LV thạc sỹ_Solutions to enhance the quality of international payment services using letter of credit in BIDV

i ACKNOWLEDGEMENT This report would not have been possibly finished without the support and orientation from many individuals who in one way or another way help me to finish it First and foremost, I would like to express my gratefulness and sincere thanks to my supervisor, Mrs… Last but not least, it is grateful to receive the interests and valuable comments from all my honored readers ii TABLE OF CONTENTS MAI-CQ493864-BUSINESS ENGLISH 49A iii LIST OF ABBREVIATIONS BIDV ICC L /C SWIFT UCP Bank of Investment and Development of Vietnam International Chamber of Commerce Letter of Credit Society for Worldwide Interbank Financial Telecommunications the Uniform Customs and Practice for Documentary Credit LIST OF FIGURES Table 1.1: Results of business activities Figure 2.1: The process of L / C payment Table 3.1 Sales of L/C payment in the period of 2008 to 2010 Table 3.2: The amounts of import L/C in the branch Table 3.4: The comparison of prices in some transactions of international payment using L/C of BIDV with VIETCOMBANK and EXIMBANK MAI-CQ493864-BUSINESS ENGLISH 49A iv EXECUTIVE SUMMARY This report, with more than 30 pages in 4 chapters, analyses and re-evaluates the reality of international payment using Letter of Credit in the Bank for Investment and Development of Vietnam (BIDV) Thanh Hoa branch On that basis, I propose some solutions and recommendations to help the branch improve the situation In order to achieve the above-captioned objectives, this report focuses on some fundamental issues as follows: * Analysis the reality of international payment using L/C in BIDV Thanh Hoa branch in the period of 2008 to 2010 * Figure out the factors affecting the quality of international payment using L/C * Come up with solutions and recommendations which are sensible to solve those problems About the structure, apart from the Introduction and the Conclusion, the main content is divided to 4 chapters Firstly, an overview about the BIDV Thanh Hoa branch and International payment using Letter of Credit is expressed in the chapter 1 Secondly, the chapter 2 explains the theoretical framework of international payment using Letter of Credit and makes clear about key terms definitions used in the report Thirdly, the chapter 3 shows anlysis and findings of the quality of international payment services using Letter of Credit in BIDV Thanh Hoa branch that I have examined in the period of internship time Lastly, the chapter 4 brings out solutions to enhance the quality of international payment services using Letter of Credit in BIDV Thanh Hoa branch with the hope of giving suggestions to improve the situation MAI-CQ493864-BUSINESS ENGLISH 49A 1 PART I: INTRODUCTION 1 Introduction of the research topic When trade between countries goes international, international payment methods become useful tools to facilitate international trade process Among of which, L/C payment is the most popular because of its convenience and safety for both importers and exporters For commercial banks, L/C payment is important because of the profit it brings up So, the research to find methods to improve the quality of L/C payment is necessary to attract more customers and establish firm relations with agent banks all over the world BIDV Thanh Hoa branch is one of the first-level branches of BIDV system In recent years, the branch is seeking new customers and the new direction of market access to enhance creativity in business However, in the period of 2008 to 2010, the revenue from international payment services using L/C is fluctuating and unstable The first cause is due to the economic crisis occurred worldwide in 2009 has led to the bankruptcy or the difficulties of many enterprises It leads to the reduction of import and export activities The other cause comes from the branch itself The system which is not responsive to market changes and lack of effective business strategies now just focuses on the traditional business In this situation, the branch should immediately find out ways to improve the quality of international payment services to attract new customers as well as to develop a reputation and trust in their loyal customers to survive in a dynamic competitive environment between financial institutions Accordingly, I have chosen “Solutions to enhance the quality of international payment services using Letter of Credit in the Bank for Investment and Development Thanh Hoa branch” as my topic for the report with the hope of giving suggestions to help the branch improve the situation 2 Research questions During the internship period in the BIDV Thanh Hoa branch I have observed and analyzed the operations to find answers for these questions: “What is the reality of L/ C payment in the BIDV Thanh Hoa branch? “What are the fundamental factors influencing the quality of International payment services using import L / C there? 2 “What should the branch do to enhance the quality of import L/C payment activities?” 3 Research methodology The research is conducted by using comparing, analyzing and synthesizing approaches to find out objective and subjective factors which directly influence the revenue from L/C payment In this research the writer has used some methods to collect primary and secondary data The primary data are gathered through observations in daily operations of the branch and interviews with some officers The secondary data are collected through facts and figures filed in the branch as well as those collected from many websites, books, newspapers and other related documents in the library of the National Economics University and Faculty of Foreign Languages 4 Scope of the research The research concentrates on the reality of international payment using L/C in the branch through the period of 2008 to 2010 together with analyzing facts and figures to find its strengths and weaknesses From which, the writer comes to giving solutions to solve the problems MAI-CQ493864-BUSINESS ENGLISH 49A 3 PART II: MAIN CHAPTERS CHAPTER I: INTRODUCTION OF BIDV THANH HOA BRANCH AND INTERNATIONAL PAYMENT USING LETTER OF CREDIT 1.1 Introduction of BIDV and BIDV Thanh Hoa branch Bank for Investment and Development of Vietnam (BIDV) is the second largest commercial bank and the fourth largest enterprises in Vietnam, calculated on the total assets as reported by UNDP in 2007 BIDV was established on April, 26 th 1957 under the name Bank for Construction of Vietnam and then it changed into Bank for Investment and Development of Vietnam in 1990 Its mission is to diversify businesses, multi-disciplinary financial, monetary, credit, banking services and non-bank in accordance with the law, constantly improve the profitability of banks, thus contribute to the national monetary policy and economic development to serve country BIDV has business relations with more than 800 banks around the world It is a member of the Asian bankers Association, Bankers Association of The Association of Southeast Asia Nations (ASEAN), the Association of Development Finance Institutions in Asia – Pacific (ADFIAP) and Association of Bank of Vietnam BIDV has been growing and improving its reputation on providing banking products as well as confirming its brand values on the sector of serving projects and programs of the country BIDV Thanh Hoa branch is derived from the point of the building bank Thanh Hoa, founded in May 1957, on the basis of an allocation of financial department, with the task: "in time to serve the mission of recovery and improvement for the nation’s economy after the French resistance.” To be complied with the 888 decision, Thanh Hoa branch was upgraded to a first-level branch, enhancing the retail expansion Therefore, in October 2010, the branch has 3 transaction departments and 9 transaction points in Thanh Hoa City The qualifications of the staff are relatively simultaneous, with more than 90% of staff with university or college degrees and the labor productivity is relatively high MAI-CQ493864-BUSINESS ENGLISH 49A 4 1.2 The role of BIDV Thanh Hoa branch in the L/C payment process of BIDV According to the Operating procedures of trade finance No 5051/QD – TTTM August 31, 2009 of Department of Services for Enterprise customers of BIDV, the branch is not allowed to carry out the international payment operation directly All international payment transactions after being verified by the branch must be transferred to the International Payment Centre to ensure the centralization of the process in the whole system of BIDV BIDV Thanh Hoa branch is only authorized to: * Directly receive and check the legality of records from customers or financial institutions * Perform the task correctly defined in the processing of transactions between Trade Finance Center (TFC) and the source branch * Provide information relating to proposed transactions comply with TFC requirements * Send the records to the TFC 1.3 Background of International payment using L/C in BIDV Thanh Hoa branch In the last 3 years, the social and economic situation has changed as our country became an official member of the World Trade Organization (WTO) Especially in late 2007 and six first months of 2008 the world economic crisis happened and had a widespread impact directly on our country Although there are many difficulties but the branch still fulfilled the criteria set out in business and even very positively It is specific as follows: Table 1.1: Results of business activities Unit: billion VND Target 2008 2009 2010 Total assets 1.005 1.156 1.127 Revenue 29,7 31,5 42,7 Profit before tax 19,4 30,2 49,3 Source: Accounting Department of BIDV Thanh Hoa Branch The total assets in 2009 have increased compared to 2008 It increases from 1005 billion to 1156 billion, up to 14.5% While total assets in 2010 is lower than in 2009 by 2.5% in early 2010 due to the impact of severe economic crisis, but sales MAI-CQ493864-BUSINESS ENGLISH 49A 5 and profitability of the branch has achieved more than the year before, namely the higher 2009 revenue in 2008 was 1.8 billion, up to 6%, while in 2010 higher than in 2009 with 11.2 billion, up to 35.3%, indicating the business of the branch is still highly effective However, the revenue from international payment service using L/C has decreased and proved to be unstable during that period It can be seen that the biggest external factor is the world economy crisis which made the import and export activities face with difficulties In other hand, the internal factor comes from the bank itself It was not sensitive with the changes of market to make the right decision at the time The sensitiveness is very important in any business, now it proved to be more crucial to the bank’s performance Therefore, the bank needs to be clear about its weaknesses and solve the problems from the rout 1.4 Key terms definitions * International Chamber of Commerce (ICC): “The voice of world business championing the global economy as a force for economic growth, job creation and prosperity".1 This is the agency to release the UCP (Uniform Customs and Practice for Documentary of Credits) * UCP 600: is the latest revision of the Uniform Customs and Practice that govern the operation of letters of credit (ICC, 2007) * Issuing bank: the bank that issues a credit at the request of an applicant or on its own behalf (UCP 600, ICC, 2007) * Advising bank: the bank that advises the credit at the request of the issuing bank It may be asked to confirm and/or pay the credit (UCP 600, ICC, 2007) * Confirming bank: the bank that adds its confirmation to a credit upon the issuing bank’s authorization or request (UCP 600, ICC, 2007) * Beneficiary: the person in whose favor a credit is issued (UCP 600, ICC, 2007) * Bill of exchange: a written order that binds one party to pay a fixed sum of money to another party at a predetermined future date *Revocable L/C: an L/C that can be modified or cancelled without noticing to the beneficiary This type is only used in the delivery of goods between the parent company and its subsidiaries or the buyer and the seller who have good relations * Irrevocable L/C: an L/C that cannot be cancelled This type is widely used 1 Website: http://www.tradefinancemagazine.com/AboutUs/Stub/Glossary.html MAI-CQ493864-BUSINESS ENGLISH 49A 6 because it ensures the rights for both parties * Deferred L/C: a kind of L/C which the applicant does not pay until a future date determined in accordance with the terms of the L/C * Acceptance L/C: a type of L/C that is paid by a time draft authorizing payment on or after a specific date if the terms of the L/C have been complied with * Red Clause L/C: a special type of L/C that permits the beneficiary to receive funds for any purchase outlined in the L/C * Transferable L/C: this type of credit allows the seller to transfer all or part of the proceeds of the original L/C to a second beneficiary, usually the ultimate supplier of the goods The second buyer bears the major risk * Back to back L/C: “Two letters of credit normally involving the same bank which cover a single shipment of goods, involving a middleman The second letter of credit is issued only because its issuing bank is happy that the first letter of credit represents goo security In practice this can be hazardous and many banks are unwilling to be involved in back – to – back transactions.”2 * Standby L/C: “an L/C which a bank issues on behalf of its customer to serve as a guarantee to the beneficiary of the L/C that the bank's customer will perform a specified contract with the beneficiary If the customer defaults, the beneficiary may draw funds against the L/C as penalties or as payments, whichever the terms of the credit provide.”3 2 3 Website: http://www.tradefinancemagazine.com/AboutUs/Stub/Glossary.html Website: http://www.teachmefinance.com/Financial_Terms/standby_letter_of_credit.html MAI-CQ493864-BUSINESS ENGLISH 49A 14 inadequacies in the management and transactions with customers but they do not really brave to do something changing the situation The branch should pay more attention to employees and encourage them to contribute ideas for improving the quality of work It needs more access, frank exchanges between the senior and staff to find practical solutions to improve the quality of banking services 2.4.2.3 Level of technology Technology it is still not strength of BIDV Its facilities of the technology have not changed significantly to keep up with the big banks with more modern machinery and software In addition, technical problems still occur frequently that make employees complained and customers to wait long The branch has not had divisions in charge of repairing these defects in time These defects are usually selfcorrected by the employees This sometimes is effective only temporarily In the long term is not a sustainable method MAI-CQ493864-BUSINESS ENGLISH 49A 15 CHAPTER III ANALYSIS AND FINDINGS OF INTERNATIONAL PAYMENT USING LETTER OF CREDIT IN BIDV THANH HOA BRANCH 3.1 Reality of L/C payment in BIDV Thanh Hoa branch The operations of international payment using L/C are the fundamental activities and occupy a high proportion of the total payment of import and export branch It is also active to bring the bank a big profit from service fees However, this activity at the branch during this period is not really developed and stable The main cause is due to fluctuations of the economic situation in the country and the world and partly due to the less nimble of the bank before the market's volatility Import L/C payment is one of the important activities of the branch Open L/C operations as well as L/C payment operations always occupy a large proportion of total revenue from the L/C payment Table 3.1 Sales of L/C payment in the period of 2008 to 2010 Unit: million USD Sales of import L/C payment % of increase, decrease 2008 2009 2010 1,5 1,35 1,6 -10 18,52 Source: Department of Services for Enterprises Customers It can be seen in the Table 3.1 that the sales of L/C payment of 2009 has decreased a considerable amount in comparision with those of 2008 It is equivalent to 10 % The branch has lost an amount of profit from this fall This can be explained that the demand for international payment using L/C has also fallen 2009 is quite a fluctuating year for international payment operations The economic situation has challenged the branch’s experience to deal with the difficulties However, the sales of 2010 seem to be brighter than the year before It reaches 1,6 million USD which is equivalent to be more than 18,52 % in comparision with those of 2009 MAI-CQ493864-BUSINESS ENGLISH 49A 16 Table 3.2: The amounts of import L/C in the branch Unit: item 2008 2009 2010 Opening L/C 30 27 32 Payment L/C 24 29 38 -10 % 18,52 % 20,83 % 31,03 % % increase or decrease of opening L/C % increase or decrease of payment L/C Source: Department of Services for Enterprises Customers According to the table 3.2, the situation is most elastic in 2009, when the number of L/C opened significantly reduced, down 10 % compared to 2008 This is completely relevant Sales of import and export payment of the branch in this year also declined This can be explained by the economic crisis occurred in 2009 has reduced the import and export activities, which also reduced the branch’s revenue in this sector The number of both opening L/C and payment L/C has rised in 2010 It’s due to the picture of foreign trade becoming brighter when the economy recovered in 2010 Through the above table we can see that the amount of international payment using L/C items of the branch is still small compared with other banks The sale is not stable at the challenges of economic situation It shows that the branch has not had adequate policies to deal with the changes of market and it’s not a really strong brand about international payment So in general, the number of international payment transactions is still small MAI-CQ493864-BUSINESS ENGLISH 49A 17 Table 3.4: The comparison of prices in some transactions of international payment using L/C of BIDV with VIETCOMBANK and EXIMBANK Firstly, fees charged by the BIDV for L/C transactions are reasonable and sometimes are lower than other banks with the same transaction as indicated in the following table: Banks BIDV VIETCOMBANK EXIMBANK Transactions Issuance of pre 10USD/L/C 50USD/L/C 20USD/L/C -advising L/Cs Cancellation of 10USD+Actual 20USD+Actual 20USD+Actual L/C at customer’s arising costs/time arising costs/time arising costs/time request Source:http://www.vietcombank/com.vn;http://www.bidv.com.vn; http://www.eximbank.com.vn In reality, the minimum discount is not always the best way attract customers Because many customers are still thinking that price is always associated with quality It means that low prices come along with low quality and vice versa Moreover, low cost policies will not guarantee profits for the branch in the long run However, the branch’s target is to attract as many customers as possible with pricing policy as above 3.2 Assessments of L/C payment in Thanh Hoa branch We can see that international payment using L/C plays an important role in import and export international payment of the branch It occupies a considerable proportion in international payment operation of the branch Increasingly, it shows the dominant characteristics in international payment activities in general But when going to find out each section of international payment, it is proved that this field is still developing and a young operation in the branch It is shown by the profits earned from this service through the years 3.2.1 Overall assessment about the quality of international payment service using L/C To assess the quality of international payments using L'C, we must apply the criteria for assessing the quality of the following issues: customer satisfaction, excellence of service provision, size and speed growth of income from services and MAI-CQ493864-BUSINESS ENGLISH 49A 18 competitiveness 3.2.1.1 Customer satisfaction International payment using L/C services provided by the bank BIDV has made a reputation among customers but it is not really largely developed The bank has not exploited a large number of potential customer especially small enterprises and its ability to retain customers is still weak To satisfy customers, the branch needs to listen to their opinions about service quality And on that base, it can meet customer’s expectations in time and create a friendly, close atmosphere to the customer and the bank to keep long-term relations with them 3.2.2 Excellence of service provision In recent years, the bank has not got significant risks in the international payment using L/C According to the payment process set out by the banks, the payment speed is quite high However, it remains quite confused with many errors such as delaying payment, causing damage to the bank reputation Moreover, types of L / C are not really varied The branch only made a number of common L / C It has not focused expansion and diversification of products yet Besides, the branch neither have a staff department which is responsible for international payments nor experienced officers who not only guide the customers to make quick transactions, but also counsel to help them choose the best options 3.2.3 The size and growth rate of income from services and competitiveness The income from the international payment using L/C occupies 10% of the total income of the branch This number is too small for a large bank as BIDV Because the branch does not expand and promote the quality and reputation of the products and services so there are a small number of customers That’s why the profitability comes from this field is not significant for the bank While this is a potential area of the future and the bank has a big advantage on reputation In terms of competitiveness in the market, the BIDV bank is not outstanding in the field of international payment, even it is a large bank BIDV clearly can not compete with banks renowned reputation in international payments, such as Vietcombank, Eximbank - is continuously awarded by reputational banks and credit institutions worldwide on merit quality international payment services One of the measures to attract new customers by BIDV is to reduce service fees This may be a good temporary measure to keep customers but in the long run it will not be good for banks because it reduces revenue The outstanding issue is the income from this MAI-CQ493864-BUSINESS ENGLISH 49A 19 decreased year by year 3.2.2 Assessments of the quality international payment L/C payment in Thanh Hoa branch III.3.1 Achievements The quality of international payment services using L/C provided by Thanh Hoa branch has set a reputation on customers In recent years, BIDV branches Thanh Hoa has made a pretty strong foothold in the banking market It is increasingly expanding operations as well as increased charter capital BIDV brings customers a peace of mind, a certain confidence The bank also made a sustained relationship and credibility with other credit institutions in the area as PVFC, Agribank, Vietinbank, Maritime, etc BIDV always know how to develop a reputation to keep tradition of customers with dedicated attitude and friendliness at work of staff A group of loyal customers still keep along with BIDV over the years Through conversations between customers and employees, it can be seen that they actually have comfortable relationships with employees as well as the branch and they always wants to have a long term relationship and cooperation Apart from, in recent years, BIDV branch does not have any big risk of international payment services using the L / C The handling of the original documents is the first employees follow strict procedures, closely applied to the entire system In the last 3 years (2008-2010), the branch does not let major risk happen to damage property and reputation of the bank This is one of the biggest bank's efforts to reduce risk and improve service quality To achieve this it needs to mention the efforts of the officers who are trained professional and dedicated to jobs They are always sticking to strictly payment process and closely examine the documents Moreover, the branch always set up good relations with agent banks to reduce risk from agent banks 3.3.2 Limitations Beside the achievements above in L/C payment, the branch still has some limitations: • It has not exploited on a larger potential customers - small businesses and the ability of customer retention is weak The bank may have not the relevant strategies to this broad market share This MAI-CQ493864-BUSINESS ENGLISH 49A 20 makes those enterprises get transactions with the bank only 1 to 2 times and then switch to other banks Annual number of customer transactions is rather high, but the rate of new customer is the majority The ability to keep customers is not very good so the rate of traditional customers is only around 25 -30% In the context of Vietnam to be a member of WTO, the number of import and export grows strongly and the market becomes more and more competitive The branch should see this opportunity before and change the marketing strategy to exploit this market If the bank cannot retain small customers, it cannot stand firmly in the market • It has occurred many confusions and mistakes which damage the reputation and finance of the branch and customers Some small mistakes still happened during the process of L/C It costs too much time of customers and the bank These mistakes can come either from the bank or the customers Sometimes it’s due to the ignorance of both customer and the officer of the bank That’s when the officer still goes through the wrong documents and it leads to the unable payment of the partners Although the bank keeps the goods but it’s hard to consume • Types of L/C are not very various The bank only concentrate on the traditional L/C and less pay enough attention to other types of L/C which are very popular in the world So it cannot bring multiplied choices for customers Now, due to technical factors, technological level that BIDV as well as many other banks can not provide the type of L / C especially L / C reserve, back to back L/C , revocable L/C etc, which the world has made a long time before • The revenue from L/C has decreased year by year It is clear that the decreased revenue from L/C is an outstanding issue in the branch Under the pressure of competition from other banks, the bank has to invest more, at the same time reducing fees The bank's fee is lower than other banks, namely only 70% of Vietcombank This is a good measure to keep customers, but considering in the long term it will affect the profitability of the bank It needs more effective measures and strategies besides measures of short-term temporarily MAI-CQ493864-BUSINESS ENGLISH 49A 21 CHAPTER IV SOLUTIONS TO ENHANCE THE QUALITY OF INTERNATIONAL PAYMENT SERVICES USING LETTER OF CREDIT IN BIDV THANH HOA BRANCH 4.1 The goal of offering solutions With the strategic objective is to build up a BIDV modern retail bank which is known for excellent service quality and professional service style in the region, BIDV must give much effort to be completed in each stage in order to meet the needs of customers, even the most demanding customers, and especially in the field of international payments, a key area of high profits for the bank 4.2 Solutions to enhance the quality of international payment services using L/C 4.2.1 Increasing the bank’s capital and control the foreign currency that international payment needs at the same time The capital has an important role to all the activities of the bank, among of them is the international payment performance The bank’s capital reflects its financial strength Being lack of funds will limit their ability to mobilize resources as well as other business activities of banks Undercapitalized banks cannot quickly access to the most advanced technology and cannot carry out the big contracts that require substantial financial resources That would limit its ability to perform quick, accurate and efficient payments Therefore, the branch needs to promote mobilization of capital In addition to the increase in annual profits, the capital increase from profits is an important factor as well The deduction for profits to fund growth capital needs to be at a reasonable rate and up to the specific situation of the bank The control of the foreign currency source helps to make the bank more active and reduce the cost Because when foreign currency shortage happens the bank has to borrow It costs time and fees The branch needs to promote the attraction of foreign currency from citizens, from businesses and organizations, simultaneously promote further business activities in foreign currencies 4.2.2 Implementation of risk prediction In the reality, the banks haven’t focused on risk management activities, -BUSINESS ENGLISH 49A 22 including the state banks and the stock commercial banks Therefore, banks should gradually establish a mechanism of risk management to operate more effectively The most crucial step in predicting the risk is to capture enough information Hence the branch needs to work effectively on storing and exploiting information about fraud and dispute settlement cases in international activities In addition, it needs to complete network of comprehensive and accuracy information of departments, agencies, other banks and businesses Moreover, the monitoring of changes in economic, political situations is also very important to notice these changes to forecast exchange rate risk, legal risks When it is aware of reliable and multi-dimensional information, the branch should be staffed with experienced personnel to analyze, evaluate and synthesize to make accurate forecasts 4.2.3 Modernizing the organization and enhance the training of staff fully qualified and professional ethics to meet the needs of payment Well organizing the management structure and personnel is the key to good success of any business The organizational structure should be adjusted to suit the nature of business It needs to be refined, compact, eligible for regional integration and international This is not only conducive to improving the quality of international payment services in particular, but also for building a modern model to improve quality in all activities of the banking sector in general Once again, human resouces are always the leading factor in all areas Especially with the service industry requires meticulous, precise and conscientious as banking services The branch must always pay attention to staff training and improving the quality of human resources It should open training sessions and courses to improve professional international payment using L/C It should enhance the exchange of experiences between the manager and the employees and encourage employees to raise comments, ideas or to help improve the quality of international payments as well as minimize risks in this field In addition, it needs consider policies to encourage, reward and punishment should be adequately paid attention to motivate employees, retain quality staff and to avoid brain drain phenomenon -BUSINESS ENGLISH 49A 23 4.2.4 Upgrading technology The application of modern leading technologies is always the key to success for all areas, especially in the service industry requires quick, smooth skills as banking services BIDV in general and the branch of Thanh Hoa in particular need to strengthen the finishing, strengthening, building the system of mechanical engineering, computer software and modernize the technology, automation to reach the world standard Along with it, it needs to improve the qualifications of the officers on applicating, using and exploitating technology And finally, technological improvements must be coupled with ensuring the safety and security in the use of information technology to avoid being the bad hackers penetrated causing damage to property and reputation to the bank 4.2.5 Diversifying the types of L / C to match the operating characteristics of customers Currently there are many types of L / C applied to facilitate the highest for users It can’t be denied that the customer's needs are always increasing in every aspect Once they understand the method of payment using L / C they will require banks to provide the type of L / C which is best for them If this bank does not meet their needs, they will look to other banks However, to apply more types of L / C it requires the branch to have strong potential and the strong links between departments To do this, banks should have a plan and specific schedule to be discussed and adopted by consensus between multiple departments to ensure everything is running smoothly 4.2.6 Marketing mix strategy * Market strategy Currently, the branch does not have any department or division to be responsible for marketing segment So it's necessary to establish a department for this array The mission of this department is conducting research to market segmentation to identify target markets and potential markets This is the first step of marketing strategy Nowadays, banks must be proactive to find customers, enticing customers to use their services and maintain long term relations To establish proper market strategy, the branch should determine the competitiveness for itself Specifically, this possibility is reflected in criteria such as the debt of the bank, the bank's reputation in the market, the level of safety in the business, the qualifications of officers -BUSINESS ENGLISH 49A 24 * Customer strategy Branches need to apply appropriate levels of deposits to attract customers Signing for deposit is a means to reduce risk on customers in case they break or do not want to repay debt It needs to consider the appropriate sign of funds to reduce risk for the loyal customers group which have longtime relations with the bank The branch needs to evaluate and classify customers’ information accurately The criteria used to classify are the level of customer relations with affiliates, the prestige in the previous transactions, the situation of production and business activities, the debt that consumers delay to pay at other banks and other mortgaged assets of the enterprises in the branch In addition, the branch should further promote the bank's image to customers and expand the market in the forms of advertising, promotions and PR To create a prestigious brand in the field of international payment it requires the branch to really work effectively and properly invest in promotional activities aimed at enhancing the position of the bank * Price strategy This is one of the important policies to attract customers Customers do not only want to use good quality services but also require low prices In international payment operations, what makes customers concern is not only the safety of services but also of service prices However, the price which is set out must ensure profitability for banks in the long run So it needs to conduct the valuation based on the competitive strategy of the branch in each period * Distribution strategy To expand the business network and ensure the best customer service, the branch needs to open more counters of retail products in areas where many economic activities focus at such as trade downtown, commercial centers Although for international payment services, customers often choose to perform at major branches or the places near the center to ensure the safety and fast progress of the transaction, but branches should also pay attention to the small transaction points in remote areas For customers wishing to have more knowledge about international payment methods locally, the officers here can provide advice and answers fully The branch must consider ways of advertising its products in these transaction points 4.3 Recommendations -BUSINESS ENGLISH 49A 25 4.3.1 To the BIDV BIDV should delegate more power to the branch to give them the independence in terms of seeking for new customers and develop a reputation It needs to encourage the branche to find business partners, and customers It should have more meetings to share experience between experienced professionals from the main headquarters for the officers in charge of this branch BIDV should promote the establishment of banking relationships more broadly with agents Besides, the main headquarters should create conditions for affiliates to actively seek to establish relations with correspondent banks in countries which have large trade relations with our country such as Japan, China and ASEAN countries This helps to utilize the development level of management and the quality and prestige of the big banks In addition, the Assembly office should regularly monitor the activities of the agent banks in order to avoid the risk of inefficient operations -BUSINESS ENGLISH 49A 26 PART III: CONCLUSION International payment method using L/C is used most by exporters and importers due to its advantages by comparison with other methods In recent years, Vietnam's economy has been booming particularly in the field of foreign trade which led to the development of increasingly widespread this method of payment of the domestic commercial banks In the context of globalization, Vietnam is integrated by developing the economy in a link with the region and the world The trend of globalization and trade liberalization takes place quickly which helped the trade relations and international cooperation between Vietnam with the world to be more growing This requires the activities of international payment must be improved and developed in terms of both width and depth to meet the payment demand which is increasingly diverse and complex On the other hand, Vietnam's economy over time with highspeed development, from 6 to 7% per year and increasing scale economies have led to growing scale of business andproduction and increasing demand to exchange goods and services Hence, it requests international payment methods to be more and more various However, we can say that, with the level of knowledge, foreign languages, as well as technology has made international payment services using L/C provided by international commercial banks in Vietnam can not meet supply needs and requiring of customers, especially foreign customers Because the quality of products, especially products and services are not limited, it needs to be good and how to get better and better This is also the goal which the BIDV Thanh Hoa branch needs to reach to survive and thrive in an environment of increasingly fierce competition Improving product quality is never an old problem, vice versa; it is a concern that has always puzzled managers, especially managers of the banks They are the persons who are in charge of making the banks more and more prosperous by improving the quality of numerous and complex services In this paper, I wish to give some directions and recommendations that could be considered and implemented -BUSINESS ENGLISH 49A 27 REFERENCES IN VIETNAMESE LANGUAGE 1 Bài viết “Nâng cao chất lượng dịch vụ Ngân hàng trong xu thế hội nhập” www.sbv.gov.vn Mục Nghiên cứu trao đổi 2 PGS.TS Nguyễn Thị Thu Thảo, Giáo trình Nghiệp vụ thanh toán quốc tế, Nhà xuất bản Lao Động – Xã hội, 2005, Hà Nội 3 Phạm Thị Phương Hiền, Ngân hàng 45, Luận văn “Nâng cao chất lượng hoạt động thanh toán quốc tế tại Ngân hàng Công thương chi nhánh Đống Đa, Hà Nội”, 2007 4 The Operating procedures of trade finance No 5051/QD – TTTM August 31, 2009 of Department of Services for Enterprises customers of BIDV 5 Tạp chí Phát triển KH & CN, tập 9, số 10 – 2006 IN ENGLISH LANGUAGE 6 Edward G Hinkelman, A short course in International payments, World Trade Press, USA, 2002 7 Joseph M Ribeiro, Procurement of Goods, Works and Services in Development Projects, Presses International Polytechnique, 2009, Canada Website: 1 http://www.tradefinancemagazine.com/AboutUs/Stub/Glossary.html 2 http://www.investopedia.com/terms/b/billofexchange.asp 3 http://www.crfonline.org/orc/cro/cro-9-1.html 4 http://scotiabank.com/images/en/filesbusiness/1180.pdf) 5 (http://www.crfonline.org/orc/cro/cro-9-2.html 6 http://www.teachmefinance.com/Financial_Terms/standby_letter_of_credit html) 7 http://www.investopedia.com/terms/r/red-clause-letter-of-credit.asp) 8 http://en.wikipedia.org/wiki/Acceptance_credit) 9 http://www.docstoc.com/docs/22550456/Uniform-Customs-and-Practicefor-Documentary-Credits -BUSINESS ENGLISH 49A ... variation in the proportion of revenue from international payments in the bank''s total income The increase in the proportion of revenue from international payments in the total income of the bank... about the quality of international payment service using L/C To assess the quality of international payments using L''C, we must apply the criteria for assessing the quality of the following issues:... used in the report Thirdly, the chapter shows anlysis and findings of the quality of international payment services using Letter of Credit in BIDV Thanh Hoa branch that I have examined in the