RATIONALE TO THE RESEARCH
The rapid advancement of information technology is transforming the banking sector, leading to a greater reliance on the Internet for daily operations like data storage and cash management This shift has facilitated the rise of online distribution channels, commonly referred to as E-banking As a result, E-banking has gained immense popularity worldwide, with the number of hybrid "brick and click" or Internet-based banks growing daily.
Despite the long presence of E-banking in Vietnam, widespread market acceptance remains elusive due to barriers such as a cash-driven economy and concerns over information security While many Vietnamese recognize the significant advantages of digital banking, these challenges hinder the adoption of E-banking services Consequently, commercial banks, including BIDV JSC—one of Vietnam's four largest banks—struggle to promote their E-banking offerings The Dong Do branch, among others, has implemented various strategies to address these issues, achieving mixed results, with some initiatives proving effective while others have had minimal impact.
To remain competitive in a rapidly growing e-commerce landscape, the bank must develop strategies to improve its current situation Acknowledging this challenge, the researcher undertakes a thesis titled “E-BANKING DEVELOPMENT AT BIDV JSC – DONG DO BRANCH” aimed at identifying the obstacles faced by the branch in advancing its e-banking distribution methods The goal is to uncover the underlying issues and propose effective solutions for enhancement.
2 some remedies to improve E–banking services at BIDV JSC in general and Dong Do branch in particular.
OBJECTIVES OF THE STUDY
This thesis proposes actionable solutions and recommendations aimed at the Government, commercial banks, and BIDV JSC – Dong Do branch to enhance and stimulate future E-banking activities.
SCOPE OF THE STUDY
This thesis analyzes the business performance of the Bank for Investment and Development of Vietnam's Dong Do branch, highlighting the E-banking operations from 2009 onwards The research data provides a comprehensive overview of the branch's operational situation and performance trends in the evolving digital banking landscape.
METHODOLOGY OF THE STUDY
The thesis employs both qualitative and quantitative statistical methods, utilizing data collection techniques alongside tables and figures for research purposes It primarily analyzes secondary data published by BIDV JSC, the BIDV JSC Dong Do branch, and other official organizations.
SIGNIFICANCE OF THE STUDY
This study is crucial for Vietnamese banks in the digital age, where banking operations predominantly occur online It provides valuable insights into E-banking services, enabling clients to maximize the benefits of these convenient options Additionally, the dissertation serves as a resource for individuals interested in E-banking, helping them achieve their goals Importantly, it also acts as a reference for future research on E-banking and its associated topics.
STRUCTURAL ORGANIZATION OF THE THESIS
The thesis consists of three main parts as follows:
Chapter 2: E-banking Development at BIDV JSC – Dong Do Branch
Chapter 3: Solutions to Develop E-banking Services at BIDV JSC – Dong Do Branch
THEORETICAL BACKGROUND
Overview of E banking services
E-banking refers to the utilization of the Internet for managing, reviewing, and modifying bank accounts and investments electronically It also encompasses the online operations conducted by banks to provide various accounts and services.
(Cambridge Dictionary’s 2017) Throughout this thesis, E–Banking is used to describe
“the process by which customers conduct banking transactions without visiting brick– and–mortar locations”
Electronic Banking Using a Telephone Connection
Phone banking enables customers to access banking services via a traditional telephone line, allowing them to manage personal information and execute various transactions Clients can utilize this service to make payment requests, including payment and collection orders, as well as to open or close term deposits and current accounts Additionally, phone banking provides valuable information about bank products and services, delivered by a telephone banker or client advisor.
This service gives clients access to bank services at any time and any place Another benefit of it is that it only requires a telephone to perform bank transactions
Telephone Banking is an automated service which permits customers to check their account information and perform daily transactions from a touch–tone telephone
An automatic reply system 24/7 works on a basis of a menu through which customers can do banking transactions just by pressing buttons on their phone
One significant benefit of this service is its cost efficiency, as some banks provide it free of charge due to minimal operational expenses However, clients may find their options limited due to a restricted selection of menu items.
SMS banking is a convenient service that allows customers to manage their banking activities via text messages This service not only facilitates transactions but also enables banks to communicate important alerts, such as significant withdrawals from ATMs or large credit card payments, ensuring customers stay informed about their account status.
SMS banking services consist of push and pull messages, with push messages sent to customers unsolicited and pull messages initiated by customers seeking information or conducting transactions To combat cybercrime, banks utilize one-time passwords (OTPs), which differ from static passwords as they are only valid for a single login session or transaction and expire after use, requiring customers to obtain a new OTP for each transaction.
Wireless Application Protocol (WAP) is a collection of protocols that allows mobile phones and other wireless devices to access the Internet Essentially, WAP serves as a web browser tailored for the limitations of mobile devices, offering a simplified version of web pages that focuses primarily on text.
6 information only In order to use this service, clients must be equipped with a mobile phone supporting WAP technology
Electronic Banking using Personal Computers
Home banking allows customers to perform banking transactions from home, using either the telephone or the Internet, rather than visiting physical bank locations This practice not only reduces operational costs for banks, enabling them to offer competitive interest rates and attract more customers, but also provides users with benefits like lower fees and enhanced convenience.
Internet Banking enables customers to conveniently access their accounts online, making it ideal for use at home or in the office However, for enhanced security, it is advisable to utilize this service from home Unlike traditional home banking, Internet banking is exclusively conducted via the Internet.
Mail banking is a banking service that allows clients to communicate with their banks via email In more complex operations, E–mail will not be used
Apart from those aforementioned, there are other more or less known types of e– banking such as payment cards, electronic wallets and terminals
A payment card is a widely utilized financial tool that allows holders to make cashless transactions and withdraw cash from ATMs This category of cards encompasses both debit and credit cards, providing users with flexible payment options.
A debit card is a payment card that allows users to make transactions by directly deducting the amount from their bank account upon authorization Cardholders can conveniently use their debit cards for payments at any merchant equipped with a POS machine.
A credit card allows holders to purchase goods and services using a credit line provided by the issuer, with payments settled at a later date Cardholders receive monthly bills and incur financial charges, or interest, on any unpaid balances if payments are not made by the due date Credit cards are typically issued by commercial banks and other financial institutions.
An electronic wallet is similar to a payment card in terms of a chip card It provides a record of a financial sum available to its owner
A terminal is a device that facilitates communication between humans and computers, typically consisting of a keyboard and a display screen Common examples of terminals include Automated Teller Machines (ATMs) and Point of Sale (POS) systems.
ATMs are a widely used e-banking service, defined by Lipis (1985) as "unmanned, automated teller devices" that facilitate cash dispensing and routine financial transactions They provide customers with 24-hour access to various services, including deposits, cash withdrawals, and loan payments, along with additional functions like account transfers and balance inquiries By enabling customers to perform banking transactions without a cashier, ATMs help banks reduce the long-term costs associated with delivering e-banking services.
Point of Sale Terminals (POS)
The term "Point of Sale (POS)" describes a location where transactions occur, such as malls, markets, or city shops It specifically refers to the area within a store where customers complete their purchases, commonly known as the checkout counter POS systems can be physical, as seen in traditional brick-and-mortar stores, or digital, as exemplified by online retailers that facilitate sales through phone or internet platforms.
A POS system enhances business operations by enabling the recording and tracking of customer orders, processing credit and debit card transactions, integrating with other network systems, and managing inventory efficiently Additionally, it reduces operating costs by streamlining checkout procedures, as customers can pay directly into the retailer's bank account, resulting in less cash on hand in stores.
The importance of E–Banking is explained in the number of reasons as follows:
Developing E–Banking services
The history of E-banking began in 1983 with the Bank of Scotland launching the first Internet banking service in England, although its capabilities were limited to basic functions and a small number of transactions This initial development laid the groundwork for future advancements in E-banking In 1994, the Stanford Credit Union created the first online banking website in the United States, marking a significant milestone By the end of 2003, over half of the commercial banks in the U.S and Europe had adopted online banking services, highlighting its growing importance Today, E-banking is essential to the banking sector, providing numerous benefits that banks now rely on heavily.
1.2.2 Criteria to assess the development of E–Banking level:
Quantitative indicators reflect measurable quantities, allowing for the assessment of e-banking development through the growth in both the variety of products and services offered and the expanding customer base.
Qualitative Indicators, on the other hand, show the status of something in qualitative terms in lieu of quantities or amounts Qualitative or Performance Indicators of E–banking development can be:
Diversification of products and services
Utility of products and services
Safety of products and services
1.2.3 Factors affecting the development of E–Banking services
A robust legal framework is essential for fostering customer confidence in E-banking services, as it protects clients from cybercrime The presence of strong legislative and regulatory measures significantly influences the successful adoption of E-banking, alleviating customer concerns about the safety of electronic transactions.
Improper ICT infrastructure is another obstacle standing in the way of E–banking development ICT is the abbreviation for ‘Information and Communications Technology’ ICT infrastructure includes telecommunication network, Internet
The connectivity and technological environment, encompassing both electronic and telecommunication aspects, significantly influence a firm's adoption of ICT (Dholakia and Kshetri, 2004) Issues like unreliable Internet connections and design flaws can diminish customer satisfaction, adversely impacting the growth of E-banking Therefore, the successful adoption and spread of E-banking services are heavily reliant on robust ICT infrastructure.
Competitive pressures, both domestic and international, are driving commercial banks in Vietnam to enhance their E-banking systems, aiming to secure a competitive edge This competition serves as a significant catalyst for the rapid growth of E-banking services.
Organizational factors/Managerial and Organizational Factors
Investing in E-banking infrastructure is crucial for facilitating e-transactions, and while the initial costs can be significant, the long-term benefits often outweigh these expenses By implementing a new IT system, banks can enhance operational efficiency and ultimately achieve a higher return on their investment.
Employee knowledge plays a crucial role in the successful advancement of digital banking Customers' choices to adopt products or services are heavily influenced by the persuasiveness of bank staff Unfortunately, many employees lack the expertise needed to alleviate customers' fears about technology and encourage them to embrace e-banking Consequently, banks risk losing potential clients to competitors.
Customer attitude poses a significant challenge for banks in advancing virtual banking, as many customers express concerns about information security regarding E-banking products Additionally, a lack of awareness about E-banking and its advantages contributes to their reluctance to adopt these services In cash-based economies, the prevalent use of cash for daily transactions further complicates the development of digital banking solutions.
Experiences from other countries and lessons for BIDV JSC
Australia's attempts to reduce branch networks
Between 1980 and 1993, Australia's bank branch network expanded significantly as banks sought to leverage accessibility and convenience to attract customers amid strict government regulations However, a subsequent recession prompted banks to address declining revenues and profitability by rationalizing their branch networks, which involved closing underperforming branches and reducing staff Electronic distribution channels emerged as a viable alternative, enabling banks to lower initial investments while offering customers 24/7 access and a broader range of services To facilitate this transition, Australian banks implemented fee policies that encouraged the shift from traditional branches to modern banking solutions Additionally, they adopted various alternative distribution methods, including phone and internet banking, to mitigate the adverse effects of branch closures, particularly for customers in remote areas.
Due to low educational levels, many banks in Australia have opened branches in shops and partnered with the post office and major retailers, while transaction offices have been established to serve rural communities These changes have led to the widespread adoption of electronic distribution channels, enhancing customer utility and contributing to the growth of the Australian banking system.
US experience on using e–banking to reduce costs and improve service quality
A Stegman study reveals that the average cost of a traditional bank transaction in the US is $1.07, while automated banking channels significantly lower costs to $0.04 for customer contact centers, $0.27 for ATMs, and just $0.01 for personal computer transactions This indicates that electronic technology-based transactions are not only more cost-effective but also enhance service quality in the US banking industry Furthermore, a Pew Research Center survey shows that 61% of Internet users engage in e-banking, a substantial increase from 18% in 2000, while 35% of mobile users utilize banking services on their devices, up by 17% since May 2011.
Lessons drawn from experience of other developed countries
To enhance E-banking services at BIDV JSC, the bank should reduce its branch network and prioritize E-banking to lower operational costs and boost competitiveness Implementing reasonable fees can attract more customers, while those with lower literacy levels can still access banking services at limited branch locations.
Sub–Conclusion
This chapter establishes a theoretical foundation for E-banking, focusing on the evolving services at the Bank for Investment and Development of Vietnam – Dong Do branch It begins with an overview of E-banking, defining its concept, major service types, and the significance of developing these facilities Additionally, it outlines key criteria for assessing the development level of E-banking in commercial banks and discusses factors influencing the adoption of this distribution channel The chapter concludes by presenting valuable lessons aimed at facilitating the successful implementation of electronic channels at the branch.
E–BANKING DEVELOPMENT AT BIDV JSC – DONG DO
General background
2.1.1 The history and the development
BIDV JSC, one of Vietnam's four largest commercial banks by assets, had a total asset value exceeding VND 1 quadrillion (approximately USD 45 billion) as of December 31, 2016 Established in 1957, the bank was initially called the "Bank for Construction of Vietnam" and has since undergone several name changes before adopting its current title, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV JSC).
BIDV JSC has transformed from a small bank with 200 employees and 11 branches into a prominent modern commercial bank, boasting 191 branches, nearly 1,000 transaction offices, and over 24,000 employees The bank has successfully expanded its presence in international markets, including Laos, Cambodia, Myanmar, the Czech Republic, Russia, and Taiwan BIDV JSC is listed on the Ho Chi Minh City Stock Exchange (HOSE) and has recently been recognized as the most valuable brand in Vietnam, ranking among the Top 30 ASEAN banks and the Top 500 global banks, as well as being listed in the Top 2000 world's largest and most powerful companies.
BIDV JSC – Dong Do branch
The Dong Do Branch of BIDV JSC was officially inaugurated on July 31, 2004, following Decision No 191/QD–HDQT from the Board of Directors This establishment is a strategic move in BIDV JSC’s expansion plans aimed at enhancing its market share and strengthening its brand image.
Dong Do Branch takes pride in being a vital part of the BIDV JSC system, having operated for over 13 years and achieved significant milestones It has received a quality management certificate under the ISO 1900:2000 standard and ranks among the top ten branches in the BIDV JSC system for fund mobilization By the end of 2016, the branch reported total capital of VND 13,655 billion, outstanding loans of VND 7,233 billion, and a pre-tax profit of VND 236.3 billion Its operational network has expanded to include six transaction offices and a head office in Hanoi, managing numerous ATMs and POS machines in Cau Giay, Dong Da, and Thanh Xuan, with a total of 14 ATMs as of December 31, 2016.
The Dong Do branch is dedicated to delivering both modern and traditional banking services while adhering to legal regulations Its efforts aim to enhance the profitability of the BIDV JSC system and contribute to the overall development of the banking sector and the nation as a whole.
The Dong Do branch of BIDV JSC is organized into four key departments: the Customer Relations Department, Risk Management Department, Operations Department, and Internal Management Department, all of which operate under the direct oversight of the branch's Board of Directors.
Board of Directors includes Director of the branch and 4 Vice Directors in charge of Customer Relations, Risk Management, Operations Management and Internal Management respectively
The Board of Directors oversees the effective use of State capital while also formulating strategic plans and policies, including business management and development strategies for Dong Do Branch.
The Customer Relations Department is composed of several divisions: Corporate Customer Relations Division I, which caters to large enterprise clients; Corporate Customer Relations Division II, focused on Small and Medium Enterprises; the Individual Customer Relations Division, dedicated to individual customers; and the Cards Division, which manages card-related services.
The primary role of this department is to build and sustain strong relationships between the Dong Do Branch and its customers, fostering trust and rapport It is specifically tasked with marketing, developing, and trading bank products and services for both corporate and individual clients Additionally, the department manages card issuance and oversees POS operations.
The Risk Management Department, encompassing the Risk Management Division, plays a crucial role in overseeing credit operations and internal activities It is fully responsible for identifying and assessing potential risks associated with the branch's credit activities, as well as developing and implementing effective strategies to mitigate these risks.
Operations Department includes Credit Management Division, Individual Customer Service Division, Corporate Customer Service Division, Treasury Management and Service Division The functions of each division are as follows:
Credit Management Division is responsible for making disbursement decisions, monitoring the collection of payments and establishing loan loss reserves (loan loss provisioning)
The two divisions of Customer Service have responsibility for managing customer accounts and conducting transactions with customers
Treasury Management and Service Division are accountable for inventory management of the branch
Internal Management Department includes Administrative Division, Finance and Accounting Division, Planning Division and IT Division The functions of each division are as follows:
The Administrative Division is responsible for creating human resource policies and practices, as well as managing personnel regulations to ensure the branch is staffed with skilled and motivated employees Additionally, it offers information technology solutions and services to enhance the branch's operational efficiency.
Financial Planning includes Finance and Accounting Division and General Planning Division o Finance and Accounting Division has responsibility for preparing financial accounting information for the branch The division is also
The General Planning Division is essential for financial analysis, management, and oversight, focusing on gathering and analyzing data related to economic, political, and social conditions This includes a keen examination of competitors within the industry to formulate strategic business plans and effective policies aimed at ensuring the sustainable development of the branch.
Network structure of Dong Do branch includes:
Head office: Head office is located in 14 Lang Ha, Dong Da district, Hanoi Head office contains offices, departments and operation department of the branch
Bac Thanh Cong Transaction Office
Figure 2.1: The model of branch organization
Source: Joint Stock Commercial Bank for Investment and Development of Vietnam – Dong Do Branch
2.1.4 The business situation of BIDV JSC – Dong Do branch in recent years
Treasury Management and Service Division
The following data table reflects funds raising activity of the branch
Figure 2.2: Fund Mobilization Results at BIDV JSC Dong Do Branch (2014–2016)
Source: Joint Stock Commercial Bank for Investment and Development of Vietnam – Dong Do Branch
Dong Do branch's business activities heavily rely on deposits, prompting the bank to seek opportunities for funding growth amid competitive pressures from other banks To achieve this, the branch focuses on diversifying its products and services while enhancing customer service Recent years have seen remarkable progress in fundraising, with total mobilized funds experiencing a consistent increase, reflecting an average growth rate of 19.27% from 2009 to 2016.
As of December 31, 2016, total funding rose to VND 13,655 billion, marking an 11.6% increase compared to December 31, 2015 This growth highlights the branch's success in capital mobilization and its enhanced reputation among the public.
Fund Mobilization at BIDV Dong Do Branch
The following datasheet reflects volatility of lending activities of the branch
Figure 2.3: Results of lending activities (2009 – 2016)
Source: Joint Stock Commercial Bank for Investment and Development of Vietnam – Dong Do Branch
The Dong Do branch consistently adheres to regulations and laws in its credit activities Over an eight-year period, the branch has demonstrated a steady increase in total outstanding loans Notably, in 2016, the total outstanding loans surged by 14.7%.
2015 With that result, the branch has reached 99% of the planned target of VND 7,250 billion for the year 2016
2.1.3.4 Service activities of Dong Do branch
The real situation of E–Banking development at BIDV JSC – Dong Do Branch 24 2.3 Assessment on online banking at BIDV JSC – Dong Do branch
BIDV JSC Mobile is a convenient banking service that enables customers to perform various transactions, such as inquiries, fund transfers, and bill payments, securely and efficiently from their mobile phones, eliminating the need to visit bank counters.
VND Billion Net income from service activities
Net income from service activities
BIDV JSC Smart Banking is the software which is installed on customers’ devices and allows them to perform transactions as follows:
Funds transfer within BIDV JSC system or Vietnam’s territory
Bill payments: airlines tickets, insurance
Account balance inquiry: current account, savings account, loan account, overdraft account
Viewing updated information related to: branch and ATM address, POS, exchange rates, interest rates, overtime branches and other useful information
BIDV JSC BSMS is the service of sending and receiving messages via mobile phones, allowing customers to:
2.2.1.2 BIDV JSC Online and Business Online
BIDV JSC Online is BIDV JSC Internet Banking service that allows individual customers to manage their accounts and conduct transactions via Internet without going to the bank counters
Applied for Vietnamese or foreign individuals with current account in VND at BIDV JSC
BIDV JSC offers a range of convenient financial services, including funds transfers within Vietnam, online term deposits, and scheduled transfers through standing instructions Customers can easily pay bills for insurance (BIC), flights (Air Mekong, Jetstar), and recharge services (Vietpay and Vn Top-up), as well as manage e-wallet transactions (Vn Mart) Additionally, users can inquire about all their accounts and submit requests for various services, such as new loan applications, loan disbursements, prepayments, new credit card applications, ATM card requests, and selecting preferred branches for processing.
Customers can choose between two service packages: Non-financial services, which include inquiries about accounts, cheque books, foreign exchange rates, and interest rates, and Financial services, which offer inquiries and facilitate transactions such as fund transfers, bill payments, online term deposits, and requests to BIDV JSC.
BIDV JSC Business Online is BIDV JSC online banking service which supports corporate customers to manage accounts and conduct financial transactions via Internet without going to the bank counters
Applied for any enterprise or organization that has deposit and/or loan accounts in BIDV JSC and has demand for BIDV JSC Business Online service
Our services include domestic fund transfers in both VND and foreign currencies, online term deposits, and automated payment options Customers can easily request account statements and inquire about their current accounts, fixed deposit accounts, loan accounts, and cheques Additionally, we provide banking information inquiries covering fees and charges, exchange rates, and interest rates.
BIDV JSC Business Online utilizes advanced security technology, incorporating encryption measures to safeguard transaction data and enhance security through two-factor authentication.
Major types of cards available to Dong Do’s customers include: o Debit Card: BIDV JSC Harmony, BIDV JSC eTrans and BIDV JSC
BIDV JSC offers a range of credit cards including Visa Premier, Visa Platinum, MasterCard Platinum, Vietravel MasterCard Platinum, Visa Precious, Visa ManU, Visa Flexi, and Vietravel MasterCard Standard, catering to diverse customer needs and preferences.
The VnMart wallet service allows individual clients to easily fund their electronic wallet from their BIDV JSC account by sending an SMS from their mobile phones This prepaid card model, co-issued by VNPAY and partner firms, enables users to make online payments for goods purchased on various enterprise websites.
ATM machines and POS terminals
As of December 31, 2016, the Dong Do branch enhanced its terminal network, reaching a total of 885 POS locations and 14 ATMs These terminals support card transactions from various major companies, including Banknetvn/Smartlink, Visa, MasterCard, JCB, and Union Pay.
2.2.2 The situation of E–banking services at BIDV JSC – Dong Do Branch
Table 2.1: The results of service activities at BIDV JSC – Dong Do branch
Source: Joint Stock Commercial Bank for Investment and Development of Vietnam – Dong Do Branch
As of 31 December 2015, total net service revenue reached 69.20 VND billion, increased by 16.13 VND billion, equivalent to 23% as opposed to 2014 However, in
2016, the net income reduced by 3.14 VND billion, representing a 4 % decrease compared to 2015 a Card Service
BIDV JSC - Dong Do branch offers a diverse range of cards, including debit and credit options such as BIDV JSC Harmony, eTrans, Moving, Visa Premier, Visa Platinum, MasterCard Platinum, Vietravel MasterCard Platinum, Visa Precious, Visa ManU, Visa Flexi, and Vietravel MasterCard Standard Each card is designed with unique features and varying credit limits to meet the diverse needs of customers.
To enhance electronic banking operations, the branch is continuously innovating its technology and expanding its network of payment instruments, leading to positive outcomes as detailed below.
Table 2.2: The results of card activities of BIDV JSC, Dong Do branch (2014–2016)
Unit: VND Billion/ Thousand units
Source: Joint Stock Commercial Bank for Investment and Development of Vietnam – Dong Do Branch
Between 2014 and 2016, the total number of issued cards experienced a significant increase, with an annual average growth rate of 19.5% This growth was primarily driven by the surge in domestic debit cards, which saw a notable rise in 2015, reaching 35,508 thousand units—an increase of 2,721 cards or 8% from the previous year In 2016, domestic debit card numbers soared by an additional 9,042 units, totaling 44,550 cards, marking a 25% increase Additionally, both international debit and credit cards also demonstrated consistent growth during this period These positive trends can be attributed to the successful expansion of the payment instrument network in 2016, which boosted the total number of ATM machines and POS terminals to 14 and 885, respectively.
Figure 2.5: The BSMS business result at BIDV JSC Dong Do branch (2014 – 2016)
Unit: VND billion/ Thousand people
Source: Joint Stock Commercial Bank for Investment and Development of Vietnam – Dong Do Branch
BSMS is a messaging service that allows customers to check their account balances and locate ATMs Recent data indicates a steady increase in BSMS service subscribers, with numbers reaching 52,463 in 2016, marking a 29% growth compared to 2015 Additionally, BSMS service revenue experienced a significant rise of 33%, increasing from 2.10 billion VND in 2015 to 2.79 billion VND in 2016.
BSMS service result at BIDV JSC - Dong Do branch (2014-2016)
Number of customers using BSMS
Figure 2.6: The IBMB business result at BIDV JSC Dong Do branch (2014 – 2016)
Unit: VND billion/ Thousand people
Source: Joint Stock Commercial Bank for Investment and Development of Vietnam – Dong Do Branch
Between 2014 and 2016, the number of customers utilizing IBMB services, which include BIDV JSC Online, Smartbanking, and BIDV JSC Business, experienced consistent growth By the end of 2016, the customer base for BIDV JSC Online and Smartbanking reached 37,001, while BIDV JSC Business had 714 customers Additionally, revenue from the IBMB services saw a significant rise, totaling VND 0.495 billion as of December 31, 2016, marking a remarkable 135% increase compared to the previous year.
2.3 Assessment on online banking at BIDV JSC – Dong Do branch
The Number of regular customers and market share
IBMB service result at BIDV - Dong Do branch (2014 - 2016)
Number of customers using BIDV Online and Smartbanking
Number of customers using BIDV Business
Despite Vietnam's fluctuating economy, BIDV JSC Dong Do branch successfully attracted customers to its E-banking services, evidenced by a 12% increase in regular customers, reaching 67,478, and a 25% rise in issued cards, totaling 44,550 by December 31, 2016 In a competitive landscape with over 100 credit institutions, BIDV JSC maintains a strong market presence, holding a 9% market share in E-banking services as of 2014, surpassing many larger regional banks.
Branch system and distribution channels
As of early 2017, BIDV JSC boasts an extensive distribution network throughout Vietnam, comprising 190 branches, 815 transaction offices, and 1,796 ATMs In 2011, BIDV's distribution network was recognized as the third largest in the banking sector, while its ATM network ranked second, highlighting its significant presence in the country's financial landscape.
Sub–Conclusion
This chapter evaluates the development of E-banking services at BIDV JSC – Dong Branch, starting with an overview of the branch's history, growth, and overall business performance, supported by data analysis It also presents insights into the performance of E-banking activities within the branch The chapter concludes with an assessment of these activities, highlighting significant achievements while addressing limitations in service provision and exploring potential reasons for these challenges.
SOLUTIONS TO DEVELOP E–BANKING SERVICES AT BIDV
Orientation to develop E banking services
3.1.1 E banking’s development trends in Vietnam
Online banking was introduced to Vietnamese customers in 2004, but adoption was slow due to a cash-centric culture and low literacy rates However, the rise of E-commerce has significantly transformed customer behavior towards E-banking, leading to an increased acceptance of digital payment methods As of June 2016, the number of payment cards reached 106 million, and the payment instrument network expanded dramatically, with over 17 million ATMs and 200 million POS systems established by mid-2016.
In just 13 years since 2004, E-banking has undergone remarkable evolution, with most banks now providing a range of online services Mobile banking, in particular, is poised for significant growth as Vietnamese millennials increasingly embrace its advantages, including easy access, enhanced security, and a variety of innovative mobile applications These factors, combined with rapid technological advancements, suggest that mobile banking is set to emerge as a dominant trend in Vietnam's financial landscape.
Given the evidence, it's clear that electronic banking is set to thrive in the future, offering significant opportunities for banks to capitalize on its growth However, this digital banking landscape also presents various potential risks that could be severe and unpredictable Nevertheless, if banks strategically navigate these challenges, they stand to gain substantial profits from this evolving distribution channel.
3.1.2 Orientation to develop E–banking services at BIDV JSC in the near future
After 13 years of development, BIDV JSC – Dong Do branch has solidified its strong position within the BIDV JSC system, primarily due to its consistent efforts and effective business strategies To maintain its success in the E-banking sector, the branch has set clear goals for future growth.
Developing and completing the model of managing, administrating and monitoring E–banking activities, especially card business in combination with the network development
Improving operational efficiency through aggressive investment in new technology and technological maintenance
Promoting marketing activities to make customers become more aware of online services offered at the branch The marketing programs will be well designed to draw customers
To enhance human resources, it is crucial to develop and improve policies focused on staff training This training will aim to increase awareness of e-banking and its significant benefits Prioritizing the development of e-banking among bank personnel is essential for driving its successful implementation.
Building the network development strategy in order to successfully develop electronic networks nationwide as well as expand the networks worldwide
Improving, upgrading and modernizing technology to increase staff productivity and performance, which is the key to enhance business efficiency and earn expected revenues
BIDV JSC is committed to diversifying its product and service portfolio by incorporating high-quality offerings that leverage modern and suitable technology Key strategic products under development include BIDV JSC Smartbanking, VnMart, and BIDV JSC Topup, aimed at enhancing customer experience and meeting evolving market demands.
Solutions to E banking’s development at BIDV JSC – Dong Do Branch
3.2.1 Increasing customer awareness of E–banking services by strong marketing strategies
Vietnam is often viewed as a cash-driven economy, with many citizens lacking awareness of E-banking services This reluctance to embrace digital banking is understandable, highlighting the need for financial institutions to educate customers about the advantages of E-banking over traditional banking methods To enhance awareness and demonstrate the superiority of E-banking, branches should implement targeted strategies that effectively communicate the benefits and ease of using these modern banking solutions.
To enhance its E-banking business, the branch must host a conference focused on essential E-banking products and services This event will provide a valuable platform for the branch to engage with customers and gain insights into their needs By understanding client perceptions and preferences, the branch can create customized products and services that meet evolving customer demands, ultimately leading to improved outcomes.
Making use of mass media
In today's digital landscape, mass media offers banks significant opportunities for business growth, with a LinkedIn study revealing that 63% of affluent consumers are prompted to engage with financial products through social media Additionally, McKinsey & Company research highlights that leveraging social media for promotions enhances marketing effectiveness, boosts lead generation, and significantly reduces promotional costs Therefore, the Dong Do branch should prioritize media strategies to advance its E-banking initiatives in the coming years.
The banking industry heavily relies on robust IT systems, as inadequate infrastructure can hinder daily transactions and competitiveness BIDV JSC, particularly its Dong Do branch, prioritizes the development of an effective and reliable banking system However, challenges remain, particularly in information security, which is a key concern for customers considering E-banking services To enhance security, the branch should move beyond outdated two-factor authentication and explore advanced methods like encryption and biometric authentication Additionally, BIDV JSC's core banking system, established in 2000, has become outdated and insufficient for managing the high volume of daily transactions Therefore, upgrading to a modern IT system is essential for optimizing banking operations in today’s technology-driven environment.
In response to increasing customer demands, banks must innovate and offer flexible products to meet evolving needs Diversification presents an opportunity for BIDV JSC to attract new clients and penetrate new markets by either enhancing existing services or introducing new ones A key focus should be on developing mobile applications, as users increasingly prefer mobile devices for banking Implementing USSD technology in mobile banking can streamline transactions through short codes, replacing traditional SMS banking Additionally, establishing a cashless ATM network allows customers to withdraw cash via their phones, enhancing security and alleviating concerns over lost cards.
Comprehensive training programs are essential for ensuring employees possess a deep understanding of E-banking products and services, enabling them to effectively assist customers through digital channels Additionally, fostering positive staff attitudes is crucial, as they significantly impact customers' willingness to embrace online banking Therefore, training should also focus on enhancing communication and problem-solving skills Furthermore, it is vital that these programs keep employees informed about the latest trends and innovations in E-banking technology.
In the current banking sector, when banks basically offer similar products and services, the quality of service is a key to make a difference for BIDV JSC The bank should
Constantly seeking customer feedback on E-banking services is crucial for enhancing service quality Additionally, implementing discount policies for existing customers can significantly boost their satisfaction, ultimately reducing the likelihood of them switching to competing banks.
Recommendations
The Government needs to assist banks in evolving E–banking services through the following ways:
The government can enhance online banking by establishing a comprehensive legal framework that draws on the experiences of developed nations It is essential for these regulations to be adaptable in order to effectively address the increasing crime rate associated with rapid technological advancements.
The government plays a crucial role in promoting e-commerce, which is vital for expanding e-banking distribution channels By implementing favorable policies, the administration can encourage investors, businesses, and financial institutions to participate in online activities This support will enhance online payment systems and attract potential customers to utilize online banking services.
The success of online services is fundamentally dependent on robust technological infrastructure Therefore, it is crucial for the State to prioritize the development of IT infrastructure to foster a supportive environment for e-banking activities.
3.3.2 To the State Bank of Vietnam
The State Bank of Vietnam should support banks in strengthening the capacity of businesses and individuals to stimulate demand for E–banking services in a number of ways as follows:
The State Bank of Vietnam (SBV) should enhance public awareness of E-banking services by collaborating with commercial banks to organize forums, seminars, and workshops Despite the existing use of electronic banking among individuals and businesses, these services have not gained significant attention By hosting informative events, the SBV and banks can provide valuable insights into E-banking, ultimately fostering a greater market demand for online financial services.
The State Bank of Vietnam (SBV) should act as a facilitator to enhance collaboration among banks, particularly in electronic payment systems In the short term, the SBV must assist commercial banks in integrating into extensive ATM networks to address the current issue of uneven distribution.
The State Bank of Vietnam (SBV) should enhance collaboration with global financial institutions to attract increased investments in vital infrastructure projects, such as the Payment System and Bank Modernization Project, which is supported by the World Bank.
The SBV should implement training programs focused on E-banking services and banking management to help banks effectively develop and provide E-banking solutions to a diverse customer base.
Sub–Conclusion
Based on information in chapter 2 about the development situation of E–banking services at BIDV JSC – Dong Do Branch, chapter 3 of the thesis suggests some possible
This chapter outlines 46 solutions and recommendations for enhancing the development of E-banking at BIDV JSC – Dong Do branch It begins by assessing the current state of electronic banking in Vietnam and then presents future development strategies for the branch Additionally, the chapter offers actionable solutions to improve E-banking services at BIDV JSC Dong Do branch and concludes with recommendations for the Government to support digital banking initiatives at BIDV JSC and other regional banks.
Despite the global advancement of E-banking services, their adoption remains limited in Vietnam Banks face significant challenges in reaching a diverse customer base, prompting the need for effective strategies to enhance acceptance While various solutions, such as adjusting fee structures and reducing branch networks, have been implemented elsewhere, these approaches may not suffice in Vietnam's unique economic landscape Therefore, it is crucial for Vietnamese banks to continuously explore and implement tailored solutions to overcome these obstacles and improve E-banking service delivery.
The branch has made notable progress in developing online services, evidenced by a steady increase in customer numbers and service revenues However, these results remain below expectations due to shortcomings in business strategies that require prompt attention To enhance growth in the coming years, the branch should focus on creating a robust business plan, upgrading IT infrastructure, providing comprehensive staff training, and improving customer service quality Furthermore, the success of E-banking initiatives relies heavily on collaboration with key stakeholders, particularly the Government and the State Bank of Vietnam, who must support the bank in enhancing its online service offerings.
The research has successfully met its initial objectives, and the author is optimistic that the solutions proposed will significantly enhance E-banking services at the Dong Do branch.
RECAPITULATIONS AND CONCLUDING REMARKS
The thesis successfully achieved its objectives by examining the development situation of BIDV – Dong Do branch and assessing its E-banking growth through comprehensive data analysis However, significant limitations in the branch's development strategies were identified, which must be addressed promptly to enhance profitability The study highlighted a preference among customers for card services over other options, presenting challenges for the branch's E-banking evolution Since 2004, the adoption of electronic banking has been sluggish, primarily due to customers' cash payment habits and concerns over online security Nevertheless, technological advancements are gradually shifting consumer demand towards online services.
IMPLICATIONS
The thesis highlights the importance of recognizing economic climate variables, as they significantly impact profitability and customer retention It emphasizes the need for the branch to invest in studying customer behavior to gain insights into their needs, which will aid in developing new products that cater to those requirements Additionally, since many customers are unaware of the online services available, the branch should implement strategies to enhance their awareness and engagement.
LIMITATIONS AND PROPOSALS FOR FURTHER STUDY
Despite the researcher's success in crafting a solid thesis, inherent limitations arise due to time constraints and limited resources These limitations encompass issues of generalization and narrow applicability The broad scope of problems associated with E-banking prevents a comprehensive discussion within the confines of the thesis chapters.
The thesis provides a detailed examination of E-banking development at BIDV – Dong Do branch, highlighting that some proposed solutions may not be applicable to other branches or commercial banks Therefore, future research should broaden its scope to investigate E-banking issues across various commercial banks, beyond just the BIDV Dong Do branch.
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