain unmet, as the personal loan processes continue to be time-consuming, particularly given the high volume of small loans handled at the branch.
The bank's services and products lack appeal, particularly the newly launched modern offerings, which have not received adequate attention from the branch Furthermore, the supporting policies and advertising campaigns remain limited, and the branch has failed to effectively communicate the full range of utilities and benefits associated with these modern products to customers.
Customer care remains limited, particularly in transaction styles, which have not undergone significant innovation This lack of advancement results in reduced competitiveness compared to other commercial banks in the area.
In terms of economic conditions
Vietnam's economic development remains at a low level, with limited educational attainment in banking activities among the population The per capita income is still comparatively low when measured against many regional countries, and Vietnam has yet to advance beyond the classification of low-income nations.
Vietnam has a high reliance on cash payments, which, coupled with limited understanding of banking services among the population, presents challenges for the expansion and development of banking products and services This issue is particularly relevant for Agribank and its Vinh Tuong branch.
In terms of the legal environment
SOLUTIONS AND RECOMMENDATIONS TO AGRIBANK
Solutions to Agribank Vinh Tuong branch
In recent years, banking services have evolved into two main categories: traditional and modern banking The period from 2011 to 2015 marked a significant transformation in the banking sector, introducing innovative services such as home banking, phone banking, internet banking, and SMS banking These advancements have enhanced deposit and credit products, making them essential for mobilizing and allocating financial resources within the economy Additionally, banking procedures and transaction times have been streamlined, offering competitive service costs However, despite these advancements, the banking sector continues to encounter various challenges in the development of its services and products.
To enhance the quantity and quality of banking services and foster the growth of Agribank Vinh Tuong branch, it is essential to implement several strategic measures aimed at improving banking operations.
4.1.1 Promoting research and development of products and services
The limited range of products and services at the Agribank Vinh Tuong branch fails to meet customer expectations and demands Additionally, the branch's offerings remain traditional and lack uniqueness Consequently, it is crucial for the branch to prioritize research and diversify its banking products and services to better serve its clientele.
4.1.1.1 Improving existing products and services
To effectively meet customer demands, the branch must assess its services and product positioning, implementing timely improvements to enhance the quality of its banking offerings Furthermore, it is essential to boost the efficiency of traditional services while simultaneously innovating modern financial products, particularly in the area of fund mobilization services.
The Agribank Vinh Tuong branch should enhance its fund mobilization strategies by diversifying maturities and offering competitive interest rates It is crucial to classify customers to implement tailored policies for those with significant deposits Additionally, improving operational hours for depositor convenience is essential The branch must focus on effective marketing and promotion while providing high-quality services alongside deposit products, such as money transfers and payments, to attract low-cost deposits without the pressure of high interest rates.
The Vinh Tuong branch should enhance its loan offerings by diversifying terms and interest rates tailored to individual customer needs To facilitate access to capital, especially for private enterprises, the branch must streamline administrative procedures associated with traditional loan products Additionally, expanding project financing and credit limits will help penetrate the residential credit market Furthermore, Agribank Vinh Tuong branch is encouraged to broaden its consumer and production lending options to capture a larger share of the individual customer market through direct lending initiatives.
To enhance non-cash payment regulations in line with international law, it is essential to simplify settlement procedures while prioritizing bank security and customer interests Financial institutions should actively educate clients about the advantages of various payment methods, enabling them to utilize these options effectively in all transactions Furthermore, these fundamental product instructions should be widely disseminated through mass media to ensure customers are informed about the usage and benefits of each payment solution.
Moreover, the branch should encourage businesses having payment accounts at the bank to participate in international payment services in order to receive preferences of fee d E- banking services
To meet the growing demand for faster services while maintaining quality and client safety, branches must enhance their network and leverage modern information technology for quicker service delivery Establishing dedicated websites with essential information about E-banking services is crucial for customer engagement Additionally, prioritizing the security of online transactions is vital to ensure customer trust and satisfaction.
4.1.1.2 Promoting doing research on new banking products and services
Enhancing the role of the R&D Department is crucial for the branch, as it conducts vital market research to understand customer needs and develops innovative products tailored to various market segments.
It is necessary for the branch to specialize in designing products and services with simple and accessible procedures to customers Besides, the branch should focus on conducting
~ 43 ~ 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
In today's competitive financial landscape, commercial banks strive to differentiate themselves through a diverse range of banking products and services To attract customers and boost profitability, banks must innovate and enhance their offerings Specifically, the Agribank Vinh Tuong branch needs to focus on developing and improving both modern and traditional products, particularly in fund mobilization services, to enhance efficiency and quality.
Fund mobilization services are crucial for commercial banks, with the Agribank Vinh Tuong branch seeking innovative strategies to attract more customers and enhance capital mobilization from the community To achieve this, the branch can introduce new personal savings products that diversify their offerings and appeal to a broader customer base.
The "Saving for the Future" product is designed for customers with a steady income, allowing them to accumulate funds for specific future goals like purchasing a home, funding education, or traveling abroad Commercial banks provide competitive interest rates based on the chosen payment terms and maturity period.
“Deposit once, withdraw multiple times” product is used by customers who have housing construction plans, students studying away from home needing for monthly costs
The innovative "life-saving" product merges the strengths of insurance companies and banks, offering customers a streamlined personal money management service This solution ensures financial support for the elderly or those facing loss of working capacity, all while minimizing the procedural complexities typically associated with traditional insurance services.
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 bank should diversify its lending products, including options like discount commercial paper This service not only offers high security for the bank but also meets customers' urgent capital needs effectively.
Lending services that utilize insurance policies as collateral offer a secure option for banks, as repayment is guaranteed by insurance companies if customers default To effectively implement these services, banks must establish a thorough evaluation process for the insurance policies involved.
Recommendations to the State Bank of Vietnam
The State Bank of Vietnam (SBV) must enhance its legal framework to align with integration demands, focusing on refining banking and credit institutions laws This involves reviewing, updating, and modifying existing mechanisms, policies, and documents to ensure compliance with international financial commitments.
To ensure the safety and soundness of banking activities, the State Bank of Vietnam (SBV) must prioritize the monitoring and supervision of commercial banks By implementing an early risk alert system, SBV can effectively identify commercial banks facing challenges in their operations.
Moreover, SBV should enhance the project of reducing cash payment to stimulate the electronic payment in society, thereby developing modern banking products and services
To enhance its international standing, the State Bank of Vietnam (SBV) should strengthen cooperation with global financial institutions, fostering relationships that promote the image of domestic commercial banks and facilitate the utilization of foreign funds Additionally, it is crucial for the SBV to incentivize growth and innovation within the banking sector.
~ 54 ~ assists commercial banks to co-operate and borrow money to improve infrastructure and modernize technology.
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
The government must implement policies to encourage non-cash payment methods across all sectors of the economy Despite efforts by commercial banks to offer products and services that facilitate non-cash transactions, there are significant challenges in shifting the population's reliance on cash payments The limited adoption of non-cash payment habits hinders the growth of modern payment methods such as cards, online transactions, and digital accounts.
The government should prioritize enhancing modern technology by offering training courses for technical experts This investment in information technology will enable commercial banks to efficiently develop innovative products and services.
In recent years, the banking sector has experienced significant growth in services, products, and channels, leading to intensified competition among domestic commercial banks, including the Agribank Vinh Tuong branch.
The banking sector is currently encountering numerous challenges, necessitating the enhancement of both the quantity and quality of services To address these issues, the Agribank Vinh Tuong branch is encouraged to explore new products and services, improve distribution channels, invest in technology, and enhance human resources Additionally, implementing effective customer care policies, staff reward systems, and robust marketing strategies will bolster the branch's competitiveness and strengthen its reputation Furthermore, recommendations are provided to the State Bank of Vietnam and the Government to support the development of banking products and services, benefiting not only Agribank Vinh Tuong but also commercial banks as a whole.
Globalization and economic integration are essential trends shaping the development of countries worldwide The banking sector's integration presents both opportunities and challenges for commercial banks in Vietnam, including the Agribank Vinh Tuong branch, which is navigating these broader trends.
To bridge the gap with other commercial banks, Agribank Vinh Tuong branch is committed to enhancing and developing its banking services to better meet customer needs Despite achieving positive results, the branch encounters numerous challenges stemming from the government's legal framework, the operational mechanisms of the State Bank of Vietnam, and internal factors.
To enhance its competitiveness in the domestic financial market and foster regional and global economic integration, the bank must implement key strategic solutions Additionally, it is essential for the government and legal framework to provide synchronized measures that support the bank in executing these initiatives effectively.
To enhance banking services at the Agribank Vinh Tuong branch, I propose several measures grounded in academic knowledge and online research These strategies aim to address the branch's existing limitations while simultaneously improving the quality of its banking products and services.
The research process has inherent limitations, highlighting the need for a comprehensive study of banking products and services This understanding is crucial for identifying optimal strategies for the development of banking offerings.