Khóa luận tốt nghiệp Tài chính ngân hàng: Improving the quality of retail banking services at Joint Stock Commercial Bank for Investment and Development of Vietnam

VIETNAM NATIONAL UNIVERSITY UNIVERSITY OF ECONOMICS AND BUSINESSFinance and Banking IMPROVING QUALITY OF RETAIL BANKING SERVICES AT VIETNAM DEVELOPMENT AND INVESTMENT JOINT STOCK COMMERC

VIETNAM NATIONAL UNIVERSITY UNIVERSITY OF ECONOMICS AND BUSINESS

Finance and Banking

IMPROVING QUALITY OF RETAIL BANKING SERVICES AT VIETNAM DEVELOPMENT AND INVESTMENT JOINT STOCK COMMERCIAL BANK

Supervisor : MSc Nguyen Dinh Trung

Student name : Tran Minh Hai

VIETNAM NATIONAL UNIVERSITY UNIVERSITY OF ECONOMICS AND BUSINESS

Finance and Banking

IMPROVING QUALITY OF RETAIL BANKING SERVICES AT VIETNAM DEVELOPMENT AND INVESTMENT JOINT STOCK COMMERCIAL BANK

Supervisor : MSc Nguyen Dinh Trung

Student name : Tran Minh Hai

I would like to confirm that the topic "Improving the quality of retail banking

services at Joint Stock Commercial Bank for Investment and Development ofVietnam" is my research work, without any copying of others The topic, method,model and content of the report are the result of my efforts in the research process.The data and results presented in this report are completely honest, do not use theresults of any similar studies I would like to take full responsibility before theschool and the faculty for this commitment if there are any problems

First of all, I would like to thank the Board of Directors as well as all the

teachers of the University of Economics - Vietnam National University, Hanoi for

creating the best conditions for me to complete my research.

I would like to express my special thanks to my instructor - Mr Nguyen Dinh

Trung During the process of making this thesis, I have received the attention, helpand dedicated guidance of the teacher, who has oriented my way of thinking,research skills and scientific way of working Those are very valuable suggestionsduring my graduation thesis

Given the limited time and experience of a practitioner, this thesis cannotavoid shortcomings I look forward to receiving the guidance and comments of theteachers so that I can supplement and improve my awareness, better serve thepractical work in the future

Sincerely thank!

Table of Contents

DECLARATION pessssssssssssssssrssnsssssssnssnsensnssnennsnesssnnssnsnsensensnsensensessesansnnsnseseensncsnsensnnstsenssesnsansnnsninns 3ACKNOWLEDGMENT orsecssssssecsssssssssssnsenssnsecenssvsnsensnnsnsssennsscssssnssnsesensensnssnsansensnssseensssstsenssnsnssness 4LIST OF ABBREVATION - e-eeeseeeeerrsrrrrrrrrsrrerersrerirrerirsrrarrersrrsrirersrriersrrsrie 7LIST OF FIGURES wescsssssssssscsvssssscenssnssssncenssnsncessnnsnssssenssvsssensenssssnsenssnsncensensscsnssnsssstsenssnsnssnssnsnsanss 7LIST OF TABLES wscssssssssscsssssssssessnssnssssnssnssssnsensevsssensensnvssesnsscssssnsnnsssensansnssnsanssnsnsinssnsnninesnsnnsnnts 7ABSTRACT vsssssssssscssssnsssssssnssssncensssssssssensensssencensnssnsensssssensansssessenssvsnsencensnsencenssnsscsssensnssssenssnsnssness 9CHAPTER I: INTRODUCTION e-«e<5sseeeresrrrrrrrrrrrrrrsrksrisraisrisrsrrsrrsrser 10

1.1 The urgency Of the topic ccccccsscsseseeseesssssesiessesseseseseeassenessesenesiesees 10

1.2 Research ODjeCtiIVES csscescesessseeseeseeseeseesensenseesensenssneseeseesneseeseesaeseesesesensoneans 111.3 Research Question ccscssssrsessreesesesersesesersesesererseserersesesoeeesesarersnserarsesneans 111.4 Research object and SCOJD «sưng ngang 12

1.6 Structure Of ÄODÍC ĩc HH HH HH HH HH ghe 12

CHAPTER 2: LITERATURE R.E VIEÌW -<<e<=s=c<eezesxesEezrsrsEkrrsrrsrssrsrr 13

2.1 Retail ban KỈng - -«- «HH Hà HH Hà Hà HH HH ngang ga 13

2.2 Service quality in retail banKing -cssnnenneeninereeinireerarriee 14

2.3 Overview of retail banking services at BIDV for the period 2018-2022

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2.5 ResearCh ØaD «cọ HH HH HH HH ggx 24

CHAPTER 3: RESEARCH METHODOLOGY -.e«e5°5seeseessessesrerrerrksrrrrsrr 28

3.1 Designing QuestÏOnIẠFC HH nh nh HH HH ngang 28

3.2 Measurement ÏnSTTUITTIE 5s xn+sekstEsrseEsrserrrsrsersrrsrkrsrrersre 28

3.4 Sample and data CoÌÏ@CtÏOT - «se neseksrereetrrrrrrrsrrrrrsrsrrsrsrsrsre 30

CHAPTER 4: RESULT AND DISCUS.SION ĂĂseeieiiriiiiiiersrrsrsar 31

4.1 Demographic profile «chanh khien 314.2 Reliability ạnaÌÏWSÌS - «<< HH HH Hà Hà HH HH grg 334.3 Exploratory factor AMalySis ung hien 334.4 Pearson correlation CO€fẨẨÏCÏ€IIK se sssekssErkrrsrierrrersrae 37

4.5 Regression aInaÌVSÌÏS - «se HH HH HH HH HH TH HH 39

4.6 CS 0) HH HH HH HH HH KH HH RHAHRHPEPEXEEXEEEEEEEEEESEEESESEESRE 41

4.7 Recommendations

CHAPTER 5: CONCLUSION

REFERENCES

APPENDIX

Table 3 1 Measurement SCale esssecsessstessstesstessstesssessssessatessneessueesstersueessseesasessneesaseesneessneeea® 28

Table 4 1 Gender of survey participant cccssessecssecssecnseseesesssecssecssesseesneeseesseenteeneessees 31Table 4 2 Age of survey pDaTtÏCÏDAIẲS «sec 31Table 4 3 Income Of SUrVey partÏCÏDATIES cc sec 32Table 4 4 Cronbach's Alpha reliability analysis e-ceeeerieiierierrer 33Table 4 5 KMO and Bartlett's Test esesssscssssssessssssstsssneessseecsessssessusessteesstessuessatensneeesseeeas 33Table 4 6 Total Variance Explained®h cesesssssessesssecssesssessesssessscsssesssesssesseesseesseeasessseeseessees 34Table 4 7 Rotated Component MAtHiX ssecssssessseessseessseesssteessstessseeesseessseeessseessssteesseenss 36Table 4 8 Pearson correlation COeffÏCÏ@Tnf -«-«-cecxrieekiiikiiiiiiirrke 37

Table 4 9 Regression analysis

Table 4 10 Analysis of regression mo d©ÌL c«ccc<ccxserxserexrerkreerkrekkkrirrerrrrerTable 4 11 Analysis Of VaFÏA'C© c set HH HH1 111tr

In the current competitive banking industry, there is a focus on enhancing service

quality to gain a competitive edge, particularly in BIDV's retail banking sector Thisstudy aims to investigate the correlation between service quality (SQ) metrics and

customer satisfaction, utilizing the SERVQUAL model to analyze the impact of

reliability, responsiveness, assurance, empathy, and tangibility on customersatisfaction in Mauritius' banking industry The researchers randomly selected asample of 200 banking customers and used SPSS 20 software to analyze the data.The study found that the SERVQUAL model is a reliable and effective tool formeasuring, evaluating, supporting, and improving service quality in the banking

industry The results demonstrate that all five SQ factors have a positive and

significant impact on customer satisfaction at the bank Additionally, the study

utilized regression analysis and identified empathy as the most significant

predictor of customer satisfaction among the five dimensions of SQ.

Key word: Service Quality (SQ), SERVQUAL, Customer Satisfaction, Retail Banking,BIDV

CHAPTER 1: INTRODUCTION

1.1 The urgency of the topic

International integration has had a profound impact on various industries,including banking While it has opened up many opportunities for banks to expand

their business, it has also brought many challenges As a result, the system of

Vietnamese commercial banks needs to continuously improve and adapt to stay

competitive in the market To improve their competitiveness, Vietnamese

commercial banks need to focus on designing their own networks, expanding their

branches, renovating their forms and ways of operation, and offering potential

products that meet customers’ needs Improving service quality is also crucial, as

it will help enhance the quality of products and services offered and ultimately help

the banks stand firm in the market In the face of fierce competition, declining profit

margins, high business costs, and increasing customer requirements, retail

banking development is becoming an inevitable and necessary trend for banks By

focusing on retail banking, banks can better serve the needs of their customers andimprove their profitability This is especially important for Vietnamese commercialbanks, given the increasing competitive pressure they face from large foreignbanks with experience and advantages in technology and personnel operating in

the Vietnamese retail banking market.

BIDV, as one of the major commercial banks in Vietnam, is not immune to thesechallenges In order to remain competitive, BIDV needs to focus on developing itsretail banking products and services, as well as improving its service quality to

meet the needs of its customers At the same time, BIDV also needs to continue to

invest in technology and personnel to ensure that it can compete effectively against

foreign banks In summary, the international integration of the banking industry

has brought both opportunities and challenges to Vietnamese commercial banks.

Only by adapting to these changes can banks hope to succeed in this rapidly

changing and highly competitive industry.

Under a lot of competitive pressures in providing banking services along with the

strong development of information technology, BIDV has given specific strategies

specifically on individual customers and SMEs with diversified, rich, convenient,professional retail products that are suitable for the needs and capabilities of eachcustomer segment with the goal of providing customers with products of goodquality, safety and high economic efficiency Grasping the current economic trendand the needs and desires of customers, Joint Stock Commercial Bank forInvestment and Development of Vietnam - BIDV has constantly promoted

expansion, investment, and improved quality of retail banking services However,

this process still has many obstacles in the implementation process Therefore, I

have chosen the topic "Improving the quality of retail banking services at Joint

Stock Commercial Bank for Investment and Development of Vietnam” in order

to re-evaluating the current situation of retail banking services quality of BIDV and

offering solutions to improve and develop retail banking services quality in the

future.

1.2 Research objectives

- Research on the theoretical basis of retail banking services, criteria to

evaluate the development of retail banking services and factors affecting thedevelopment of retail banking services

- Evaluation of the quality of retail banking services of the Joint Stock

Commercial Bank for Investment and Development of Vietnam in the period

of 2020-2022 Based on detailed statistics, make comments on the quality of

retail banking services, evaluate the achieved results and analyze the

remaining problems

- Research and propose possible solutions to develop retail banking services

at Joint Stock Commercial Bank for Investment and Development of Vietnam

1.3 Research question

- Which factors influencing customers’ service quality satisfaction at BIDV

- How does the quality of banking services at BIDV affect customers’

satisfaction?

- How can the Joint Stock Commercial Bank for Investment and Development

1.4 Research object and scope

- Research object: The quality of retail banking services at the Joint Stock

Commercial Bank for Investment and Development of Vietnam

- Research scope: 2018-2022

1.5 Research Methods

- Primary data collection: consult with the intern instructor

- Collecting secondary data: refer to data from the bank's income statement,

combined with information on the bank's website, internet, and referencebooks on retail banking services

- Based on the SERVQUAL model, survey and analyze customer satisfaction at

BIDV, by processing data on SPSS 20 software, making suggestions andsolutions to improve quality of retail banking services

1.6 Structure of topic

The graduation thesis consists of 5 chapters:

e Chapter 1: Introduction

e Chapter 2: Literature review

e Chapter 3: Research method

e Chapter 4: Result and disscussion

e Chapter 5: Conclusion

CHAPTER 2: LITERATURE REVIEW

2.1 Retail banking

Retail banking is a banking service provided to individuals, small and mediumenterprises, through a network of branches or customers can directly access

banking products and services through a network of branches through electronic

and telecommunications means Retail banking activities of commercial banks are

activities of providing banking products and services to individual individuals and

small and medium-sized enterprises through a network of branches, customers

can access directly with banking products and services through electronic means

of telecommunications and information technology Retail banking services bring

a large amount of service fee income Develop diversified services, many utilities

in the direction of improving payment methods, simplifying procedures,

developing support services Retail banking services play an important role in

diversifying products, expanding markets, improving competitiveness, creating a

key medium and long-term capital source for banks to change income structure ofthe bank, minimizing risks in banking business, and at the same time contributing

to diversifying banking activities and strengthening the national finance

Retail banking is an important issue in the commercial banking sector and has been

a topic of discussion among researchers and practitioners alike In recent years,retail lending has been a spectacular innovation in the banking industry, and it has

played a vital role in shaping the growth of the sector globally According to

Gopinath (2005), the expansion of retail lending has contributed significantly tothe development of the commercial banking sector Contiero (2006) states thatretail banking is the financial sector for individuals and households, providing

financial products and services such as savings accounts, credit cards, consumer

loans and services other The article also classifies Retail Banking into three main

categories: Retail Banking, Consumer Finance and Consumer Finance Individuals

and households are retail customers, they often need to use common financial

products and services such as bank accounts, loans, credit cards and investment

products (Harrison, 1994) Research by Cumming and Zhang (2016) focuses on

traditional banks need to adapt to compete with new digital finance companies.The study also addresses strategies for banks to take advantage of opportunities inthe online financial market In emerging economies, the growth of retail lendinghas been attributed to several factors, including rapid advances in informationtechnology, evolving macroeconomic environments, and financial market reforms(Rao, 2014) These factors, coupled with micro supply and demand factors, have

made retail lending a lucrative business for banks in emerging economies The

growth of the retail banking industry and its contribution to the overall growth ofthe banking industry will depend on banks' capacity to meet challenges andcapitalize on opportunities (Chakrabarty, 2013) The banking industry's success in

the future will largely depend on the competitive advantage that banks can gain by

using technology and operational efficiency to provide better services to

customers Therefore, banks must focus on building their capacity to meet these

challenges to succeed in the retail banking business.

In conclusion, the issue of retail banking is crucial to the growth of the banking

industry Retail lending has been an essential innovation in the banking sectorglobally and has played a vital role in shaping its growth With the use of technologyand operational efficiency, banks can provide better services to customers and gain

a competitive advantage in the retail banking business Therefore, it is crucial forbanks to focus on building their capacity to meet challenges and capitalize onopportunities to succeed in the retail banking business

2.2 Service quality in retail banking

According to Levesque and McDougall (1996), customer happiness and retentionare critical for retail banks, and they analyze the primary factors of consumersatisfaction and intention Retail banking has a bright future The study highlighted

service quality characteristics, service features, service difficulties, service

resiliency, and products employed as determinants It was revealed that serviceissues and a bank's service resiliency had a significant impact on customer

satisfaction and intent to switch.

Based on multiple levels of consumer perception of service quality, Hossain andLeo (2009) analyze service quality in retail banking in the Middle East in generaland Qatar in particular Analytical research relies heavily on primary data gatheredthrough carefully designed questionnaires The questionnaire was administeredindividually to a sample size of 120 people drawn at random from four Qataribanks Banks should give a greater degree of service quality in order to attainhigher service quality in the retail banking sector, and in the current setting,customer impression of infrastructure is highest on deposit, followed by the bank's

operating time and profit Due to increased competition in the retail banking

sector, customer service is becoming increasingly crucial, and bank management

should reconsider how to improve client satisfaction in terms of service quality.

Jamal (2022) recognizes that both the premise and outcome of client satisfaction

are critical issues for both banking academics and marketers As major antecedents

of customer happiness, the author has listed service quality, expectations,nonconformities, performance, desirability, influence, and equity A survey isconducted based on these findings to investigate the impact of customer service

quality and competence on satisfaction According to Jamal's research, both

fundamental and relational dimensions of service quality appear to be related tocustomer happiness The findings also show that expertise has a negativerelationship with satisfaction The study of Jamai (2002) is similar to the study of(Ravichandran et al., 2010) Specifically, Ravichandran et al., (2010) concluded thatimproving service quality of banks can satisfy and develop customer satisfaction,

thereby ultimately retaining customers Besides, the authors also find that financial

liberalization has led to fierce competitive pressure As a result, private retail

banks are directing their strategies towards improving service quality levels to

promote customer satisfaction and loyalty through improved service quality.

Hamzah and Moghavvemi (2017) showed that a bank's reputation has a strong andpositive impact on customer satisfaction and their trust in the bank Throughexamining aspects of service quality from the customer's perspective and itsrelationship with the overall SERVQUAL perceived in retail banking and alsoinvestigating the relationships between SERVQUAL overall perceived customer

confidence, customer satisfaction and bank reputation SERVQUAL model can beused in different service areas/settings and provides a basic framework that can

be tailored to fit the specific attributes of a particular organization It is applicableacross different empirical contexts and different countries and cultures Especially

in the research evaluating service quality of retail banks, this model is very populardue to its accuracy and comprehensiveness According to Culiberg and Rojsek

(2010) explore service quality in the retail] banking environment in Slovenia and

its influence on customer satisfaction For this study, a 28-item scale was

established based on SERVQUAL Four aspects of service quality were determined

by factor analysis The study's regression analysis revealed that all four factors of

service quality, as well as service scope, influence customer satisfaction This

study's findings can be utilized to develop marketing strategies to boost customer

satisfaction in the retail banking sectors.

In their research, Angur, Nataraajan, and Jahera (1999) tested the SERVQUALmodel in their study, with the goal of measuring the SQ aspects perceived bycustomers in India's retail banking industry, where data shows that

responsiveness and reliability are the most important aspects and assurance

appears to be the least important Based on the SERVQUAL model, Lau et al (2013)investigate the impact of five factors in the banking service environment on

customer satisfaction The purpose of this research is to determine the reciprocal

link between service quality, customer happiness, and customer loyalty in Hong

Kong's retail banking market The study also seeks to identify the most essential

features of retail banking service quality, which may be used to assess banking

service quality as perceived by clients In their investigations, both Angur,

Nataraajan, and Jahera (1999) and Lau et al (2013) stated that SERVQUAL is the

best model and assessment tool for measuring service quality in the retail banking

market.

2.3 Overview of retail banking services at BIDV for the period 2018-2022

BIDV is one of the leading banks in Vietnam, providing a wide range of retail

banking products and services to individual customers These include savings

accounts, checking accounts, credit and debit cards, personal loans, mortgages,insurance, and investment products In addition, BIDV has been expanding digitalbanking services, providing mobile banking and online banking platforms to help

customers access accounts and make transactions conveniently.

Over the years, BIDV has focused on enhancing the customer experience byproviding innovative and personalized solutions to meet the ever-changing needs

of customers BIDV has also invested in improving operational efficiency and risk

management systems to ensure the safety and security of customers’ assets

According to BIDV's Business Performance Report (2018-2022), specifically:

In 2018, the retail banking sector demonstrated exceptional growth, positioning

itself as the market leader in terms of size, while significantly increasing its

contribution to the bank's overall net income Outstanding retail loans amounted

to 308.337 billion, marking a 29% increase compared to the previous year and

comprising 31% of the bank's total outstanding loans Retail deposits reached

571,204 billion, accounting for 54% of total capital mobilization Net income

generated from retail banking activities represented 34% of the total net income

of the entire system The number of individual customers surged to nearly 11million, reflecting a 13% increase from the previous year and accounting for 12%

of the country's population

BIDV's retail credit outstanding balance constituted the most significant customersegment for the first time in 2020 As of December 31, 2020, the retail outstandingbalance rose by 13.7% compared to 2019, making up 35.7% of total outstandingloans, indicating a 1.6% proportion increase from the beginning of the year.Furthermore, the number of individual customers surged to over 11.6 million,

reflecting a 14% increase from 2019 and accounting for 11.9% of the population

of the country

BIDV's positive business performance was evident as of September 30, 2022, with

numerous indicators displaying growth Total consolidated assets soared to VND

2.05 million billion, representing a significant 16.3% increase from the start of the

year The bank's credit balance steadily rose, with a primary focus on the

manufacturing sector, priority areas based on the government policy, the direction

of the State Bank, and BIDV's business strategy As of September 30, 2022,

customer loans surged to VND 1.5 million billion, indicating a 10.4% increase fromthe beginning of the year, surpassing the growth rate of previous years Ofparticular note, retail credit exhibited remarkable growth, with an increase of

19.6%

In general, BIDV has been striving to become the leading retail banking serviceprovider in Vietnam by providing comprehensive products and services to meet

the diverse needs of customers.

2.4 Research Model and Hypothesis

Service quality is a measure of how well the service delivered to the customer

matches the customer's expectations Creating a quality service means meeting

customer expectations consistently According to Gronroos (1984), service quality

is assessed on two aspects, namely technical quality and functional quality In the

study of Parasurman, Zeithaml and Berry (1988) said that service quality is theexpected gap between customers’ products and services and their perceptions andfeelings when using that product or service It is necessary to develop a system thatdefines customer expectations, and then to create an effective service qualitystrategy This can be considered as the most general concept, fully covering themeaning of service when considering service quality from the customer's point ofview, considering the customer as the center

To measure service quality, there are currently two models that have been tested

by researchers for many years, namely the service quality model of Gronroos in

1984 and the SERVQUAL model of Parasuraman et al in 1988.

Figure 2 1 Model of 5 service quality gaps

Service delivery (including ail External

pre and post contacts)

communi-cations toGAP I the

the consumer expectations

Source: Parasuraman et al (1985)

Gap 1: Occurs when there is a difference between the customer's

expectations of the service to be received and the bank's perception of these

expectations of the customer Gap 1 often occurs because banks do not fully

understand what characteristics make up the quality of their services and

underestimate the needs of customers.

Gap 2: This gap arises during the performance of service quality objectives.

Banks have difficulty translating their perceptions of customer expectations intoservice characteristics The second gap depends mainly on the bank's productdesign capabilities

Gap 3: Occurs when bank staff do not deliver services to customers

according to defined criteria This gap depends a lot on the quality of the staff

directly providing the product or service Even if the product is designed with theright idea, many utilities, capable of meeting the needs of customers, if at the supplystage, the attitude and professional qualifications of the staff are not guaranteed,not meeting the needs of customers If customers' needs are met, makingcustomers feel uncomfortable, the bank's efforts in understanding market needs,product design, are no longer meaningful.

Gap 4: This is the gap between actual service quality and customer

expectations under the influence of external propaganda such as advertising,

marketing, etc These are falsely exaggerated promises accurate, beyond the

service provider's ability to perform It is very easy to lose the trust of customers if

the service provider advertises and propagates the truth.

Gap 5: After using the service, customers will have a comparison of theservice quality they perceive with the service quality they initially expected The

key issue to ensure service quality is that the value customers receive in the

process of using products and services must meet or exceed what customers

expect Thus, service quality is rated high or low depending on how customers

perceive the actual service in the context of what customers expect from the bank.

Parasuraman et al (1985) argue that service quality is a function of the fifth gap.

This fifth distance depends on the previous distances Therefore, in order to

shorten the 5th gap and increase service quality, service administrators must make

efforts to shorten the distances 1,2,3,4.

The SERVQUAL model is the most widely applied and popular model In their

research of business schools, Pariseau and McDaniel (1997) stated that Total

Quality Management (TQM) increases quality while lowering costs, but it requires

constant improvement based on metrics In fact, the statistics should be evaluated

based on student and faculty satisfaction To verify for consistency of opinion, the

SERVQUAL model was used to evaluate both the quality and importance of each

aspect: assurance, reliability, empathy, responsiveness, and tangibility of teachers

(suppliers) and students (consumers) SERVQUAL has been proven to be an

effective tool for measuring performance and improving service quality Therefore,

banking The quality of banking services applied according to the SERVQUALmodel consists of five components: reliability, responsiveness, tangible means,service capacity and empathy In addition, according to the analysis of therelationship between service quality and customer satisfaction, this article uses atheoretical research model on banking service quality and customer satisfaction asfollows:

Figure 2 2 Research model SERVQUAL

Reliability

Responsiveness

Tangibles

Customer Satisfaction

Source: Parasuraman et al (1985)

Customer satisfaction and service quality are considered important issues in mostservice industries High quality and originality is one way to win customers andkeep them loyal for a long time (Zineldin, 2006) The management literature

proposes many concepts and approaches related to how to address service quality.

There are also many different views on how to understand the concept of "service

quality" (Parasuraman, Zeithaml and Berry, 1985) Providing the right quality of

service plays an increasingly important role in service industries such as insurance,banking, etc because service quality is important to the profitability and survival

of these organizations

Therefore, it is worthwhile to measure service quality to better understand thequality of services provided by organizations (Tahir & Abubakar, 2007) According

to Parasuraman, Zeithaml and Berry (1985), there are 5 factors affecting customer

satisfaction: (1) Reliability, (2) Responsiveness, (3) Tangible, (4) Assurance, (5)

Empathy

Reliability is understood that the bank performs reliable transactions, clear

and accurate statements, always advises information for the benefit of customers

and helps customers avoid risks.

Responsiveness is expressed through the willingness and willingness to serve

by bank employees

Tangible means are understood as physical facilities, images outside and

inside the bank, technical means; tangible images of employees, clothing,

appearance in the bank's retail space in order to promptly respond to customers’inquiries.

Assurance means creating trust and credibility for customers It is dependent

on the employees’ technical knowledge, practical communication skills, courtesy,

credibility, competency, and professionalism.

Empathy is caring, considerate customer care, giving customers the bestpossible thoughtful treatment, helping customers always feel warmly welcomedanytime, anywhere The human factor is at the core of this success and the more

the service provider cares about the customer, the more empathy will increase.

The service quality gap model (5 Gap Model) assists enterprises in understanding

customer satisfaction The gap model is commonly used in the service business to

analyze the numerous variances that occur during service delivery to potentialclients (Frost and Kumar, 2000) The gap model develops a roadmap for the totalservice delivery process and detects gaps between activities in order for the entiremodel to function efficiently and productively (Brogowicz, Delene and Lyth, 1990)

This assists service providers in identifying inefficiencies in the service delivery

process.

Similar to SERVQUAL, a tool developed by Parasuraman et al (1985; 1988) is a

popular measure to measure service quality Therefore, the use of the SERVQUAL

scale and 5-gap model has been widely applied in research on improving service

quality in organizations and enterprises For example, a study by Chen, Chang and

Lai (2009) on "Service quality gaps of business customers in the shipping

industry" The authors extended the service quality gaps model from service

provider to customer side businesses by examining two service quality

vulnerabilities One is the service quality gap between the types of business

customers and the other is the gap between the employee statuses of corporate

customers Besides, the 5-factor SERVQUAL measure as the initial hypotheticalmodel was also tested The study applies SERVQUAL to Taiwan's shipping industry,and the service quality gap between types of corporate customers and betweenemployee statuses of corporate customers is tested using perceived SQ data offorwarders and shippers in Taiwan's shipping industry

From there, find out the weaknesses in Taiwan's shipping industry and propose

solutions to overcome them In study of Blesic et al., (2011), this paper also

investigates hotel service quality by using the Gap model and the SERVQUAL

questionnaire According to studies, clients who have had their complaints

resolved satisfactorily become more loyal to a company than customers who have

never complained before When delivering accurate information about services

and delivery, it is critical to manage internal marketing communications by

establishing successful horizontal and vertical communication within the firm.

Excessive expectations based on grandiose promises might disappoint clients evenwhen the level of service offered is excellent

It can be seen that the importance of providing high-quality services cannot be

overstated in today's competitive business landscape Businesses that are able to

consistently deliver exceptional service are more likely to retain their customers

and gain a positive reputation in the marketplace However, measuring service

quality is not always straightforward This is where the service quality model andthe SERVQUAL scale come in.

The service quality model is a framework that helps organizations understand the

factors that contribute to service quality It identifies five dimensions of service

quality: tangibles, reliability, responsiveness, assurance, and empathy These

dimensions are used to assess the quality of services and identify areas for

improvement The SERVQUAL scale is a tool that measures customer perceptions

of service quality The scale provides a quantitative measure of service quality and

helps organizations identify gaps between customer expectations and perceptions

By applying the service quality model and the SERVQUAL scale, organizations can

gain valuable insights into their customers’ needs and expectations This can help

them identify areas where they need to improve the quality of their services For

example, if customers rate the reliability dimension low, the organization can focus

on improving its processes to ensure that services are delivered on time and aspromised

In conclusion, the application of the service quality model and the SERVQUAL scale

can help organizations better understand their customers and identify areas for

improvement in service quality By addressing these areas, organizations can

improve customer satisfaction, loyalty, and ultimately, their bottom line.

2.5 Research gap

When researching about retail banking and its development, Gopinath (2005);

Contiero (2006); Harrison (1994); Rao (2014); and Chakrabarty (2013) have

provided valuable insights into this industry However these statements and

opinions about retail banking are quite general and unclear in specific aspects of

the industry, such as the specific challenges and opportunities that banks are

facing One of the major challenges facing retail banks is the emergence of newcompetitors, such as fintech companies, that are leveraging technology to offer

innovative and convenient financial services Banks must respond to this challenge

by developing their own digital capabilities and partnering with fintech companies

Furthermore, banks must ensure that they comply with the regulatoryrequirements related to data privacy and security.

On the other hand, there are several opportunities that retail banks can leverage to

remain competitive in the market For example, banks can leverage the vast

amounts of customer data they collect to provide personalized and targeted

financial products and services They can also leverage their existing customer

base to expand their reach and offer new services However, the authors

mentioned above do not address the complex issues related to policy and

regulation, economic and political impacts on retail banking, and other factors that

may affect the success of retail banking For example, policy and regulatory

changes can significantly impact the operations of retail banks, and it is important

for banks to stay informed and compliant with these changes

In conclusion, previous studies have provided a general overview of the retailbanking industry and its development However, in order to get more specific and

complete judgments about this industry, it is necessary to gather more information

and research from different sources Retail banks must remain vigilant in

monitoring the changing market conditions and adopt strategies that enable them

to remain competitive and profitable in the long run.

In the research reviews on service quality in retail banking, most of the studies

share the same view that the factors in the SERVQUAL model: Tangible,

Responsiveness, Reliability, Assurance, and Empathy all assess fairly accurately

about service quality in retail banking and how those factors affect customersatisfaction However, besides the achievements that the studies have obtained,there are still some limitations in the research on service quality in retail banking.Specifically, the study of Ravichandran et al., (2010), Hamzah and Moghavvemi(2017), Culiberg and Rojsek (2010) presented and tested empirical research on the

overall SERVQUAL model perceived in the banking industry, especially in the

Malaysian context While it has been identified that aspects of SERVQUAL affect the

overall perceived SERVQUAL and how these overall perceptions will ultimately

affect customer confidence, customer satisfaction with the retail bank industry.

Implementing SERVQUAL and measuring customer perceptions and expectations

of service can lead to customer retention, customer loyalty and positive word ofmouth, increased opportunities for upselling, employee benefits employees,improve company image, increase profits and financial performance However,

measuring too often can also cause customers to lose motivation to answer

correctly (Shadin, 2006)

Although it is confirmed that the SERVQUAL scale provides better diagnostic

information than the SERVPERF scale, Angur, Nataraajan, and Jahera (1999) do not

fully apply the five-factor conceptualizations of SERVQUAL in their study As Angur,

Nataraajan, and Jahera (1999), the study by Lau et al (2013) also found thatSERVQUAL is a suitable tool to measure service quality in the retail banking sector

in Hong Kong Therefore, those practicing in the banking industry can consider this

as a tool to evaluate and help improve the quality of their services However, this

study (Lau et al., 2013) does not specifically focus on a specific department or

department, but measures service quality across the banking industry in HongKong This has limited the ability to research and measure accurately andcomprehensively of the topic

Although the above studies have helped to identify the aspects that affect the

overall SERVQUAL and their impact on customer trust and satisfaction in the retail

banking industry, there are still some shortcomings that need to be mentioned.

First, the above studies often focus on measuring the level of customer satisfaction

with the service quality of the bank, instead of measuring the effectiveness of the

SERVQUAL model in improving service quality Thus, further studies need to focus

on measuring the impact of SERVQUAL implementation on service quality and its

impact on the bank's business indicators, such as revenue, profitability and

customer loyalty Second, some studies have shown that measuring too often cancause customers to lose motivation to answer correctly

These studies above need to consider specific cultural, market and customerfactors to ensure the accuracy and reliability of the results In my research paper, Iwill overcome these problems by focusing on research on improving the quality ofretail banking services at Joint Stock Commercial Bank for Investment and

Development of Vietnam (BIDV) In addition, based on previous researchachievements and research gaps to complete my research paper.

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Designing Questionnaire

Within the scope of this research, the questionnaire is divided into 2 main parts(presented in the appendix):

Part I includes questions related to important information of customers to classify

participants and the time they have used BIDV's services.

Part II includes questions to collect customers’ evaluations of BIDV's perceived

service quality according to 5 independent factors and 1 dependent factor in the

research model.

In this questionnaire, Part II includes a total of 23 variables Evaluation of

perceived service quality according to the proposed research model includes 18

variables to measure 5 service quality components: Tangibility, Responsiveness,

Reliability, Assurance and Convenience; The remaining three variables are used to

measure service quality This measurement is based on a 5-point rating scale

corresponding to 1 = Strongly disagree, 2 = Disagree, 3 = Neutral (neither agree

nor disagree), 4 = Agree, 5 = Strongly Agree

3.2 Measurement instrument

Table 3 1 Measurement scale

Variables Contents Encryption

The bank did exactly what it promised RL1

The bank always keeps customer

RL2information confidential

Reliability The bank always keeps its credibility

and considers the interests of RL3

customers first

The employee's business process does

RL4