Developing retail banking services in joint stock commercial bank for investment and development of vietnam,graduation thesis

STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty - - GRADUATION THESIS DEVELOPING RETAIL BANKING SERVICES IN JOINT – STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM Lecturer Student Class Student Code : Nguyen Phuong Lan (M.A) : Le Thi Trang : K15ATCD : 15A7510234 23thMay, 2016 GRADUATION THESIS ACADEMY OF VIETNAM ACKNOWLEDGEMENT I am deeply indebted to my thesis advisor, M.A Nguyen Phuong Lan, for her great interest and assistance in the preparation of this thesis Special thanks are also given to all lecturers in Faculty of Foreign Languages, for having taught and instructed me since I was a freshman in Banking Academy I am grateful for a number of mates in supporting me to start the work, persevere with it, and to publish it Finally, I would like to acknowledge with gratitude, the support of my beloved family – my Father, Mother and Brother They all kept me going, and this thesis would not have been possible without them Le Thi Trang – K15ATCD i GRADUATION THESIS ACADEMY OF VIETNAM DECLARATION I declare that Thesis for Master of English for Banking and Finance “Developing retail banking services in Joint – Stock Commercial Bank for Investment and Development of Vietnam” has been conducted by me, which is reliable with clear information source written by the subjective view I am solely responsible for the accuracy from the reference materials Hanoi, 23th May 2016 Author Le Thi Trang Le Thi Trang – K15ATCD ii GRADUATION THESIS ACADEMY OF VIETNAM ABSTRACT When the general trend of Vietnam commercial banks at present is developing retail market, Joint – Stock Commercial Bank for Investment and Development of Vietnam has also focused on developing this market instead of the wholesale market as before Based on knowledge and actual information related to retail banking services in general and BIDV‟s these services in particular, this thesis conducts a current situation of developing retail banking services in BIDV with a view to evaluate achievements, limitations and reasons for these limitations In the study, the researcher uses the quantitative and qualitative research methods Especially, with analyzed figures and summarized opinions from different sources, the research brings out solutions and recommendations which hopefully might be useful in identifying targets and strategies for developing retail banking services of BIDV in short – term future Le Thi Trang – K15ATCD iii GRADUATION THESIS ACADEMY OF VIETNAM TABLE OF CONTENTS ACKNOWLEDGEMENT i DECLARATION ii ABSTRACT .iii LIST OF TABLES vii LIST OF FIGURES vii LIST OF ABBREVIATIONS .viii CHAPTER 1: INTRODUCTION 1.1 Rationale 1.2 Objective 1.3 Subject and research cope 1.4 Research methodology 1.5 The structure of thesis CHAPTER 2: THE THEORY OF RETAIL BANKING SERVICES 2.1 The basics of retail banking services 2.1.1 Definition 2.1.2 Characteristics of retail banking services 2.1.2.1 Customer 2.1.2.2 The quantity and scale of transaction 2.1.2.3 Modern technology application 2.1.2.4 Wide distribution network and diversified product 2.1.3 The main retail banking services 2.1.3.1 Retail capital raising service 2.1.3.2 Retail credit service 2.1.3.3 Card services 2.1.3.4 Payment service 2.1.3.5 Other retail services 2.1.4 The role of retail banking services 2.1.4.1 For the economy 2.1.4.2 For the bank 2.1.4.3 For the customer 2.2 Developing retail banking service Le Thi Trang – K15ATCD iv GRADUATION THESIS ACADEMY OF VIETNAM 2.2.1 The evaluation criteria of developing retail banking service 2.2.1.1 The diversity of products and services 2.2.1.2 The quantity of customers and market share 2.2.1.3 Branch system and distribution channel 10 2.2.1.4 Increasing the utility of products and services 10 2.2.1.5 Safety 10 2.2.1.6 Increasing profit for the bank 10 2.2.2 Factors affecting developing retail banking services 11 2.2.2.1 Objective factors 11 2.2.2.2 Subjective factors 12 CHAPTER 3: THE CURRENT SITUATION OF DEVELOPING RETAIL BANKING SERVICES IN JOINT – STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM 15 3.1 Overview of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) 15 3.1.1 The process of BIDV‟s formation and development 15 3.1.2 Business performance of BIDV in the period from 2011 to 2015 16 3.2 The situation business activities of retail banking services in BIDV 18 3.2.1 Retail capital raising service 18 3.2.2 Retail credit service 21 3.2.3 Card services 24 3.2.4 Payment services 26 3.2.5 Other retail services 27 3.2.5.1 Oversea remittance services 27 3.2.5.2 E – banking services: 28 3.3 Evaluation business activities of retail banking services in BIDV 30 3.3.1 Achievements 30 3.3.2 Limitations 33 3.4 The reasons for limitation of developing retail banking services in BIDV 36 3.4.1 Objective reasons 36 3.4.2 Subjective reasons 38 CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS FOR DEVELOPING RETAIL BANKING SERVICES IN BIDV 40 4.1 Orientation of developing retail banking service of BIDV 40 Le Thi Trang – K15ATCD v GRADUATION THESIS ACADEMY OF VIETNAM 4.1.1 The growing trend of retail banking service 40 4.1.2 Orientation for developing retail banking service of BIDV 41 4.2 Solutions for developing retail banking services of BIDV 42 4.2.1 Improving the management and operation capacity of retail banking services 42 4.2.2 Continuing to improve and develop the retail banking services 43 4.2.3 Improving financial capacity and facilitating technological modernization 46 4.2.4 Promoting and improving the quality of retail banking services 48 4.2.5 Strengthening marketing activities 49 4.2.6 Diversifying distribution channels and implementing effective distribution 50 4.2.7 Training professional and specialist staff 51 4.3 Recommendations 52 4.3.1 Recommendation for Vietnam Government 52 4.3.2 Recommendation for State Bank of Vietnam 53 CONCLUSION 55 REFERENCES 56 Le Thi Trang – K15ATCD vi GRADUATION THESIS ACADEMY OF VIETNAM LIST OF TABLES Table 3.1: The result of BIDV‟s business activity from 2011 to 2015 19 Table 3.2: The result of the issuance card in the period from 2012 to 2015 27 Table 3.3: The results of payment services in BIDV in the period 2012 – 2015 29 Table 3.4: The result of WU operation from 2012 to 2015 31 Table 3.5: The BIDV‟s result of IBMB operation in 2015 32 LIST OF FIGURES Figure 3.1: The density and total raising capital from resident (Unit: % and billion) 22 Figure 3.2: The structure of raising fund from citizen by type of money (Unit: 23 %) Figure 3.3: The structure of raising fund from citizen by term (Unit: %) 23 Figure 3.4: The density and growth rate of BIDV‟s retail credit from 2012 to 2015 (Unit: %) 24 Figure 3.5: The lending structure by customers (Unit: %) 25 Figure 3.6: The growth rate of loans for SMEs (Unit: %) 26 Figure 3.7: The outstanding individual loan and the density of outstanding individual loan (Unit: Million VND and %) 26 Le Thi Trang – K15ATCD vii GRADUATION THESIS ACADEMY OF VIETNAM LIST OF ABBREVIATIONS SMEs Small and medium enterprises ATM Automatic teller machines POS Point of sale JCB Japan Credit Bureau PDA Personal digital assistant BIDV Joint – Stock Commercial Bank for Investment and Development of Vietnam Agribank Vietnam Bank for Agriculture and Rural Development ROA Return on total Assets ROE Return on Equity FicoBank First Joint Stock Bank Vietinbank Vietnam Joint Stock Commercial Bank for Industry and Trade SBV State Bank of Vietnam Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam VISA Visa International Service Association ACB Asia Commercial Bank Sacombank Saigon Thuong Tin Commercial Joint Stock Bank SeAbank Southeast Asia Commercial Joint Stock MHB Housing Bank of Mekong Delta ABB Asea Brown Boveri Techcombank Vietnam Technological and Commercial Joint Stock Bank SCB Saigon Commercial Bank WU Western Union IBMB Internetbanking and Mobibanking BSMS Broadcasts Short Message Service ASEAN Association of Southeast Asian Nations VIP Very important people ADB Asian Development Bank ANZ Australia and New Zealand Banking Group Limited HSBC Hong Kong and Shanghai Banking Corporation IT Information Technology Le Thi Trang – K15ATCD viii GRADUATION THESIS ACADEMY OF VIETNAM CHAPTER 1: INTRODUCTION 1.1 Rationale The period from 2005 to 2009, Vietnam commercial banking system mainly operated based on wholesale banking model when banks mainly provided credit and investment for large enterprises However, in the period of last economic crisis, the fact proven that profit of whole banking segment declined gradually because of fierce competition among commercial banks as well as ceiling interest rate of State Bank of Vietnam In addition, the enterprise‟s predicament because of downturn cycle of economic is reason for those commercial banks changed gradually their target customers Research shows that a large number of Vietnam population have a large demand for individual banking products, such as loans for buying house, car and studying abroad as well as modern banking services such as Internet Banking and Phone Banking Taking opportunities, banking services in general and retail banking services in particular in Vietnam are being developed rapidly when the period from 2012 to 2015 is evaluated to be a “booming period” on retail banking service with increased approaches to the individual customers and small and medium enterprises This is reason why commercial banks constantly launch new products, services with new technologies in order to provide more utilities for customers, promote capital flows and develop socio – economic On the basis of the development trend of retail banking services of Vietnam commercial banking system, Joint Stock Commercial Bank for Investment and Development of Vietnam (also BIDV) has been providing most of retail banking products and services for customers Being fully aware of the importance of the retail banking market in the context of international economic integration as present, BIDV continuously improves existing retail products and applies modern technology so as to develop new retail services with more utilities to meet social needs It is very essential for commercial banks to focus on developing retail banking when the structure of bank assets is instable and wholesale banking activities become saturated However, international economic integration has placed many challenges to the banking service suppliers because they have to compete severely in retail market Le Thi Trang – K15ATCD GRADUATION THESIS ACADEMY OF VIETNAM + Market share: BIDV has the market share and scale of a Vietnamese leading retail bank BIDV‟s customers make up around 18% Vietnam‟s population (approximately 16 million customers) in 2020 The operational scale is in the top three largest retail banks in Vietnam The bank‟s efficient operation is improvement of the proportion income from retail business activity in the total income which reaches about 26% in 2020 + Customers: retail customers of BIDV are defined as individual, household and SMEs The target retail clients include residential customers (individual, household) with high and medium income and SMEs in the fields of production, business, service, processing, aquaculture, agriculture and import – export + Products: Developing modern banking products and services depends on modern technology The bank develops a full range of products, but focuses on several strategic products, such as deposit, cards (17% market share of domestic debit card, 12% international debit card and 14% accepted cards, E – banking, consumer credit, housing loans, production and business loans of household Moreover, BIDV also improves the quality and utility of traditional products by improving service process, simplifying transaction procedures and being friendly customers + Target area: types of urban area which have potential and many retail customers + Distribution channels: BIDV develops accessibly and modernly distribution channels in order to provide timely, fully and conveniently retail banking services and utilities for customers In addition, the bank combines traditional distributions (branches, trading departments and funds) and modern channel (Internet Banking, Mobile Banking, ATM and Contact Center) BIDV also cooperate with agents to expand distribution channels and provide products and services effectively for customers 4.2 Solutions for developing retail banking services of BIDV 4.2.1 Improving the management and operation capacity of retail banking services The human factor is the most important factor in achieving success of service business Because the characteristic of banking services is easy to imitate, if the technological level of banks is equal, the quality of human resources will make a difference to the Le Thi Trang – K15ATCD 42 GRADUATION THESIS ACADEMY OF VIETNAM service quality among banks Therefore, to develop retail banking services, BIDV cannot ignore enhancing management capacity to improve competitiveness - To improve managerial and executive capacity, BIDV should: + Construct and improve the model of business organization The bank should improve the functional model of developing retail banking services, increase the coordination and agreement on responsibility and power between head office and direct sale department at the branches The bank also develops and improves the model of management, operation and supervision of retail banking business activities as well as combines card business with network and brand development + Improve the quality of management and executive The bank should separate clearly powers and responsibilities of departments, center at Headquarters of retail business as well as enhance the coordination between these departments and BIDV‟s branches in developing retail services BIDV should research to build the model of income – cost distribution for each specific service in order to compare the effectiveness of each product to another, thereby appropriate developing measures Besides, the department should regularly update the feedback from customers and the changes in demand for product on market as well to avoid missing business opportunities The responsibility of management should be intertwined with development of each delivered products + Have the specific and right policy of bonus and commendation to encourage officials and employees work and enhance sense of responsibility If any department does not complete assigned task well and has not enough work capable in retail sector through observation and monitoring, the bank must guide and train professional skills for them 4.2.2 Continuing to improve and develop the retail banking services  Developing capital mobilization from individuals and SMEs Capital which is mobilized from resident is the most potential resource, accounting for a large age in the total capital for business activities of commercial banks Therefore, this is a fund source with a tough competition among banks Normally, when an individual client chooses the banks, he/she will base on some criteria, including safety, high interest rates, location near his/her house, simple and fast procedure and staff‟s attitude BIDV should depend on criteria from customer‟s demand in order to have a specific strategy and continue to improve deposit products Le Thi Trang – K15ATCD 43 GRADUATION THESIS ACADEMY OF VIETNAM + Providing some new deposit products with many utilities For example, accumulated deposit products can mobilize maximum resources from resident when population have tended to save a part of income for future purposes such as buying house, car, studying abroad and travelling At the same time, the bank should have the preferential policies of interest rate for special customers, namely long – term deposits, depositors with a large amount of money and old customers + Promoting capital mobilization in various forms such as saving, valuable papers, and certificate of deposit, time bill and deposit products with high technological content, multiple utilities and competitive interest rate for customers For example, enterprises pay monthly salary through deposit account and bills or the bank issue overdraft cards  Developing retail credit The development and diversification of retail credit services will help bank spread risks in the portfolio of loan, investment and contribute to improvement the quality of bank credit Through analysis and assessment of the quality of BIDV‟s retail credit services, it can be seen that the income from this service is much high although the density of this services in the total of credit services is medium and the quality is controlled more and more tightly However, the credit products of BIDV are not really diversified and not exploit much market share in proportion to development potential Some products are supplied mainly: SMEs loans, employee‟s loans, loans for buying house or car and overdraft via payment account However, the use of these services is unequally distributed, mainly focusing on SMEs lending and loans for supporting the demand for accommodation In the near future, to implement and diversity successfully retail credit products, BIDV is required to: + Research carefully the demand of customers; evaluate products of other banks and the competition level in the market On this basic, the bank establishes a specialized department with the function of researching and developing new products periodically + Extend the kind of customers by many ways For instance, the officials and employees working in the bank is potential personal customer, the bank should continue to expand consumer lending for them with attractive preferences Le Thi Trang – K15ATCD 44 GRADUATION THESIS ACADEMY OF VIETNAM + Simplify credit procedures while ensuring safety for the bank BIDV need to innovate credit procedures in order to improve the quality of credit, control loans and simplify procedures to encourage customers be access funds in a fastest way For example, for SMEs, diversification of credit products and services through financial leasing, operating leasing as well as improving the quality of evaluation and information ensures to have full information on customers with the purpose of right investment, efficiency and involved – risk limitation This will help banks develop other retail services such as payment, consultant and ATM cards for SMEs + Promulgate appropriate policies to retain traditional customers Besides, the banks should frequently look for, be interested in new customers like labors whose stable income and enterprise whose high reputation  Developing non – cash payment services Besides fund mobilization and credit, non – cash payment also accounted for a significant proportion in retail banking services This service brings not only revenues for the banks but also benefits for whole society which reduce the cost of monetary circulation and illegal cash transactions This type of payment increases along with the continuous development of society That is a general progress of developed countries in the world that Vietnam needs to learn and follow At present, BIDV and other banks issued ATM cards, international credit cards and installed ATMs, POS in crowded areas To develop more and more this kind of service, BIDV should classify specifically customers with particular cards For instance, domestic debit cards are used primarily by individuals who have medium salary, officials and employees who are paid income via account and students who live far away from home By contrast, international credit cards are provided for mainly individuals who have high salary and often go abroad Moreover, the bank also should expand and diversify the utilities of cards such as providing overdraft limit, transferring and paying types of bill by connection with service providers Service charge of BIDV should be reduced in order to enhance its competitiveness with other banks in the market BIDV expand operational location by installing more ATM, POS machine or connecting the network among banks to decrease annual cost of installation and repair BIDV also upgrade the operational quality of ATMs, POS and the information transmission speed in bank‟s intranet Le Thi Trang – K15ATCD 45 GRADUATION THESIS ACADEMY OF VIETNAM Furthermore, BIDV should have marketing policies for promoting impressively card services Advertising is done via mass media such as newspapers, television station or at public locations by banners, slogans in order to encourage customers to use card for everyday activities and try to change consumption habits of people  Developing other retail services - Oversea remittance services For the past few years, the trend of labor export has increased dramatically oversea remittance and contributed noticeably to improvement of people‟s life, especially in rural areas Therefore, oversea remittance becomes more active and creates competition among banks Realizing the potential, BIDV is the first bank to cooperate with people's credit fund in opening remittance payment agency and attracting more customers to open an account In addition, BIDV should also implement some solutions as follows: + Organizing propaganda programs and advertising about oversea remittance services and international money transfer as well as setting direct remittance channels with correspondent banks in the countries which many Vietnamese live and money transferring companies in the world as well + Applying flexible exchange rate and reasonable remittance charges, implementing the forms of incentives for some special customers such as loyal customers and customers who transaction with large sums of money and increasing working hours in the peak seasons like Christmas, Lunar New Year + Researching and applying modern software to serve the fastest remittance services - E – banking services: The decisive factor for developing of E – banking services is the range of technological knowledge of people Therefore, BIDV needs to strengthen promotional activities and popularize the use for people Bank tellers not only implement the requirement of customers but also introduce actively these products BIDV must improve and apply modern technology so that information technology becomes an important distribution channel, helping banking services quickly and conveniently 4.2.3 Improving financial capacity and facilitating technological modernization  Improving financial capacity Le Thi Trang – K15ATCD 46 GRADUATION THESIS ACADEMY OF VIETNAM Financial capacity is an important factor in determining the image, reputation of the bank in people‟s mind BIDV is known as a large bank with high reputation and several years‟ experiences in the market This is strength of BIDV compared to other new banks To keep a good image, the bank must have a sustained effort in improving financial capacity and confirming its position in the market - Handling bad debts: + Continuing to use provision to handle completely debts which are not able to recover under BIDV‟s procedure This is a core, long – term measure + For debts of business which is bad debt but it can be repaid in the future, BIDV should negotiate with business to have the preferences of principal and interest rate If the business delays or disputes deliberately, the bank should take legal action to recover debts + For the debts that are implausible to be repaid, BIDV should sell these debts to companies that trade debts and exploit asset in order to decline the time of debt and collateral management as well as focus on business operation - Debt management + To reduce bad debts, BIDV needs to control and manage the growth rate of credit by reviewing and assessing regularly debt situation, classifying periodically debts to control the status of outstanding credit quality + Approving and appraising carefully before granting new credit, especially evaluation and setting up provision + Credit officials must have good professional skills and devotement to bring safe and risk – limited products + Strengthening to handle short – term loans without collateral and inspect the loan purpose in order to limit credit risk BIDV should stop lending for businesses with weak financial capacity  Facilitating technological modernization With a strong financial capacity, BIDV has enough competence conditions to improve infrastructure and modernize banking technology in accordance with the model of a dynamic bank that serves on many fields The requirement of developing retail Le Thi Trang – K15ATCD 47 GRADUATION THESIS ACADEMY OF VIETNAM banking services is a fast modern technology foundation of high quality Besides, technology foundation also supports timely and continuously management information for leadership; ensures safety for operating system so as to meet all requirements of customers at anytime, anywhere - The following specific solution: + Building and opening more trading departments, outlets with installation of ATMs, POS to take full advantage of potential customers, improve competitiveness in comparison with other banks and take the lead of deposit and credit market + Maintaining existing equipment, ensuring machines operate well without losing data or failure of the transmission during operation to meet demand of both customers and bank staff + Applying new management software in accordance with retail banking activities Previously, because BIDV mainly operates in wholesale sector, serves large customers who are easy to manage, BIDV‟s software is quite simple If the bank changes to retail banking management, its software becomes inappropriate and does not separate for each individual product line + Maintaining and improving the efficiency of Call Centre system to promptly respond all questions and collect customer‟s opinion about banking services 4.2.4 Promoting and improving the quality of retail banking services It is essential to diversify the types of services and develop the width of products, but the bank must also be interested in the depth and quality of each type of services in order to create absolute trust of customers The quality of service depends on two basic factors, including machinery, equipment and customer care Because the customer of retail banking services is diversified from all classes of society, the bank needs to classify customer according to each specific subjects to create a flexible initiative for bank staff during doing transactions + VIP customers: are customers who have extremely good credit worthiness, a strong financial capability, use many kinds of banking service and bring large revenue for banks Therefore, BIDV needs to have a special customer care policy that is especially for them and they are prioritized in doing all banking transactions Moreover, BIDV should have a gift program on special occasions such as birthday, Le Thi Trang – K15ATCD 48 GRADUATION THESIS ACADEMY OF VIETNAM holiday so that they feel the bank‟s devotion and BIDV keeps a long – term relationship with all its VIP customers + Middle – class customers: are customers who have high stable salary and good credit worthiness These kinds of customer have the largest number customers They can be government officials or can be employees with high salary of enterprises, corporations They often use modern banking services and understand the types of banking products While VIP customers few transactions but the value of each transaction is large, middle – class customers many transactions with the middle value of each transaction Therefore, it is extremely important to retain old customers and expand new customers That requires BIDV‟s staff to be friendly, polite, considerate as well as promote advertising other products to enhance revenue from cross – selling + Normal customers: are customers who have low income and less use of banking services They are often students who use ATMs only to withdraw money, transfer money or common people who is mainly interested in safety and interest rate without the high demand for service quality Therefore, BIDV should divide customers according to the types of customer to have appropriate policies, apply point system for individual in order to reduce risk and make lending decisions quickly and accurately 4.2.5 Strengthening marketing activities Marketing not only implement products advertising and introduction, but it also consist of a series of steps, such as research, segment market, discover timely market demand and find out products which meet this demand This is a indispensable activity of commercial banks The goal of marketing is providing the products that the market needs, not products that the banks have To promote this activity, BIDV should carry out specific measures + Establishing a professional marketing department and assigning responsibility for each staff to develop strategies of product, price, promotion and support + Standardizing brand, transaction style and transaction space of outlets as well as strengthening the promotion of BIDV‟s brand identity + Further advertising and introducing retail banking services by mass media, banners and slogans BIDV should also have measures to combine advertising with Le Thi Trang – K15ATCD 49 GRADUATION THESIS ACADEMY OF VIETNAM sponsorship for game shows which have many audiences in order to propagandize BIDV‟s activities + Changing the mode of sale Staff should actively look for customers by propaganda in companies and enterprises BIDV should also have collaborator programs to introduce products, hand out leaflets and consult products/services in potential locations, such as office building, commercial center The bank should look for collaborators who are enthusiastic and have more time like students + Boosting marketing and indirect selling via the third parties, including its partners, enterprise customers, agencies + Taking part in more social activities which are not merely charity activities For example, BIDV should hold fairs, exhibitions and competitions to welcome holidays for specific audiences + Organizing promotions and service discount such as issuance free ATM cards, lucky draw programs and lucky number programs 4.2.6 Diversifying distribution channels and implementing effective distribution In the trend of integration, competition in the retail banking market is getting fiercer Developing retail banking service is identified as an important strategy orientation of Vietnam commercial bank Particularly, developing distribution channels is one of the prerequisite solutions which require BIDV to actively develop a network of outlets with a compact model Apart from the maintenance and expansion of the traditional distribution channels, BIDV also needs to maximize effectively the role of individual distribution channels and meets trading requirement at all times in all places + Increasing the efficiency and the self – service ability of ATM system in order to supply many different kinds of service with lower cost and upgrade ATMs like small bank in all provinces and cities At the same time, BIDV develops a network of POS and strengthens the connection between it and other commercial banks to boost efficiency and widen the possibilities of using ATM card and POS + Developing banking services via computer or at home to take advantage of the development of personal computer and internet connection Moreover, BIDV should have a further growth of new services so that customers can order, pay, check balance and information between bank and customers Le Thi Trang – K15ATCD 50 GRADUATION THESIS ACADEMY OF VIETNAM + Developing banking services via phone This is a common model with very low cost, convenience for both customers and bank Customers can transaction at any time and in any places just by a phone connected Internet + Expanding distribution channels through oversea remittance agents, ATM card agents and payment agents The process of development and complement of retail banking services must be implemented gradually and steadily However, the bank must also make breakthroughs to develop rapidly on the basic of maintaining market share and extending market As a result, the bank creates more benefits for customers as well as combines the harmony of customer‟s interest, bank‟s interest and the country‟s benefits The key of retail banking strategy is developing information technology to create background for business development and expansion of new services following the applications of scientific, technical and advanced technology, the development of online transactions, the implementation of one – door transaction model and the modernization of all banking BIDV also needs to process automatically all procedures such as receiving customer‟s requirements, evaluating and appraising information with ensuring safety and security in business 4.2.7 Training professional and specialist staff As mentioned above, human is in the heart and play a key role in all matters, and developing retail banking service is not exception Previously, staff of BIDV is accustomed to wholesale working style which is specialized in large customers Therefore, the change to a retail model takes more time to get used to a new working way The change starts from psychological of staff to their service attitude The strategy of developing retail banking services always needs human resources that are properly trained to access and apply information technology in products and services The investment in human resources will bring success in the future BIDV should organize training courses so that their staffs, especially front office staff, are equipped with the most basic knowledge about modern banking technology, general market economy and marketing activities in banking Because bank tellers are persons who customers, they play a very important role in attracting customers and deciding bank‟s competitiveness Bank tellers must have qualifications in their hand to transactions quickly and save time They should be properly trained in communication, selling skills, the capacity of propaganda and advertising, convincing Le Thi Trang – K15ATCD 51 GRADUATION THESIS ACADEMY OF VIETNAM customers to use banking services In addition, BIDV needs to focus on training to enhance the capacity of staff in IT department so that they can operate proficiently electronic equipment, research and use the maximum features of equipment, advanced technology in order to improve the quality and efficiency of the operation Therefore, they can create innovative software which has high applicability in retail banking activities To have a good and high quality staff, BIDV must carry out right from recruiting BIDV should select applicants with right professional to reduce the pressure of cost, time and effort in retraining At present, the recruitment is under BIDV Headquarters‟ responsibility that holds recruitment examination Therefore, BIDV needs to balance human resources among departments, branches to determine the right number of staff who complete work well, avoid wasting labors and wage funds BIDV should also provide scholarship or investment for young talents, the best students whose major is banking and finance at top universities These students will work for the bank after graduation The bank should connect training with the use of human resources in which meeting the work‟s requirement is the ultimate goal and the measures of training effectiveness Furthermore, it is necessary for BIDV to have attractive, equal and accurate reward program in order to motivate employees, maintain loyal, dedicated and high quality staff 4.3 Recommendations It can be seen that the non – stop growth of economy as well as the improvement of legal environment and financial infrastructure are decisive factors ensuring the development of retail banking service in newly – emerging countries This is not a simple matter and the role of the government, central bank and ministries involved is extremely important in developing retail banking services, 4.3.1 Recommendation for Vietnam Government Firstly, the stability of socio – economic environment creates conditions for the effectiveness of banking operations The reason is that the psychology and habits of people change with income and economic condition If economy grows steadily, people have higher income and their expectation is higher and higher on a better life in the future Therefore, they can spend more and more and have the need of loan for their purposes Obviously, Government needs to develop a stable economy and politics Le Thi Trang – K15ATCD 52 GRADUATION THESIS ACADEMY OF VIETNAM with maintaining appropriate inflation, encouraging foreign investment, developing heavy industries and increasing people‟s income People then have the opportunity to access banking products; thereby the bank can develop retail banking services In addition, Government also needs to encourage people not to use cash for payment, but by card, encourage enterprises to pay salary through cards That also helps Government manage income tax and increase revenue for state budget Government should have the measures to research and complete legal regulations about retail banking market, services; tax policies to support transaction via POS machine soon They should also build a full legal system for electronic banking service, e – commerce; establish a modern electronic financial portico to ensure the effective operation of banking system Government coordinates with media agencies, newspapers to propagandize card services for the social classes as well as coordinates with ministry of Public Security to fight against crimes and strengthen the security of electronic banking services There is a close cooperation between bank and financial institution system such as Department of Customs and Department of Taxation Especially, card associations and member banks should increase cooperation to push harder the interoperable connection among card organizations in order to establish a network of ATM and POS in whole market for saving human resource, maximizing benefits and minimizing cost of using retail banking services Vietnam Government should continue to develop and implement long – term plans to reform banking sector That helps retail banking activities raise efficiency, become more transparent and safer Bank‟s legal environment should be also improved gradually with the market flow and the international standard of capital conditions and supervisory requirements 4.3.2 Recommendation for State Bank of Vietnam At present, State Bank of Vietnam still plays leadership in banking activities SBV needs carry out suitable solutions to encourage retail banking service of BIDV in particular as well as of other commercial banks in general to develop in accordance with the world trend + Retail banking activities have not been adjusted by legal document yet, so SBV should draw up a piece of legislation to orient accurately for commercial bank in implementing retail banking services That will help commercial banks avoid carrying Le Thi Trang – K15ATCD 53 GRADUATION THESIS ACADEMY OF VIETNAM out services or products which are prohibited by law, a waste and difficulties for the banks The legal documents of retail banking services must also ensure the strictness and consistency with the previous legal documents as well as with international standards so as to avoid getting around law of small banks, so retail banking services are ensured with safety, efficiency and healthy + SBV makes binding regulations which commercial banks must share credit information This is suitable for complex socio – economic situation in order to ensure safety for credit system as well as banks, avoid situation that a person uses mortgage asset to borrow money from many different banks + It is necessary for SBV to enhance its role in banking activities SBV needs to be a pioneer of technological innovative activities Especially, non – cash payment activities should be conducted through the intermediary of SBV in order to speed up, improve the quality of non – cash payment and encourage all walks of life to participate in this activity so it can limit cash – payment Therefore, SBV helps commercial bank expand the issuance of modern payment card and increase revenue from service + SBV needs to be more flexible in conducting national monetary policy and setting suitable base interest rates and ceiling rate which are adapted for current economic situation so as to avoid causing difficulties for commercial banks in fund mobilization and credit activities Le Thi Trang – K15ATCD 54 GRADUATION THESIS ACADEMY OF VIETNAM CONCLUSION Developing retail banking services is an inevitable trend of modern banks in the world, especially when the economy is going through a difficult and volatile patch and large enterprise loans will be risky Realizing this, Joint – Stock Commercial Bank for Investment and Development of Vietnam (BIDV) – the bank has a long history in Vietnam market – changed its operation orientation from focusing on wholesale banking activities to focusing on retail banking activities and gained certain achievements With the purpose of providing modern and high – tech banking services with high quality for customers in order to bring maximum efficiency for customers as well as the highest business efficiency for BIDV, the thesis mentioned the following basic contents: - Theoretical basic of retail banking services and developing retail banking services The current situation of developing retail banking services in Joint – Stock Commercial Bank for Investment and Development of Vietnam, evaluation - results achieved, limitations and reasons Suggestion necessary solutions and recommendations for BIDV so as to improve gradually retail banking services alongside existing traditional products The thesis is written based on my objective opinions so it still has deficiencies in the process of analysis, evaluation and suggesting solutions Therefore, I am looking forward to receive teacher‟s attention and comments to more complete the thesis Finally, I sincerely thank my thesis advisor, M.A Nguyen Phuong Lan, for her great interest and assistance in the preparation of this thesis Le Thi Trang – K15ATCD 55 GRADUATION THESIS ACADEMY OF VIETNAM REFERENCES Peter S.Rose (2008), Bank management & Financial Services, 7th Ed, MC Graw – Hill Irwin Law No.47/2010/QH12 of June 16, 2010, on Credit Institution Joint – Stock Commercial Bank for Investment and Development of Vietnam (2011 – 2015), Annual Report Joint – Stock Commercial Bank for Investment and Development of Vietnam (2012 – 2015), Audited Consolidated Financial Statement Joint – Stock Commercial Bank for Investment and Development of Vietnam (2008), The introduction to retail banking services and the orientation of retail banking services Vietnam Banks Association (26th November, 2011), Developing retail banking services in the period from 2010 to 2015 State Bank of Vietnam (18th January, 2014), Developing retail banking services in Vietnam David Cox (1997), Modern professional banking The summary record of SBV‟s scientific conference (2007), Developing retail banking services of commercial banks 10 Dao, L K Oanh (2012), Doctoral economic thesis: Developing retail and wholesale banking services in Joint – Stock Commercial Bank for Investment and Development of Vietnam 11 http://bidv.com.vn/ 12 www.sbv.gov.vn/ Le Thi Trang – K15ATCD 56