Issues in credit granting process in VP bank

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business LE HUNG CUONG Student ID: 22170008 Issues in Credit Granting Process in VP bank MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – 2019 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business LE HUNG CUONG Student ID: 22170008 Issues in Credit Granting Process in VP bank MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Prof TRAN HA MINH QUAN Ho Chi Minh City – 2019 EXECUTIVE SUMMARY This research is developed with the objective of identifying the main problems that lead to the downturn of credit growth rate of VPBank during 2018 It was captured that VPBank has faced up with lower credit growth rate in 2018 and this symptom was explained by some problems, namely SBV’s credit growth cap, peer-to-peer lending, overlapped products, lower lending interest rates from bigger banks, higher document processing time, impolite collection activities, slow SMS and mobile internet banking, lack of live banking services, high lead time for customer complaints, incorrect information by sales teams, and less attractive advertising contents However, only two problems are actually existed, namely higher document processing time and incorrect information by sales teams Other problems have not had high impact or have no impact in coming years Based on that, the researcher proposes set of solutions to help VPBank to further decrease the time required for document processing and to reduce adverse impact from wrong information provided by sales officers The set of solutions are translated to change plan with detail solutions, detail actions, people management, and communication PART I - BACKGROUND 1.1 Company background 1.1.1 History of establishment and development Vietnam Prosperity Joint Stock Commercial Bank (VPBank) was established in 1993 Over 25 years of doing business in Vietnamese financial and banking industry, the bank achieved outstanding result since its charter capital was reached US$681.49 million and total asset was more than US$12 billion in the financial year of 2018 VPBank has been listed in Ho Chi Minh Stock Exchange (HOSE) with 1.33 billion shares were issued to public investors VPBank conducted the transformation in 2010, remarked by new logo and brand identify as well as the focus on modern retail banking business under the consultation from McKinsey & Company In 2011, the bank implemented different business initiatives consulted by McKinsey & Company and successfully raised charter capital to balance with new business capacity and development In 2012, VPBank achieved national brand value and it established risk management division to monitor risk issues in bank wide level In 2013, VPBank was rated at B3 by Moody and it conducted Information Technology and Risk Management Master Plan In 2014 and 2015, VPBank focused on mass consumer market by establishing VPBank Finance Company Limited (FECredit) and the bank was among largest corporate income tax payers in Vietnam The year of 2016 remarked a big leap since VPBank moved to new head office and total asset was over US$8 billion The bank also received a loan from International Finance Corporation (IFC) with cheap price In 2017, VPBank conducted Initial Public Offering (IPO) and it successfully issued 1.33 billion shares and raised nearly US$300 million from public investors Moody rated VPBank as B2 which was known as an upgrade from the last rating in 2013 Digital banking services have been developed in order meet new business opportunities in the market 1.1.2 Market share An illustrative way to capture market share of VPBank is through its market capitalization in comparison with other banks and financial institutions listed in Vietnam stock exchanges According to the data obtained from cophieu68.com, there are 26 listed banks and financial institutions with total market capitalization of US$39 billion Currently, VPBank has been ranked at 6th position with US$2.1 billion, lower than VCB (US$10.8 billion), BIDV (US$5.2 billion), TCB (US$3.8 billion), CTG (US$3.5 billion) and BVH (US$2.8 billion) Based on this statistics, current market share of VPBank is 5% in term of total market capitalization value 1.1.3 Vision, mission, core values The vision of VPBank is to become one of the largest joint-stock commercial banks and one of the leading retail joint-stock commercial banks in Vietnam To support this business vision, the bank conducts two different missions The first mission is to conduct aggressive organic-growth with high attention to retail, small and medium enterprises (SMEs), consumer finance, and corporate segment The second mission refers to strong investment and continuous development of foundation systems, including human resource, information technology, risk management, and operation Moreover, there are core values which are being maintained in VPBank, including make the difference, ambition, customer focus, trust, people development, and productivity Toward the long-term and sustainable development, VPBank committed to deliver banking products and services to the customers with professionalism, simplicity, dedication, and difference 1.1.4 Organization structure Currently, VPBank has been organized by high standardized organization structure General Shareholder Meetings takes the higher position in the structure and it is being supported by Board of Directors Chief Executive Officer (CEO) is managing advisory units (finance, risk management, human resource management, strategy and project management) and business units (retail banking, household banking, SME banking, commercial banking, corporate and investment banking, digital banking services, financial institution and transactional banking) and operating and supporting units (credit, operations, information technology, legal and compliance, business intelligence competency center, and marketing and communication) Moreover, current organization structure addresses the importance of different committees, including human resource committee, risk management committee, credit committee, operational risk committee, credit and collections committee Supervisory board and internal audit are established to support Board of Directors in entire banking management and monitoring Figure 1: Organization structure of VPBank Source: VPBank’s annual reports (2017) 1.2 Symptom During the period of 2014-2018, business performance of VPBank is summarized below: Table 1: Business performance of VPBank Indicator Total asset Equity Saving Lending Lending growth Total operating income Profit before tax ROA ROE Unit US$m US$m US$m US$m 2014 2015 2016 2017 2018 7,698 423 5,619 3,696 8,826 609 6,925 5,317 10,222 768 7,705 6,464 12,226 1,307 8,789 8,041 14,028 1,508 9,524 9,476 43.86% 21.57% 24.40% 17.85% % US$m 296 549 754 1,102 1,349 US$m 76 141 220 358 399 % % 0.99% 17.92% 1.60% 23.12% 2.15% 28.69% 2.93% 27.38% 2.85% 26.47% Source: VPBank’s annual reports (2019) VPBank’s total asset was nearly double from US$7,698 million in 2014 to US$14,028 million in 2018 Equity was raised from US$423 million to US$1,508 million during the period The bank attracted depositors with value in 2018 recorded at US$9,524 million while lending value was US$9,476 million Total operating income in 2018 was stood at US$1,349 million and profit before tax was US$399 million Although VPBank achieved many remarkable results, the bank faced a shortfall in returns on asset (ROA) and returns on equity (ROE) in 2018 In more detail, ROA of the bank increased from 0.99% in 2014 to 2.93% in 2017 but it dropped to 2.85% in 2018 Similarly, ROE in 2018 was 26.47% lower than ROE in 2017 The comparison between the target and actual result for the financial year of 2018 provided more detail about the symptom of the bank Table 2: 2018 target vs actual performance of VPBank Indicator Total asset Saving Lending Profit before tax Unit Target Actual US$m US$m US$m 15,598 10,486 9,943 14,028 9,524 9,476 US$m 469 399 Source: VPBank’s annual reports (2019) Target vs Actual -10.1% -9.2% -4.7% -14.8% In March 2018, VPBank delivered a business plan for 2018 in which total asset was expected at US$15,598 million but actual result was captured at US$14,028 million or the actual result is 10.1% lower than the target Similarly, saving size and loan size were lower than the target of 9.2% and 4.7% Profit before tax was not achieved the target since it was US$399 million and it was lower than the target by nearly 15% Lending is key symptom since lending is important item of total asset and the lower lending size affects to total asset In addition, saving was decreased but it was not the issue since the bank has good funding resources from Internal Finance Corporation When lending size is decreased, the profit from interest income is decreased From 2014 to 2018, the structure of net interest income of VPBank is presented below: Table 3: Structure of net interest income of VPBank Indicator Interest income Interest expenses Net interest income Net interest income Unit 2014 2015 2016 2017 2018 US$m 585 854 1,145 1,503 1,748 US$m 335 383 468 595 676 US$m 249 471 678 907 1,072 % growth - 88.92% 43.79% 33.88% 18.11% Source: VPBank’s annual reports (2019) It was observed that net interest income of VPBank was increased only 18.11% in 2018 compared to 2017 and it was a big drop compared to 33.88% as growth rate of net interest income in 2017 It was captured that the growth rate of net income has been decreasing and the trend has been continuously since 2016 Moreover, lower net interest income is not by high interest expenses Table above shows that interest expenses in 2018 increased 27.14% and 13.61% in 2017 but interest income increases 31.27% and 16.30% Therefore, it is concluded that the weaknesses in lending activities is the business symptom in the case study of VPBank It is translated to the fact that when the bank has lower lending volume, its net interest income will be decreased and it reduces the bank’s profits since large of income source is from lending activities In the next section, the initial cause-effect map is prepared and it is developed to point out what the main reasons of lower growth rate in lending portfolio of the bank A focus group of discussion was conducted between the researchers and some branch managers of VPBank and the findings are categorized into several causes or explanatory factors 1.3 Initial cause-effect map As mentioned earlier, the interviews with focus group of branch managers helps to capture initial causes that leader to lower lending growth of VPBank during 2018 branch managers were participated into the interviews To protect the personal information of branch managers, the researcher codes the name of each branch manager as A, B, C, D, and E For all interviewees, an interview question of what the causes of lower lending size during 2018 was asked and their answers are summarized below Branch manager A said that one of the main reason for lower lending size in 2018 was the credit growth rate cap by State Bank of Vietnam (SBV) He mentioned that SBV only allowed local commercial banks to grow their credit at maximum of 14% However, VPBank was exceeding this level since the third quarter of 2018 He provided the credit growth rate of VPBank was more than 15% after quarter III of 2018 and therefore, the head office team asked him to postpone disbursement activities Branch manager B indicated that his branch faced with the shortfall in unsecured lending due to the new peer-to-peer lending activities in the North of Vietnam He noted that Vietnam has a population of about 96 million, GDP per capita in 2018 is nearly US$2,590 so that Vietnam is considered a potential market for retail banking, and this trend is expected to continue Moreover, a large number of Vietnamese people have not yet access to banking products and services, and will become a source of retail banking In particular, in the era of information technology, retail banking activities will be strongly supported when there are millions of new customers from rural to urban areas and having quick access to financial products through the application of new technology He confirmed that there are new players in Vietnamese financial market with high investment funded from foreign investors in order to provide super convenient unsecured loans to lower income customers Normally, the third and the last quarter of a year was good time for unsecure lending due to the customers wanted borrowing money to purchase some stuffs (i.e smartphone, durable goods) but his branch suffered a big drop in customer demand His sale officers could not achieve the sales target for the third and the fourth quarter because of peer-topeer lending form He also noted that peer-to-peer lending platform is faster compared to traditional banking process as the customers can receive the loan in less than 24 hours while the normal disbursement time of VPBank is about days However, he questioned about the quality of peer-to-peer lending since it has very high interest rate (i.e more than 60% per annum) Branch manager C provided the same reason as Branch manager A and B She noted that her branch could not grow lending portfolio due to SBV’s cap and the raise of peer-to-peer lending has been a threat Moreover, she emphasized the overlap in product structure of VPBank Currently, retail banking division provides unsecure lending to individual and household customers SMEs banking division also provides loan to micro-SME customers which is quite similar to household customers VPBank has FECredit which is providing unsecured lending to individual customers She explicated that the bank should review product policy and to combine products from different division into single package She concerned that the overlapping leads to future business growing issues She often faced up with the situation of one customer is categorized as household business and retail customers, leading to different loan booking for two segments Branch manager D has strong experience in banking and finance He mentioned that the demand for banking services has been increasing recently, especially retail banking services Focusing on retailing activities is becoming a trend of commercial banks to diversify revenues, increase business efficiency and reduce operational risks Only in the period of 2016-2018, the income from retailing activities of banks increased every year with a large growth rate He indicated that VPBank cannot compete with bigger banks like BIDV, Agribank and Vietcombank in term of interest rate Generally, the interest rate of VPBank is always higher than BIDV, Agribank, and Vietcombank due to these banks have cheaper sources of funds He took an example of Agribank since this bank is offering the loan package to lower income customers with interest rate is much cheaper than current 25% as unsecure lending interest rate of VPBank BIDV and Vietcombank are providing auto loan and home loan with cheaper interest rate compared to VPBank His concern was further expanding to current operating cost of VPBank was high since the bank has been conducting fast growing business strategy with number of branches and network have been increasing rapidly The bank did not care about the growth quality for the last few years and it might be the issue in the long run perspectives Branch manager E provided another reason for lower lending growth rate She indicated that document processing time in VPBank was higher than other banks He noted that TPBank offered loans to the customers in 1.5 days while her branch’s average document processing time is 3-5 days, depending on lending products A home loan may take more than week to finish and to disburse to the customers She provided another concern related to collections activities of VPBank Some customers went to her branch and claimed for impolite debt collection reminders should take into account the design ATM to ensure the consistency between ATM appearance and VPB’s branch appearance The bank should also improve the customer satisfaction through the employee training Once the employees receive the training, the human resource management can assign the customer satisfaction as one of the most important Key Performance Indicator for the employees, especially to tellers and customer relationship officers Beside of the development of product bundle, VPBank should develop the supply chain finance (SCF) product It is defined a financial product and service which is designed to provide financial supports to the companies based on physical and information flows in their supply chain process SCF product refers to working capital financing with the application of information technologies It is asserted that VPBank should develop following SCF products, including export and import finance, trade finance loans, structured trade loans, online trade solutions, and risk solutions These products are grouped into four major categorizes, namely trade risk management solutions, online trade solutions, import and export financing solutions, and commodity financing solutions Table 17: Supply chain finance solutions Solutions Trade risk management solutions Online trade solutions Import and export financing solutions Commodity financing solutions Descriptions - Sub-products: bid bonds, document letters of credit (LOC), guarantees, standby letters of credit, and performance bonds - Customers’ benefits: § The customers who utilize guarantees services from VPBank are not worry of subjecting their money as security for their contracts in trade activities § The customers who utilize bid bonds and performance bonds gain the benefit of using their bonds as securities and it is useful in case of large capital-required projects § Document LOC is utilized in case of the sellers and the buyers have strong relationship and VPBank will provide credit supports to the sellers in case of they can provide a prearranged documentary credit facility § Standby LOC is applied when VPBank must pay guarantees to the sellers when their underlying transactions are not fulfilled or payment becomes defaults - Online trade solutions is a web-based credit services which are offered by VPBank to the customers who want to apply a credit by sending invoices of goods through an online portal established and maintained by the banks Security technologies are applied to protect transaction information and the bank accesses information of transactions to timely offers the credit supports to both buyers and sellers involved into this VPBank’s network - Sub-products: documentary collections, trade finance loans, bills negotiated not under credit, and repayment - The most important is trade finance loans since it gains high attention and demands from enterprises customers - Trade finance loans require the companies to open current account in VPBank and loans will be disbursed after the customers to provide proper documents to prove that it is a genuine underlying trade transactions - Commodity finance has another name as structured trade finance It refers to the solutions for the customers who demand for short-term working capital loans In order to get a credit, the customers must submit the inventory evidence and trade evidences between parties The objective of developing commodity finance is because of it is flexible and is suitable to the customers who want to have sufficient liquidity during their business cycle VPBank should apply credit scoring system to reduce the time of validating information from the customers Currently, general practice in lending assessment is conducted by credit 37 verification officers in Operation Division and they must make a call to customers and to sales officers to verify customers’ information and cash-flow before taking the final decision related to loan disbursement Credit scoring system can help to reduce the time required for this process Credit scoring is developed with quantitative analysis techniques it is based on historical data of good and bad borrowers A modelling team which is placed under Risk Division should take the responsibility of gathering data, developing the assessment criteria, and modeling all factors and generating final scoring model By using credit scoring system, expected decision time should be decreased by at least 30% compared to current process Another way to decrease document processing time refers to checking of the customers’ historical lending profile Currently, when a customer submits loan application, credit officers must check historical lending profile through State Bank of Vietnam’s portal This process often takes at least working day to generate the result VPBank should take into account similar services which are offered by private credit bureau in Vietnam The cost of using this services is about VND 5,000-10,000 per case and the response time is much higher It is because of SBV’s services are being used by all commercial banks in Vietnam and therefore the number of queries is enormous By using private credit bureau’s services, VPBank can release the dependency to SBV’s services while increasing the response time and therefore further reducing overall document processing time It is also recommended that credit verification team should be divided into sub-teams and each sub-team will be in-charge different products Currently, credit verification process is characterized by secured and unsecured lending However, the bank should categorize secured team to home loan verification team, auto loan verification team, and working capital verification team while unsecured team is categorized into consumer lending verification team and credit card verification team Since each team will handle different product, the specialization is increased and it is expected that the time spent for each verification session is reduced 3.2.2 The set of solutions to eliminate wrong information provided by sales teams To reduce adverse impact from the wrong information provided by sales teams, VPBank should develop the disciplines for each identified violation Sanction Committee must be setup and it takes the responsibilities of validating violation cases and providing the disciplines for each violator Sanction Committee will be involved by Head of Human Resource Management Division, Head of Credit Division, Head of Legal and Compliance Division, and at least one 38 member from Board of Director Legal and Compliance Division should cooperate with Credit Officer to develop independent team who make a field check to the bank’s branches The objective of this action is to check what the integrity of sales officers For example, the team can send one employee to be a customer and it will check how the sales officers provide information related to lending products and services, the hidden cost that the customers have to pay for sales officers, and the information related to interest rate repayment from the sales officers It is recommended that the bank should develop feasible training for credit officers and sales officers in term of products and services’ characteristics In more detail, newly recruited employees in credit and sales services must be trained and they must pass the exam to ensure that they understand the bank’s credit and product policies The training should be given to existing employees so that they are up to date with new policies changes Training quality must be conducted through after-training assessment forms and the trainees must provide their assessment about training content and quality of the trainers Moreover, the training should be given to the branch’s directors so that they are able to manage their employees in the way of not providing wrong information to the customers Another recommendation refers to the customer verification before loan is disbursed To that, VPBank should develop a call center which is placed under Operation Division and it takes the responsibilities of making calls to the customers before their loans are disbursed A calling script is developed with some basic information checking, including the customers’ identification and the loan purpose Tele-callers must check whether the customers agree with the loans’ conditions such as loan amount, loan term, and lending interest rate In case of the customers agree with all the loans’ conditions, their loans will be disbursed In the contrast, the loans will not be disbursed if the customers disagree with the loans’ conditions Improving customer care service is also one of the core issues in the development trend of retail banks when customers’ emotions are a key factor for deciding to use the service In this area, young private banks like Techcombank or TP Bank are always highly appreciated with the staff, especially young, dynamic and friendly traders Most of local commercial banks are also working hard to improve the quality of their customer care For example, BIDV established a Social Network Center (SMCC) to help listen and monitor all information, discussions and especially the opinions of customers on social media listening related to BIDV Since then, the unit can find out 39 customers' problems not only in service products but also in consulting staff, helping to improve service quality and take care of users more effectively Customer service department of VPBank must provide one team to handle customers’ complaints related to wrong information provided by sales teams This team receives all customers’ complaints and categorizes into several groups In addition, customer service department must purchase the software to help them managing overall customer complaint handling process It is denoted that the bank does not have the software for customer complaint resolution and everything is done manually by using Excel file In this context, customer service department must work with Information Technology Division and Procurement Center to develop or to purchase customer service management software The investment cost of this system is ranged from US$300,000 to US$500,000 in term of software cost and the bank must purchase the hardware such as server to use this software properly VPBank should further use a risk management framework to manage information flows Three Line of Defense Risk Management Framework must be applied in VPBank and it is depicted in the Figure below: Figure 8: Three Line of Defense Risk Management Framework in VPBank The first line of defense consists of management controls and internal control measures The second line of defense includes financial controllers, security, risk management, quality, inspection, and compliance The third line of defense is internal audit All three lines of defenses will be under the management of senior management such as Chief Risk Officer, Head of Legal and Compliance, and Head of Internal Audit External audit and regulators are two key stakeholders in Three Line of Defense Risk Management Framework 40 VPBank should provide clear information about loans terms and loans conditions through its website and associated communication channels such as Facebook It means that the bank publish the documents requirement for loans applications, the interest range, the repayment period, and the location of making payment It helps the customers to pre-understand their responsibilities after the loan is disbursed 3.3 Change plan design Change plan is designed given to the set of solutions It is expected that a change plan will consist of the objectives, the actions, the people, and the communication plan Table 18: Change plan Solutions Automate lending solution Objectives - To reduce the document processing time and decision process Actions - To purchase online lending solutions from T24 - To digitalize document entry process People - Information technology department - Credit division - Operation division Product bundle - To reduce the time required in customers’ information verification - To develop Dynamic Bundle, Closed Bundle, and Open Bundle - Information technology department - Credit division - Operation division - Product Team Supply chain finance products - To diversify products and services related to credit process - To develop export and import finance, trade finance loans, structured trade loans, online trade solutions, and risk solutions - Product development department - To collect historical data related to customers’ information and customers’ repayment behavior - To develop quantitative model based on logistics regression - To align credit scoring decision with cut-off rate - To identify the possible vendor who can provide customers’ historical lending profile - To check the price of services - To make a bidding process to choose the best vendor - To divide secured team into home loan verification team, auto loan verification team, and working capital verification team - To divide unsecured team into consumer lending and credit card verification team - To set up clear roles of department involved into this framework - To define each checking point of risk management - To communicate through the bank’s website, Facebook, mass-media instruments, and billboards - To communicate through the bank’s website, Facebook, mass-media instruments, and billboards - Risk management division - Credit division - To communicate internally throughout the bank’s intra-network - Procurement center - Credit division - To communicate internally throughout the bank’s intra-network - Credit division - Human resource management division - To communicate internally throughout the bank’s intra-network - Risk management division - To communicate internally throughout the bank’s intra-network - Operation division - To communicate internally throughout the bank’s intra-network Credit scoring system - To fasten the lending decision time Use of services from private credit bureau - To fasten the time of checking customers’ historical lending profile Specialize credit verification team - To improve the productivity of the employees during credit verification process Three Lines of Defense Framework - To improve the control overall entire banking process Separate team to handle customer complaint related to wrong information provided sales officers - To reduce the time required to resolve one customer’s complaint - To newly recruit people or to transfer people from existing teams - To purchase the software to monitor customer services Call center for before loan is disbursed - To reduce the fraud issues from sales officers or customers - To newly recruit people or to transfer people from existing teams - To develop call script to verify customers’ information and loans demands - Operation division Training to the employees - To strengthen the employees’ knowledge - To provide trainings to newly recruited and existing employees about products and lending process - Human resource management division Communication Plan - To communicate internally throughout the bank’s intra-network - To communicate internally throughout the bank’s intra-network - Online communication system - Online communication system - Email push 41 - To provide trainings to the branches’ directors to control their people Sanction Committee - To monitor all internal violation of the bank’s employees - To develop the set of discipline applicable for each violation type - To develop independent unit to randomly check the integrity in sales teams - Human resource management division - Credit division - Legal and compliance division - Human resource management division Source: Developed by the researcher (2019) 42 REFERENCES Agribank (2019) SBV Governor: Credit growth of 14% in 2019 Retrieved from http://www.agribank.com.vn/32/822/tin-tuc/tai-chinh-ngan-hang/2019/01/15121/sbv-governor-credit-growth-of-14 in-2019.aspx Al-Ajmi, J., Abo Hussain, H & Al-Saleh, N (2009) Clients of conventional and Islamic banks in Bahrain: How they choose which bank to patronize International Journal of Social Economics, 36 (11), pp.1086-1112 Amri, P D., Prabha, A P., & Wihlorg, C (2012) What makes high credit growth harmful? Evidence from banking crises SSRN Electric Journal Arnold, R A (2008) Economics (9th Ed.) South-Western Cengage Learning Ballard Spahr (2013) Statement of the Office of the Comptroller of the Currency Provided to the Subcommittee on Financial Institutions and Consumer Protection Senate Committee on Banking, Housing, and Urban Affairs Retrieved from https://www.ballardspahr.com//media/files/alerts/2013-07-19occ.pdf?la=en&hash=47C49B6032FB1A554A2B4231AF941A5B Bean, M A (2017) Determinants of interest rates Education and Examination Committee of the Society of Actuaries Financial Mathematics Study Note Boyd, W L., Leonard, M & White, C (1994).Customer preferences for financial services: An analysis International Journal of Bank Marketing, 12(1), pp.9-15 Boyd, W L., Leonard, M & White, C (1994).Customer preferences for financial services: An analysis International Journal of Bank Marketing, 12(1), pp.9-15 Brostrom, A., Mohammadi, A., & Saiedi, Ed (2018) Distrust in banks and Fintech participation: The case of peer-to-peer lending Swedish House of Finance Research, 18(6), pp.145 Bureau of Consumer Financial Protection (2019) Fair debt collection practices act Retrieved from https://files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report- congress_03-2019.pdf CafeF (2019) Many P2P companies in Vietnam are originated from China, Singapore, and Indonesia Retrieved from http://cafef.vn/rat-nhieu-cong-ty-p2p-lending-o-viet-nam-conguon-goc-tu-trung-quoc-singapore-va-indonesia-20190307084829606.chn 43 Central Bank of Nigeria (2016) Interest rate Education in Economics Series No.3 Retrieved from https://www.cbn.gov.ng/out/2017/rsd/cbn%20education%20in%20economics%20series%20no %203%20interest%20rate.pdf Cicic, M., Brkic, N & Agic, E (2004) Bank selection criteria employed by students in a south-eastern European country: An empirical analysis of potential market segments’ preferences International Journal of Bank Marketing, 27(2), pp.1-18 Cicic, M., Brkic, N & Agic, E (2004) Bank selection criteria employed by students in a south-eastern European country: An empirical analysis of potential market segments’ preferences International Journal of Bank Marketing, 27(2), pp.1-18 Coyle, T (1999) The bank of tomorrow Americans Community Banker, 8(7), pp.16-18 Darko, S., Terkper, V D., Novixoxo, J D., & Anning, L (2018) Assessing the effect of lead time management on customer satisfaction International Journal of Developing and Emerging Economies, 6(1), pp.1-22 de Treville, S., Bicer, I., Chavez-Demoulin, V., Hagspiel, V., Schurhoff, N., Tasserit, C., & Wager, S (2014) Valuing lead time Journal of Operations Management, 32, pp.337-346 Dominick, J (2013) The dynamics of mass communication New York: McGraw-Hill Eugenia, O A (2018) Peer-to-peer lending: Business model analysis and the platform dilemma International Journal of Finance, Economics and Trade (IJFET), 2(3), pp.31-41 Fallis, D (2009) A conceptual analysis of disinformation University of Arizona Federal Deposit Insurance Corporation (2019) Underwriting and loan approval process Retrieved from https://www.fdic.gov/regulations/examinations/credit_card/pdf_version/ch7.pdf Federal Reserve Board (2018) Fair debt collection practices act Retrieved from https://www.federalreserve.gov/boarddocs/supmanual/cch/fairdebt.pdf Foos D., Norden L., & Weber M (2010) Loan growth and riskiness of banks Journal of Banking and Finance, 34, pp.2929-2940 Fox, C., Levitin, A., & Redman, T (1994) The notion of data and its quality dimensions Information Processing and Management 30, pp.9-19 Frangos, C C., Fragkos, K C., Sotiropoulos, I., Manolopoulos, G., & Valvi, A C (2012) Factors Affecting customers’ decision for taking out bank loans: A case of Greek customers Journal of Marketing Research and Case Studies, pp.1-16 44 Frolova, S (2014) The role of advertising in promoting a product Thesis Centria University of Applied Sciences Gambacorta, L., & Shin, H S (2016) Why bank capital matters for monetary policy BIS Working Paper No 558 Gerrard, P & Cunningham, B (2001).Bank service quality: A comparison between a publicly quoted bank and a government bank in Singapore Journal of Financial Services Marketing, 6(1), pp.50-66 Gerrard, P & Cunningham, B (2001).Bank service quality: A comparison between a publicly quoted bank and a government bank in Singapore Journal of Financial Services Marketing, 6(1), pp.50-66 Goyal, V., Pandey, U S., & Batra, S (2012) Mobile banking in India: Practices, challenges, and security issues International Journal of Advanced Trends in Computer Science and Engineering, 1(2), pp.56-66 Haanpera, T M (2012) Easy mobile person-to-person payments: End users’ perspective Thesis Aalto University Haron, S., Ahmed, N & Planisek, S L (1994) Bank Patronage factors of Muslim and Non-Muslim customers International Journal of Bank Marketing, 12(1), pp.32-40 Holstius, K & Kaynak, E (1995).Retail banking in Nordic countries: The case of Finland International Journal of Bank Marketing, 13(8), pp.10-20 Igan, D., & Pinheiro, M (2011) Credit growth and bank soundness: Fast and furious? IMF Working Paper WP/11/278 Iqbal, S (2017) Global peer to peer lending market by end-user (Consumer credit loans, small business loans, student loans, and real estate loans) and business model type (Alternate marketplace lending and traditional lending) - Global opportunity analysis and industry forecast, 2014-2022 Applied Market Research Kamakodi, N & Khan, B A (2008) An Insight into factors influencing bank selection decisions of Indian customers Asia-Pacific Business Review, 4(1), Available at: http://www.freepatentsonline.com/article/Asia-Pacific-Business-Review/179978535.html Kazeh, K., & Decker, W H (1993) How Customers Choose Banks Journal of Retail Banking, 14(4), pp.92-93 45 Kwan, S H (2010) Financial crisis and bank lending Federal Reserve Bank of San Francisco Lee, E-B., Lee, S-G., Yang, C-G (2017) The influences of advertisement attitude and brand attitude on purchase intention of smartphone advertising Industrial Management & Data Systems, 117(6), pp.1011-1036 Liebana-Cabanillas, F., de Luna, I R., & Montoro-Rios, F (2017) Intention to use new mobile payment systems: a comparative analysis of SMS and NFC payments Economic Research, 30(1), pp.892-910 Maddern, H., Maull, R & Smart, A (2007) Managing service quality in banks: Customers’ gender effects International Journal of Operational and Production Management, 27(9), pp.998-1019 Massachusetts Securities Division (2018) Peer-to-peer lending North American Securities Administrators Association Mfwaya, J L (2013) Lead time management and customer satisfaction in the telecommunication industry in Kenya Thesis University of Nairobi Mikołajczak-Degrauwe, K., & Brengman, M (2014) The influence of advertising on compulsive buying – The role of persuasion knowledge Journal of Behavior Addictions, 3(1), pp.65-73 Mokhlis, S (2009) Determinants of choice criteria in Malaysia’s retail banking: an analysis of gender-based choice decisions European Journal of Economics, Finance and Administrative Sciences, 1(2), pp.1450-1467 Mokhlis, S (2009) Determinants of choice criteria in Malaysia’s retail banking: an analysis of gender-based choice decisions European Journal of Economics, Finance and Administrative Sciences, 1(2), pp.1450-1467 Mutinda, D M (2012) The effect of lending interest rate on economic growth in Kenya Thesis University of Nairobi Nguyen, T D (2017) Evaluating the quality of internet banking services on Prosperity Vietnam Commercial Joint Stock Bank (VP Bank) through satisfaction of customers Thesis International School, Vietnam National University, Hanoi Ostromogolsky, P (2017) Lender-borrower relationship and loan origination costs Working Paper Series, Federal Deposit Insurance Corporation 46 Rahmani, Z., Tahvildari, A., Honarmand, H., Yousefi, H., & Daghighi, M S (2012) Mobile banking and its benefits Arabian Journal of Business and Management Review, 2(5), pp.37-40 Skala, D (2012) Loan growth in banks: Origins and consequences Retrieved from http://www.wneiz.pl/nauka_wneiz/frfu/54-2012/FRFU-54-113.pdf Slotnick, S A (2013) Lead time quotation when customers are sensitive to reputation Retrieved from https://engagedscholarship.csuohio.edu/cgi/viewcontent.cgi?article=1037&context=bus_facpub Song, P., Chen, Y., Zhou, Z., & Wu, H (2018) Performance analysis of peer-to-peer online lending platforms in China Sustainability, 10, pp.1-15 Tang, H (2019) Peer-to-Peer Lenders versus Banks: Substitutes or Complements? HEC Paris Retrieved from http://huan-tang.com/wp-content/uploads/2019/01/p2p_tang.pdf Terkan, R (2014) Importance of creative advertising and marketing according to university students’ perspective International Review of Management and Marketing, 4(3), pp.230-246 Thompson, D V., Hamilton, R W., & Rust, R T (2005) Feature Fatigue: When Product Capabilities Become Too Much of a Good Thing Journal of Marketing Research, XLII, pp.431442 Thulani, D., Kosmas, N., Collins, M., & Lloyd, C (2012) Adoption and use of SMS/mobile banking services in Zimbabwe: An exploratory study Journal of Internet Banking and Commerce, 16(2), pp.1-16 Tronvoll, B (2008) Customer complaint behavior in service Thesis Karlstad University Studies Unterreiner, M., Mierzwinski, Ed., & Murray, L (2014) Debt Collectors, Debt Complaints The CFPB’s Consumer Complaint Database Gets Real Results for Consumers Retrieved from https://frontiergroup.org/sites/default/files/reports/USP%20CFPB%20DebtCollection%20Report %20Feb14%20Web.pdf Vietnam Business Review (2018) Central bank adamant on credit growth cap Retrieved from https://www.vir.com.vn/central-bank-adamant-on-credit-growth-cap-62047.html Vietnam Insider (2019) SBV sets annual credit growth limits, 15 percent for best banks Retrieved from https://vietnaminsider.vn/sbv-sets-annual-credit-growth-limits-5-for-best-banks/ 47 Vietnam Investment Review (2018) Central bank warns of P2P lending Retrieved from https://www.vir.com.vn/central-bank-warns-of-p2p-lending-64846.html Zywicki, T J (2015) The law and economics of consumer debt collection and its regulation Mercatus Working Paper 48 APPENDIX: INTERVIEW AND TRANSCRIPTS What is your opinion towards VPBank’s technology performance? Interviewee Branch manager A Branch manager B Branch manager C Branch manager D Branch manager E Summary of interview content I don’t think VPBank’s technology is weak In fact, the bank is among top leading technology absorption in Vietnam with the introduction of Timo which is known as the first digital banking services provider We deliver internet banking to both retail and SMEs customers VPBank’s technology level is good in overall The time to access internet banking is fast and responsive user interaction through mobile banking application It is available in both Android and iOS mobile platform So, I don’t think there are any issues with VPBank’s technology performance Sometimes I got a customer complain about they could not access to VPBank’s mobile internet banking in specific time Generally, it was happened during salary pay day and there were often large transactions which were carried out by both salaried customers and VPBank’s employees transferred money to others or paid the bills Currently, VPBank introduced mobile internet banking services with the integration of many payment services such as electric bill payment, Internet bill payment, television cab, etc I thought it is very good services that VPBank is offering to the customers However, I believe that other banks also introduce the same services to their customers The main thing here VPBank has lack of innovative technological based products and services to the customers For example, I saw that TPBank introduces a service all Live Banking whether the customers are able to take payment cards immediately in this bank’s live counters My customers sometimes go to the branch and asked for the issue of they did not receive SMS to know their repayment information I checked with IT support and found that it was delayed by the system error I believed that if the bank could not fix this issue, the customer would not satisfy with VPBank’s service quality It is my major concern Other while, I don’t think there are other issues in VPBank’s technologies What is your opinion towards VPBank’s bank location? Interviewee Branch manager A Branch manager B Summary of interview content I think VPBank does not have good location compared to other banks like Agribank since Agribank has better network coverage For instance, my branch has small size and it creates the concern to the customers since it is often full of people to transact My branch is located in District of HCMC and the bank network is quite good compared to other banks like Vietinbank or BIDV I 49 Branch manager C Branch manager D Branch manager E think branch location is important to almost customers since Vietnamese people prefer going to the branches rather than doing everything in Internet banking VPBank’s branches are not covered well in the district Only one branch is there to compete with three branches from TPBank I believe that if VPBank does not open more branch in this district, TPBank will take over my clients soon VPBank has more than 200 branches and transaction offices in Vietnam It is good setup and allows the bank to expand quicker and to approach different customers However, I faced with the fierce competition from financial companies and they are mostly located in every street to provide finances to individual lower income customers I believe that VPBank has good location I have no concern about the branch coverage Current branch can serve well current customer base even we can provide services more to the customers What is your opinion towards VPBank’s service quality? Interviewee Branch manager A Branch manager B Branch manager C Branch manager D Branch manager E Summary of interview content VPBank currently provides wide range of banking services to the customers such as home loan, auto loan, unsecured loan, etc I think VPBank is doing a good job in term of service quality All the customers’ complaints are effectively resolved by my staffs I am not allowing my staffs to take hidden fees from the customers from taking a credit If I know someone did that, I will fire them I am very concern about service quality of VPBank The bank is growing very fast recently and it seems no one take care for service quality I received a complaint from the customers and asked them to call to customer service hotline but they had to wait more than week to get appropriate resolution I think VPBank should review the quality of customer complaint handling I found that the ATMs have been overloaded many times My customers could not withdraw money in specific time or the ATMs did not return the cards to the customers In this month, I have received four complaints about ATMs issues My staffs have apologized to the customers and it was a shame Service quality of VPBank is improving over the time although there are still some weaknesses My customers are quite happy with the bank service But they only complaint the late collections call reminders However, these customers were overdue so that they accepted the calls with little dissatisfaction My branch got a rating as maximum satisfaction score from the customers The major limitation in VPBank’s service quality is the unclear consultant services from sales team when they introduced loans to the customers I have been going to this branch for few months It 50 seemed previous guys did not fulfill the jobs since some customers complained unclear charge fees I believed that VPBank should provide clear documents and guidance related to sales advisors We could not accept the case of incorrect information provided by our staffs It takes the customer dissatisfaction and they might not want to keep relationship with the bank What is your opinion towards VPBank’s reputation? Interviewee Branch manager A Branch manager B Branch manager C Branch manager D Branch manager E Summary of interview content I believe that VPBank has good image in the public It is the result of strong market campaign to raise the awareness of the customers towards VPBank’s brand I think VPBank is doing a good job in rising customer’s brand awareness My branch frequently conducted a marketing campaign in which sales teams going to the street in order to provide the leaflet to the customers My personal opinion is that VPBank is highly well-known in HCMC It surpasses smaller banks like OCB with household products and unsecured lending from FECredit VPBank did not utilize well the poster to inform the customers about the bank’s services in big street It might be the concern for brand reputation However, I believe that the Internet may help to widen our reputation to the customers It is somehow to improve brand reputation through the advertisement VPBank should focus on brand reputation through diversified and innovative products and services to increase customers’ brand awareness Some banks are now introducing live banking services or they advertise that the processing time is within 24 hours I think their advertisement is more attractive than VPBank What is your opinion towards VPBank’s technology performance, bank location, service quality, and VPBank’s reputation? 51 ... business units (retail banking, household banking, SME banking, commercial banking, corporate and investment banking, digital banking services, financial institution and transactional banking)... the business of the bank in general and to credit growth rate of the bank in particular 2.2.4 Lower lending interest rate from bigger banks VPBank has been doing business in Vietnam banking industry... CHI MINH CITY International School of Business LE HUNG CUONG Student ID: 22170008 Issues in Credit Granting Process in VP bank MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Prof TRAN HA MINH QUAN