improving the quality of retail banking services in bank for investment and development of vietnam - hanoi branch south

Paris Graduate School of Management Thai nguyen University THESIS INTERNATIONAL BUSINESS MANAGEMENT THESIS "IMPROVING THE QUALITY OF RETAIL BANKING SERVICES IN BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM - HANOI BRANCH SOUTH" Student : Nguyen Hong Phong Class : ieMBA.B01 10/2012 ACKNOWLEDMENT First, I would like to say my sincere thank to our teachers in the Paris Graduate School of Management who have equipped me with valuable knowledge in the past I would like I would like to express my sincere thanks to the Doctor Nguyen Thanh Hieu, who has enthusiastically instructed me to complete the thesis After all, I would like to send many thanks to my friends, my colleages and my closed people who did not hesitate to spend time on support, give comments and help me during my study time I want to express my sincere thanks to all of you Student’s name: Nguyen Hong Phong Class: ieMBA.B01 Paris Graduate School of Management i DECLARATION I declare that the Thesis for Master of Business Administration "Improving the quality of retail banking services in Bank for Investment and Development of Vietnam - Hanoi Branch South" has been conducted by myself, which is reliable with clear information source written by the subjective view I'm solely responsible for the accuracy from the reference materials Hanoi, 10th October 2012 Author Nguyen Hong Phong ii TABLE OF CONTENS iii LIST OF TABLES AND FIGURES TABLES FIGURES Figure 1.1: Model of five service quality gap Error: Reference source not found Figure 1.2: The theoretical study model Error: Reference source not found iv INTRODUCTION 1 THE THESIS SIGNIFICANE The international economic integration has opened up many opportunities, but it also places many challenges to the banking service suppliers because they have to compete severely with foreign banks who are not only powerful on the financial potential but much experienced about modern banking service development Under the competition pressure on banking service supply and the fast IT development, the year 2010 and 2011 is evaluated to be a “booming year” on retail banking service with increased approaches to the individual customers and small and medium enterprises According to the estimate, the Vietnam population will increase by 90 million people in 2012 with the increasing income for people It is the potential market for the commercial banks, when aiming at the payment not by cash Therefore, the retail bank development strategy of BIDV- the South Hanoi Vietnam will focus specially on individual customers with various retail products which are professional and suitable to the demand and capacity of each different objects and customer segments With the aim of building the retail banking service system of high quality, safety with high economic effectiveness on the base of enhancement of international economic integration, retail banking service market expansion by through the bilateral and multilateral management, application of advance banking technology and suitable development of distribution system to provide sufficiently, timely and conveniently retail service products and utilities for all customers With the continuously changing trend of consumption according to the life demand, BIDV- Southern Hanoi Branch must build new strategy and solution to become a multi-functional retail bank For meeting the increasing banking demand in the severe competition among banks, BIDV-Southern Hanoi Branch is trying to extend the business net, increasing the retail banking service with the improved 1 service style “customers are God”, step by step increasing the reputation and brand name of BIDV in general and BIDV-Southern Hanoi Branch in particular in the financial market From the above fact, the quality re-evaluation of the retail banking service quality of BIDV- Southern Hanoi Branch as well as supporting banks in building solutions for enhancing the retail services during the incoming time in order to increase the satisfaction of customer is very important, so I have considered and selected the thesis subject “Improving the quality of retail banking services in Bank for Investment and Development of Vietnam - Hanoi Branch South" The subject is conducted for the above objectives and hopefully the author will receive contribution ideas to complete the subject matter 2 STUDY SUBJECTIVES: - Evaluate the real situation of the retail banking service quality of BIDV- Southern Hanoi Branch - Suggest some solutions for increasing the retail banking service quality of BIDVSouthern Hanoi Branch The main objective focuses on the Credit and Capital mobilization 3 SUBJECT, METHOD AND RESEARCH SCOPE - Research: The quality of retail banking services in BIDV- Southern Hanoi Branch - Research methodology: Analyze main factors affecting the quality of retail banking services at BIDV- Southern Hanoi Branch, after that conducting the analysis of the customer satisfaction through practical survey, then proposing the solutions for increasing the retail banking service quality -Scope of study: The research data is to 31/12/2011 in BIDV- Southern Hanoi Branch 4 THE PRACTICAL MEANING OF THE RESEARCH SUBJECT: Based on evaluation of retail banking service system in BIDV- Southern Hanoi Branch, analyzing the achievements and failures in the retail banking system quality, then propose the solutions for increasing the retail banking service system in BIDV- Southern Hanoi Branch 2 5 STRUCTURE OF THE RESEARCH SUBJECT: Apart from the Introduction of the subject and the Conclusion, the research subject is divided into 3 chapters with the detailed contents as below: CHAPTER 1: Theoretical bases on retail banking service quality CHAPTER II: The current situation on service quality of retail bank at bank for investment and development of Viet Nam – Ha Noi South branch CHAPTER III: Solutions for service quality improvement in retail banking of bank for investment and development of VietNam – Ha Noi South branch 3 CHAPTER 1: THEORETICAL BASES ON RETAIL BANKING SERVICE QUALITY 1.1 General view on retail banking services 1.1.1 Definition of retail banking services In the open economy, the demand on banking services is increasingly high, especially for the retail banking services The targets of retail banking services are individual customers, so the services are usually simple, easy for implementation with focus on the services of deposit, account, debts, credit card registering and so on Depending on different ideas and research approaches, there are some concepts on “retail banking services” being recognized as followed: Retail market is a total new concept in the financial market, through which a large number of individual laborers will approach the banking services, creating a potential, variable and dynamic market The terminology is Retail Banking- it means that supplying services to the hand of end-users with quantity It should be understood that retailing is an activity of distribution, in which the researching, promotion, study, experiment, discover and develop the modern distribution channels- the outstanding feature is online business The retailing includes three main fields: market, distribution channels, services and service supply Retailing is more developed to be international According to economic experts in the Asian Institute of Technology-AIT, retail banking service is to supply products, banking services to each individual, small and medium enterprises through branches, customers who can approach directly to products and banking services through telecommunication electronic equipments and Information Technology According to the WTO, the retail banking is a typical service type of banks where individual customers can make transactions in branches/ transaction offices of banks to perform the services like: Deposit, account checking, mortgage, loan, credit card service, debit card and related services 4 According to the BIDV, retail banking services are the supply of products mainly for individual customers with services like saving deposit, card services, money transfer for abroad study, remittance services, electronic banking services, individual consumption loans , business, etc In short, retail banking services can be fully understood as "retail banking services banking are services provided to the individual or individuals, small and medium-sized businesses through a network of branches or customers can directly access to the banking services through electronic media and telecommunication " 1.1.2 Characteristics of retail banking services - The served customer objects are variable from individuals, households and small and medium enterprises - The retail banking services are variable but the value of each transaction is not high so the risk level is low - The retail banking services require building a large number of various distribution channels to supply services ton customers on wide region - The retail banking services base mostly on the modern IT background with a professional staff team to extend and increase the product quality, bringing the products to each individual customer - The service is simple and easy to implement: The target of retail banking service is individual customers, so the services focus on deposit, payment, loan and card services - The business development mainly bases on the brand name, quality of the banking services, so the service quality is an important factor to develop the retail banking services -The average operation cost is high Although the number of customers is high but they are in different place, so the transaction is not convenient The bank usually opens the network and invest into the online transaction with high cost - More various management ways which is more complicated because of the wide customer network 5 6 Survey on the satisfaction demand of the retail banking services Factor HL Average 3.812 HL HL- Customers are satisfied with quality of retail banking services of BIDV Frequency % Value % Value 1 3 4 5 Total 2 46 58 27 133 1.5 34.6 43.6 20.3 100 1.5 34.6 43.6 20.3 100 % Progressive 1.5 36.1 79.7 100 APPENDIX 2: CRONBACH’S ALPHA MEASUREMENT SCALE ASSESMENT 1 Reliability The factor cronbach’s alpha: 0,791>0,6 so the scale is acceptable The correlation factor between the variable and the total variables is over 0.3, 82 so it is acceptable 2 Adaptability Cronbach’s alpha factor: 0,781>0,6 , so acceptable The correlation factor between the variable and the total variables is over 0.3, so it is acceptable 3 Tangible Cronbach’s alpha factor: 0,849>0,6 -> acceptable 83 The correlation factor between the variable and the total variables is over 0.3, so it is acceptable 4 Demand satisfaction Cronbach’s alpha factor: 0,835>0,6 -> aceptable The correlation factor between the variable and the total variables is over 0.3, so it is acceptable 84 5 Sympathy Cronbach’s alpha factor: 0,820>0,6 -> acceptable The correlation factor between the variable and the total variables is over 0.3, so it is acceptable 85 APPENDIX 3: EFA FACTOR ANALYSIS 86 87 APPENDIX 4: LINEAR REGRESSION ANALYSIS 88 APPENDIX 5: QUESTIONAIRES FOR CUSTOMER OPPINIONS Dear Customers! Joint Stock Commercial Bank for Investment and Development of Viet Nam – Branch of Southern Ha Noi (BIDV Southern Ha Noi) would like to wish you health and sincere thanks to our customers which select our bank during that time With the motto “always work closely with you from concept to action”, we always want to give the best satisfaction for customer Please, Customers fill out the following survey and send back as soon as possible Sincere thank you for all your help! Part I: CUSTOMER INFORMATION 1 Full name (If possible): 2 Gender:  Male  Female 3 Age:  18-22 years old  23-35 years old 36-55 years old  above 55 years old 4 Nghề nghiệp:  Housework/don’t work  Tư doanh  Officer 5 Please add information about service which customers are using at BIDV Southern Ha Noi:  Deposit, Saving service  Credit Service (loans, guarantees, etc )  Payment Service ( cash, revenue and expenditure)  Card Service (ATM, VISA, MASTER )  Phone banking, internet banking service  Transaction of currency, gold  International payment services, money transfer  Other service 6 To perform banking transaction, customer:  Go to bank to make transaction 89  Transaction through ATMs  Transaction through Fax  Transaction through Phone Banking  Transaction through Internet Banking 7 Our customers have used our banking services, how long?  Less than 1 year  1-2 years  3 years  over 3 years 8 How many bank have customer used services?  1 bank  2 banks  3 banks  4 banks 9 Highlights of BIDV Southern Ha Noi compared to other banks that you pay attention, impressive?  Modern equipment and machinery  Bank’s products and services are varied, multifarious and consistent  Reasonable transaction fee table, flexibility pricing policy and competitive rates  Bank’s officer is friendly and enthusiastic Part II: QUALITY ASSESSMENT OF RETAIL BANKING Please, Customer give your consent for following statement about the quality of retail banking service of BIDV Southern Ha Noi in during that time, by making X or  in a appropriate blank below: Quality of retail No banking service Bank 1 2 3 has Completely Disagree multiple, convenient branches and transaction office Bank has modern ATM system and easy to use Bank’s products and 90 Disagree Nomal Agree Completely Agree services are varied, multifarious and consistent Regulation Form of bank is clear and easy to 4 understand; simple transaction procedures, quick transaction time Bank has modern equipment 5 and machinery, full facilities ( waiting chairs, books, drinks, etc….) Internet site has full of 6 information, product brochures is eye – catching and attractive Bank’s officer wear 7 neatly dressed, polite and impressive Bank’s office has good 8 qualification and professional work Bank’s officer are very 9 10 polite, willing considerate, to serve and guide customer Bank’s officer is always give the best solution and satisfactorily resolved complaint of 91 customers Officer 11 made transactions accurately and quickly Bank’s officers always 12 13 14 serve justice to customers Bank’s officers all don’t annoy for customers Bank’s officers don’t prove too busy to serve customers Bank keep information 15 16 and transaction customer Bank provide services at the time committed Bank apply flexibility pricing 17 of policy, competitive rates and reasonable transaction fee table Bank always keep its reputation 18 with customers and consider benefit of customer is the most important Banks has effective 19 20 marketing activities, impressive and lead in innovative work Promotion, customer 92 care program after sale work is reliable Bank’s officer always 21 attention needs Bank’s 22 to customer officer guide procedure for customer full and easy to understand Customers are satisfied 23 with quality of retail banking services of BIDV Southern Ha Noi Part III: OTHER COMMENTS ( In addition content below, customers also have other commnents, please specify below intended to help BIDV Southern Ha Noi enhancements to provide customers with quality banking product and services better) Sincerely thank you for the comments of customers! We wish you health and prosperity 93 ... on retail banking services 1.1.1 Definition of retail banking services In the open economy, the demand on banking services is increasingly high, especially for the retail banking services The. .. considered and selected the thesis subject ? ?Improving the quality of retail banking services in Bank for Investment and Development of Vietnam - Hanoi Branch South" The subject is conducted for the. .. declare that the Thesis for Master of Business Administration "Improving the quality of retail banking services in Bank for Investment and Development of Vietnam - Hanoi Branch South" has been