INTRODUCTION
Rationale
Since joining the WTO in 2007, Vietnam has progressively integrated into the ASEAN and global economies, leading to the gradual removal of trade barriers that present both opportunities and challenges Vietnamese exporters and importers face difficulties related to language, geography, customs discrepancies, and varying consumption habits, alongside inherent risks stemming from limitations in operational scale, financial capacity, and knowledge of international regulations To mitigate these risks, commercial banks have focused on enhancing international payment operations, serving as a crucial link between importing and exporting businesses by facilitating document forwarding and payment processes.
In Vietnamese commercial banks, the use of international payment by collection, particularly under forward D/P conditions, has gained popularity due to its safety and advantages for transaction parties To establish and enhance their market reputation amid an unstable economy and a fragile banking system, banks must consistently improve the quality of international payment services, with a specific focus on forward D/P transactions.
To support the rapid development of international payments and address the diverse demands of the market, Vietinbank recognizes the need to identify shortcomings and implement effective solutions Despite its efforts, the bank's international payment services, particularly forward D/P, have faced slow growth due to a lack of experience and specialized knowledge, coupled with low enterprise demand Therefore, Vietinbank's primary focus must be on meeting the varied needs of customers and attracting more clients to its forward D/P offerings through enhanced safety and effectiveness Drawing on insights gained from my studies at the Banking Academy, I have selected the topic “Developing Forward D/P in a Vietnam Joint Stock Commercial Bank for Industry and Trade” for my graduation thesis.
Objectives
Systematizing theoretical issues of international payment by forward D/P in commercial banks
Giving data analysis and assessment on reality of payment by forward D/P at Vietinbank
Proposing solutions to develop forward D/P at Vietinbank.
Scope and subject of the study
Subject of study: theoretical issue and practice related to quality and development of payment by forward D/P of Vietinbank
Scope of study: mainly focusing on research on development of payment by forward D/P at Vietinbank during the stage of 2011 – 2013.
Research methodology
This article employs fundamental scientific research methodologies, including comprehensive analysis, synthesis, and comparison, enhanced by the use of graphs, tables, and figures sourced from a Vietnamese commercial bank These elements work together to clarify the research issue and present the findings effectively.
Thesis structure
In addition to the beginning, conclusion and references, the main content of the gradual thesis comprises of four chapters:
Chapter 2: Literature review of international payment by forward D/P
Chapter 3: The reality of international payment by forward D/P at Vietinbank
Chapter 4: Solutions to the development of forward D/P at Vietinbank
LITERATURE REVIEW OF INTERNATIONAL PAYMENT
Definitions and Characteristics of forward D/P
According to the Trade Finance Guide released by U.S Department of Commerce on April 12, 2007, concepts related to Collection method are defined as follow:
Documentary collection (D/C) is a transaction in which an exporter authorizes their bank to collect payment by sending the necessary documents to the importer's bank, accompanied by payment instructions The importing bank receives funds from the importer and forwards them to the exporter through the banks involved in the collection process, in exchange for the documents.
D/P, or Documents against Payment, is a financial arrangement where an exporter directs the presenting bank to release shipping and title documents to the importer only upon full payment of the accompanying bill of exchange or draft, commonly referred to as cash against documents.
- Forward D/P is a kind of D/P, in which the importer must pay B/E within X days after the documents have been presented
- Importer does not have to pay at sight but within X days after documents are presented
An importer has the right to accept a Bill of Exchange (B/E) but will only receive the associated documents upon honoring the B/E at its maturity date However, if the payment is secured by a bank guarantee, the importer can obtain the documents without needing to make an immediate payment.
- A usance B/E is an optional tool in a forward D/P transaction.
Advantages and disadvantages and role of forward D/P in international trade
- Exporter is ensured that importer receives documents only when he makes payment or honors payment
- Exporter has right to take importer to the court if importer does not honor B/E on the due date
- Importer can appoint his representative at importer’s country on his behalf to deal with his payment delay or refusal of making payment
- Importer can check documents at presenting bank before making payment or accepting payment so as to ensure that documents are in compliance with the sale contract
- Importer has a period of time (X days after documents are presented) to find financing source for making payment
Although payment by forward D/P limits drawbacks of other payment conditions of collection, it still reveals some disadvantages
- Exporter has to pay all charges related to the goods protection of bank though bank does not require
If an importer fails to make payment, the exporter has the option to pursue legal action based on the signed contract However, this process can be lengthy and expensive, especially since the goods may have already been unloaded and stored.
Exporters bear the responsibility for any delays or losses of documents, as banks do not assume liability for these issues Additionally, if a collecting bank makes errors in processing a collection order, the exporter will still face the associated risks, even if they did not choose the collecting bank.
- Importer may take risk when exporter makes forged documents or intentionally cheats in transaction while banks participating in transaction do not respond for forged or erroneous documents
Once an importer accepts a Bill of Exchange (B/E), they are legally obligated to honor it at maturity, regardless of any rational reasons for non-payment, such as non-shipment or significant delivery flaws Failure to meet this obligation can lead to legal action from the exporter and may severely damage the importer's reputation.
2.2.3 Role of forward D/P in international trade
In international trade, the delivery of goods and documents often occurs at different times To facilitate this process, exporters allow importers to make payments within a specified number of days after receiving the documents, enabling importers to settle their payments conveniently when the goods are shipped to the port.
Exporters typically prefer to release documents to their partners only after receiving payment; however, importers may not always have immediate funds available To accommodate this, exporters often allow a grace period of X days following the document presentation, enabling importers to secure the necessary financing If the importer is backed by a commercial bank, they can obtain the documents sooner without upfront payment, using the proceeds from the sale of the goods to settle the debt once it matures after X days In this scenario, the exporter effectively extends credit to the importer.
Because forward D/P is more advantageous than D/P for importer, exporter can sell more goods, increase revenue and so increase their market share.
Parties to forward D/P transactions
-Principal: is a person who initiates the transaction, requiring his bank (remitting bank) to collect money
+ Making requirements and stipulating content of the transaction
+ Instructing parties to execute the Collection process
+ Having right to become beneficiary
In a forward D/P transaction, principal is seller or exporter
- Drawee: is a person who finally makes payment and/or accepts payment after document presentation Normally, drawee is importer in international trade
- Remitting bank (principal's bank): is the bank to which principal has entrusted the handling of collection Therefore, remitting bank serves principal and responses toward principal in collection process
A collecting bank is any financial institution, aside from the remitting bank, that plays a role in processing collections by managing documents and securing payment from the drawee Once the payment is obtained, the collecting bank is responsible for transferring the funds to the remitting bank and ensuring the collection process is fulfilled Typically, the collecting bank acts as an agent or a branch of the remitting bank located in the drawee's country.
+ If drawee opens accounts at Collecting bank, presentation will be made directly in accordance with collection instruction to Drawee In this case, Collecting bank is concurrently Presenting bank
If the drawee does not maintain an account with the collecting bank, the presentation will follow the collection instructions directed to the presenting bank In this scenario, the presenting bank acts on behalf of the drawee and communicates directly with the collecting bank.
For domestic forward D/P transactions, when both the seller and buyer hold accounts at the same bank, that bank assumes the roles of the remitting bank, collecting bank, and presenting bank, thereby streamlining the collection process through a single financial institution.
Forward D/P operation process
Step 1: Exporter and importer sign the sale contract
Step 2: Exporter ships the goods to importer's port
Step 3: Exporter submits documents to Remitting bank
Step 4: Remitting bank forwards documents to collecting bank for obtaining payment
Step 5: Collecting bank advises importer of documents and ask importer to pay Step 6: Importer pays immediately or accept usance B/E
Step 7: Importer receives documents from collecting bank after making payment Step 8: Collecting bank transfers money or usance B/E to remitting bank
Step 9: Remitting bank transfers money or usance B/E to exporter
Factors affecting the development of forward D/P in commercial banks
Objective factors are factors that banks cannot predict and control, related to surrounding environments including domestic and international environments, and customers who directly involve in forward D/P transactions
The economic environment encompasses the overall development of the economy, active participation of all market members, and productivity standards across various sectors Banking operations, particularly in international payments, thrive in a stable and growing economic context Political stability further enhances national economic growth and international trade, resulting in increased demand for import-export transactions A stable political climate also boosts investment safety, presenting opportunities for both domestic and foreign investors to expand their import and export activities.
International payment activities must adhere to the domestic laws and legislative systems of the transaction's country Specifically, Documentary Collection, and forward D/P transactions, are required to follow international regulations to resolve disputes among participants The International Chamber of Commerce (ICC) has established the Uniform Rules for Collections (URC), with the current official version being URC 522, which governs Collection transactions.
The legal nature of the Uniform Rules for Collections (URC) is governed by national law, which takes precedence in cases of inconsistency When national legislation aligns with international regulations, it minimizes risks associated with collection transactions and helps prevent legal disputes among the parties involved.
Commercial banks serve as crucial facilitators for international payments, primarily catering to importers and exporters with strong and stable financial backgrounds By attracting these reliable clients, banks can enhance the efficiency of international transactions, thereby minimizing payment risks for all parties involved This strategic focus ultimately contributes to improved payment quality through effective collection processes in commercial banking.
In international payments, participants must select a settlement currency, which can be the currency of the exporter, the importer, or a third country The stability of this settlement currency significantly affects the business outcomes for importing and exporting enterprises, thereby influencing the international payment activities of commercial banks.
Subjective factors are factors belonging to banks themselves and have direct impact on the quality of payment services by Collection, including forward D/P of commercial banks
Business strategy and external policy of banks:
The development of international payment operations focuses on prioritizing specific high-quality products and services offered by banks Strengthening relationships with foreign and correspondent banks will further enhance these payment operations By implementing effective policies, banks can attract both domestic and international clients, positively influencing their overall business expansion.
Prestige plays a crucial role in establishing a bank's trade name, enabling the expansion of a reliable network of correspondent banks This extensive network enhances the ability to meet clients' international payment needs while minimizing verification and confirmation fees.
Qualification of international payment staff:
The qualifications, language skills, behaviors, and practical experience of payment staff are crucial for ensuring high-quality international payment operations When bank employees possess strong professional skills and a solid understanding of foreign trade, insurance, transportation, customs, and import-export policies, payment processes become more efficient, thereby minimizing risks for both banks and clients and enhancing the bank's reputation Furthermore, knowledgeable payment staff provide valuable consultancy, assisting clients in selecting appropriate payment methods and reducing risks, which fosters client trust and loyalty.
Banking technology encompasses all facilities and communication networks essential for ensuring fast, accurate, secure, and confidential payment operations A slow internet connection, non-standardized programs, and inadequate security fail to meet the high standards required for quality payments Consequently, commercial banks must adopt modern technology systems to satisfy the diverse needs of their customers.
The global economic landscape has experienced significant volatility in recent years To effectively implement forward D/P strategies, banks must stay informed about international payment processes and applicable regulations Additionally, it is essential for these rules to be tailored to specific circumstances to best serve customer needs.
The quality of related services:
Supporting operations like foreign currency exchange, bank guarantees, and import-export financing significantly enhance payment quality under forward D/P conditions Clients appreciate prompt service with straightforward procedures and competitive exchange rates for their foreign currency needs in import-export activities Additionally, when clients enter into sales contracts but lack sufficient funds, bank guarantees provide the necessary payment assurance, facilitating smoother transactions.
Norms reflecting the development of forward D/P at commercial banks
In order to assess the development of payment operation by forward D/P at commercial banks, it must be based on five main criteria
Analyzing the annual data on forward Document against Payment (D/P) transactions reveals the development status of international payments using this method A rising trend in forward D/P transactions indicates growing popularity and successful implementation, while a declining trend highlights existing weaknesses, signaling the need for commercial banks to enhance the quality of forward D/P services to foster further growth in this area.
Turnover in international payment by forward D/P
Turnover serves as a key indicator for evaluating the growth of international payments through forward documents against payment (D/P) Analyzing turnover across various years reveals the profitability of this operation, allowing for predictions regarding future trends Based on these insights, strategic solutions can be implemented to enhance and sustain the effectiveness of forward D/P payment methods.
Proportion of forward D/P in total turnover from payment by Collection
Forward D/P is the most popular payment method in collections due to its advantages for both exporters and importers This method is generally safer than D/A and offers more benefits to importers compared to D/P Analyzing the percentage of forward D/P in relation to D/A, D/P, and other payment methods provides insights into its performance at commercial banks A high proportion of forward D/P in total sales indicates the efficiency of this operation, while a low percentage suggests that banks need to explore solutions to enhance the use of forward D/P.
THE REALITY OF INTERNATIONAL PAYMENT BY
History and development of Vietinbank
Foundation and development of Vietinbank
Established in 1988 after separating from the State Bank of Vietnam, the Vietnam Bank for Industry and Trade, now known as Vietinbank, was equitized on July 3, 2009 Over the years, Vietinbank has solidified its status as a leading commercial bank in Vietnam's financial market, with its chartered capital growing from 11.252 trillion VND at inception to over 37.234 trillion VND by 2013 Ranking second among Vietnamese commercial banks in terms of total assets and branch network, Vietinbank has evolved beyond traditional banking, expanding into sectors such as securities, insurance, and financial leasing.
Vietinbank boasts an extensive network comprising one headquarters, 151 branches, and over 1,000 transaction points, alongside strong correspondent relationships with 900 banks and financial institutions across more than 90 countries As a pioneer in modern technology and e-commerce, it was the first Vietnamese bank to establish branches in Europe and has since expanded to include a branch in Laos (opened in May 2012) and a representative office in Myanmar (opened in March 2013), showcasing the remarkable growth of Vietnam's financial market on both regional and global stages Vietinbank is proud to be the only Vietnamese bank listed among the top 2,000 largest enterprises worldwide.
The main operations of Vietinbank include mobilizing capital, making investment loans, guarantee, international payment and trade finance, cards and e – banking and other operations
The organizational structure of Vietinbank includes:
The board of directors at Vietinbank consists of eight members who serve a five-year term, overseeing the bank's objectives and responsibilities Supporting the board are five committees that provide valuable advice and proposals to enhance decision-making and strategic direction.
- Executive board includes 1 general director together with 10 deputy general directors
- Supervisory board includes 3 members on behalf of shareholder council supervising operations and compliance with law, bank’s charter and accounting regime
By the end of 2012, Vietinbank employed a total of 19,046 staff members, including those from subsidiaries, business units, and representative offices The bank's Board of Directors and executive team highly value their employees, recognizing them as the most important asset and prioritizing their development and well-being.
The reality of international payment by forward D/P at Vietinbank
Figure 3.1: The number of forward D/P transactions at Vietinbank in the period of 2011 – 2013
(Source: Report of international payment Dept – Vietinbank)
Between 2011 and 2013, Vietinbank experienced a significant increase in forward D/P transactions, as illustrated in Figure 3.1 The number of transactions rose from 9,425 in 2011 to nearly 11,500 in 2012, marking a 21% growth This upward trend continued, culminating in a total of 14,289 transactions by the end of 2013.
In 2011, commercial banks faced significant challenges, with Vietinbank being notably affected Despite the prevailing economic depression, Vietinbank distinguished itself by successfully maintaining and achieving growth in payment through forward D/P strategies This resilience set the stage for continued success in 2012.
2013 witnessed an outstanding development of this method when the number of transactions always grew more than 20% compared to the previous year
To enhance profitability, prioritizing the acquisition of new clients alongside maintaining strong relationships with existing ones is essential Increasing the volume of transactions directly correlates with higher profits, making client expansion a key focus for business growth.
3.2.2.Turnovers of payment by forward D/P at Vietinbank
Figure 3.2: Turnovers of payment by forward D/P at Vietinbank in the period of
The chart from Vietinbank's international payment report illustrates the turnover of forward D/P transactions from 2011 to 2013, revealing a consistent upward trend in both import and export activities during this period.
Between 2011 and 2012, import forward D/P turnovers surged from over 310 million USD to nearly 422 million USD, marking a significant 34% increase This upward trend continued in 2013, with turnovers surpassing 600 million USD, highlighting the growing importance of import forward D/P in international trade.
In 2012, export forward D/P turnover rose by 27%, reaching approximately 360 million USD, mirroring the growth trend of import forward D/P but at a slower pace This upward trajectory continued into 2013, with turnover nearing 400 million USD by the year's end.
The remarkable growth of forward D/P is evidenced by impressive figures, particularly in export forward D/P, which consistently outperforms its counterpart This trend stems from Vietnam's balance of payments (BOP) imbalance, highlighting the differing characteristics of the national economy Despite export forward D/P not being the primary focus for Vietinbank or other Vietnamese commercial banks, the bank has successfully enhanced the growth rate of turnover from export forward D/P during this period.
3.2.3 The proportion of payment by forward D/P in total turnover from collection Figure 3.3: Proportion of payment by forward D/P in total turnover form collection in three years from 2011 to 2013
(Source: report of international payment Dept)
The three pie charts illustrate the changes in the proportion of forward D/P in total turnover from collection between 2011 and 2013 Throughout this period, there was a consistent increase in the proportion of forward D/P, which consistently represented a significant share of total turnover Starting at 57% in 2011, the value from forward D/P transactions rose, leading to a modest increase of 2% the following year By 2013, forward D/P experienced more rapid growth, contributing a substantial 64% to the total turnover.
In recent years, forward D/P has emerged as the primary collection method for banks, largely due to its convenience and safety compared to D/P and D/A This method allows importers time to secure funds for payment while ensuring exporters only release documents upon receipt of proceeds, benefiting both parties Despite its growing popularity in international payments, data indicates a slow growth in forward D/P transactions, prompting banks to seek effective strategies to enhance both the quality and quantity of these transactions.
Table 3.4: customers’ satisfaction with Vietinbank’s international payment services Criteria Competitivenes s of service fee
Credibility Convenience Serving style Amount of satisfied customers
According to a 2013 survey conducted by Vietinbank's International Payment Department, 81% of the 100 participating customers expressed satisfaction with Vietinbank's competitive fees for international payment services.
It is inferred that in the eyes of customers, Vietinbank’s service fees are quite competitive in comparison with other commercial banks
The bank’s image ranks at the second among criteria with 75% of customers asked This appreciates customers’ feeling on Vietinbank and quality of international payment services offered by the bank
Vietinbank has successfully established customer trust, achieving a notable 68% confidence rate in its international payment services This credibility is a vital asset for the bank's growth, as customers are more likely to engage in transactions when they perceive safety and reliability.
The next criterion is convenience To be more specified, convenience is assessed on
Five key factors influence customer satisfaction with banking services: the correspondent bank network, procedural efficiency, transaction points, service types, and the speed of customer response Customers report a 65% satisfaction level, indicating that the convenience of the bank's services is generally acceptable.
The serving style of payment staff falls short of customer expectations, with only slightly over 50% of customers expressing appreciation for the bank's payment personnel This significant shortcoming highlights the urgent need for the bank to address and improve its customer service standards.
The assessment of international payment by forward D/P at Vietinbank
In recent years, Vietinbank has achieved significant success in its forward D/P payment operations, marked by increases in transaction volume, turnover, and the proportion of forward D/P within total collection turnover This growth not only enhances the bank's collection fee revenue—providing a stable income source—but also reflects improved customer satisfaction with the bank's service quality Key factors contributing to this success include effective leadership strategies aimed at retaining existing clients and attracting new ones, exemplified by a fee preference policy for enterprises with high trading frequency at Vietinbank.
Vietinbank has successfully diversified its customer base, expanding beyond its initial focus on state enterprises to include non-state enterprises This strategic shift has provided a solid foundation for increasing sales and profitability through enhanced demand for the bank's services.
Vietinbank has significantly expanded its network of correspondent relationships, now partnering with over 900 banks and financial institutions across more than 90 countries and territories This extensive network enhances the bank's transaction efficiency and safety while minimizing risks Furthermore, it facilitates the exchange of vital market information and insights into the customs and legal frameworks of its partner countries.
In conclusion, Vietinbank's effective management and operational reforms have solidified its status as a leading commercial bank in Vietnam, resulting in impressive and consistent growth over the years However, there are limitations and underlying causes that need to be addressed for further improvement.
Beside encouraging success, there have been some weaknesses that inhibit the development of payment operation by forward D/P at Vietinbank
Between 2011 and 2013, there was a significant imbalance in turnover from import and export forward D/P, with import forward D/P consistently accounting for over 50% of total turnover Additionally, the growth rate of import forward D/P surpassed that of export forward D/P, highlighting not only external factors but also the bank's shortcomings in improving export payment operations.
The customer relations department at Vietinbank faces challenges in effectively promoting products, as many customers remain unclear about the ordering process and transaction procedures after product introduction Despite the simplicity of the forward D/P collection method, the payment staff have not provided sufficient explanations to ensure customer satisfaction This lack of clarity hinders Vietinbank's ability to make a positive impression on new customers and to retain them for future banking needs.
Vietinbank's marketing strategies currently overlook foreign companies operating in Vietnam, focusing primarily on domestic enterprises Their products, including forward D/P, are tailored to meet the needs of local importers and exporters Consequently, foreign companies tend to favor offerings from foreign banks, making it challenging for Vietinbank to attract these international clients.
The legal framework governing collection practices, particularly forward D/P transactions, remains inadequate in Vietnam, lacking a specific regulatory document Consequently, commercial banks rely on the URC 522 of ICC, which, while standardized internationally, often conflicts with local customs and conventions Additionally, language barriers can lead to misunderstandings among bank staff who may not be proficient in international payment terminology Furthermore, Vietnam's economy has faced significant challenges amid global changes, with national inflation peaking at 18.6% in 2011 before dropping to 6.81% in 2012, highlighting the vulnerabilities of an integrating and growing economy.
Between 2011 and 2013, the average growth rate was a mere 5.6% per year, marking the lowest level in 13 years This unstable economy, characterized by low GDP, is not conducive to the growth of international trade Furthermore, political instability on the global stage has led to a rise in unsold exports, negatively impacting the national trade balance.
The banking sector, particularly in international payments, is facing intense competition, with Vietinbank striving to leverage its strengths amidst formidable rivals like Vietcombank and Techcombank Additionally, domestic banks are enhancing their marketing and fee structures to attract customers Since Vietnam's accession to the WTO, the influx of foreign banks, such as HSBC and ANZ, has intensified the competitive landscape, posing significant challenges for domestic banks like Vietinbank, which struggle against their foreign counterparts in financial capacity, professionalism, and extensive correspondent banking networks.
Vietnamese exporting and importing enterprises face significant limitations due to a lack of information regarding their international partners, consumer needs, and export-import regulations This knowledge gap negatively impacts their export quantities and, consequently, the scale of international payments processed through banks To mitigate these risks in their business operations, these enterprises require effective consulting services from banks.
Payment by collection has its limitations, as it is a straightforward method with low fees but lacks safety for exporters The reputation of Vietnamese trading companies is relatively low among foreign partners, leading them to prefer more secure payment methods like Letters of Credit (L/C) to protect their interests Consequently, transactions via payment by collection and forward D/P represent a minor share of total international payment turnover However, as trust builds between parties after successful transactions, they may opt for collection or remittance to lower transaction costs.
Vietinbank's lack of focus on staff training has resulted in inadequate specialized knowledge and situation-handling skills among payment staff Consequently, employees struggle to clearly and effectively communicate the bank's products to customers, leading to confusion and increased risk of transaction errors for all parties involved.
Secondly, the bank has not yet paid much attention to marketing payment methods
Currently, Vietinbank primarily serves its long-standing traditional customers and has yet to engage foreign companies and small domestic enterprises To attract new clients and diversify its customer base amid intense competition, the bank must align its marketing strategies with the product design division to create innovative service packages tailored to the specific business conditions and needs of these target companies.
Vietinbank's network of correspondent banks remains limited, with a growing number of partnerships in recent years; however, it still falls short compared to similar-sized banks.
Figure 3.5: Correspondent bank network of some Vietnamese commercial banks in 2013
Name of bank Number of correspondent banks
Number of countries and territories
(Source: official websites of commercial banks)
MEASURES TO DEVELOP INTERNATIONAL PAYMENT
Orientations toward the development of forward D/P at Vietinbank during the
4.1.1 General orientations of Vietinbank in the next period
In the challenging economic landscape of 2013, Vietinbank demonstrated resilience by successfully navigating difficulties and fulfilling its business objectives The bank focused on safe and effective development in alignment with international practices and standards, reinforcing its position as a leading state-owned bank and a cornerstone of the banking industry.
In 2014, Vietinbank aims to enhance its competitiveness in the financial market by focusing on growth and restructuring towards a modern business model The bank's primary goal is to support government policies and alleviate challenges faced by enterprises while adhering to monetary regulations Key objectives include investing in technology innovation, improving service quality, and strengthening risk management capabilities, all directed towards sustainable and effective development Additionally, Vietinbank remains committed to social welfare and community responsibility.
4.1.2 Orientations toward the development of international payment by forward D/P Besides general orientations, Vietinbank also sets specific ones for international payment and for forward D/P in particular as follow:
- Continuing to increase turnover from forward D/P by at least 30% per year, especially focusing on boosting export forward D/P
Establishing effective customer care policies is essential for retaining high-value traditional customers while attracting new clientele, including small and medium enterprises By prioritizing customer satisfaction and tailored support, businesses can enhance loyalty and drive sales growth.
- Developing network of correspondent banks, especially setting relations with leading prestigious banks in other countries and territories in order to more safely and effectively serve international payment by forward D/P
In the coming years, a significant transformation in human resources is anticipated, characterized by a reduction in workforce numbers while enhancing the quality of staff Vietinbank is committed to establishing a network of highly qualified personnel across all branches, focusing on recruiting exceptional talent capable of driving substantial sales and profits Additionally, the bank will refine its salary and bonus mechanisms to align with employee responsibilities, benefits, and overall work performance.
- Organizing more short – term professional training courses for staff who are weak at professional, contributing to improvement of quality of customer care service
4.2 Solutions to develop international payment by forward D/P at Vietinbank
Technology serves as a crucial foundation for all industries, particularly in the banking sector The advancement of banking technology is essential for optimizing business processes and ensuring successful transactions that meet customer needs Additionally, strategic investments in technology enhance a bank's competitiveness, allowing it to keep pace with formidable rivals, especially amid the intense competition posed by new foreign banks.
Vietinbank, as the first bank in Vietnam to adopt modern banking technology and e-commerce, continually innovates to align with international standards To leverage technology effectively, the bank should prioritize the development of its Core Banking system and SWIFT payment network, enhancing information transfer, risk management, and reducing transaction costs Additionally, strengthening technological cooperation with foreign banks and financial institutions is crucial for gaining valuable support and expertise.
4.2.2 Improving quality of payment staff
In addition to technology, the human factor is crucial for the long-term development of a bank, necessitating a focus on the comprehensive development of human resources Payment staff, in particular, must excel in professionalism and possess knowledge of international practices, as they directly interact with customers during transactions Their qualifications and attitudes significantly impact the bank's service quality and overall image Consequently, banks should prioritize these aspects to enhance their operational effectiveness.
- Setting up a reasonable and scientific recruitment process to ensure that the bank is able to find excellent staff who meet requirement of the jobs
To enhance the bank's future workforce, we are committed to facilitating opportunities for potential staff to study abroad This initiative aims to equip them with valuable knowledge and experiences from developed countries, ensuring they become the driving force behind our institution's success.
To enhance the effectiveness of human resource management, banks should implement appropriate policies and measures for staff assessment and classification An annual evaluation of employees is essential to identify those who require retraining, particularly among standardized staff who do not meet performance criteria This approach will ultimately elevate the overall quality of payment staff within the organization.
Innovative incentive policies are essential for enhancing employee performance and retention in the banking sector By offering competitive salaries and bonuses, banks can motivate staff to fully utilize their skills and enthusiasm Additionally, a strict system of rewards and penalties fosters healthy competition and encourages employees to strive for excellence in achieving their goals.
- Strengthening compliance with discipline of payment staff Staff need to implement business process strictly, cooperate actively with their colleagues to dealt with problems
- Short – term training courses and workshops should be held more regularly so that staff can exchange knowledge and experience with counterparts of other banks
The attitude of payment staff is crucial for customer satisfaction; they should always be courteous and maintain a friendly demeanor, even in challenging situations It is essential for them to respond enthusiastically to customer inquiries and provide clear guidance throughout the payment process.
The Vietnamese financial market is characterized by a multitude of commercial banks and a rapid enhancement in service quality Vietinbank faces fierce competition from both domestic and foreign banks that excel in financial strength, technology, and expertise With customers presented with numerous appealing options, Vietinbank must proactively attract clients rather than waiting for them to come To effectively promote its image and acquire new customers, Vietinbank should enhance its marketing strategies through targeted measures.
Regularly and flexibly planning customer care tailored to different customer segments—VIP, traditional, and ordinary—ensures that banks can effectively meet diverse needs Conducting periodic satisfaction surveys allows banks to promptly adjust their services, enhancing the overall customer experience and aligning with customer expectations.
We organize exchange meetings with customers to enhance their understanding of international payment processes, discuss strategies for minimizing collection risks, and outline relevant rules and practices During these sessions, we also introduce our latest banking products and services to better serve our clients' needs.
To attract new customers through existing ones, Vietinbank must prioritize delivering high-quality services and demonstrating the commitment of its payment staff By fostering trust and establishing a strong reputation, satisfied customers will be more inclined to refer their connections to the bank, thereby expanding its clientele.
Petitions
The Vietnamese government should enhance the microeconomic environment by implementing effective policies, such as tax incentives and quotas, to promote enterprise development and stimulate export and import activities Currently, the lack of an official legal framework governing international payment by collection places Vietnamese enterprises at a disadvantage, as banks rely on the URC 522 guidelines from the ICC for collection transactions and dispute resolution This reliance on international practices, without a supportive national legal framework, exposes businesses to significant risks and potential losses Therefore, it is crucial for the government to establish a legal document addressing international payment by collection to safeguard the legitimate rights and interests of domestic enterprises.
The Government should prioritize the development of policies aimed at enhancing export activities Despite Vietnam's goods being available in numerous countries, they predominantly consist of low-value agricultural products Therefore, it is essential for the Government to implement strategies that diversify and improve the quality of exports.
To enhance trade cooperation and diplomatic relations with robust economies like the European Union and the USA, it is essential to broaden our export markets Additionally, the Government should proactively showcase Vietnam's key export commodities to the international community by frequently organizing fairs and exhibitions.
- To issue protectionism policies to domestic enterprises, offer tax incentives, and simplify administration procedures to facilitate smooth export – import activities
4.3.2 Petitions to the State bank of Vietnam
Perfecting legal system for banking activities
The SBV should build effective methods of supervision and risk assessment toward international payment operation of commercial banks under international standards
The SBV must collaborate with relevant ministries to finalize regulations on international payments, particularly focusing on payment by collection, enabling commercial banks to implement measures that reduce risks for both themselves and their customers.
The exchange rate significantly impacts foreign trade and banking operations, especially in today's globalized economy where foreign capital flows are highly volatile This unpredictability in demand and supply of foreign currency creates challenges for businesses, leading to unforeseen risks and potential losses, particularly for exporters and importers A rising exchange rate can enhance export activities while limiting imports, thereby affecting banks' international payment sales Consequently, it is crucial for the State Bank to manage exchange rates flexibly and maintain them at a reasonable level to foster the growth of foreign trade.
4.3.3 Petitions to exporting and importing enterprises
The risks associated with payment by forward D/P primarily stem from customer involvement in transactions To mitigate these risks and potential losses, enterprises must adopt effective strategies By implementing specific measures, businesses can address their vulnerabilities and enhance their overall transaction security.
To minimize risks and ensure the benefits of their enterprises, companies need to employ highly trained staff with expertise in foreign trade and a strong understanding of international payment laws These professionals should also possess reliability and other positive traits to effectively manage contracts and safeguard the interests of the organization.
To improve the quality of trade deals with foreign partners, enterprises must enhance their staff's foreign language skills, as international rules are often complex and written in foreign languages This can be achieved by sending employees to short-term language courses or organizing in-house language classes Proficiency in foreign languages is essential for better understanding and navigating international regulations, ultimately benefiting the business's global operations.
Prestige and honesty are crucial for sustaining long-term business relationships and the overall success of enterprises Unfortunately, the reputation of Vietnamese companies among foreign partners is often tarnished due to the unethical practices of a few businesses, which negatively impacts the perception of the entire industry To foster a positive image and strengthen ties with international associates, it is essential for Vietnamese enterprises to address and rectify these issues.
Enterprises must anticipate potential risks and losses associated with using the forward D/P payment method in transactions By establishing provisions for these risks, businesses can effectively manage disputes when they arise.
Vietnam's economy has experienced significant positive transformations following its integration into the global market, leading to a rise in international trade This surge in export and import activities highlights the critical need for advanced international payment methods Among these, Forward D/P has emerged as one of the most secure options for international transactions, warranting considerable attention from commercial banks.
On the basis of various study methods, combining with theoretical knowledge and data on international payment by forward D/P provide by Vietinbank, the graduation thesis has found out following issues
Firstly, the thesis has researched general theoretical knowledge about international payment by forward D/P at commercial banks
Secondly, on the following part, the thesis has shown reality of payment by forward D/P at Vietinbank by analyzing data collected from the bank in three consecutive years from 2011 to 2013
The thesis outlines effective strategies for advancing the forward D/P method at Vietinbank and calls on the Government, the State Bank of Vietnam, and local exporting and importing businesses to support this development.
My graduation thesis has some limitations due to time constraints and research conditions I sincerely appreciate the support and guidance from my teachers, which is invaluable in enhancing the quality of my work.
I would like to express my heartfelt gratitude to the faculty of foreign languages, particularly to my instructor, Mrs Nguyen Phuong Lan, for her dedicated guidance during my research I hope that my findings and proposals in this thesis will contribute to the advancement of international payments through D/P at Vietinbank in the future.