LV thạc sỹ_Product diversification for retail banking services at vietcombank

1 TABLE OF CONTENTS TABLE OF CONTENTS .1 ACKNOWLEDGEMENTS LIST OF FIGURE LIST OF TABLE .5 INTRODUCTION CHAPTER A COMMON CONCEPT PRODUCT DIVERSIFICATION IN RETAIL BANKING .11 1.1 Retail banking of commercial bank 1.1.1 The concept of retail banking services .11 1.1.2 Characteristics of retail banking services 12 1.2 Product diversification of retail banking .15 1.2.1 Definition of product diversification 15 1.2.2 The necessary of product diversification in retail banking .16 1.2.3 Products of retail banking 17 1.2.4 The benefits of product diversification .20 1.3 Factors affecting product diversification .23 1.3.1 Internal factors 23 1.3.2 External factors 26 CHAPTER PRODUCT DIVERSIFICATION IN RETAIL BANKING AT VIETCOMBANK 29 2.1 Overview of Vietcombank 29 2.1.1 Features the formation and development 29 2.1.2 Organizational Structure 30 2.1.3 Business performance of VCB over period 2008-2010 32 2.2 VCB’s current product diversification in retail banking .33 2.2.1 Products and services 33 2.2.2 Customer and Market 44 2.2.3 Distribution network 45 2.2.4 Product diversification result in retail banking at VCB 48 2.3 Factors driving the product diversification in retail banking at VCB 54 2.3.1 Internal factors 54 2.3.2 External factors 57 2.4 Assessment 59 2.4.1 Achievement 59 2.4.2 Constraints 62 2.4.3 Causes of constraints 65 CHAPTER 3: SOLUTIONS TO IMPROVE PRODUCT DIVERSIFICATION IN RETAIL BANKING AT VIETCOMBANK .68 3.1 Strategy of Vietcombank in product diversification in retail banking 68 3.1.1 The retail banking development trends 68 3.1.2 Strategy of Vietcombank in product diversification in retail banking .69 3.2 Proposed solutions to develop product diversification in retail banking at Vietcombank 72 3.2.1 Building retail banking strategy .72 3.2.2 Identifying retail banking target market and marketing strategy .73 3.2.3 Developing new products and services 73 3.2.4 Expending network and channels .77 3.2.5 Invest in banking technology 78 3.2.6 Improving banking administration and risk management 79 CONCLUSION .81 REFERENCES .82 ACKNOWLEDGEMENT First and foremost, I would like to express my sincere gratitude to my supervisor, Dr … Last, but not the least, I thank my families for their support and encouragment and my dear class mates who always keep contact each other and exchange ideas and documents to pursue my interests LIST OF TABLES Table No.1: Financial status of Vietcombank 32 Table No.2: Status of individual fund mobilization from 2008-2010 34 Table No.3: Status of individual credit 2008-2010 36 Table No.4: Status of individual credit by product 2008-2010 37 Table No.5: Status of transfer money through Swift channel 2008-2010 39 Table No.6: Status of transfer money through Money Gram channel 2008-2010 .40 Table No.7: Status of E- banking services 2008-2010 .41 Table No.8: Total amount card issuance 43 Table No.9: Total branch network 2008-2010 46 Table No.10: Total oustanding loans and NPL’s rate of Car loans 2008-2010 49 Table No.11: Margin interest analysis of Car loans 2008-2010 50 Table No.12: Total oustanding loans and NPL’s rate of Project housing loans 2008-2010 50 Table No.13: Margin interest analysis of Project housing loans 2008-2010 .51 Table No.14: Total oustanding loans and NPL’s rate of Staff loans 2008-2010 .52 Table No.15: Margin interest analysis of Staff loans 2008-2010 52 LIST OF FIGURES Figure No.1: Model of governance structure of VCB 31 Figure No.2 : Portfolio of individual credit 38 Figure No.3: Structure of customers of Retail banking 44 INTRODUCTION Research topic PRODUCT DIVERSIFICATION FOR RETAIL BANKING SERVICES AT VIETCOMBANK Rationale - With 89 million people of population today, Vietnam is clearly a huge market for retail banking serives According to a recent report by a consulting firm, Bain & company, Vietnam banking industry is still in an ealier stage of development at which by 2007 only 2% of Vietnam’s 84 million people have ever taken out a bank loan and only million have a personal bank account Since then it is natural to expect that these figures have augmented but they shall not be signigicantly improved In the past several years, Vietnamese people have witnessed and enjoyed a greater choice of retail banking services ranging from housing loans, auto loans, saving loans to bancasurrance, guarantee To catching the huge and new demand, general banking and retail banking services in particular in our country is being developed very rapidly The bank constantly launching products, services and technologies bring many benefits to customers, boosting turnover in social capital and promote economic development - Based on the growing trend of retail banking services of commercial banking system of Vietnam, Bank for Foreign Trade of Vietnam (Vietcombank) has been implementing supply most of the banking products and services sold retail customers A full awareness of the market importance of retail banking services in the context of international economic integration today, Vietcombank constantly improve the products and services retail banking has, and applications use modern technology to develop products and services retail banking, to meet social needs One of the activities that mark the full development, demonstrates the correctness of the above strategy is the achievement in the areas of retail banking services Besides wholesale services which have an international reputation for economic organization (coporate banking), Vietcombank is known as a trusted address for individual customers with a variety of services and modern (retail banking services- retail banking ) as a flexible loan product, payment cards, system ATM automated teller machine, the product diversification of capital mobilization, the online banking service, remittance services - It could be said that the period form 1995 to moment is not a long period in Vietcombank’s history but 45 years is the period witnessed many changes to the methods and operations in retail banking in a bank that has advantages in wholesale banking From a few thousand retail customers in the early 90s, now the number of individual customers has reached million (over 30% market share in Vietnam) and continual development of both quantity and quality However, along with achievements, there are still problems that need to be improved First, customers don’t completely satisfy with retail banking products and services at Vietcombank They feel that the bank’s staffs are not professional, the retail banking products are poor which charaterised with limited diversification to sub-segments of the market and rather simple customers’ care Secondly, the network remains concentrated largerly on big cities and metropolitan areas rather expands to rural areas Even when openned in the cities, proportion of the fullrange-of-services branches over the total numbers of branches are relatively small, giving limited accesses to the customers Some reasons can be used to explain for the above existing problems: lack of human resource, lack of policy for customers’ care, limited network, lack of strategy for product diversification - Having recognised the potentials in retail banking and experienced the difficult conditions by Vietcombank, product diversification for retail banking services is chosen as the topic for this MBA thesis To study mentioned problems, VCB must push strategies to expand retail banking through diversifying product It is also research purpose of this thesis The study will research and offer some lessons and strategies for VCB based on analyzing current situation and its competence - Research objectives Systemize theoretical theories of retail banking, the products of retail banking and - product diversification in retail banking and its functions Analyze and evaluate current situation and realize pending issues of product - diversification in retail banking at VCB To analyze factors driving the development of product diversification in retail banking at - VCB Propose solutions to develop product diversification in retail banking at VCB Research questions What is product diversification and how important is it to develop retail banking in a - commercial bank? What is the current state of the product diversification in retail banking at VCB? - - What are effects of financial aspects of product diversification at Vietcombank? What are solutions to develop the product diversification in retail banking at VCB? Literatutre reiview Development of retail banking services was identified as an important part in the development strategy of commercial banks in Vietnam, starting from the grasp opportunities from new markets, from the application of systems and technology used to create many new products and services, efficient distribution methods, enhancing the - relationship between clients and banks Product diversification may also achieve competitive advantage for banks through economics of scale and other synergies from using the banks resources and capabilities across different product lines Ahmed Ebrahim and Iftekar Hasan (2002) had the study to assess the value relevance of product diversification in US commercial banks, results show that annual abnormal returns have more significant positive relation with changes in the noninterest component of bank earnings compared with changes in the interest component of earnings Alank Reichert and Larry D.Wall (2000) had swept away most of the barriers limiting the affiliation of banks with nonbank financial services providers The focus now shifts to financial services executives who must decide which combinations provide the best opportunities to increase shareholder wealth Existing empirical evidence suggests that an important consideration in this decision is the potential gain from portfolio diversification into new activities The available empirical evidence also suggests that the potential for such gain clearly exists However, the results provided by this article emphasize that the efficient combination may change over time, perhaps for reasons such as the macroeconomic environment or technology Allen N Berger , Iftekhar Hasanb, Mingming Zhouc (2010), diversification is captured in four dimensions: loans, deposits, assets, and geography Kevin J Stiroh (2002), the U.S banking industry is steadily increasing its reliance on nontraditional business activities that generate fee income, trading revenue, and other types of noninterest income This paper assesses potential diversification benefits from this shift This shift toward noninterest income has contributed to higher levels of bank revenue in recent years, but there is also a sense that it can lower the volatility of bank profit and revenue, and reduce risk Theoretical background In this study, a simple model will be applied: Leding interest rate = Fund mobilization interest rate + Operating expenses rate + Risk premium rate + Gaining profit rate Where: + Lending interest rates is the lending interest rate which applied for each + retail product; Fund mobilization interest rate is the fixed deposit interest rate with term 12 months; + Operating expenses rate is calculated by dividing the operating expenses (include: the salary, rent house, depreciation, materials…) to everage + individual outstanding loans Risk premium rate is based on budget risk expense divide everage + individual outstanding loans ; Gaining profit rate is calculated by formula: Gaining profit rate = Interest margin – Operating expenses rate - Risk premium rate - In Vietcombank, Lending interest rate = Fund mobilization interest rate + Interest margin So that Interest margin must cover all the components: Operating expenses rate, Risk premium rate, Gaining profit rate and also ensure the competitive Leding interest rates in the market Based on the data conducted by VCB’s report from 2008-2010, I will employ the model above to analyze the effect of product diversification on cost and profit - efficiency Research methodology The methodology used in the thesis is quantitative analysis The data of thesis consists of two sources, including primary data and mostly secondary data The secondary information and data will be obtained from newspaper, annual report, magazine, internet, books…Other secondary data regarding VCB will be acquired from VCB and other related sources of information such as SBV, VBA While the primary information and - data will be collected through deep interview with officials of VCB Research scope The study was conducted at Vietcombank only as follows: Time: The time research is a period from 2008- 2010 and 1st quarter of 2011 Products: The research focuses on some current retail products at Vietcombank like: auto loans, living house loans, unsecured lending to employees, saving loans Geographic scope: The primary data would be collected in the whole system at - Vietcombank Limitations: This research focuses mainly on financial aspects of product diversification at Vietcombank and the data were 2008-2010 It also gave out solutions to develop product diversification at Vietcombank only, not for the whole economy and other banks 10 Limitations of the thesis also lie on its sole research on the product diversification, instead of comparing working model on product diversification at Vietcombank to those of other banks who have succeeded in this field So this search is for Vietcombank, if it - were applied for another, we should take further and supplemental study Research structure This paper has been specifically written to provide its readers a comprehensive picture of product diversification in retailbanking, product diversification in retail banking at Vietcombank at present, and propose solutions to VCB in the coming time Following this introduction are three chapters Chapter will discuss on theory about product diversification in retail banking and factors that would have an effect on the development of product diversification in retail banking Chapter will outline overview of Vietcombank’s business result and it also accesses the product diversification in retail banking at Vietcombank Besides, the chapter will indicates factors driving the development of product diversification in retail banking at Vietcombank These assessment will supply all achievements, constraints and causes of constraints of product diversification in retail banking Chapter will propose solutions to further develop product diversification in retail banking at Vietcombank The chapter researches all solutions based on strategic orientations of Vietcombank and the retail banking trends The solutions were executed base on studying both theoretical aspect and the assessment reality of product diversification in retail banking Implemeting solutions will enable product diversification in retail banking at Vietcombank to develop the product diversification in retail banking CHAPTER A COMMON CONCEPT PRODUCT DIVERSIFICATION IN RETAIL BANKING 1.1 Retail banking of commercial bank 1.1.1 The concept of retail banking services - In the past 20 years, the world of financial services has changed dramatically with the outbreak of the banking services that changes the approach to the basic operation of a commercial bank There are many different approaches to retail operations Literally, in the provision of goods and services, retail is selling directly to final consumers, little by little It differs from the wholesale which is selling to intermediaries, distributors 76 + Replicate the experience of the branched which were successful in promoting the products and customer care + Design diversified promotion programs, customer gifts that are suitable with kind of customers - Hu man resources: + Human resources play an important role in retail operations Although, the human resources of Vietcombank have a good knowledge, ability but lack of experience and retail skills, conservative psychology, afraid to selling retail products So the restructuring, re-training to change perceptions in VCB’s staffs, create enthusiasm for officials and staffs to ensure that each staff, each level staff must correctly following the position and the discipline of the bank is essential + The leaders of the branches must recognize seriously and pay attention properly to the training, fostering, promoting and expanding the typical tellers at the branches because they are the face of Vietcombank, who build, maintain credibility for the leadership, for the bank - Tec hnology: + Technology must play a role in supporting for the business but it is a prerequisite for the development and maintenance of products So the retail banking department and technology department should work closely together to provide better products - Th e support measures: + To increase the number of employees to meet the development requirements of retail banking + To study and formulate policies to encourage the development of retail banking like conversion policy targets wholesale / retail which deliveried to each branch, compensation corresponding targets sales policy 77 3.2 Proposed solutions to develop product diversification in retail banking at Vietcombank 3.2.1 Building retail banking strategy - Ranked as a biggest bank in wholesale banking with wide geographical coverage in a competitive banking environment, in which the level of requirement of retail banking products have been increasing and the revenue growth can not be taken easily, VCB should focus in the attention to the value is the customer With the concentration on customer and the differentiation without drastically affecting margins through pricing initiatives, is the way for the VCB’s retail banking to success, which is measured by the revenue growth, personal market share growth, productivity, cost control, and customer loyalty improvement Differentiation is to make VCB distinctive the products and services, outstanding management, and ethical dealings with customers Differentiation aims to create more value and impressive return to all stakeholders And “ Differentiating for value” strategy shed the light for VCB to move forward 3.2.2 Identifying retail banking target market and marketing strategy - VCB’s retail banking main target is the mass of high- class consumers With these groups, its focust is likely to be those in their twenties and thirties, to whom VCB offets a particular set of products such as ATM cards, credit card, consumer loans To those in their forties and fifties who are married, VCB wish to expand fund transfer, housing loans, car loans, wedding financing For aged customers, VCB’s deposit products and health care loans should be customized VCB will compete for high net worth individuals through fund management service - In order to obtain marketing goals, VCB should pursue both direct marketing and relationship marketing policies 3.2.3 Developing new products and services Ca  ptial mobilization products 78 Vietcombank needs to determine funding products are key product groups which serve all customer segments to research, plan, offering solutions that fit the current situation - Cur rently, in Vietnam the capital mobilization situation is quite difficult, the banks raise interest rates as well as launching many promotion programs to attract customers, so this is the stage for competing on price Vietcombank needs to research, survey market to make suitable fee and interest rates to attract customers who have the big amount of idle money in the population - Vie tcombank needs to study and survey the customers’ demand in all subjects and all ages to offer more new products in this type of service to diversify their portfolio frequently, such as open more extensive mobilization period, savings prize - Kee p adding features to existing products, increasing the attractiveness to the customers - Foc us on designing products for priority customer segments (VIP clients, middle-class, high deposit balances, high income; intellectual customers, officials, employees of state owned companies, joint stock companies, corporations, businesses and organizations with foreign elements; closed clients, using banking products and services frequently ) - Bui lding the friendly of mobilization products to customers such as the simple procedures, lightweight processes, increasing the utility Le  nding products Personal lending activities contributed significantly to the growth of the bank’s credit High growth rate of individual loans will contribute to increase income for the bank - The using of credit rating systems for individual customers by product and lending standards 79 to apply in making loan decisions by lending activity always requires carefully, effectively and safely in operation Because lending is always associated with risk, these decisions decide the survival of a bank - Vie tcombank needs to work with partners and the third party to develop the linking credit products such as loans combined transport services, warehousing loans, insurance services combined loans, combined telecommunications services because when combined with the partners, the bank will share the risk in credit operations, diversify the lending products - Foc us on the product groups: real estate loans, auto loans, consumer card, mortgage loans, student loans, secured households In addition to research some other products such as travel loans and treatment loans, wedding loans VCB should have a group or a department which specify in researching about defining prices of products and eveluating the effect of selling product and services on finance aspect - Bui ld the friendliness for individual credit products to ensure synchronization among the branches, on the basis of automation to be able to keep track of customer records easily that can collect debts from automatic which reduces maximum manipulation of operational credit officers Re  mittance products Vietcombank determine payment services, money transfer service has always been strong, core retail banking operations of the bank, so to implement the following measures to fulfill the above objectives: - Imp roving the quality of the traditional payment services 80 - To promote remittance services by the time, the amount of remittances to Vietnam grew rapidly and became a source of income, contribute to improve the incomes of people in the country Vietcombank needs to research and develop the remittance services at home through money transfer companies in the country, besides that there should have mechanisms to encourage customers using these services Remittance services should focus on Vietnamese labors who are working abroad and transfer money back to Vietnam - Bui lding the friendliness of money transfer services to customers through specific content such as improving the safety and security for these services to give customers confidence and peace of mind when come to Vietcombank E-  banking services E-banking service is one of many applications of Vietcombank’s modern banking technology With the ability to handle online information, E- banking services offers electronic payment services and online queries to customers for credit institutions and economic organizations which related payments and account with the bank In the general trend of integration, the modern electronic banking is deployed widely to serve all customers - Foc us on the development of modern banking services: ATM (money in deposit accounts, savings); Internet (billing, credit card payments, other transfer systems, savings) ; Phone (transfers, deposits, billing) SMS (billing, bank transfer, credit card payment); Mobile (queries, transfers, deposits, payments); Merchant (payment and withdrawal) - Co ncentrate the investment in research and develop new value addition to the existing services to meet the increasing needs of customers 81 - Sel ect the link partners to develop payment services such as: Partners have extensive physical network (eg VNPost) partners which have a large network clients - Co nstruct the friendliness of the modern electronic banking: Ensure safety and security , instant transaction processing; simple manipulation, easy to understand, serve and support 24x7 Ca  rd products and services to Although this is the strength of Vietcombank, but in terms of severe competition today, to ensure better and better to meet customer needs, Vietcombank should develop the card service qualitatively and effectively in the future as follows: - The needs of people are using the Connect card 24, SG 24 card attached to the ATM service, so to develop card services generally and Connect 24, SG 24 in particular, the Bank must ensure an extensive ATM network, operating 24/24 Reduce maximum the interuption of ATM network because this is made customers uncomfortable when using automated banking services Besides, the bank needs to invest in research to deploy more services together with Connect 24 card such as opening the automatic term accounts for customers and they can use the Connect 24 card by the money from those accounts The expansion functions for the Connect 24 card will help the bank to attract customers, increase competitiveness with other banks, increase sales and deposits and increase fee revenues - Wit h the numerous and the best quality card in Vietnam, the international debit and credit cards of Vietcombank is the first choice for customers who have stable income regulations, or go abroad and high demands To serve the customers better and better, in addition the trends in business card in the world and the region, Vietcombank should promote the search for partners and expose new and modern services such as links with partners which are big trade organizations in the country (insurance, corporation, telecommunications ) to expose the linking with many benefits for users 82 - De ploy quickly the smart card technology which mounted electronic chip because this type card is securier than general magnetic cards It is an inevitable trend of the evolution of the card in the future - Bes ides the promotion programs, Vietcombank needs to cancel permanently the fee of issuing card, reduce issuance procedures and reduce the annual card fee 3.2.4 Expending network and channels The commercial banks are directing the development of banking services in general, retail banking in particular on high technology platform, aims to serve the target customers with multi-channels, is an inevitable trend, suitable with the general trend of commercial banks in the region and the world Expand the network of traditional communication channels follows the directions: - Rev iew the network of branches, transaction offices to invest more in effective branches, transaction offices and close ineffective branches and transaction offices to reduce costs - Bui lding a long-term plan to develop priority areas in each period - De veloping branches, transaction offices ensures: Align with the overall planning and in accordance with actual conditions in each area, to avoid overlapping - De ploying branches serving VIP guests in Hanoi, Ho Chi Minh by this group has always been Vietcombank priority attention based on the evaluation of the optimal value that this group brings Hence the formation of branches serving customers in two largest cities, is also essential requirements in the system and requires as soon as possible 83 - Res earch subsidiaries model/ satellite company specialized support services for the retail operations Develop the system of modern distribution channels follows the directions: - Ste p by step expand the method of providing products, retail services (including communications products) through electronic channels to customers so they can trade anytime, anywhere - De velopment VCC channel customer service into a sales channel through the forms: Voice chat, Email, YM, Skype 3.2.5 Invest in banking technology - IT’s role in retail banking is undeniable IT are coupled with marketing, product design, customer service, innovation, and constant cost reduction in ways that reflect a bank’s clear understanding of its business, its markets, and its competitive strengths within evolving industry context Thus, IT exploitation and deployment in VCB must be fully taken into account The newly installed software in VCB system has so far enabled VCB to create diverse deposit products and personal loans to customers Basically, VCB are able to vary its e-channels on the back of existing IT system However, VCB should be ready in anticipation of new software solution development for initiating new products, or services in a specific market, that the existing solution is not able to serve as long as the new one is assured to be compatible with the existing system - Most concerning matter is that this existing software solution that packaged risk management module while Vietnamese risk management has come closer to international standards and become a hot issue of daily banking operations Without the support of this module, VCB’s risk management capacity shall be shrunk or in other words it may expose to more potential risks As such, the risk management module is required to be incorporated into the existing software solution 84 - VCB’s investment in IT should be focused with clear priority order in each certain period Package product purchase way of investment for VCB since compatibility is assured enabling VCB to shorten installment and test running duration as well as to tackle problems easily when occurred Noticeably, the hardware and software products must be opened- structured for easy upgraded and developed - IT team is an integral part of VCB’s information system Hence it requires to be invested to keep pace with the IT application in VCB for its IT efficient deployment 85 3.2.6 Improving banking administration and risk management Sta  ndard the block model of retail banking - At Head Quarter: Beside the Retail Banking Department, Vietcombank has set up the Marketing and Sales Management Department So there is a seperation between two departments, the assignments of the Retail Banking Department are: have idea, design retail products and services and the Marketing and Sales Management Department will promote advertising programs for these product and manage the selling products situation at branches - At the branches: First of all, VCB needs to establish The Retail Banking Management Departments at all branches These departmens will responsible for managing and developing individual client portfolio, implementing and acting as the general manager of retail operations at branches, is the bridge connected between Head Quarter and Branches In principle, the model of retail operations should integrated about the range of selling products and services and the jurisdiction to minimize the competition in the internal Vietcombank But depending on each branch, Vietcombank builds the model of retail operations with the different sizes (large, medium and small scale) reasonably and effectively - Nee d to build a system, method of evaluation, measuring performance of retail banking effects for each product or service, as well as for each branch, each transaction office to find out the advantages and limitations in retail operations to improve the quality of customer services - Tec hnology application is a effective tool to support the development of banking services in general and retail banking in particular such as: support measures the effectiveness of each product and service, each channel And it is the reporting system timely, completely, 86 accurate technology, applications also open to reasonable adjustment should be continuously upgraded to meet the requirements of Vietcombank’s business Hu  man Resource Solutions: - Sta ndard requirements and criteria for retail banking staffs in the working position on business requirements and require sales skills and customer care - Ma ke forums to exchange experience - Bui ld a forum to exchange work experiences - Per form salary mechanism following the volume of selling products and services with a clear incentive mechanisms - De velop a reasonable salary bonuses to retain long experience staffs as well as younger staffs which have good skill in the retail banking, when there are a lot of banks, the foreign banks opening branches in Vietnam Sol  utions for marketing, communications, advertising - Bui lding the annual marketing and advertising budget for retail operations - Bui lding regulations on media activities, advertising retail services to ensure consistency throughout the system 87 - Ima ge, media messages and advertisements towards a Vietcombank friendly and closely to the customers 88 CONCLUSION At the beginning of the 21st century, the biggest banks in the industrial world hae become complex financial organizations that offer a wide variety of services to international markets and control billions of dollars in cash and assets Supported by the latest technology, banks are working to identify new business niches, to develop customized services, to implement innovatiove strategies and to capture new market opportunities With further globalization, consolidation, deregulation and diversification of the financial industry, the banking secotr will become even more complex Over the past decade there has been an increasing coveragence between the activities of investment and commercial banks, because of the deregulation of the financial sector Today, some investment and commercial banking institutions compete directly in money market operations, private placements, project finance, bonds underwriting and financial advisory work Furthermore, the modern banking industry has brought greater business diversification Some banks in the industrialized world are entering into investments, underwriting of securities, porfolio management and the insurance business Taken together, these changes have made banks an even more important in the global business community Together with banking industry development, diversifying products and services is indispensable trend for both foreign and domestic banks, including VCB Towards the target of becoming a modern bank, providing not only traditional products, much depend on credit activities, but also new products, which help to increase non- interest income proportion, VCB needs to make diversification its current products This will improve its adaptability in the fierce competition environment, help it survival and further develop Due to the author’s own difficulties time arrangement, information collection and limited knowledge to complete this study, shortcomings in this paper is unavoidable Thus, the author highly appreciates all value comments, advices and proposals for my thesis better 89 REFERENCES GS.TS Phan Thị Thu Hà (2004), Giáo trình Ngân hàng Thương Mại, Nhà xuất Thống kê Feredic S.Miskin (1994), Tiền tệ, ngân hàng thị trường tài chính, Nhà xuất Khoa học kỹ thuật PGS.TS Nguyễn Thị Quy (2008), Dịch vụ ngân hàng đại Nhà xuất khoa học xã hội Peter Rose (2004), Quản trị ngân hàng thương mại, Nhà xuất giáo dục Elyas Elyasiani, Sotitis K Staikouras Panayiotis Dontis-Charitos (2010) CrossIndustry product diversification: The case of Bank- insurance takeovers [Online] Address: http://sbm.temple.edu/dept/rihm/documents/seminars/fa10/Elyas %20Elyasiani.pdf [ Accessed on: 11/5/2011] Kevin J Stiroh (2002) Diversification in Banking Is Noninterest Income the Answer? 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TO IMPROVE PRODUCT DIVERSIFICATION IN RETAIL BANKING AT VIETCOMBANK .68 3.1 Strategy of Vietcombank in product diversification in retail banking 68 3.1.1 The retail banking development