Abstract of Doctoral thesis: Quality of financial- banking services in the commercial banks of Vietnam be an important contribution to the commercial banks of Vietnam in improving the service quality to increase competitive advantage in the financial market.
MINISTRY OF EDUCATION AND TRAINING THE TSTATE BANK OF MINISTRY OF EDUCATION AND TRAINING VIETNAM THE STATE BANK OF VIETNAM BANKINGUNIVERSITY UNIVERSITYOF OFHO HOCHI CHIMINH MINHCITY CITY BANKING -oo0oo -oo0oo - NGUYENTHANH THANH CONG CONG NGUYEN DEVELOPMENT OF FINANCIAL - BANKING SERVICES IN THE COMMERCIAL QUALITY OF FINANCIAL - BANKING SERVICES BANKS OF VIETNAM IN THE COMMERCIAL BANKS OF VIETNAM SUBJECT OF RESEARCH STUDENT ABSTRACT OF DOCTORAL THESIS Major: Economics - Finance - Banking Major: Finance Banking Code: 62 31- 12 01 Code: 62 31 12 01 Course: 14 Course: 14 Science instructors: Instructor 1: Science Ass Dr.instructors: TRINH QUOC TRUNG Instructor 1: DR TRINH QUOC TRUNG Instructor 2: Dr PHAN NGOC MINH Instructor 2: DR.PHANNGOC MINH HO CHI MINH CITY - 2016 CHAPTER INTRODUCTION 1.1 THE URGENCY OF SUBJECT Along with the global economic integration trend, financial - banking sector of Vietnam has made striking changes, commercial banks have quickly get access to the modern business models, advanced banking technologies, new experience and management methods of the developed countries, etc., Besides valuable opportunities; however,Vietnam's commercial banks also have met many difficulties and challenges, especially since Vietnam officially became a member of WTO and signed bilateral trade agreements with the United States, Japan, etc whichhas created enormous pressure for domestic banking system According to the roadmap, many foreign credit institutions will join Vietnam's financial market while many barriers, regulations restricting activities of the foreign banks by the Government will gradually be removed These require domestic banks to innovate operation methods, improve quality of service to be able to adapt to the new situation In Vietnam, although there have been many studies about service quality in many different areas anddifferent levels; general results of these studies still exist certain drawbacks For exclusive studies about the banking sector, the authors tend to focus on evaluating service quality of some specific types of services such as: electronic banking, credit, international payment, retail banking, etc., in a particular bank; hence, the results cannot perform panoramic features about service quality of the finance - banking sector in Vietnam market Besides, commercial banks in Vietnam have conducted various surveys and preliminary evaluation of service quality for some types of services; however, these surveys have not demonstrated quantitativeness in an scientific way which leads to ineffective and non-integrated implementation of advanced methodsfor service quality improvement in banks Therefore, in order to demonstrate general current status of service quality in the entire commercial bank system of Vietnam in the current period undera fundamental and and scientific foundation, the author chooses the subject "Quality of financial- banking services in the commercial banks of Vietnam" The research results can be an important contribution to the commercial banks of Vietnam in improving the service quality to increase competitive advantage in the financial market 1.2 OBJECTIVES As mentioned on the critical nature of the service quality of credit institutions in the financial market, the thesis mainly focuses on the quality of financial- banking services in the commercial banks of Vietnamwith the following objectives: - Build a system of scales and models measuring the quality of financial- banking services in the commercial banks of Vietnam - Measure, evaluate the quality of financial- banking services in the commercial banks of Vietnam and compare differences in service quality perception among commercial bank groups - Inspect impacts of any factors on the service qualityand service quality itself on satisfaction of customers' needs, and then compare differences in service quality perception among customers by gender, age, income and education level - Propose policy implications to improve the quality of financial- banking services in the commercial banks of Vietnam To accomplish the above objectives, the thesis is designed to address the following questions: - Which factors should Vietnam's commercial banks consider when evaluating the service quality? - How is quality of financial- banking services in the commercial banks of Vietnam measured? - Are there any differences in customers' service quality perception towards commercial bank groups and among groups of customers? - Does service quality affect the satisfaction of customers' needs? - Which issues must be improved to be able to maintain a long-term commitment of customers to the banks as well as contribute to improve competitiveness of the financial market ? 1.3 RESEARCH SUBJECT AND SCOPE - Research subject: Quality of financial- banking services in the commercial banks of Vietnam - Research scope: + Regarding to contents: This thesis mainly studies issues related to the banking sector in Vietnam's commercial banks; factors affecting the service quality; its situation in Vietnam's commercial banks in the current period through surveys of domestic customers; impact level of factors on the service quality and the service quality itself to the customers' satisfaction; and comparison of differences in service quality perception among customers + Regarding to research space: To ensure representativeness of research samples in a comprehensive review of the service quality of financial- banking sector in Vietnam's commercial banks, data are collected from surveys of customers who use financial banking services in Vietnam's commercial banks in big cities + Regarding to research time: Data of research are obtained from business results of the entire banking system in Vietnam from 2009 to 2014 and the surveys of customers about the financial - banking service quality during the period from June 2014 to September 2014 1.4 RESEARCH METHODS The methods to be applied in the thesis are as follows: - Qualitative research, a method of in-depth interview techniques for experts in the financial - banking sector and customers using the bank's services - Quantitative research,a method of surveying customers' feedbacks through detailed questionnaires 1.5 SCIENTIFIC AND PRACTICAL MENANINGS The research "Quality of financial - banking services in the commercial banks of Vietnam" represents significantly scientific and practical meanings as follows: - Scientifically, the research results contribute theoretical basis about the service quality, the system of scales and measurement models of financial - banking service quality into the source of theoretical research on relevant issues - Practically, the research results help managers obtain an overview on the current status of service quality in commercial banks of Vietnam, identify possible factors affecting the service quality, thereby, identify the targeted directions in the formulation of appropriate policies in order to maintain the customer's long-term commitment to the banks as well as improve competitive advantage in the financial market 1.6 NEW CONTRIBUTIONS OF THE THESIS It can be seen from the research results that the thesishas the following new contributions: - Develop a system of scales and models of measuring quality of service with clearly scientific grounds, reaching reliability and allowable values, in accordance with the context of researching and evaluating financial - banking service quality in the commercial banks Especially, the research results of this thesis have been expressed in the extensive research trends From the – component SERVQUAL model of Parasuraman (1985), the theoretical model of this thesis is adjusted further factor to match with the context of market and customers psychology in Vietnam that the previous research works of the authors could not show clearly - In addition to measuring and evaluating service quality, testing impacts of factors on the services quality and the satisfaction of customers' needs, the research results also compare differences in service quality perception among commercial banks, among customer groups by gender, age, income and education level - From the research results of this thesis, eight policy implications which the commercial banks of Vietnam need to focus to are recommended to enhance the quality of financial banking services 1.7 STRUCTURE OF THE THESIS Apart from the list of tables, charts, figures, references, the thesis is broken down into chapters as follows: Chapter 1: Introduction Chapter 2: Theoretical basis of quality of financial - banking services Chapter 3: Research methods and models measuring quality of financial - banking services in Vietnam's commercial banks Chapter 4: Research results of measuring quality of financial - banking services in Vietnam's commercial banks Chapter 5: Conclusion and policy implications for improving quality of financial - banking services in Vietnam's commercial banks CHAPTER THEORETICAL BASIS OF QUALITY OF FINANCIAL - BANKING SERVICES 2.1 DEFINITION OF SERVICE Services are a variety of activities intended to meet human needs They are featured by non-existence in specific product types (tangible) such as goods, inseparability from the origin, quality instability, inability to be preserved, etc., but direct serving certain needs of society 2.2 FINANCIAL- BANKING SERVICES 2.2.1 Concept of financial- banking services Financial - banking services are the entire intermediary activities in terms of monetary, credit, payments, foreign exchange, etc., of banks in order to meet the needs of customers and provide the best source of profit for the banks 2.2.2 Features of financial- banking services From the concept mentioned above, it can be seen that the financial- banking services differ with conventional commodities in term of its nature According to Trinh Quoc Trung (2009, p.330), the financial - banking services have two basic characteristics deciding the entire process of formation, supply, management and exploitation of products and services as follows: - By comparing service attributes of banking products to those of industrial products, the former expresses its invisibility, heterogeneity, lump-sum, inseparability between the production and consumption and inability to be reserved like the latter Depending on the type of products and services that the above-mentioned elements are combined in a proportionate manner - In term of financial attributes, the former is expressed by privacy, confidentiality and sensitivity of information related to financial aspect of any individuals or organizations Financial attributes are considered one of the largest obstacles or barriers for providers of banking services in the process of formation, supply, exploitation and product management 2.2.3 Types of financial - bankingservices 2.2.3.1 Funds generation Funds generation is either basic types of services of commercial banks aimed at creating business capital for banks By this service, commercial banks use different tools and methods to mobilize idle money from individuals and entities in the economy to meet the borrowing requirements of the economy This service is expressed in the following forms: + Deposit service, including: Term deposit, payment deposit, resident savings deposit, demand deposit, time deposit, deposit services of other banks - Issuance of valuable documents to raise capital + Other services, including: Borrowings from the State (State Bank of Vietnam), loans to other credit institutions, Reliability service, etc., 2.2.3.2 Funds utilization From funds mobilized from organizations and individuals in the economy, the commercial banks provide different types of lending services, bank guarantee, financial leasing and other lending forms to contribute to revenues and profitsfor the banks as well as promote economic development Where: + Direct lending includes: Real estate lending, consumer lending, agricultural lending, import and export loans + Indirect lending includes: Discount of valuable papers, factoring + Bank guarantee: Borrowing guarantee, Bid security, Performance guarantee, Work quality guarantee, Payment guarantee, Financial leasing + Other forms of lending 2.2.3.3 Charged services - Forex trading service Domestic and international payment service Electronic banking service, including: Internet banking, Home banking, Mobile banking, Phone banking, SMS Banking, VnTopUp… Treasury service Other charged services, such as: asset safe-keeping; safe rental; card payment acceptance; balance confirmation to prove financial capacity; brokerage for securities investment, real estate; debt trading, etc., 2.2.3.4 Mixed services Mixed services is the one to combine multiple different utility functions or some types of services mentioned above to increase convenience for customers when using financial banking services Common mixed services provided by the commercial banks to customers in the current financial market include card service and insurance link - Card service, including:domestic card and international card Bank insurance model (Bancassurance) 2.3 QUALITY OF FINANCIAL - BANKING SERVICES 2.3.1 Concept of quality of financial - banking services Quality of financial - banking services is the difference between expectations and perception by customers when using services provided by the banks 2.3.2 Roles of service quality for banking operations 2.3.2.1 Enhance competitive advantage for banks 2.3.2.2 Strengthen collaborative links among organizations both at home and abroad 2.3.2.3 Promote diversification of types of products and services 2.3.2.4 Attract and retain customers 2.3.2.5 Consolidate position and enhance brand reputation for the banks 2.3.3 Relationship between the service quality and satisfaction of customers' needs Service quality is one factor greatly affecting the satisfaction of customers' needs If the banks provide customers with products and services of high quality and satisfy their needs, these banks are considered initially making customers happy Therefore, the banks are highly recommend to enhance service quality at first to enhance the satisfaction of customers' needs, In other words, service quality and satisfaction of customers' needs have close relationships with each other, in which the former is created at first and decides on the satisfaction of customers' needs Although the service quality is determined by many factors, it is one important source, the thing to be created at first and then decides on meeting the needs of customers 2.3.4 Factors affecting the quality of financial - bankingservices 2.3.4.1 External factors - Economic environment - Political and legal environment - Social, cultural, demographic and geographical environment - Demand and tastes of customers - Globalization and level of competition among banks 2.3.4.2 Internal factors - Financial capability - Facilities - Network operation - Level of banking technology investment - Marketing strategies and communications - Policies on customers - Quality of human resources 2.4 CRITERIA FOR MEASURING QUALITY OF FINANCIAL - BANKING SERVICES From the '80s to the present, the researchers Grönroos (1984), Parasuraman & CTG (1985, 1988), Cronin & Taylor (1992), have launched research models and measurement criteria of service quality under different approaches from previous ones, which creates extended premise to studypractical issues related to the service quality Based on the model of service quality measurement by Grönroos (1984), Parasuraman (1988) built and developed SERVQUAL model which consists of criteria: (1) tangibles, (2) reliability, (3) responsiveness, (4) assurance, (5) empathy with 22 observes variables to measure the service quality as follows : Table 2.1 Measurement criteria of SERVQUAL model Criteria of service quality measurement Reliability Responsiveness Assurance Empathy Tangibles Description Measure the ability to perform service appropriately and on time at the first time Measure the desire and readiness of personnel in providing timely service to customers Measure qualification and service styles of being polite and affable with customers Measure care to each individual customer Measure appearance, outfits of service personnel, equipment, materials, facilities to render services Source: Parasuraman & ctg (1988) Although SERVQUAL model hasbeen used by many researchers to measure service quality in many different areassuch as: restaurants, hotels, telecommunications, hotels, supermarkets, schools, finance - banks, etc., they have not still get the entire consensus from many researchers Cronin&Taylor (1992, 1994), Teas (1993), Haywood- Farmer (1988), Philip&Hazlet t(1997) Cronin & Taylor (1992) suggested that service quality is a form of customers' attitude and perspective, the premise ofsatisfaction and meaning for purchase intentions of customers Customers not purchase services of the highest quality but purchase on the basis of an evaluating the services' value; hence, the evaluation and measurement is best based on the perception quality without any expectations quality of customers and then the author proposes SERVPERF model to measure the serice quality Thus, it can be seen from an examination of the measurement models mentioned above that none of models is thoroughly accepted by the researchers and none of general definition is completely recognized regarding to measurement activities of serice quality However, in the measurement models, SERVQUAL as proposed by Parasuraman & ctg (1988) has been received much support from many researchers such as Akan (1995), Avkiran (1994), Babakus & Mangold ( 1992), Bojanic (1991), Carman (1990), Johns & Tyas (1996), Saleh & Ryan (1991),etc., and most of them supported the view that the measurement and evaluation of serice quality should be implemented on the basis of comparing any difference between perception quality and expectations of consumers when using services Therefore, starting from viewpoints of service quality of researchers around the world as well as limitations of research work of local authors, within the research scope of this thesis, the author suggest using measurement criteria of SERVQUAL model to measure financial- banking service quality in Vietnam's commercial banks However, the application of these criteria need additional adjustments, by adding or removing certain criteria, etc., to fit the cultural context and behaviors of customers in Vietnam CHAPTER RESEARCH METHODS AND MODEL MEASURING QUALITY OF FINANCIAL - BANKING SERVICES IN VIETNAM’S COMMERCIAL BANKS 3.1 RESEARCH METHOD Research objectives Qualitative research Draft scale Quantitative reseach Adjusted scale (1sttime) Scale adjustment Analysis of reliability Cronbach’s Alpha Adjusted scale (2ndtime) Exploratory factor analysis (EFA) Adjusted scale (3rdtime) Confirmatory factor analysis (EFA) Complete scale Structural Equation Modeling (SEM) Boostrap test Multigroup structure analysis Analysis of service quality distance Figure 3.1: Research process Source: References from Churchill (1979) This activity has been brought many benefits to insurance companies, banks and insured people From 2009 to date, in order to meet customers' demands, the banks and insurance companies design and offer various types of bancassurance services which can be divided into basic groups as follows: - Traditional services Affiliated services Insurance services for banks itself Thus, the bancassurance in Vietnam's market has appeared full of models from dealer agreement to establishment of joint venture or single ownership in the form of parent subsidiary company or a financial group owning both banks and insurance companies Vietnam is a potential market for the development of Bancassurance 4.2 MEASUREMENT RESULTS OF FINANCIAL - BANKING SERVICE QUALITY IN VIETNAM’S COMMERCIAL BANK 4.2.1 Sample description To cater for the analysis and evaluation of the scales, the data were collected directly from customers who are using the services in Vietnam's commercial banks in the period from June 2014 to September 2014 by delivering questionnaires to the customers when they made transactions at the banks, at conferences and at their houses After finishing the surveys, a total of £ 794 questionnaires were collected After screening, a number of questionnaires were eliminated because customers did not respond incompletelyor the information were not true answers; hence, there were 556 questionnaires satisfying the requirements This statistical result shows that the participants have used banking services for years or more while transactions made among banks made up a sizable proportion in the survey This can prove high understanding level ofabout types of financial - banking services thereby ensure reliability in analyzing and evaluating the situation of financial - banking service quality in Vietnam's commercial banks 4.2.2 Results of measurement and evaluation of financial - banking service quality in Vietnam's commercial banks Although the types of financial - banking service quality in Vietnam's commercial banks in recent years have been developing strongly, the author made surveys about the customers' perception ofservice quality when using banking services to reflect the quality of banking services provided to customers Analysis and evaluation process of situation of the financial - banking service quality in Vietnam's commercial banks for measurement factors through analyzing the average distance between the perception (P) and the expectations ( E) of customers when they use banking services It can be seen from Table 4.9 that overall average distance (P - E) of measurement factors is expressed in negative value, indicating the perceived level of customers is lower than expected when using the service provided by banks, in which the factor "Staffs" has an average value of the largest distance (-0.98), followed by the factors "Reliability" (-0.79), "Access" (-0.78), and "Tangibles" (-0.65) So, from the analysis results we can conclude that 17 the service quality of Vietnam's commercial banks has not currently met all the needs of customers and they feel less satisfied with service quality especially the staff of the banks concerned In comparing the differences among the commercial bank groups, the research results show that the factor " Access" of the state's commercial banks & joint stock commercial banks has the lowest average distance (-0.64) while the remaining have an average value greater distance than those of other commercial banks group In other words, the factor " Access" of the state's commercial banks & joint stock commercial banks has lower dissatisfaction level of customers than that of the non - state's commercial banks, foreign banks and joint venture and other credit institutions, while the factors "Staffs", "Reliability", and "Tangibles" have a higher level of dissatisfaction Table 4.9 Evaluation results of overall perception of service quality Distance of perception of service quality(P - E) Factor Number of observed variables State's commercial banks & joint stock commercial banks Non state's commercial banks Foreign banks & joint ventures Other credit institutions Total Staffs Access Tangibles Reliability -1.02 -0.64 -0.68 -0.68 -0.98 -0.82 -0.64 -0.64 -1.13 -0.76 -0.63 -0.63 -0.97 -0.73 -0.58 -0.58 -0.98 -0.79 -0.65 -0.65 Moreover, the results of detailed analysis and evaluation for each observed variable for each factor mentioned above show that there are main causes negatively affectingon the bank's service quality as well as satisfaction of customers' needs as follows: Staffs It can be indicated from the results that catering staffs of Vietnam's commercial banks remains certaindrawbacks affecting the bank's service quality Knowledge and skills of staffs working at the commercial banks are still limited Policy programs ofnew services are not timely updated In the course of serving, the staffs not express their effective problem-solving skill in learning, leading and eliciting customers' needs For products and services with complicated rules for participation and contents, the staffs not know how to present to the customers In term of service attitude, it can be seen form the survey results that the staffs of commercial banks not portray positive attitude in serving customers When approaching customers, many staffs not express their affable, enthusiastic, friendly and welcoming attitude to the customers When the customers have any troubles or complaints, etc., the staffs not show great concern and quick resolutions to the customers, etc., In term of working styles, the bank staff have not demonstrated professionalism yet Profession manipulation is still slow which makes the customers take a long time to wait in the transaction process, even some of themmake mistakes in the working process such as recording customers' information inaccurately, miscalculating interest or making insufficient payment for customers, etc., In addition to the above issues, appearance of the staffs serving customers has not been highly appreciated 18 Facilities, equipment and technology Premises, furniture, counters, etc., at some commercial banks have not been really spacious with narrow transaction area which creates uncomfortable feeling for the customers to conduct transactions In addition, machinery and equipment such as computers, electronic information boards, ATM, etc., are old without being upgraded synchronously Regarding to staffs' outfit, most of the banks are offering costumes by its own style and colorto represent elements of cultural identity and specific brand identity; however, the investment in equipment at some commercial banks are not highly appreciated by the customers, from the quality of fabric, color to the combination of colors in the same outfit Relating to technological factor, the level of investment and application of modern technology among the current commercial banks still exist many difficulties For banks with high levels of investment, they have not yet fully exploited inherent features of the system while banks with low investment levels due to limited financial capacity tend to have difficulties inexpanding and increasing the utility of these types of products and services When deploying associated types of cooperation among the banks, the connection between banking systems also has drawbacks Particularly for payment services, technical infrastructure to serve development of payment operations has been uneven, mostly concentrated in cities, urban areas without fitting to the countryside and mountains Therefore, the majority of people not have access to the services and facilities of modern payment In addition, Internet bandwidth system connecting points of transaction and the Headquarters across the system is still limited which greatly impacts on the implementation process for customers such as frequent transmission dropouts, slow core banking system access and transaction processing, unsuccessful transaction when customers withdraw money from ATMs or making transactions via Internet banking, etc., Products, services and pricing polices It is shown from the survey that diversity of types of products and services provided by banks is still limited, the packages of products and services launched by the banks fail to meet high demand level of society due to inability to promote theinherent features to Most features and benefits of different types of products and services remain anonymous mass, without showing on-demand characteristics of each customer group or specific features to each regional area and career At the same time, mechanisms and policies to promote the development of products and services have not been synchronized without motivating the customers to use Same as above, product and service policies, interest rates and service charges by the commercial banks also would not really meet the needs of customers Although the commercial banks have made great efforts to improve and develop the product and service policies by customer groups, there have not been many excellent differences among commercial banks For the case of interest rates and service charges, the survey results show that services with competitive rates and reasonable service charge provided by the banks are one of the priority criteria in selecting banks to make transactions Therefore, to entice or attract customers, the banks have mainly applied competitive interest rates and service charges 19 Procedures of services rendering In banking operations, all activities of all banks must comply with the internal procedures, rules and regulations, and banking law issued by the government to ensure the safety and limit risk However, the application of prescribed processes related to the supply of products and services and business process are often quite cumbersome, complicated, time consuming resulting in dissatisfaction of customers in many cases Distribution channel network Although Vietnam's commercial banks are diversifying its various types of distribution channels, from the traditional channels level 1, level 2, level 3; collaborators, association with businesses outside the industry to application of modern technology such as ATMs, Internet banking, SMS banking, Mobile banking, Phone banking, they have not satisfied customers' demand yet For traditional distribution channels, the majority of points of transaction of current Vietnam's commercial banks are mainly concentrating in the urban areas densely populated; as a result, any remote customers in rural areas often find it difficult getting access to the banks In addition, because most of the customers using banking services are currently workers, some banks implement extra curricular activities to create convenient conditions for customers; however, due to limited arrangement of extra curricular with concentration in the commercial center, supermarkets, railway stations and airports, it is hard for the banks to attract many customers For modern distribution channels, since the majority of customers are older people, aging 40 or more with less routine use and performance of transactions such as money transfers, payment services,account settlement, etc., on the modern trading system such as Ebanking, ATM, POS, etc., while the promotion work on guiding customers on how to use or carry out transactions of this type of service is still limited, this distribution channel has not attracted more customers yet Promotional activities and customer services The study results show that promotional activities to customers of most commercial banks in Vietnam are still limited and have not created the charismatic and deep impression to customers, even those banks still have confusion about the brand from customers such as Sacombank, SCB, etc., When implementing programs and policies to new products and services, most of the promotional activities of banks rarely inform directly time to deploy services but they are mainly expressed in the form of bandroll hanging, building standee at the points of transaction of banks; thus, the banks fail to obtain broad level of information to each customer, many customers still not grasp timely information about the features and benefits of products and services to be deployed When wishing to use banking services, customers themselves often have to actively seek out information through channels such as the Internet, friends, or directly meet the staffs, etc., In addition, forms, brochures, etc., are not designed in an impressive way; materials for instruction not show information in a clear and understandable manner which lead to more than 60% of customers over the age of 40 without much knowledge and habits using different 20 types of banking services such as Internet banking, mobile banking, SMS banking, etc., have many difficultiesusing the service Customer services activities of the banks generally remain anonymous mass, sometimes incompatible with each specific customers Market surveys and researches, surveys of habits of each group of customers are not paid great attention; thus, the design of gifts, customer care programs is still subjective without creating impression and satisfaction for the customers For customers, the feeling of being discriminated between VIP customers and regular ones conducting transaction still exists Safety and reliability in service rendering Although safety and reliability are consider one of the priority criteria in selecting the bank to making transactions, reliability factor at present banks are still in adequate as a matter of fact For the service rendering system, any mistakes or systematic errorsin the transactionare common The program or implementation or problems solution for customers tend to differ from what the bank announced or committed with their customers Relating to human, serious compliance with the internal regulations of the banks and the law of the staff (employees) are not currently high, especially the provisions relating to professional ethics This has made a huge impact on the reputation of the bank brand as well assafe operation of financial market On the work of monitoring compliance with of internal regulations of the banks and the state's regulations, although some joint-stock commercial banks have applied - round protection method, the work has not yet been implemented and closely synchronized 4.3 IMPACTS OF FACTORS TO SERVICE QUALITY AND SATISFACTION OF CUSTOMERS' NEEDS The study of any impact of these factors on service quality and service quality itself on the satisfaction of customers' needs was done throughanalysis of structural equation modeling (SEM) The assumptions set out in SEM test include: - H1: There is a positive relationship between"Staff" and "Service quality" - H2: There is a positive relationship between"Access" and "Service quality" - H3: There is a positive relationship between"Tangibles" and "Service quality" - H4: There is a positive relationship between"Reliability" and "Service quality" - H5: There is a positive relationship between "Service quality" and "Satisfaction of the customers' needs." 21 Staffs 0.93 0.90 Reliability 0.48 0.82 Satisfaction of the needs Service quality Tangibles 0.80 Access Chi - square = 576.805; df = 291; P = 0.000; Chi - square / df = 1.892; GFI = 0.927; TLI = 0.961 CFI = 0.965; RMSEA = 0.042 Figure 4.1: Testing results ofstructural equation modeling SEM testing results show that the index measuring the appropriateness of the structural model VBSQ are satisfactory (see Figure 4.1) Specifically as Chi-square/df = 1.982 0.9; TLI = 0.961> 0.9; CFI = 0.965> 0.9; and RMSEA = 0.42