Improving competitiveness of vietnamese commercial banks in the open economy,graduation thesis

STATE BANK OF VIETNAM BANKING ACADEMY FOREIGN LANGUAGES FACULTY - - GRADUATION THESIS IMPROVING COMPETITIVENESS OF VIETNAMESE COMMERCIAL BANKS IN THE OPEN ECONOMY Supervisor : Ms Can Thuy Lien (M.A) Student : Nguyen Phuong Thao Class : K16-ATCC Student code : 16A7510137 May, 2017 DECLARATION I hereby declare that this submission is my own work in design and execution, and that all material contained herein has been duly acknowledged Signature Nguyen Phuong Thao ACKNOWLEDGEMENT I would like to extend my deepest appreciation and gratitude to my thesis advisor, M.A Can Thuy Lien, for her tremendous interest and assistance in the preparation of this thesis I am greatly indebted to all lecturers in Faculty of Foreign Languages for having expertly instructed me through my graduate education at Banking Academy of Vietnam With boundless love and appreciation, I would like to express my profound gratitude to my friends for supporting and encouraging me to this study Finally, I would like to acknowledge with a deep sense of reverence towards my family This thesis would not have been possible without them TABLE OF CONTENTS DECLARATION ACKNOWLEDGEMENT LIST OF TABLES AND FIGURES LIST OF ABBREVIATIONS INTRODUCTION 1 RATIONALE TO THE RESEARCH OBJECTIVES OF THE STUDY 2.1 General Objectives 2.2 Specific Objectives SCOPE OF THE STUDY METHODOLOGY OF THE STUDY SIGNIFICANCE OF THE STUDY STRUCTURAL ORGANIZATION OF THE STUDY CHAPTER 1: THEORETICAL FRAMEWORK OF COMPETITIVENESS AND COMMERCIAL BANKS IN VIETNAM 1.1.The concept of competitiveness 1.2 The concept of competitiveness of commercial banks 1.2.1 Competitiveness in the banking operations 1.2.2 The factors affecting the competitiveness of commercial banks 1.3 The history of banks in Vietnam 1.4 Profile of the Banking Sector 1.4.1 Number and size of Banks 1.4.2 Types of banks by ownership 12 1.5 The concept of open economy 14 1.6 Banking Regulation in Vietnam and Basel Agreement 15 1.6.1 Banking Regulation in Vietnam 15 1.6.2 Basel Agreement and its effects on the Banking Regulation in Vietnam 17 CHAPTER 2: THE REALITY OF COMPETITIVENESS AT VIETNAMESE COMMERCIAL BANKS 20 2.1 Competitiveness of Vietnamese Commercial Banks through indicators 20 2.1.1 Financial Capability and Capital Adequacy Ratio (CAR) 20 2.1.2 Return on Asset (ROA) and Return on Equity (ROE) 23 2.1.3 Diversification of products and services 27 2.1.4 Technology 30 2.1.5 Human resources 32 2.1.6 Management qualification 33 2.2 The Competitiveness of Vietnamese Commercial Banks according to SWOT analysis: 34 2.2.1 Strengths 34 2.2.2 Weaknesses 35 2.2.3 Opportunities 37 2.2.4 Threats 37 2.3 Assess the opportunities and challenges of Vietnamese Commercial Banks in the open economy: 38 CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS TO IMPROVE COMPETITIVENESS OF VIETNAMESE COMMERCIAL BANKS IN THE OPEN ECONOMY 41 3.1 To the State Bank of Vietnam 41 3.2 To Vietnamese Commercial Banks 41 3.2.1 Strengthening financial capacity 42 3.2.2 Improving assets and liabilities management 43 3.2.3 Enhancing the diversification of traditional products and develop new services 43 3.2.4 Improving service quality 44 CONCLUSION 45 REFERENCES APPENDIX LIST OF TABLES AND FIGURES List Of Tables Table 2.1: Top 10 Banks with the highest ROA, ROE indicators in 25 ASEAN Table 2.2: Some financial indicators of Vietnamese Commercial 26 Banks Table 2.3: The qualification of the banking sector ’s labor force in 32 2016 List of Figures Figure 1.1: Banking Sector Assets by Type Figure 1.2: Banking Sector Chartered Capital by Type 10 Figure 1.3: Compare Credit Market Shares of types of Banks 11 Figure 4: Total Assets of Vietnamese Largest Listed Banks in 12 2016 Figure 2.1: Owner’s Equity of Vietnamese Commercial Banks in 21 12/2016 Figure 2.2: ROA and ROE indicators of Vietnamese Commercial 24 Banks in 2015 Figure 2.3: The amount of ATMs in 2016 31 Figure 2.4: The amount of POS Machines in 2016 31 Figure 2.5: Human Resources of Vietnamese Commercial Bank until 33 March, 2017 LIST OF ABBREVIATIONS ACB Asia Commercial Bank Agribank Vietnam Bank for Agriculture and Rural Development ATM Automatic Teller Machine BIDV Bank for Investment and Development of Vietnam CIs Credit Institutions CTG/VietinBank Vietnam Joint Stock Commercial Bank for Industry and Trade - VietinBank DongA Bank DongA Joint Stock Commercial Bank Eximbank - EIB Vietnam Commercial Joint Stock Export Import Bank IPCAS Intra Payment and Customer Accounting System JSCBs Joint Stock Commercial Banks MHB Mekong Housing Bank NPLs Non-performing Loans POS Point of Sale Sacombank Sai Gon Thuong Tin Commercial Joint Stock Bank SBV State Bank of Vietnam SOCBs State-owned commercial banks SWIFT Society for Worldwide Interbank and Financial Telecommunication Techcombank Vietnam Technological and Commercial Joint Stock Bank UNDP United Nations Development Programme VIB Vietnam International Commercial Joint Stock Bank Vietcombank/VCB Joint Stock Commercial Bank for Foreign Trade of Vietnam VND Vietnamese Dong VPBS Vietnam Prosperity Bank Securities INTRODUCTION In the context of globalization, the banking industry plays a crucial role as one of the mobilization channels to regulate the capital of the economy, and also an important tool in stabilizing the financial market and economic management of the state The growth and development of this system has a direct and dramatic impact on the growth of the overall economy In particular, many business sectors such as ecommerce, retail, securities, etc depend a lot on banking services Recently, the first 100% foreign-owned subsidiary of HSBC and Standard Chartered Bank was established in Vietnam This event opened a stage for the development of a foreign bank's reputation as part of Vietnam's WTO accession commitments to clear the barriers to the scale and business operations of foreign banks The presence of an offshore bank can provide incentives for domestic banks to change but also poses new challenges for the banking system in the country Foreign banks which have strong financial capacity and experience in risk management, and especially high standards of operation, modern technology than the Vietnamese Commercial Banks will be a challenge to maintain the domestic market and to expand the market overseas Meanwhile, the financial market has not really developed There is no unified policy to manage competitive performance in the banking sector Therefore, improving the competitiveness of Vietnamese Commercial Banks at the moment is essential for successful integration RATIONALE TO THE RESEARCH In recent years, along with the renewal of the operating mechanisms of the market economy, commercial banks of Vietnam has made important strides in improving competitiveness to prepare for international integration through objective measures : increased the size of capital, developed technology and applied modern banking, enhanced marketing activities It is undoubtedly recognized by numerous scholars that competitiveness play a crucial role in any organization Besides, the worldwide trend of globalization and economic integration is dramatically spreading out, along with that tendency is the continuous development of science and technology Vietnam's financial market is not an exception for this trend However, compared to the modern commercial banks in the developed and developing countries around the world, the commercial banks of Vietnam has much limitations on competitiveness The limitations express that banking activities are not really under the laws of the market, the governance mechanisms remains weak, thereby increase corporate value is not the only target To be able to stand firm and grow in the market mechanism as required economic development of the country in the present and future, the government needs to implement more comprehensive measures to enhance the competitiveness of commercial banks of Vietnam Currently, Vietnamese market has appeared a great number of banks, not only the local banks but also the foreign banks That almost all of the banks offer similar services drives us to a question that: How to improve the competitiveness of Vietnamese Commercial Banks in the open economy? OBJECTIVES OF THE STUDY 2.1 General Objectives The general objective of the study is to evaluate and assess the competitiveness of Commercial Banks of Vietnam, especially the big four banks: BIDV, VietcomBank, AgriBank, VietinBank 2.2 Specific Objectives The specific objectives of the thesis are to measure competitiveness of Commercial Banks of Vietnam, and to recommend area(s) that requires improvements Moreover, the thesis is made with the objective of clarifying basic theories of international economic integration in general, international integration in the banking sector in particular and competition in international economic integration, giving an overview of competitiveness of Vietnam's JSCBs under the model of competitiveness of Michael Porter In addition, the thesis introduces some solutions to improve the competitiveness of the JSCBs system in Vietnam, propose a number of recommendations to functional agencies to facilitate the implementation of the solutions mentioned The thesis are based on a number of research topics, specialized journals, specialized books, reports and websites of some banks, hoping to contribute to the improvement of competitiveness in the integration process SCOPE OF THE STUDY The thesis focuses on the current situation of Vietnam's commercial banks, the competitiveness and integration of commercial banks in Vietnam, the state management of these activities and the factors related to enhancing the competitiveness of Vietnamese Commercial Banks in the integration process METHODOLOGY OF THE STUDY The type of research that will be used in this thesis are quantitative research and qualitative research The thesis aims to gather an in-depth understanding of the competitiveness of Vietnamese Commercial Banks in the open economy Furthermore, it also examines the phenomenon through observations in numerical representations and through statistical analysis Besides, the thesis follows the combinations of dialectical materialism method, historical materialism method, statistical method, financial analyze method, and inductive method Specifically, in the previous research studies, many researchers often assess the competitiveness of Vietnamese Commercial Banks base on the following criteria: market share, risk management ability, marketing level However, such a narrow focus may not fully explain how the Vietnamese Commercial Banks may perform better in the integration context and under the Basel Agreement Consequently, a great deal of research has focused on the analysis of competitive factors such as financial power, financial indicators, new product development, human resources quality, technological levels, and management ability In addition, the thesis provides the latest data and figures of the Vietnamese Commercial Banks in the current situation On the basis of such real situations, the thesis hypothesizes some solutions to the improvement of competitiveness in domestic commercial banks in the context that Vietnam has been opening up the banking sector completely and our country has joined in the WTO commitments Furthermore, the author use Basel Agreement to analyze the significance of competitiveness of Vietnamese Commercial Banks In order to achieve the objective of understanding the current strengths, weaknesses, opportunities and threats of the current Vietnamese banking system from the perspective of practitioners, a survey was conducted to collect the ideas and opinions of a group of professionals working in the banking - finance sector, investment and securities companies The However, the function of representation and supervision of the Board of Directors and the Supervisory Board still remain unclear As the state-owned commercial banks not have a shareholders’ meeting, the supervision of the Board of Directors' activities are not yet possible There is a conflict of power and overlapping responsibilities between the Board of Supervisors and the Board of directors, which triggers the inferior management of SOCBs In addition, the manager of some banks neglect in understanding the needs of employees which create separateness between groups, thereby affects the bank's performance Some leaders have not recognized the ability of employees and not give the staff the flexibility in quitting or changing jobs 2.2 The Competitiveness of Vietnamese Commercial Banks according to SWOT analysis: 2.2.1 Strengths - The Vietnamese Commercial Banks have the advantages of business culture This is a key factor to enhance the position of commercial banks in Vietnam in the international integration Trust and cultural sympathy are the primary attractions of commercial banks in continuing to strengthen their traditional relationships with their customers as competitive rivals themselves in many ways - Unquestionably, Vietnamese Commercial Banks have extensive networks (especially JSCBs) At present, these banks have built up an immense system, especially in the rural market Therefore, it is undeniable that understanding and penetrating into the market will still be the dominant strengths of domestic banks - Stable market share is also a big advantage of the commercial banks in Vietnam Assuredly, we can see the opportunities for the flourish Vietnamese banks to expand their market share in this environment, as well as to drive additional growth in retail banking, card payment channels and to tap on the rising affluence among the young population in the country - In spite of unfavorable developments in the international financial market, Vietnam's banking system develops safely to make an important contribution to the overall economic growth of the economy 34 - With the advantage of highly qualified executives who have studied, worked abroad and occupied leading positions in the banking system, Vietnamese Commercial Banks have a huge competitive advantage, especially in the context of human resource scarcity in the banking sector today - Although the banking sector remains small, banking networks and services have been expanding rapidly and there is a great potential for banks to develop the retail banking business (approximately 75 percent of Vietnam’s 90 million people use banking services while the remaining 25 percent have not taken advantage of banking services.) With the goal of becoming leading financial groups in Vietnam and in the region over the next decade, Vietnamese Commercial Banks has built significant strategies as follows: improving competitiveness to raise its minimum capital adequacy ratio (CAR) to 10-12% and other financial indicators reach the international standards, striving to achieve the ratings class "AA" of the international rating agencies 2.2.2 Weaknesses - Vietnamese banks are basically small-sized banks which have not formed as the backbone of the financial system Credit quality (expressed through bad debt ratio) has been improved but potential risk to the whole system is still big A particular weakness of the state-owned commercial banks is the low level of risk management and corporate governance - In terms of information technology infrastructure, it can be said that for stateowned banks, the current level of information technology application and IT infrastructure building can be on a par with other banks in the region However, the biggest weakness in technology capacity is the ability to exploit technology effectively According to many experts, the application of technology has developed slowly, unevenly and there are too many weaknesses to overcome For modern banking services, although many banks have progressed, the convenience for users has not been taken into account, the number of ATM is limited, and the association of ATM systems are not accomplished 35 - The phenomenon of both shortage and weakness of human resources is also a constant difficulty of banks today ‘The crisis of human resources’ that led to the phenomenon of manipulation and job jolting may create a burden for the banks’ managers Moreover, the quality of human resources is still low Therefore, improving the quality of human resources and the ability to attract talents may be considered as the most important long-term task of Vietnamese Commercial Banks in the open economy This is also a mechanism whereby Vietnamese Commercial Banks can create high competitive advantages by improving customer service quality and developing new products Furthermore, some banks lack senior staff and policy analysts Specifically, at VietinBank, the number of certified CFA level is very small, although the leadership team and employees have a college degree or higher In addition, Vietcombank‘s ATMs sometimes cause annoyance to customers when the machine is out of money on the peak days such as holidays, New Year's Day, etc - Low management capacity and a lack of effective management tools are characterized as shortcomings in the competitiveness of Vietnamese Commercial Banks Furthermore, low management capacity can lead to policy mistakes that waste a large amount of resources - Unquestionably, the progress of equitization of banks is still slow After more than four years of equitization implementation, some main tasks have not been completed on schedule The current legal regulations on equitization still have some contents that are not quite suitable for the specific characteristics of the operation of stateowned commercial banks For example, regulations on asset revaluation are considerable problems that SOCBs cannot carry out in a short time Additionally, another cause of delays is that the banks‘ Board of Directors are very inexperienced in developing terms of reference as well as negotiating the scope of work or consulting costs to select the right consulting firm Therefore, this is also a time-consuming process - Understanding the world financial markets is still limited This is not only the Vietnamese Commercial Banks’ weaknesses but also the weaknesses of the whole Vietnamese banking system (including SOCBs) This decrepitude could not be immediately improved, but it will be enhanced while Vietnam is joining the open economy 36 - Banking products and services are monotonous Although there is a variety of products for different customers, these products have not yet attracted the attention of customers Therefore, in the near future, the Vietnamese Commercial Banks should have more improvements to enhance their competitiveness and get the larger number of potential customers 2.2.3 Opportunities - The macroeconomic development of Vietnam's economy is relatively fast (Shown through economic growth) Nowadays, Vietnam is the country which classified as developing country in the world with annual economic growth of about 78% (ADB, 2016) Especially, the growth rate of the banking sector was also high: 20%/year When Vietnam joined the WTO and the open economy, import and export opportunities will sharply increase and create the demand for international payments - In order to enhance socio-economic development and curb the inflation, the government has made considerable rules and policies to limit the circulation of cash by making the payment to workers and employees via ATM cards, encouraging people to purchase through payment cards of banks Since then, the banking services, such as opening personal accounts, paying bills through ATMs of Vietnamese Commercial Banks have been growing and providing a huge amount of profit for the banking sector - International integration will create motivation for Vietnamese Commercial Banks in banking reform Moreover, financial markets will grow faster, enable Vietnamese Commercial Banks to develop new types of services 2.2.4 Threats As Vietnam officially joined the WTO, foreign banks in Vietnam will create fierce competition to capture market share in the banking sector in Vietnam The foreign banks with large capital advantage, high technical employees’ level, senior management experience, clear and specific business strategies in the long run will pose particular difficulties for domestic banks in competing for market shares in the country Besides, struggles in the labor market of the foreign banks would cause a brain drain situation 37 2.3 Assess the opportunities and challenges of Vietnamese Commercial Banks in the open economy: Firstly, international economic integration is becoming an accelerating trend on the global scale in many areas With the expanding of the world‘s financial market, Vietnam has to open up the domestic market, including the banking and finance sector In this integration context, Vietnamese Commercial Banks have to actively aware and willing to participate in the process of competition for the domestic market Secondly, it can be admitted that not every credit institutions can fully satisfy all the requirements of the customers Normally, a bank has the advantage in some aspects and a proportion of restrictions in some fields Therefore, the banks should be aware of this in order to enhance competitiveness through the services’ promotion, maintain the market share, and their profit in terms of market opening Thirdly, integration in the banking sector means that liberalization and expanding in banking sector will be implement according to international commitments This will not only create opportunities for Vietnamese Commercial Banks but also pose many difficult challenges From the above analysis, along with the importance of the banking sector in the process of developing the national economy, take advantage of the opportunities and confront with the considerable challenges is now becoming indispensable issue for Vietnamese Commercial Banks  Opportunities Firstly, the integration of the banking sector allows domestic and foreign commercial banks to compete, penetrate into international markets and expand business operations Integration also gives Vietnam banking industry exchange opportunities and international cooperation in the field of fiscal policy, monetary, inspection, monitoring, foreign exchange management, thereby enhances the position and prestige of Vietnam commercial banks in the banking and financial transactions internationally 38 Second, the market participation of foreign banks not only increase the level of competition, but also escalate safety of the entire banking system Furthermore, through integration, Vietnamese commercial banks have access to capital, technology, experience and management skills of commercial banks on the global scale Besides, in order to improve the quality of business operations and keep up with the development requirements of domestic and foreign markets, Vietnamese Commercial Banks have actively implemented organizational restructuring towards more rational and professional directions, performed deeper specialization in banking operations, improved capital efficiency, and retrained the staff These are important prerequisites for Vietnam banks to enhance their position on the international arena Third, the integration will create the transparency, self-responsibility character of Vietnam’s banking system to meet the requirements of integration and the implementation of commitments, thereby enhance operating efficiency in the field of monetary and banking Fourth, open economy may exert great opportunities for credit institutions to approach and develop a variety of convenient banking products and services, expand business activities and continuously upgrade the quality of customer services Fifth, the integration requires a more accomplished regulatory environment in order to implement international commitments, create an attractive investment environment, encourage capital inflows into the country through direct investment, and create more chances for banks’ lending and capital mobilization  Challenges Although in recent years, the banking system has made certain progress, the gap between domestic banks and the institutions in the region is still tremendous in all aspects First, Vietnamese Commercial Banks now have little financial resources, lowquality assets, poor portfolio of products and services, and the quality of products and services is not high Additionally, the organizational structure and operation 39 management is not professional Moreover, the banking technology also has a significant gap compared to the standard of the region and the world Second, the integration will bring fierce competition in the banking sector Foreign banks currently hold only minority share in Vietnam’s banking sector but they will have full advantages in the future when the restrictive regulations of the State Bank of Vietnam are easing gradually to implement market-opening commitments Third, international economic integration increases the risk in capital transactions of the banking system, while the management mechanism is not perfect, especially the mechanism of inspection and coordination between the relevant ministries will be a big challenge for Vietnam's commercial banks If legislators not keep pace with rapid growth of financial transactions, there will be two possibilities as following: the banking sector lost the ability to control, which may lead to a national crisis, or they will still apply the restrictions to maintain control These two cases are both harmful to the development of the banking sector Fourth, in open economy, human resources of the banking sector need to understand the international trade law, equip with the knowledge and skills in the international standards However, the labor of commercial banks in Vietnam still lack soft skills and realization in this field Thus, the process of international economic integration will create greater pressure for increasing business activities of commercial banks The competition takes place not only abroad but also takes place in the domestic market, where commercial banks in Vietnam still has many advantages In order to grasp the advantages and increased competitiveness, Vietnamese Commercial Banks need to know their position in order to assess their competitiveness based on the criteria mentioned, take measures to improve their internal capacity and their own competitiveness 40 CHAPTER SOLUTIONS AND RECOMMENDATIONS TO IMPROVE COMPETITIVENESS OF VIETNAMESE COMMERCIAL BANKS IN THE OPEN ECONOMY 3.1 To the State Bank of Vietnam - The State Bank of Vietnam (SBV), in its role of a management agency, annually organizes the assessment and ranks the competitiveness of credit institutions - The SBV should also review Circular No 13/2010 / TT-NHNN issued by the Governor of the State Bank on May 20th 2010, effective from October 1st 2010 In fact, some provisions of this Circular are quite inadequate which may lead to the shrinkage of competitiveness (in terms of capital) of Vietnamese Commercial Banks For example, Circular 13 states that deposit capital used for lending does not include demand deposits from economic organizations, State Treasury, social insurance and other organizations This provision is unreasonable, as the demand deposits of these subjects usually account for between 15% and 20% of total mobilized capital of credit institutions The capital to ensure solvency can be up to 35% of total mobilized capital; therefore, the moderately high ratio will exert negative influences on the use of capital of commercial banks, thereby reduce the bank's competitiveness - In addition, the SBV should establish a number of organizations to provide guidances and recommendations on commercial banks' suppliers transferring banking technology, avoid the import of dumping sites technology or less competitive technologies 3.2 To Vietnamese Commercial Banks To enhance the position of Vietnamese Commercial Banks in the international integration, there are some solutions as following: - Strengthen the financial capacity in the direction of increasing charter capital, ensuring capital adequacy in accordance with international standards and compliance with Vietnamese banking laws Accordingly, commercial banks need to determine a 41 reasonable percentage of annual retained profit to increase chartered capital or may undertake mergers and acquisitions (M&As) of small banks to form a bigger one - Build a staff of highly professional level with high quality - Organize effective training and professional training for staff about new products and services provided In particular, commercial banks should consider building and upgrading the E-Learning system to simplify the training - Build and develop new products with new and updated gadgets Indeed, new product development is one of the determinants of the competitiveness of commercial banks, as commercial banks ultimately compete with each other through their supply chains In addition, banking products are not proprietary, therefore banks can only create strengths or differences for banks by using additional services In order to improve the competitiveness of products, commercial banks need to develop new product development strategies and make an appropriate investment in new product research and development - Strengthen and promote their bank's brands by creating advertisements or becoming the sponsors of remarkable events in Vietnam As the brand of the bank confirms its position in the market, the position of the bank is reflected in the market share of the product, the prestige of the product, and the perfection of the service Therefore, Vietnamese Commercial Banks should strive to pursue their own brand development strategy, which is unique to their products and services own strengths - Continue to accomplish the technology infrastructure, expand the types of new products on the basis of ensuring accuracy, confidentiality and safety Specifically, the banks need to check the quality of old machines and replace the unqualified machines with the new ones The technology systems that the banks are building today have to be adapted to rapidly changing needs and to integrate new technologies 3.2.1 Strengthening financial capacity - As presented in chapter two, the important role of equity for banks is very large It contributes to a healthy financial capacity of the banks according to 42 international standards Whether it's one of the domestic banks with strong financial capacity or not, the bank's financial capacity is still relatively low compared to other banks in the region According to the provisions of Law on Credit Institutions of the Socialist Republic of Vietnam, investment of commercial banks cannot exceeds 15% of its equity Therefore, increasing capital is the main tasks of Vietnamese Commercial Banks in the current period - There are some suggestions for the bank's capital raising in the current period: + Firstly, increasing the Tier capital: In order to raise capital, the banks should recover the State‘s outstanding debts, thereby increase funds towards the Tier capital + Secondly, raising the Tier capital: In order to raise capital, the banks should continue to issue bonds with competitive interest rates to boost Tier capital 3.2.2 Improving assets and liabilities management Managing assets and liabilities is an indispensable part for the existence of a credit institution Specifically, liabilities and assets may affect liquidity, profitability, and the competitiveness while using price as a competitive tool Admittedly, most Vietnamese Commercial Banks still confront lack of liquidity Besides, with the sluggish of real estate market, the stocks and shares will push the credit risk of commercial banks in Vietnam Therefore, in order to strengthen assets - liabilities management, Vietnamese Commercial Banks should apply some methods as following: - Improve and strengthen the statistical reports, ensure accurate reporting data - Construct and apply assets-liabilities management in business activity - Coordinate and synchronize between the credit risk and liquidity risk in assets - liabilities management 3.2.3 Enhancing the diversification of traditional products and develop new services: 43 There are some solutions to develop and diversify the bank's products and services in order to enhance their competitiveness: - Diversify new product lines on the basis of traditional products to meet the expectations of distinct types of customers’ segment - Improve the quality of the marketing department, build a marketing strategy for each product to help clients understand and use the new product line effectively - Enhance marketing capabilities of each bank staff, not just the marketing department - Accomplish the infrastructure and the information technology development to ensure that the products are up-to-date - Ensure the consistency in terms of technology between branches and transaction offices - Avoid congestion in the transmission line, which causes negative sentiments for the consumers - Continue to improve IPCAS synchronization system - Intra Payment and Customer Accounting System - from urban to rural areas in order to deploy a perfect system for deposits and withdrawals 3.2.4 Improving service quality Nowadays, the quality of services is also seen as an important criterion in order to attract consumers of the bank - In order to improve service quality, thus contributing to increase the competitiveness of Vietnamese Commercial Banks, these institutions should build a team of employees dealing with professional qualifications; have a good sense of responsibility; have good moral qualities, serious working style, and honest personality This will help customers feel comfortable when making transactions and become loyal customers with long-term commitments to the bank - Furthermore, the credit institution may conduct surveys of customers’ satisfaction periodically by questionnaires, emails, phone calls, interview which give them chances to express their opinions, thoughts, comments and evaluation 44 CONCLUSION With a view to enhancing the competitiveness of Vietnamese Commercial Banks, this thesis has synthesized, analyzed and evaluated the real situation and offered detailed solutions There are some main contents as follows: The first thing to mention is the theoretical basis, including the concept of competitiveness, the history and the profile of the banking sector in Vietnam Furthermore, the first chapter of the thesis also illuminates the concept of the open economy, banking regulation in Vietnam and Basel Agreement The second chapter chiefly analyzes the reality of Vietnamese Commercial Banks in the current period As a result, a framework of factors to measure the competitiveness of Vietnamese Commercial Banks is developed These chosen factors are classified into different categories: financial capability, financial indicators, diversification of products and services, technology, human resources and management qualification In this chapter, the advantages and limitations of Vietnamese Commercial Banks are pointed out It can be easily seen that Vietnam is making progress in developing the basic infrastructure to support a modern banking system and financial markets to meet the international standards However, when being compared to foreign banks in the region and in the international arena, Vietnamese banks are relatively low-developing Therefore, measuring the effects of integration appears essential for the regulators and banks in seeking appropriate and prompt solutions to these challenges and in seizing valuable opportunities to obtain sustainable and efficient development, thereby enhancing the banks’ competitiveness in the open economy Finally, from all the facts discussed in the preceding chapters, the purpose of the third part of the thesis is to work out some practical solutions and recommendations for the improvement of competitiveness of Vietnamese Commercial Banks Once these solutions are taken into consideration and deployed at the same time, the competitiveness of Vietnamese Commercial Banks will certainly be improved 45 REFERENCES  Bank for Investment and Development of Vietnam (2014, 2015, 2016) The Annual Report  Joint Stock Commercial Bank for Foreign Trade of Vietnam (2014, 2015, 2016) The Annual Report  Vietnam Bank for Agriculture and Rural Development (2014, 2015, 2016) The Annual Report  Vietnam Joint Stock Commercial Bank for Industry and Trade (2014, 2015, 2016) The Annual Report  VP Bank Securities and HSC (2015, 2016) The Annual Report  Cornett (2006) Financial Institutions Management: A Risk Management Approach, 8thedition  Peter S Rose (1991) Commercial Bank Management (Irwin Series in Finance)  Porter M (1998) On Competition Harvard Business Review Boston  Porter Michael (1990) The Competitive Advantage of Nations London  Robert J Barro (1996) Determinants of Economic Growth: A Cross-Country Empirical Study National Bureau of Economic Research, Inc  Sakata, S (2013) Vietnam’s Economic Entities in Transition Ide Jetro  Schmuck Roland (2008) “Measuring Company Competitiveness” Proceedings Papers of Business Sciences: Symposium for Young Researchers (FIKUSZ)  Singh, K & Dutta, V (2013) Commercial Bank Management Mc Growth Hill  http://www.cafef.vn/  http://www.duxtonam.com  http://www.moj.gov.vn/vbpq  http://www.nfsc.gov.vn/  http://www.sbv.gov.vn  http://www.viettimes.vn/  https://www.bis.org/  https://www.vietnamnet.vn  https://www.weforum.org/  https://www.adb.org/countries/viet-nam/economy APPENDIX Total Assets of Vietnamese Banks in 2016 compared to 2012 2016 2012 Sources: Banks’ Annual Report 2016 Unit: Billion VND