INTRODUCTION
Current problem statement
The past few years have witnessed an exponential growth in science and technology
The banking system has embraced modern payment methods, with non-cash payments, particularly through bank cards, significantly transforming purchasing habits globally, including in Vietnam.
The bank card service has emerged as a modern and essential banking solution in Vietnam, offering safety and convenience to clients As this service gains traction, banks, particularly the Bank for Investment and Development of Vietnam (BIDV), are implementing strategies to enhance their market share and increase revenue The intense competition in the bank card sector has led to better fulfillment of client needs, resulting in a significant rise in the number of users and an increasingly dynamic market Consequently, enhancing the quality of bank card services has become crucial for sustaining growth and meeting consumer expectations.
Under the supervision of my thesis advisor, MA Nguyen Thi Hong Mai, I selected the topic "Improving the Quality of Bank Card Services at the Bank for Investment and Development of Vietnam (BIDV)." This research aims to analyze the current state of bank card services and propose effective solutions to enhance their quality, ultimately contributing to the growth and development of BIDV.
Objective and research questions
The objective of this study is to:
- Study the fundamental theoretical issues about quality of bank card service in the commercial bank
- Analyze and evaluate quality of the bank card service at BIDV
- Propose several solutions and recommendations to promote quality of bank card service at BIDV
The thesis should be able to answer the following questions:
- What is quality of the bank card service?
- How to measure the quality of the bank card service?
- What is the current situation of BIDV in bank card service sector?
- What are the solutions and recommendations to improve quality of the bank card service at BIDV?
Scope and limitations
- Subject of research: quality of the bank card service in the commercial bank
- Scope of study: quality of the bank card service at BIDV from 2013 - 2015
Research methodology
- Analysis, synthesis and evaluation of the information from various materials and sources: magazines and newspapers, specialized journals, the Internet and previous research
LITERATURE REVIEW
Fundamental theoretical issues about the bank card service
2.1.1 Definition, features and roles of the bank card service a Definition of the bank card service
A bank card is a non-cash payment method that has evolved alongside advancements in information technology within the banking industry Issued by banks, it serves as a payment tool for purchasing goods and services or for withdrawing cash, utilizing either the account balance or an agreed-upon line of credit between the bank and the customer.
The bank card service sector, a relatively recent development in the banking industry, has emerged over the past few decades This service is recognized for its multifunctionality and numerous benefits, largely due to advancements in science and technology It offers clients valuable utilities associated with bank card products, enhancing their overall banking experience.
Since their introduction, bank cards have evolved significantly in both security and functionality for users The manufacturing and utilization of these cards leverage advanced information technology, particularly magnetic encoding and electronic circuit innovations Typically constructed from plastic, a bank card consists of three laminated layers: two outer thin layers and a central plastic core The internationally recognized dimensions of a bank card are 85mm x 55mm x 0.76mm, featuring rounded corners Each card has two sides, each displaying distinct information and symbols.
The front side of the card has the following components:
Cardholder’s name (which is embossed)
Issuing bank’s name of the card
Symbol and brand of the card
Valid date: The period that the card can operate
The back side of the card has the following components:
Magnetic stripe containing security elements such as card number, cardholder’s name, valid period, secret codes, and credit limit
The bank card includes essential details such as the customer service phone number and the cardholder's signature Additionally, some banks may incorporate unique security features, such as exclusive bank symbols, the cardholder's photo, and a chip for electronic banking These elements enhance the overall security and functionality of the bank card service.
The bank card service is one of retailing banking services The features of the bank card service are:
The bank card service is rapidly expanding across commercial banks worldwide, driven by the implementation of cutting-edge technology.
Compared to other banking services, the bank card service demands significant investment and operational costs, resulting in a lengthy payback period Additionally, this service presents various risks and potential losses for both the bank and its clients.
The bank card service plays a crucial role in enhancing socio-economic development by benefiting both banks and users Alongside other banking services like checks, standing orders, and e-banking, it significantly reduces the reliance on cash payments in the economy.
In today's banking landscape, nearly all financial institutions provide bank card services, yet these products tend to be quite similar Consequently, the quality of bank card services becomes crucial in enticing clients to engage with the offerings The effectiveness and reliability of these services significantly influence customer satisfaction and loyalty.
Evidently, the bank card boosts the payment in the economy, giving rise to reduction of volume of cash in circulation
Bank card is a civilized mean of payment, which reduces the manual transactions, thereby building up a civilized and modern business environment and contributing to the socio-economic development
Thanks to bank card payment, the bank can easily control all transactions and provide the foundation for the Tax management of the Government and nation’s foreign currency policy
Cardholders benefit from a flexible, modern and comfortable mean of payment
Cardholders can use the card for goods and service purchase, which saves time and eliminate risks compared to using cash, especially when going abroad
Cardholders have the convenience of quickly withdrawing cash at banks or ATMs, while also accessing a variety of additional services These include debt payments, money transfers, balance inquiries, and value-added services such as bill and utility payments.
Cardholders can take control of the cash transactions, as well as, the spending
The bank obtains value from the activity of card issuance and payment Specifically:
Banks generate revenue through the issuance and use of bank cards, primarily earning profits from merchant fees, annual card usage fees, and interest on late payments Additionally, clients are required to maintain a minimum balance in their bank accounts, typically set at 50,000 Vietnamese Dong.
6 bank can take advantage of this fund to invest in other projects while still ensuring the solvency
Encouraging clients to use cards instead of cash or checks reduces the number of banking transactions, leading to increased efficiency for the bank This shift results in fewer manual transactions and streamlined operations, ultimately benefiting the bank's overall performance.
- Diversification of the banking service
The emergence of bank cards has led to a diversification of banking services, significantly enhancing the availability of additional offerings such as SMS banking, e-banking, and mobile banking.
To remain competitive in the evolving financial landscape, banks must continually enhance their services by improving professional knowledge, investing in advanced technology, and ensuring operational credibility, safety, and efficiency.
- Fund raise for the bank
The rise of bank cards has significantly increased both the volume of deposits and the number of bank accounts, creating substantial funds for banks These funds enable banks to invest and generate profits, highlighting the financial impact of widespread bank card usage.
For the card accepted merchant
Bank cards provide a modern, fast, and convenient payment method that significantly enhances revenue and attracts customers to merchants that accept card payments.
Quality of the bank card service of the commercial bank
2.2.1 The definition of quality of the bank card service
Karim (1996) defined that “Quality as anything that accords with the characteristics of the product to meet the external clients' needs” Crosby (1981) believed that: “Quality as consistency with fixed specifications”
Service is defined in multiple ways, with Kotler (2003) describing it as an act or behavior arising from the interaction between a provider and a receiver, emphasizing that this reciprocal process is fundamentally intangible.
(2000) denied service as “a set of economic activities that provide time, location form and psychological benefits”
In general, the service quality is the evaluation of how well a delivered service meet the client's expectations Every business frequently
13 assesses the service quality so as to enhance its service, and to better comfort the client’s satisfaction
From this standpoint, it can be understood that quality of bank card service is the evaluation of how well the bank card service meet the bank client’s expectation
2.2.2 The dimension to assess quality of the bank card service
In accordance to the research “SERVQUAL” proposed by Parasuraman et al
(1988) Service quality measure involves five dimensions: reliability, responsiveness, empathy, assurance, and tangibles
“Tangibility: physical facilities, equipment, and the physical appearance of on employee
Reliability: the ability to provide the exact required service according to given specifications and conditions
Responsiveness: the inclination and willingness of the employees to serve customers quickly and properly
Assurance is the sense of trust and confidence that individuals feel when interacting with an organization This trust is rooted in the employees' expertise and experience, which not only fosters their own self-confidence but also instills confidence in customers.
Empathy: understanding the customers' personal needs, taking care of them individually and showing them all sorts of sympathy and affection, looking at them as close friends and distinguished clients.”
Therefore, in order to evaluate quality of the bank card service, we based on five aforementioned dimensions:
Tangibility: the facility and equipment of bank card service: ATM machine, invoice printer, POS machine, etc
Reliability: the ability to conduct the bank card transitions, the security of bank card service, the risk management activity
Responsiveness: the customer service of bank card service, the prompt reply to client’s inquiries
Assurance: the feelings of trust and confidence in working with the bank and the bank’s staff
Empathy: understanding the client’s need with additional card services, taking care of client
Apart from above dimensions, a number of quantitative dimensions can be used to measure quality of bank card service
The revenue generated by the bank card service sector encompasses all earnings from merchant fees, annual card usage fees, and interest from late payments A high-quality bank card service not only enhances user satisfaction but also increases the number of cards in circulation, ultimately driving greater revenue in this industry.
The market share of a bank's card service sector represents its revenue percentage compared to the total revenues of all banks in the same sector, measured monthly, quarterly, or annually An increasing market share indicates that the bank is becoming more competitive, reflecting an undeniable improvement in the quality of its services.
2.2.3 The importance of improving quality of the bank card service
The bank card service is crucial to the current economy and essential for the growth of any bank In recent years, banks have increasingly focused on this sector due to the significant deposits attracted from clients Consequently, enhancing the quality of card services has become a vital strategy for banks, as it directly contributes to the overall development of the banking sector.
The finance and banking sector plays a vital role in the national economy, and its sustainable development relies on the growth of all related sectors By enhancing bank card services, significant advantages can be achieved for the bank card sector, which in turn fortifies the overall banking industry Furthermore, improving bank card services helps eliminate barriers between clients and banks, fostering better accessibility and customer relationships.
In the past, clients faced significant obstacles when conducting transactions with banks due to limited operating hours The introduction of bank card services has transformed this experience, allowing customers to perform transactions such as deposits, withdrawals, and transfers at ATMs and POS systems 24/7 This convenience enables clients to check their account balances and make utility payments without visiting a bank branch, effectively bridging the gap between banks and their customers.
Factors affecting quality of the bank card service
2.3.1 Subjective factors a Funds and technology innovation of the bank
Bank cards represent a modern payment method reliant on advanced technology, including ATMs and POS systems The effectiveness of banking services, particularly bank card services, is significantly influenced by the application of science and technology within financial institutions As a result, banks must invest substantial resources to provide seamless services and attract customers Additionally, the qualifications of staff managing bank card operations play a crucial role in ensuring service quality and customer satisfaction.
The qualifications of staff significantly influence the quality of bank card services, as human expertise is crucial in any business To effectively manage bank card operations and transactions, banking officers must possess extensive professional knowledge in bank card issuance.
To enhance business development, banks should implement effective incentive policies and provide comprehensive training courses for their staff, particularly in information technology By focusing on these strategies, banks can significantly improve their operational efficiency and capitalize on growth opportunities in the industry.
To succeed in the competitive bank card service industry, banks must establish clear goals and strategies A well-defined strategy not only enhances market position but also provides a significant edge over competitors This approach should be grounded in thorough research and analysis of client needs, competitor activities, and market trends, alongside effective risk management practices.
The bank card service industry, like any other business, carries inherent risks that can arise at any stage of the process, potentially impacting both banks and their clients negatively Effective risk management is crucial, as banks that neglect card risk management may encounter significant challenges.
2.3.2 Objective factors a Habits and psychology of the people
To enhance the bank card service, it is crucial for clients to understand the significance of bank cards in modern society A lack of awareness often leads individuals, particularly those with lower educational backgrounds, to rely heavily on cash, hindering the growth of bank card usage Promoting awareness about the benefits of using bank cards over cash is essential for maximizing their advantages Additionally, individuals' income levels play a vital role in their ability to adopt bank card services effectively.
Higher income levels among individuals lead to increased bank deposits, which in turn fosters the growth of bank card services and enhances their overall quality Additionally, affluent individuals tend to utilize these services more frequently, further driving demand and innovation within the banking sector.
17 higher demand for goods and services purchase and a fast, safety and flexible mean of payment like bank card service is definitely essential c Legal environment
The issuance and payment activities of bank cards in any country must adhere to specific legal frameworks, including regulations, rules, and laws When these frameworks align with current conditions, they can bolster the bank card sector, fostering a more competitive environment.
The competitive environment significantly influences a bank's market share in the bank card sector When only one bank provides card services, the market remains stagnant, discouraging improvements However, the entry of multiple banks into this sector creates a dynamic landscape, compelling all institutions to seek innovative solutions to enhance service quality and meet customer expectations.
RESEARCH METHODOLODY AND DATA ANALYSIS
Overview of Bank for Investment and Development of Vietnam
3.1.1 History of construction and development of BIDV
Being founded on 26 th April 1957, BIDV has undergone four stages in its development
- From 1957 to 1980: Under the name ‘Bank for Construction of Vietnam’
- From 1981 to 1989: Under the name ‘Bank for Investment and Construction of Vietnam’
- From 1990 to 27/04/2012: Under the name ‘Bank for Investment and Development of Vietnam (BIDV)’
- From 27/04/2012 until now: Under the name ‘Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)’ a Period of Bank for Construction of Vietnam (1957-1981)
The Bank for Construction of Vietnam, established by the Ministry of Finance on April 26, 1957, initially operated with 11 branches and 200 employees Its primary objectives were to manage essential construction capital, lower costs, and finance numerous government projects This period marked the beginning of its evolution into the Bank for Investment and Construction of Vietnam from 1981 to 1990.
The Bank for Construction of Vietnam was rebranded as the Bank for Investment and Development of Vietnam, operating under the oversight of the State Bank of Vietnam (SBV) Its primary role is to facilitate capital flow to organizations at both central and local levels, ensuring smooth operations in issuing and providing loans for investments The period from 1990 to April 27, 2012, marks a significant decade of innovation for the bank, reflecting its commitment to supporting economic development.
In 1990, the Bank for Investment and Construction of Vietnam transformed into the Bank for Investment and Development of Vietnam, expanding its functions BIDV not only issues and supplies funds for government projects but also focuses on mobilizing long- and medium-term funds for lending and financial operations.
From 1995 to 2000, BIDV was allowed to operate as a commercial bank This was the time BIDV asserted its position in Vietnam banking sector
After years of economic renovation, the Bank for Investment and Development of Vietnam (BIDV) has achieved significant milestones, establishing itself as a leading enterprise in the country, as recognized by the UNDP BIDV has made noteworthy contributions to Vietnam's industrialization and societal development since becoming a Joint Stock Commercial Bank on April 27, 2012.
On April 27, 2012, the Hanoi Authority for Planning and Investment issued the 13th amendment of Business Registration Certificate No 0100150619, officially transforming BIDV into the Joint Stock Commercial Bank for Investment and Development of Vietnam The bank's charter capital was set at 23,011,705,420,000 VND, inheriting its business operations from the Bank for Investment and Development of Vietnam.
3.1.2 History of formation and development of the bank card service of BIDV
In 2002, BIDV became a pioneer in the banking sector by launching its ATM system, supported by extensive market research and significant investments in advanced technology This year also marked the introduction of BIDV's domestic bank card, featuring three distinct brands: ‘Power’, ‘eTrans 365’, and ‘Van Dam’.
In 2006, BIDV emerged as a leader in the construction of a bank card center and a payment center, aimed at enhancing the quality and diversity of its bank card services while ensuring compliance with international standards These centers collaborated with various branches to provide direct card services to clients, significantly boosting BIDV's brand presence Additionally, 2006 marked a milestone for BIDV as it successfully integrated VISA/Plus card payment services into its ATM system, further solidifying its competitiveness in the banking sector.
In 2007 BIDV completed the ATM connecting system with different banks in Banknetvn system and was regarded as the first bank with the ATM system presented in 63/63 provinces of Vietnam
In 2008, BIDV became an official member of MasterCard Corporation, enabling the successful launch of its international credit card campaign, featuring BIDV Precious and BIDV Flexi Within one year of this initiative, BIDV issued 6,624 credit cards, generating a monthly revenue of 8.24 billion Vietnamese Dong.
In 2010, BIDV ungraded the ATM card and introduced the advanced debit card – Harmony
In 2013, BIDV enhanced its banking services by launching the international debit card, starting with the BIDV MasterCard Ready in April Later, in September, BIDV partnered with Manchester United to introduce the BIDV-ManU international debit card, featuring an advanced electronic chip This innovative card provides a range of benefits from both BIDV and MasterCard Corporation, catering to the needs of modern consumers.
In 2014, BIDV launched a new category of bank card known as the Co-Branded card, exemplified by the BIDV-Vietravel card This innovative card offers cardholders a unique blend of benefits from both BIDV and the Vietravel Agency, enhancing their overall experience.
BIDV has consistently enhanced its bank card services through market research, technological innovations, and the expansion of its payment network These initiatives are designed to diversify the bank card offerings and significantly meet client expectations.
3.1.3 Development orientation of the bank card service at Bank for Investment and Development of Vietnam by 2020 a Development orientation of the banking service at Bank for Investment and Development of Vietnam
The general objective of the period 2015 – 2020 is to switch to the model of ‘Group’, aiming at becoming the leading group in finance and banking sector and one of top
20 modern banks in Southeast Asia in terms of service quality, effectiveness and credibility
BIDV aims to establish itself as a leading bank in providing comprehensive finance and banking services, with a particular emphasis on electronic payment solutions The bank is committed to enhancing the quality, diversification, effectiveness, and risk management of its banking offerings.
Development orientation of the product
BIDV focuses on delivering comprehensive products designed to enhance profitability while strengthening cross-selling opportunities between banking and insurance services Utilizing a multi-channel distribution system that includes traditional branches, ATMs, POS, internet banking, mobile banking, and call centers, BIDV aims to meet clients' diverse financial needs and foster trust and loyalty among its customers.
- Additionally, BIDV intends to elaborate and diversify the banking product including payment, saving, loan and discount products
Development orientation of customer segment
- Retail customer: BIDV aims at the middle class client who have stable income and good intellectual standard The potential customer is the student
- Corporate customer: BIDV plans to cultivate and enhance the relationship with big businesses, strengthen and initiate the relationship with the small and medium-sized businesses
Development orientation of the distribution system
- Maintain and better the existing distribution channels: branch office, ATM and POS system
- Strengthen other distribution channels: Call center, Internet Banking and mobile banking b Development orientation of the bank card service at Bank for Investment and Development of Vietnam by 2020
- The domestic debit card: rank 4 th in the number of cards issued and 5 th in revenue of this sector (While in 2015, BIDV ranked 5 th and 6 th , perspectively)
- The international credit card: rank 6 th in the number of cards issued and 5 th in revenue of this sector (While in 2015, BIDV ranked 7 th and 6 th , perspectively)
- The international debit card: maintain 7 th position in both number of cards issued and revenue)
The vision by 2020 : be one of 3 leading banks in terms of the bank card service in Vietnam
- Enhance quality of existing banking products and services, launch superior products and services to the market, and expand the network of card accepted merchants, ATM and POS system
To effectively reach potential customers, focus on retail customers and small to medium-sized businesses Enhance research and product development to introduce innovative products, features, and benefits tailored specifically for retail customers.
The current situation of the bank card service at Bank for
3.2.1 The current situation of bank card service at Bank for Investment and Development of Vietnam (2013 – 2015)
Nowadays, BIDV offers the client three main categories of the bank card: the domestic debit card, the international credit card, the international debit card a The domestic debit card service
At present, BIDV supplies the domestic card with 3 different brands: Moving, eTrans 365+, Harmony
The 'Moving' bank card caters specifically to young individuals, particularly students, by offering a low-cost issuance, minimal account balance requirements, and negligible withdrawal limits.
Source: The bank card center of BIDV
The 'eTrans 365+' card is Vietnam's pioneering bank card, allowing users to manage one primary card alongside two additional cards for family members This innovative card can be linked to eight personal accounts, enabling seamless transfers of substantial funds between accounts.
Source: The bank card center of BIDV
The 'Harmony' card is designed for high-income clients, including successful businesspeople and executives, offering exceptional benefits from BIDV along with substantial withdrawal and transfer limits Available in five colors, this card symbolizes the five fundamental elements of life: mental, wood, water, fire, and earth.
Source: The bank card center of BIDV
As of December 31, 2015, BIDV ranked fourth among Vietnam's commercial banks in terms of bank card issuance, with a total of 7,148,132 domestic bank cards issued, according to statistics from the Vietnam Bank Card Association.
Table 3.1: Number of domestic debit cards issued by BIDV (2013 – 2015)
Year Number of bank cards issued in the year
Accumulated number of the bank card issued
Source: The business report of the bank card center of BIDV
To achieve its objectives, BIDV launched several advertising campaigns for its bank card products and implemented various incentive policies to boost marketing and issuance at its branches The bank also focused on enhancing its debit card offerings by introducing new products such as eTrans365+, Harmony, and Moving Card In addition to increasing the quantity of cards available, BIDV improved the quality of its domestic debit cards by adding extra benefits and services tailored to a diverse clientele, including young people, students, doctors, and teachers.
Despite consistent annual growth, BIDV's domestic debit card growth rate consistently lagged behind the market average, resulting in a decline in its market share and standing In 2013, BIDV held the fourth position in bank card issuance, capturing 15.65% of the market share, following Vietcombank, DongA Bank, and Vietinbank However, this changed in 2014, when BIDV fell to the fifth position.
As of December 2015, BIDV held a market share of 11.71 percent in the bank card sector, ranking fourth after Vietcombank, DongA Bank, and Vietinbank, which collectively commanded a 13.54 percent market share Despite a positive outlook, BIDV's market share decreased, widening the gap between it and its competitors, including Vietcombank, Vietinbank, and Agribank.
Table 3.2: BIDV’s market share in the domestic debit card market by 12/2015
Bank Number of domestic debit cards issued (by 12/2015)
Revenue of bank card sector
Source: The business report of the bank card center of BIDV
Figure 3.1: Market share of BIDV in the domestic bank card market by 12/2015
BIDV's market share in the banking sector has consistently lagged behind competitors like Vietcombank, Vietinbank, and Agribank, which have effectively implemented strategies to boost their bank card issuance The ability for clients to use one bank's card across different banking systems has led smaller banks to capitalize on this by offering low-cost card issuance policies, rather than investing in the development of their own systems This approach has allowed them to attract customers and meet sales targets, creating significant competitive challenges for BIDV, particularly in the international credit card service market.
BIDV's international credit card offers a secure and convenient payment method, enabling cardholders to access banking services at various merchants and ATMs worldwide This card is recognized globally, ensuring seamless transactions for users.
BIDVVCBVietinbankAgribankDongA BankTechcombankOthers
- BIDV Visa Platinum: line of credit is more than 100 million VND
Source: The bank card center of BIDV
- BIDV MasterCard Platinum: line of credit is more than 100 million VND
Source: The bank card center of BIDV
- BIDV Vietravel Platinum: line of credit is from 50 million to 500 million VND
Source: The bank card center of BIDV
- BIDV Visa Gold (Precious): line of credit is from 50 million to 290 million VND
Source: The bank card center of BIDV
- BIDV Visa Manchester United: line of credit is from 10 million to 200 million VND
Source: The bank card center of BIDV
- BIDV Visa Classic (Flexi): line of credit is from 10 million to 45 million VND
Source: The bank card center of BIDV
- BIDV Vietravel Standard: line of credit is from 10 to 100 million VND
Source: The bank card center of BIDV
Table 3.3: BIDV’s market share in the international credit card market
Bank Number of international credit cards issued by 12/2015
Revenue of the international credit card sector
Source: The business report of the bank card center of BIDV
BIDV launched its international credit card service in December 2008, and by the end of 2009, it had issued 3,662 cards, signaling strong growth in this new sector By December 2015, BIDV had issued a total of 42,758 international credit cards, capturing a 3.1% market share and ranking 7th in the market, with revenue from this sector reaching 727.2 million VND This achievement highlights BIDV's successful expansion into the international credit card market.
Table 3.4: Number of international credit cards issued by BIDV (2013 – 2015)
Year The number of cards issued in the year
Source: The bank card center of BIDV
Despite launching its international credit card service later than competitors, BIDV has achieved significant success, reflecting positive growth for both the bank and the commercial banking sector To better meet client expectations in this area, BIDV must strive for even greater efforts in enhancing its services Additionally, the introduction of the international debit card service represents another step forward in expanding its offerings.
BIDV provides four main types of international debit cards, each offering significant advantages such as ATM cash withdrawals, money transfers, payments for goods and services at merchants, and online payment capabilities.
- BIDV Ready: This is for the client demanding on practicing the modern banking service, domestic - international purchase payment and online payment
Source: The bank card center of BIDV
The BIDV-ManU Debit card is a unique financial product resulting from the collaboration between BIDV and the Manchester United football club, designed exclusively for fans of the club.
Source: The bank card center of BIDV
The BIDV Vietravel Debit card is a co-branded offering from BIDV and Vietravel Agent, combining the standard features of BIDV and MasterCard with a wealth of exclusive benefits from Vietravel Agent.
Source: The bank card center of BIDV
- BIDV Premier: This is for the key client of BIDV Thus, several additional benefits are applied for this card
Source: The bank card center of BIDV
Table 3.5: BIDV’s market share in the international debit card market (by 12/2015)
Bank Number of the international debit card issued by 12/2015
Revenue of the international debit card sector
Source: The bank card center of BIDV
Table 3.6: Number of international debit cards issued by BIDV (2013 – 2015)
Year The number of cards issued Growth rate (%)
Source: The bank card center of BIDV
BIDV launched its international debit card service in 2013, achieving impressive growth of nearly 45% in its first year However, the following year saw a moderate growth rate of 32.81% Despite this progress, BIDV's market share in the international debit card sector remains limited, indicating the need for increased effort and investment to enhance its presence in this competitive market.
3.2.2 The current situation of the payment network at Bank for Investment and Development a ATM network
ATM payment of BIDV has operated since 1998 and was officially introduced to the client in 2002 After 13 years of execution, BIDV has achieved the encouraging result
Year Accumulated number of ATMs Growth rate (%)
Source: The bank card center of BIDV
Quality of the bank card service at Bank for Investment and Development 39
BIDV is one of top 5 commercial banks in Vietnam nowadays With the history of nearly 60 years of construction and development, BIDV has currently 100 nationwide
BIDV operates 40 branches and over 100 transaction offices across 63 provinces in Vietnam, employing more than 16,000 staff The bank is renowned for its diverse range of services, particularly its bank card offerings Enhancing the quality of these services plays a crucial role in elevating BIDV's brand image and market position in Vietnam To address challenges and boost client engagement, the BIDV bank card center has focused on improving marketing activities and implementing incentive policies.
To assess the quality of bank card services, the author examines five key dimensions: tangibility, reliability, responsiveness, assurance, and empathy However, the research primarily concentrates on two dimensions—tangibility and reliability—while also considering market share and revenue as additional factors.
The ATM system of BIDV has experienced significant growth in recent years; however, clients have encountered various issues, including network obstructions, long wait times, malfunctioning machines, failed transactions, and insufficient cash during peak hours These challenges indicate that the current ATM infrastructure does not adequately meet client needs, highlighting the necessity for an increase in the number of ATMs to match the rising number of issued cards.
Despite significant efforts to meet client expectations, BIDV's bank card service has struggled to maintain reliability and maximize utility for customers Key issues include network security vulnerabilities and transaction-related problems Although the issuance of cards has increased, BIDV has not implemented a diverse range of solutions to prevent counterfeiting and fraud, which raises concerns about client security.
The analysis highlights that while domestic debit cards, international credit cards, and international debit cards have achieved significant milestones, the growth rate of bank card services has lagged behind competitors, resulting in a decline in market share within Vietnam Notably, BIDV has been affected by this trend.
41 ranked 4 th , 7 th and 7 th in the numbers of domestic debit, international credit and international debit card, respectively
The bank card service revenue has shown a steady year-on-year increase; however, when compared to competitors like VCB and Vietinbank, BIDV's revenue remains relatively modest Specifically, BIDV ranks 5th in domestic debit cards, 6th in international credit cards, and 7th in international debit cards within the domestic market.
Evaluation of quality of the bank card service at Bank for Investment and
3.4.1 Achievements a Numerous benefits offered to the client
First, the card product of BIDV supplies various utilities to diversified types of clients, with high transaction limit and reasonable, competitive fee compared to the rival
BIDV has consistently broadened its client base, demonstrating significant growth over recent years The number of clients rose from 1,046,158 in 2005 to 6,254,624 by the end of 2011, and further surged to 11,535,635, highlighting the bank's rapid expansion and success in attracting new customers.
Since 2015, BIDV has consistently innovated and introduced new features and benefits for clients, solidifying its position in the Vietnamese bank card market Additionally, the bank has made significant contributions to reducing risks and enhancing the security of bank cards.
BIDV has made significant investments in technological innovation to improve its banking services, particularly through the implementation of 'Core Banking' technology This advanced system centralizes and updates client data, streamlining both client and bank card management while reducing time and costs Additionally, 'Core Banking' technology enhances the speed and efficiency of banking operations.
42 up the processing time, shorten transition time, which saves time and cost for the client and the bank c Boost in revenue, profit and market share of BIDV
Revenue, profit and market share of BIDV have steadily climbed over recent years
Enhancing the quality of bank card services significantly increases client numbers and the issuance of bank cards This growth attracts substantial deposits, resulting in higher revenue, increased profits, and an expanded market share.
Despite BIDV's significant accomplishments and strong reputation in the Vietnamese market, the quality of its bank card service has revealed certain deficiencies.
BIDV's product and service offerings lack diversity, with only two options available: debit and credit cards, falling short compared to competitors like Vietcombank, Techcombank, and Sacombank Despite providing various ATM services, such as bill payment and electronic wallet features, many customers remain unaware of these utilities Additionally, the essential bill payment function at POS, a key feature of debit cards, has not gained sufficient attention.
BIDV faces challenges in information security due to limitations in its infrastructure and technology Currently, the bank relies on magnetic stripe cards, which offer less security compared to chip cards Additionally, there have been reports of three counterfeit bank card incidents at POS terminals, highlighting the need for improved security measures.
2013, issuing a warning against the increasing risk of cloned and forged bank cards These frauds were punished timely, avoiding tremendous financial losses
Despite the rising number of registered debit and credit cards, customer dissatisfaction with bank card services remains high Many users have expressed concerns about the inadequate quality of service, citing issues such as limited ATM functionalities, slow processing times, and frequent errors in POS systems These complaints have gained significant attention in the media, highlighting the urgent need for improvements in bank card services.
- Customer’s limited awareness of card service Bank cards are preferably used to withdraw money rather than paying bills
- POS network is not nationwide and interbank POS is not closely associated Clients are charged extra when using card payments, resulting in limitations in the development of card payments
- ATM system is not evenly distributed and unstably functioned ATM’s network outages and contemporary deactivation still exists b Causes
Deficient infrastructure and technical equipment
Despite BIDV's extensive ATM network, many machines are outdated and suffer from inadequate maintenance, decoration, and safety measures The reliance on leased lines from telecommunications providers has led to inconsistent speed and reliability, causing network outages and ATM deactivations that inconvenience users Additionally, the use of outdated POS systems and dial-up connections prolongs transaction times, further detracting from the customer experience.
Difficulties in POS network development
BIDV, as a relatively new player compared to established banks like VCB and ACB, faces challenges in expanding its POS network Despite proactively launching and promoting marketing strategies to enhance POS partnerships, the effectiveness of these efforts remains limited, as most initiatives have not yielded significant results.
44 supermarkets, restaurants, and hotels have already signed the contracts with banks mentioned above
Limited speed of bank card modernization
BIDV began diversifying its credit card offerings by launching MasterCard in 2008 However, the project's development significantly lagged, with completion expected only by 2013 This delay has hindered the diversification of products and services, limited market segment expansion, and impeded the growth of the POS network.
Many BIDV branch sales representatives are senior staff members who lack adequate training in professional sales techniques for card products and services Banking officers often rely on self-learning from documents, which hinders their ability to keep up with the rapidly evolving card services sector Consequently, their approaches to problem-solving and customer service can be unprofessional at times, resulting in lower customer satisfaction levels.
Limitations in bank card advertisment and promotions
Despite the BIDV management boards' significant efforts to establish a strong brand identity, their strategies have fallen short in effectiveness There is a lack of uniformity in customer service across the organization, with counter officers often failing to actively promote the bank's card utilities and benefits The product image has not been consistently and systematically promoted, resulting in a limited positive impression among clients Additionally, customer care initiatives and promotional programs have not been executed continuously, consistently, or diversely.
Several BIDV branches have failed to adhere to bank card service regulations, including proper ATM placement, 24/7 availability, surveillance camera installation, signage, and air conditioning Inadequate maintenance of ATMs has been noted, and some banking officers who completed general and professional training are assigned to other departments Notably, many ATMs frequently run out of cash and printed receipts during peak times and holidays, resulting in temporary suspensions and deactivations.
The inadequate provision of bank card services in BIDV and the broader Vietnamese banking system is primarily due to the unsustainable development of Vietnam's financial and monetary markets, which have been adversely affected by the global financial crisis and recession Additionally, national import and export activities have suffered from economic and political instability, as well as the impact of natural disasters, creating significant challenges for the entire banking system.
Psychological habits, financial incomes and awareness of the people
SOLUTIONS AND RECOMMENDATIONS
Elaborate the bank card product
In today's banking landscape, lengthy transaction times, averaging around eight hours a day, pose significant challenges for banks The introduction of ATM systems represents a major innovation aimed at addressing this issue and attracting a broader client base To fully capitalize on the benefits of ATMs and technological advancements, banks must diversify their card offerings and introduce a wider range of services for their customers.
Product diversification is a key objective for BIDV and all commercial banks in Vietnam With cash transactions still dominating the market, banks must intensify their efforts to shift consumer habits towards alternative payment methods.
BIDV's bank card services cater primarily to students, civil servants, office holders, business professionals, and high-income individuals By diversifying its product offerings, BIDV effectively addresses the diverse needs of its clients, resulting in an expanded market share and enhanced credibility within the banking sector.
4.1.1 Improve the existing feature and utility of the bank card product
BIDV currently provides two types of bank cards: debit and credit cards Enhancing these existing products is crucial for retaining current clients while also attracting new ones.
The BIDV debit card is a widely used financial product that offers various utilities, including bill payments, mobile top-ups, and airline ticket purchases To enhance customer satisfaction, it is essential to promote these features more effectively and conduct thorough research to exceed client expectations Additionally, a redesign of BIDV’s bank card, both in terms of aesthetics and functionality, is necessary to align with modern consumer needs.
48 the client’s needs The withdrawal limit and overdraft limit should be diverse to attract greater client’s interest
BIDV's process for launching an international credit card has become increasingly complex, necessitating significant efforts to streamline the procedure To enhance customer experience, BIDV aims to provide a more flexible and reasonable credit limit for clients.
4.1.2 Research and initiate the new product
To effectively meet client needs and stay competitive in the market, it is essential to not only enhance existing features of bank card products but also to develop innovative new features and benefits.
Introducing our exclusive new bank card designed for the affluent, featuring a sophisticated and luxurious aesthetic Cardholders will enjoy exceptional benefits, including the highest daily withdrawal limits and preferential treatment at hotels, restaurants, and resorts, ensuring a premium experience tailored to their lifestyle.
To enhance product diversity and provide clients with a wider range of options, BIDV should focus on launching more co-branded cards in collaboration with various businesses This strategic partnership will enable BIDV to effectively develop and market co-branded cards, catering to the diverse needs of customers.
BIDV should collaborate with various domestic and global partners, focusing on businesses that are well-known to customers, such as supermarkets and companies specializing in airlines, insurance, and petroleum This strategic integration will enhance BIDV's service offerings and strengthen its market presence.
Second, BIDV should create the bank card with parties offering the service, such as recreation, travel, television, medical, etc These services are indispensable parts of every person and household.
Develop the bank card network
4.2.1 Develop the network of the bank card accepted merchant (POS)
To broaden the acceptance of BIDV bank cards, it is essential to improve the effectiveness of POS systems and launch marketing campaigns that educate merchants on the advantages and importance of POS technology.
- Strengthen marketing activities to the merchant: supermarket, restaurant, hair salon, etc., which generate high revenue
- Introduce and popularize POS to small and medium-sized department stores
- Set up POS at airport, train station, etc., where the huge number of people gather every day
- Encourage and launch promotion policies and gifts for the merchant that produces high revenue generated by bank card payment
4.2.2 Develop the card payment system (ATM)
To optimize ATM placement, BIDV should focus on high-traffic areas such as industrial zones, colleges, and universities, where large groups of people and students congregate Additionally, establishing ATMs in shopping malls and tourist attractions will cater to the increased demand for goods and services Implementing a cluster of ATMs in these locations can also help alleviate congestion during peak usage times.
To enhance the operational quality of ATMs, BIDV should upgrade the machines' configurations and transaction software to expedite client transactions and minimize manual operations Additionally, implementing monthly maintenance will ensure the effective functioning of the ATMs.
To effectively address common ATM issues such as network obstructions and cash shortages, BIDV's staff must conduct regular monitoring of the machines This includes carefully checking and classifying the cash before loading it into the ATMs to ensure smooth operation and minimize downtime.
Upgrade quality of market and customer research
Effective classification and identification of customer segments are crucial for any business, including BIDV, as they enable the bank to tailor appropriate products and services To enhance its bank card offerings, BIDV must focus on understanding three distinct market segments.
Businesses are essential clients for banks, as they significantly contribute to the bank's revenue, particularly through card services Corporate customers, including state-owned, private, and foreign businesses, play a pivotal role in driving this income.
BIDV should focus on enhancing its advertising efforts to raise awareness of its services among businesses, as the current usage of bank cards by staff is limited despite the high number of businesses By promoting its brand effectively, BIDV can increase cooperation with more businesses and boost the number of personal accounts opened by their employees.
4.3.2 The high income and upper class client
The target clientele comprises government officials, business leaders, and representatives from foreign and specialized companies in sectors like petroleum, airlines, and telecommunications These high and stable income earners exhibit significant demand for goods and services, including travel, resulting in an increased need for banking services To capitalize on this opportunity, BIDV should implement incentive policies aimed at attracting these clients, thereby enhancing the bank's revenue potential.
BIDV has a significant opportunity to engage with a large and accessible demographic, particularly students and their parents, who represent a substantial portion of the nation's population While this group may not generate high income, focusing on their needs can lead to valuable benefits for the bank, such as increased deposits from parents Additionally, by offering bank cards specifically designed for students, BIDV can enhance its appeal and foster long-term customer relationships.
51 integrate with universities to initiate new services such as loan making for school tuition.
Improve staff’s proficiency
To enhance the expertise of personnel at the bank card center and branch offices, it is essential to organize regular training courses Additionally, sending staff abroad to learn from successful bank card markets worldwide would significantly contribute to their knowledge and skills development.
- Organize the event to introduce comprehensively new products, new features and utilities of the bank card product
- Strengthen the training to the bank card marketing officer to ensure the effective market research activities and flawless communication to the client
- Improve the knowledge of technology information to the bank card officer
- Launch the incentive policy of salary, benefit and bonus to encourage the staff
- For the bank card accepted merchant, BIDV should organize the training session for the merchant’s staff, especially on-job training in the branch office
Enhancing the awareness and responsibility of counter officers is crucial for fostering effective client interactions By regulating their attitudes and working styles, we can improve service marketing, consulting, and instructional activities, ultimately leading to a more positive customer experience.
Enhance the security and risk management activity of the bank card service 51
Risk is an inherent aspect of any business, and BIDV must actively work to mitigate these risks, particularly in bank card issuance and payment activities It is essential for the officer responsible for bank card issuance to meticulously verify client information prior to approving applications Additionally, staff must adhere to safety protocols, ensuring that both the card and PIN code are securely delivered directly to the cardholder.
Ensuring security is crucial for minimizing risks, which necessitates that professionals in this field adhere to strict ethical standards and remain committed to safeguarding sensitive card information.
- Set up the camera inside the ATM to monitor and supervise the client’s activity and to avoid the illegal activity at the ATM
- Set up various channels to update information about the bank card account whenever one transaction is conducted The channel can be mobile, email, website
- Use the communication (television, internet, radio …) to instruct the client to secure the PIN code and signature.
Other solutions
4.6.1 Enhance the marketing, advertising activity
Currently, bank card services are predominantly recognized in densely populated urban areas To expand the reach of bank card services across the country, banks, especially BIDV, must promote their card products to diverse demographic groups in all regions.
To enhance its advertising campaign, BIDV should leverage various media platforms, including newspapers, radio, television, YouTube, and Facebook, while also utilizing street banners and posters Additionally, BIDV can gain valuable insights by studying successful advertising strategies employed by banks globally.
Organize an engaging event or multimedia program, such as a game show, short film, or talk show, to educate clients about BIDV's bank card services This interactive approach will enhance understanding and promote the benefits of the bank card offerings effectively.
- Apply the model of direct issuance of the bank card for the client in shopping malls, commercial centers
- Launch promotion and incentive policies for any business which introduces the bank card service of BIDV to the staff
4.6.2 Strengthen the relationship with the domestic bank card network
The trend of collaborating with bank card networks is becoming increasingly prevalent BIDV should take the initiative in integrating and developing its bank card payment network, such as Smart Link and Banknetvn, to enhance service offerings for clients.
Bank card services are the most widely used banking solutions globally, providing significant advantages over cash payments Non-cash transactions, particularly through bank cards, offer users various benefits while also generating substantial revenue for banks.
To effectively integrate with the regional and international economy, BIDV must continuously enhance the quality of its bank card services to reduce cash usage Additionally, increasing competition among banks and rising client expectations necessitate that BIDV implement innovative strategies and solutions to improve service quality in this sector.
In recent years, BIDV has significantly increased its investment in the banking sector, particularly in its bank card products, which have bolstered client credibility and strengthened BIDV's market position in Vietnam However, the bank still falls short of fully meeting client expectations, as its bank card features and utilities remain limited, and the equipment and facilities supporting these services lack diversity Additionally, the marketing and advertising efforts have not been executed thoroughly or effectively To solidify its standing in the competitive market, BIDV must prioritize enhancing the quality of its bank card services.
In an effort to improve the bank card service at BIDV, the author has proposed several solutions aimed at enhancing its quality Feedback from educators is sought to refine the thesis further.