Enhancing the competitiveness of BIDVs card services in the digital era

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - ĐẶNG THỊ HẢI YẾN ENHANCING THE COMPETITIVENESS OF BIDV'S CARD SERVICES IN THE DIGITAL ERA NÂNG CAO KHẢ NĂNG CẠNH TRANH VỀ DỊCH VỤ THẺ CỦA NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT TRIỂN VIỆT NAM (BIDV) TRONG KỶ NGUYÊN SỐ LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2019 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - ĐẶNG THỊ HẢI YẾN ENHANCING THE COMPETITIVENESS OF BIDV'S CARD SERVICES IN THE DIGITAL ERA NÂNG CAO KHẢ NĂNG CẠNH TRANH VỀ DỊCH VỤ THẺ CỦA NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT TRIỂN VIỆT NAM (BIDV) TRONG KỶ NGUYÊN SỐ Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS HỒNG ĐÌNH PHI HÀ NỘI - 2019 DECLARATION The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article The other’s research result and documentation (extraction, table, figure, and other document) used in the thesis are cited properly and the permission (if required) is given The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for abovementioned declaration Author, Dang Thi Hai Yen i ACKNOWLEDMENT I have gained huge knowledge, skill and insights from my MBA11 course The course raised my capacity of administration and management up to the next level I would like to extend my sincerest thanks and appreciation to all those who have made this thesis possible I would like to express my great gratitude to my supervisor, Assoc Prof Dr Hoang Dinh Phi for his useful comments, remarks and engagement during my process of doing this master thesis I would also like to thank the leaders and staff of Technology Department of BIDV, IT Center of BIDV and Card Center of BIDV who enthusiastically participated in the survey and provided me with valuable advice and comments during my thesis completion Sincere thanks are extended to the Hanoi School of Business & Management – Viet Nam National University, Hanoi for equipping me with huge knowledge and skills through various interesting and practical subjects I also would like to thank my classmates for their friendship and reciprocal encouragement to make our class unforgettable time During the process of writing the thesis, although the effort has been made, due to the limitations of the level of knowledge, practical experience, experience in scientific research, the thesis is inevitably limited I would like to receive the comments of researchers, teachers and readers so that the thesis is more complete both scientific and practical reason Author, Dang Thi Hai Yen ii TABLE OF CONTENTS DECLARATION i ACKNOWLEDMENT ii LIST OF ABBREVIATION vi LIST OF TABLE vii LISTS OF FIGURE viii INTRODUCTION CHAPTER 1: THE BASIC THEORY OF COMPETITIVENESS IN BANK CARD SERVICE SECTOR 10 1.1 Competition and roles of competition 10 1.1.1 Competition concept 10 1.1.2 Roles of competition 11 1.1.3 Competition classification 13 1.2 Competitiveness and the necessity to promote the competitiveness 15 1.2.1 Concept of competitiveness of the enterprise 15 1.2.2 Concept of competitiveness of the product 18 1.2.3 Criteria to evaluate competitiveness of enterprise/product 18 1.2.4 Factors affecting the competitiveness of enterprise/product 21 1.2.5 The necessity of the competitiveness of enterprise/product 26 1.3 Bank Cards and Bank Card Services 27 1.3.1 Bank Cards 27 1.3.2 Bank Card Service 28 1.3.3 The Role of Bank Card Service 29 1.3.4 Criteria for assessing the competitiveness of bank card services 31 1.4 Concepts of digital technology, capacity of technology and digital banking 32 1.4.1 Digital technology 32 iii 1.4.2 Digital Capability 33 1.4.3 The concept of digital banking and digital banking trends 35 1.5 The Content Research of Thesis 37 CHAPTER 2: CARD SERVICE OF BIDV AND COMPETITIVENESS OF BIDV CARDS IN THE DIGITAL ERA 39 2.1 About BIDV and Card Services of BIDV 39 2.1.1 BIDV’s General information 39 2.1.2 BIDV’s Organization Structure 42 2.1.3 BIDV’s Card Center Organization Structure 45 2.2 The current status of BIDV's card service competitiveness in Vietnam 45 2.2.1 General assessment of card business activities in Vietnam 45 2.2.2.Evaluating competitiveness of BIDV's card services in comparison with competitors in Vietnam market 47 2.2.3 Some limitations in applying information technology in card services at BIDV 57 2.2.4 SWOT Analysis 58 CHAPTER SOLUTIONS TO ENHANCE BIDV’S CARD SERVICES COMPETITIVENESS IN THE DIGITAL BANKING TRENDS 62 3.1 Digital banking trends in Vietnam, the impact on the overall competitiveness of banks and bank card services 62 3.1.1 The trend of digitilation and digital banking 62 3.1.2 The trend of digital banking and card service in Vietnam 63 3.1.3 Card services in the digital era Trends 66 3.2 Objective of card business and requirements to enhance the competitiveness of card services at BIDV 68 3.2.1 Demand for enhancing the competitiveness of BIDV's card services in the digital banking trends 68 iv 3.2.2 BIDV's card business orientation for the period of 2019-2025 with a vision to 2030 70 3.3 Major solutions to enhance the competitiveness of card services for BIDV in the digital banking trends 71 3.3.1 Improvethe organizational model and renew the business operation in cards sector in line with Digital banking trends 71 3.3.2 Research and development of innovative products, application of digital technology for card services 72 3.3.3 Apply digital technology to promote marketing and communication 74 3.3.4 IT application solutions for card fraud risk management 74 3.3.5 Training to Improve the quality of the human resource 75 CONCLUSION 77 REFERENCES 79 APPENDICES 81 APPENDICES 84 v LIST OF ABBREVIATION NO Abbreviation Agribank ATM BIDV Meaning Vietnam Bank for Agriculture and Rural Development – Agribank Automated Teller Machine Joint Stock Commercial Bank for Investment and Development of Vietnam Đơn vị chấp nhận thẻ (Merchant - ĐVCNT Organization or person that accept card payment) GNNĐ Thẻ Ghi nợ nội địa (Domestic Debit card) GNQT Thẻ Ghi nợ quốc tế (International Debit Card) IT Information Technology KNCT Khả cạnh tranh (Competitiveness) KPI Key Performance Indicator 10 NAPAS National Payment Corporation of Vietnam 11 NHTM Ngân hàng thương mại (Commercial Bank) 12 POS Point of Sale, point of service 13 TDQT 14 Vietcombank 15 Vietinbank Thẻ Tín dụng quốc tế (International credit card) Joint Stock Commercial Bank for Foreign Trade of Vietnam Vietnam Joint Stock Commercial Bank for Industry and Trade vi LIST OF TABLE Table 0.1: Assess the impact of technology on the competitive factors of the product Table 0.2: Table of SWOT matrix Table 2.1: BIDV’s Competitiveness - Compared to total number of Domestic Debit card 49 Table 2.2: Evaluate competitiveness of BIDV - Compared to total number of International Debit Card 51 Table 2.3: Evaluate competitiveness of BIDV - Compared to total number of International credit card) 52 Table 2.4: Evaluate competitiveness of BIDV - Compared to total number of POS 54 Table 2.5: Evaluate competitiveness of BIDV - Compared to total number of ATM 55 Table 2.6: Evaluate competitiveness of BIDV - Comparison of Scale 56 Table 2.7: Evaluate competitiveness of BIDV - Comparison of transaction turnover 57 vii LISTS OF FIGURE Figure 1.1: Enterprise competitiveness pyramid model 17 Figure 1.1: Comparative competitive model (to illustrate and analyze, clarify the role of technology capacity): 34 Figure 2-1: BIDV’s Organizational Structure 43 Figure 2-2: BIDV’s Governance Structure 44 viii Integrated payment cards with social networks such as: Facebook, Wechat, Zalo, Promoting coordination and cooperation with Fintech companies to bring into full play the strengths of the bank and Fintech companies (Fintech companies have the strength to bring new technologies together with new experiences, performance and convenience, while the bank has strengths in terms of reliability, solidity, customer base Research and develop card acceptance services using new technologies such as Mobile Payment (Mpay, MVISA, MasterPass, QR Code, SamsungPay, Wechat, Alipay) to diversify services Launch new services such as Multi Currency Acquiring, Multi Currency Pricing for MERCHANT on internet to take advantage of the tremendous growth opportunity of the global e-commerce market (2020-2030) Deploying multi-function POS devices: wired, wireless, compliant with EMV and PCI DSS standards Diversify payment methods (magnetic stripe, chip, PIN, NFC and other forms of mobile payment) Step by step to digitize the registration process of MERCHANT and deploy POS equipment to MERCHANT Research and develop new ATM lines with facilities such as cash deposit, ATM video support lines to diversify products and serve the requirement of channel switching to automatic channels Study new ATM cards on BIDV ATMs (such as Diner Club Cards) to be the market leader in ATM services Research and deploy ATM withdrawals on mobile devices and QR codes to increase utility for debit card holders Transform the new Corebanking Project (in line with the digital banking plan) in accordance with the plan and meet the requirements of converting domestic debit cards to chip cards to ensure cardholder safety and SBV orientation 73 3.3.3 Apply digital technology to promote marketing and communication Diversifying sales channels through digital channels such as internet, mobile; Allowing customers to register card, register additional products and services on the application of Internet banking / mobile banking / ATM of BIDV (via App / Website) Continuously update and capture digital technology advances, apply the latest marketing tools / trends to marketing, and optimize digital marketing communications Creating website to provide complete information to customers, ensuring modernity, aesthetics, so that customers can actively monitor the card transactions and interact directly with the bank 24/7 Improving customer care, reducing customer complaint handling time, and expanding customer care channels on the mobile app (such as receiving and responding to customer requests via mobile phones app) 3.3.4 IT application solutions for card fraud risk management In order to enhance the security of card payment and card data security, speeding up the deployment of 2-factor authentication system for transactions via 3D Secure network in order to create peace of mind for cardholders Providing Internet access control for cardholders (OTP passwords sent to email / e-mail), minimizing fraudulent transactions through increased security in card authentication, as well as helping BIDV dramatic increase in card transaction turnover Standardize credit card management reports on the MIS / Master Report system so that Branches can easily look up for customer development and management Synchronize deploying the Ascore and Bscore credit scoring systems to support customer risk assessment 74 Developing RLOS (Personal Loan Management) to automate the credit process and customer risk assessment (with functions such as online management in full process for customer contact, customer risk premium, credit approval) In addition, the system should be linked to customer credit information systems (CICs, PCBs) to increase efficiency and minimize time spent on customer evaluations Implementing plan of accepting domestic chip cards in accordance with the strategy and direction of the State Bank up to 2020 to increase the safety of card payment at ATMs Developing tools that allow customers to actively manage cards such as PFM (Personal Financial Management) as well as card management features on Mobile app, Internet banking Control transactions from BIDV cards through suspicious and abnormal trading alerts systems in accordance with risk management requirements from time to time In case of detecting unusual suspicious transactions, immediately take measures to prevent losses 3.3.5 Training to Improve the quality of the human resource At the Head Office: Trainning card specialists, focusing on the areas of research and development of innovative products, digital products, business analysis, card technology, card security and card risk management At the Branch: Innovating training methods and intensively train the use and introduction of digital banking products, sales skills and customer care Regularly communication and training customers actively prevent the risk of fraudulent card diversity through the channels of newspapers, messages, emails, websites, social networking sites of BIDV At the same time, enhance internal communication, improve the skills of identifying, receiving and handling risks for Branch staff 75 Consolidate the card organization model Training at BIDV will be implemented under BIDV's upcoming banking development consultancy project 76 CONCLUSION Enhancing competitiveness for survival and development is an indispensable objective of businesses in general as well as the banking sector in particular, especially in the digital era with the rapid development of digital technology It will create a new development trend in the banking sector, as well as card services, creating a fierce competition environment Therefore, the topic "Enhancing competitiveness of BIDV's card services in the digital era" has been implemented: (1) Systematize the theoretical basis for the competitiveness: Concept, role of competition, the concept of competitiveness of enterprises, competitiveness of product, criteria for assessing the competitiveness of a business/product, factors affects competitiveness and the need to enhance the competitiveness in general in the current period (2) The author also studies banking card services, the role of bank card services for banks, clients as well as the Vietnamese economy Learn about the concept, importance, and role of digital technology in building, developing, and sustaining business competitiveness in the digital age The banking trend has been strongly affecting all sectors of the economy, the banking sector and banking card services The trend of applying digital technology into bank card products Opportunities, challenges, and the need to improve the competitiveness of banks in the digital age (3) The author has synthesized assessment data and analysis of BIDV's competitiveness in terms of card products based on data from the Bank Card Association According to analytical data, BIDV has made great efforts in enhancing its competitiveness in card services and has made achievements However, due to subjective and objective reasons, BIDV is still behind these banks, compared with similar banks (such as Vietcombank, Vietinbank and 77 Agribank) This shows that BIDV's competitiveness in card services is still not as expected by the Board of Directors of BIDV (4) Factors affecting the competitiveness of enterprises in general, including: External factors: macroeconomic factors such as economic environment, politics - law, science - technology, culture, society and nature; Industry sector factors: internal competition, buyer pressure, alternative products and services; Internal factors such as human resources, finance, business strategy management, production ability and brand reputation of the enterprise, etc In the digital age, the element of digital technology capacity, typical of creative capacity, plays an important and decisive role in the existence and sustainability of business competitiveness in general, and especially the banking industry (2) With the topic "Enhancing competitiveness of BIDV's card services in the digital era", The author focuses on proposing measures / solutions to apply digital technology to improve the competitiveness of BIDV in the card services sector, which should focus on the group of solutions copies: (i) To consolidate and renovate the card center's model in line with the trend of banking development; (ii) Research and development of innovative products, application of digital technology for card services; (iii) Apply digital technology to promote marketing and communication; (iv) IT application solutions for fraud risk management; (vi) Training to Improve the quality of the human resource 78 REFERENCES - BIDV, Annual Reports 2016 – 2017, http://investor.bidv.com.vn/ - BIDV’s IT Strategy 2015-2020 period, vision 2030 (Resolution No 1078 / NQ-BIDV dated 20/04/2016) - BIDV, Adjusting the IT Strategy up to 2020 in accordance with BIDV's structure in line with NPLs up to 2020 (Resolution No 01 / NQ-BIDV dated 02/01/2018) - Website https://www.bidv.com.vn - 12th National Assembly The Law on the State Bank of Vietnam No 46/2010 / QH12 of June 16, 2010 - Regulation on the issuance, payment, use and provision of banking card support services, (issued together with Decision No 20/2007 / QD-NHNN dated 15 May 2007 of the Governor of the SBV) - Decision No 488 / QD-NHNN dated 27/03/2017 of the Governor of the SBV on the information technology application plan of credit institutions for the period 2017-2020 - Study and innovation of technology (Contract to build technology capacity and sustainable competitiveness for Vietnamese enterprises) Dr Hoang Dinh Phi - Vietnam Education Publishing House - Karl Marx 1978.The Marx – Engels Reader Truth Publisher, Hanoi - Michael Porter 2009a Competitive strategy Youth Publisher, Hanoi - Michael Porter 2009b Competitive advantages Youth Publisher, Hanoi - Nguyen Viet Lam 2014 Discussing the method to determine competitiveness of Vietnamese enterprises Economy & Development Magazine National University of Economics, issue 206, August, 2014 79 - Le Thi Hang 2013 “Promoting competitiveness in mobile information service supply of Vietnam telecommunication companies” Phd Thesis - National Economics University - Nguyen Duy Hung 2016.Enhancing the competitiveness of the Stock Companies in Vietnam PhD Thesis - National Economics University - Nguyen Manh Hung 2013 Promoting the competitiveness of Vietnam telecommunication industry.PhD thesis - National Economics University - Nguyen Thi Van Khanh 2015.Promoting competitiveness of Agricultural and Rural Development Bank of Vietnam in the integration trend PhD Thesis, Institute of Strategy and Development - Le Quoc Uy 2015a Roles of Competition - Le Quoc Uy 2015b Instruments used to promote competitiveness - Hoang Trung 2015a Types of competition - Hoang Trung 2015b Main competitive instruments of the enterprises - Hoang Trung 2015c Promoting competitiveness of commercial enterprises - Hoang Trung 2015d Model analysing competitiveness of the enterprises - Website https://www.sbv.gov.vn/ - Website https://vietcombank.com.vn - Website https://bidv.com.vn - Website https://vietinbank.vn - Website http://agribank.com.vn - Website www.napas.com.vn - Website www.worldbank.org - Website https://en.wikipedia.org 80 APPENDICES CUSTOMER COMPLAINT FORM BIDV would like to thank you for using the card products and services of BIDV in recent years In order to improve the quality of products and serve customers, we would like to evaluate the card products and services of BIDV The cooperation of customers will help BIDV have solutions to improve the quality of card products and services of BIDV Sincerely! I Customer Information: - Name of customer: ……………………………… ……………………… - Sex (Male/Female): ……………………………… ……………………… - Your average income: ………………………………… ………………… - Time for comments (Date/Month/Year): ……… /…………/ 2017 Please tick "X" in the box you agree II Content of the survey What type of card service is BIDV currently using? o Domestic Debit card o International Debit Card o International credit card o Not yet used The other bank card product that you currently using? o Domestic Debit card o International Debit Card o International credit card o Not yet used Do you need to use card products? o Yes o No 81 If you have a need, what type of card service would you like to own? o Domestic Debit card o International Debit Card o International credit card What are your priorities when using card products?? o Cost (issue fee, annual fee) o Utility / Product Features o Application of technology o Brand of the bank o Network of banks o The care of the bank If yet What is the source of information that you have access to BIDV?? o Website o Press o Via company headquarters, branches o Referral from friends o Through television, radio Do you have any requirements on card products that BIDV provided? o Reduce costs o Increase utility / product features o Applying technology o Expand banking network (increase ATM, POS) o The care/concern of the bank o Other (comment): ……………………………………………… Please give assess the competitiveness of BIDV card products with other Bank (similar size, like as Vietcombank, Vietinbank, Agribank)? (Please give your opinion as 1, 2, 3, 4) o Domestic Debit card: 82 o International Debit Card: o International credit card: o ATM: o POS: Other comments for our company: ……………………… ……………… ………………………………… …………………………………… ……… ………………………………… …………………………………… ……… ………………… 83 APPENDICES FORM FOR ADVICE FROM BIDV’S LEADERS AND EXPERTS To assess the competitiveness of BIDV against other competitors in the market, Please participate in the survey through the answers to the questions below Your cooperation will help BIDV properly assess its competitiveness in the market and propose suitable solutions to help BIDV improve its competitiveness in the future I Information of Participant: - Name: …………………………………… …………………………… - Position: ………………………………………………………………… - Qualifications: …………………………………………………………… - Working time at BIDV: ………………………………………………… - Place of Work(at the department / center): ………………………………… II Content of the survey Questions 1: In your opinion, which of the following factors most important (about affect level) the current card service competitiveness? (Please give your opinion as 1, 2, 3, in the box next to you, and you can add other elements from your point of view The score ranges from to 4, of which is very low, is very good or very high) Impact on the No Evaluation Criteria competitiveness of card services Market share Financial position Quality products and services Cost (issue fee, annual fee) 84 Network system Trademark/ Brand Communication / Marketing Application of technology Service after Sale 10 Other Questions 2: Please give comments on the competitiveness of BIDV card products with the Bank's card following factors? (Please give your opinion as 1, 2, 3, in the box next to you, and you can add other elements from your point of view The score ranges from to 4, of which is very low, is very good or very high) Competitiveness No Evaluation Criteria compared to 03 similar banks (*) Organizational Model fit in the digital age today Assessment on the responsiveness of BIDV's IT system to serve card business Research and development of innovative products, application of digital technology for card services Apply Technology to promote marketing and communication IT application solutions for card fraud risk management Training to Improve the quality of the human resource Other comments / additional 85 (*):Vietcombank, Vietinbank and Agribank Questions 3: Please give assess the competitiveness of BIDV card products with other Bank (similar size, like as Vietcombank, Vietinbank, Agribank)? (Please give your opinion as 1, 2, 3, 4, of which is very low, is very good or very high) o Domestic Debit card: o International Debit Card: o International credit card: o ATM: o POS: Questions 3: Direct interviews with relevant BIDV leaders? 3.1 How you assess the strengths of BIDV's card services compared to its competitors? (maximum comments required) 3.2 Do you assess the limitations of BIDV card services today compared with competitors? (maximum comments required) 3.3 Please tell us the development direction of BIDV to 2020 for card services? 86 3.4 What types of solutions are suitable for BIDV to improve its competitiveness? 3.5 How you assess the importance of applying digital technology in the card sector of BIDV to enhance its competitiveness? Sincerely! 87 ... of card business and requirements to enhance the competitiveness of card services at BIDV 68 3.2.1 Demand for enhancing the competitiveness of BIDV's card services in the digital banking... Vietinbank), the author selected the topic "Enhancing competitiveness of BIDV's card services in the digital era" as the topic of graduation thesis As staff in the IT department at BIDV, the. .. BIDV’s branch) "Enhancing competitiveness of BIDV's card services in the digital era" , actually is the application of digital technology to enhance the competitiveness of card services of BIDV compared