Lợi thế cạnh tranh của ngân hàng TMCP đầu tư và phát triển việt nam trên thị trường ngân hàng bán lẻ

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - HÀ THANH LƯƠNG ADVANTAGE OF JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM IN RETAIL BANKING MARKET LỢI THẾ CẠNH TRANH CỦA NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT TRIỂN VIỆT NAM TRÊN THỊ TRƯỜNG NGÂN HÀNG BÁN LẺ Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 TÓM TẮT LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: TS.TRẦN HUY PHƯƠNG HÀ NỘI - 2018 INTRODUCTION Rationale of the study The retail banking market in Vietnam is witnessing the competition of 43 commercial banks (including state-owned commercial banks, state-owned joint stock commercial banks, private joint stock commercial banks, joint venture banks and wholly foreign-owned banks), more than 40 branches of foreign commercial banks in Vietnam, lots of consumer financial companies and financial technology companies (Fintech) According to the research of consultancy companies, individual and household customers in Vietnam have better financial abilities They are more open-minded, but they are also more demanding in banking services, and their loyalty is decreasing These features make it more difficult to build sustainable competitive advantages and maintain the competitive advantages of retail banking services Michael Porter's (2011) point of view on the retail banking market of Vietnam is that commercial banks in Vietnam are the same in the directions, strategies, products, services, technology, distribution methods and advertising and promotion programs The failure to create outstanding competitive advantages will prevent the banks from reaching a higher competitive position, especially when Vietnam's banking market is deeply integrated into the world’s financial market Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), with more than 60 years of history of establishment and development, has built up its reputation and a firm position in the market In the development strategy for the period of 2006-2010, BIDV orientated its development towards retail banking market in addition to the traditional wholesale market In the period of 2015-2020, BIDV aims to become the leading retail bank in Vietnam and will become a regional bank in 2030 BIDV has achieved some remarkable results in the activities of providing retail banking services such as having second largest scale and market share in the market (after Agribank) The retail banking activities of BIDV have changed synchronously from orientations to strategies However, BIDV still has some limitations For example, the service quality is unequal Different values of the bank are not experienced and clearly felt by customers The number of products used by one customer is low (one customer only uses of 12 basic retail banking services) The proportion of loyal customers is not high (about 30% of the customers have transaction time at BIDV from 3-5 years) The increase in sales and market share is not actually sustainable With the fierce competition and rapid changes in customers’ behaviors, if BIDV does not build and exploit its outstanding and sustainable competitive advantages, it is unlikely to maintain its rapid development and gain a leading position in the retail banking market in the future From the above reality, the author chose the topic "Competitive advantages of Joint Stock Commercial Bank for Investment and Development of Vietnam in the retail banking market" as the title of his master thesis It is hoped that the thesis will make meaningful contributions in terms of both theory and practice to improve the competitive advantages of BIDV Research overview 2.1 Some foreign studies Porter (1980) proposed an approach in building competitive advantages based on market positioning Enterprises need to rely on their knowledge of business and competitors, and then build their value positioning strategy in the market The author presented a 5-force model and suggested that an enterprise could achieve competitive advantages from positioning itself in a particular industry by pursuing low costs, differentiation or centralized strategies In 1985, Porter introduced the concept of value chains and the conditions for maintaining competitive advantages In order to have a low cost advantage, it is necessary to have a scale advantage, relationship with the parent company, relationship with suppliers, continuous learning, technological process, timeliness and synchronization of strategic actions In order to have a differentiation advantage, there need to be unique resources, cost advantages, differentiation sources and conversion costs of customers Zhou, Brown and Dev (2009) studied the impact of customer value on competitive advantages and behaviors of service enterprises If enterprises think that customers appreciate the use value, they would follow the customers and competitor orientation If enterprises thought that customers were sensitive to the purchase price, they would follow the competitor orientation The study also emphasized that competitive advantages through differentiation and innovation would lead to better business results Crook, Ketchen and Snow (2008) proposed a model of competitive advantages including the factors such as price, product quality, distribution channels, marketing activities, images, trademarks, and concepts, tools and figures These factors would give the managers an overall picture of what was going on inside and outside the enterprise through industry analysis, nation analysis, analysis of related parties and enterprise analysis Al-Debi, Mustafa (2014) and Akroush (2011) studied the competitive advantages in Jordan's service sector The research by Al-Debi and Mustafa (2014) showed the role of mixed marketing strategy (7Ps) in building the competitive advantages of service enterprises Moreover, in the study of competitive advantages in the service sector, Akroush (2011) argued that the mixed marketing strategy with factors (7Ps) in the service field could be replaced by the 5P marketing strategy in which three extended factors of service industry could be replaced by the service quality Accordingly, the model of competitive advantages that the authors proposed included the following factors: price, product, promotion, distribution, human resources, facilities and process of providing products and services Gomes and Romao (2015) argued that competitive advantages were formed not only from fixed capitals but also from intangible assets such as intellectual property, employee skills, knowledge, ability and strategy of enterprises The author suggested using the balanced scorecard as a good tool to help enterprises achieve superior business results For example, it helps managers see the impact of investment in learning and development processes (including investment in staff, IT system) to the outputs of enterprises When studying the competitive advantages of commercial banks in the retail banking market, Backstrom and Johansson (2006) stated that the attitudes of employees, the quality of services, and the interior decoration of the branch had the most important influence on customers’ experiences at the branch The friendliness of the bank staff, the knowledge and skills of selling services, the pleasant atmosphere and openness at the branch could increase the level of satisfaction, commitment and loyalty of customers 2.2 Some domestic studies Issues related to competition, competitive capacity and retail banking have been studied by some authors in their doctoral dissertations and master theses However, these researches have only focused on some related aspects such as competitive capabilities of commercial banks, factors leading to the satisfaction of individual customers and effectiveness of banking operations and there have been no systematic studies about competitive advantages There were some related studies as follows: Nguyen Thu Hien (2012), in the doctoral dissertation entitled "Improving the competitive capabilities of state-owned commercial banks in the process of international economic integration", systematized the theories on competitive capabilities and evaluated the competitive capabilities of state-owned commercial banks in Vietnam based on financial indicators (sales turnover, product market share, number of products, number of customers, profit from business operations) and non-financial indicators (customer satisfaction, reputation of the bank) The subject, scope as well as the approach of the dissertation was completely different from the author's research idea Nguyen Thi Hoai Thu (2013), in the doctoral dissertation entitled "Models for analyzing competitive capabilities of Vietnamese commercial banks", studied the models for analyzing competitive capabilities of commercial banks, then proposed the model for analyzing competitive capabilities for commercial banks including the following factors: price of services, product system, quality of human resources, facilities of the bank, marketing policy and distribution channels The research focused on building a system of criteria and standards to rank the competitive capabilities of commercial banks in the current conditions Do Thi To Quyen (2014), in her doctoral dissertation entitled "Investment to improve the competitive capabilities of Joint Stock Commercial Bank for Foreign Trade of Vietnam", focused on studying investment activities to improve the competitive capabilities of commercial banks, including investment in upgrading the technology level, investment in brand development and sales promotion, investment in improving human resources and investment in infrastructure Nguyen Thi An Binh (2016), in her doctoral dissertation entitled "Factors affecting the loyalty of retail customers", gave conclusions on the factors affecting the loyalty of retail customers, including service quality, customer satisfaction, costs of bank conversion, social responsibility of the banks It was noteworthy that the hypothesis that the price had a positive impact on the customers’ loyalty was not accepted This was a surprising conclusion as it might be a suggestion for building competitive advantages of commercial banks Pham Thi Tam and Pham Ngoc Thuy (2013), in the research entitled "Factors affecting the trend of choosing banks of individual customers", conducted a survey with 350 individual customers in Da Lat city The results showed that the brand recognition had the strongest impact on trend of choosing banks The next factors included convenient locations, problem resolution, influence of relatives, appearance and attitude towards marketing These results could also be a hint for commercial banks to build their competitive advantages in the retail market 2.3 Research gap The review of previous studies showed that although there have been many studies related to the thesis topic, there were still some research gaps as follows: - There was no agreement on the criterion system for assessing competitive advantages of commercial banks on the retail banking market Most studies on competitive advantages only evaluated competitive advantages of commercial banks in one or more aspects and had not based on a complete theoretical framework - There was no agreement on which competitive advantages would be the most valuable in the retail banking market of Vietnam, especially in the stage when consumer behaviors were changing rapidly and the competition among financial institutions (banking and non-banking) was increasingly fierce In summary, of the previous domestic and foreign studies, no studies have directly and systematically focused on the development of competitive advantages of commercial banks in the retail banking market The published researches were useful references for the author to form the research ideas and contents The thesis hoped to partly address the abovementioned research gaps Research objectives 3.1 General objective The thesis was designed with the aim to provide solutions to enhance the competitive advantage of BIDV 3.2 Specific objectives To achieve the general research objective, the thesis needed to achieve some specific research objectives as follows: - Systematizing, analyzing and clarifying the theoretical framework on competitive advantages of commercial banks on the retail market - Assessing the reality of competitive advantages of commercial banks on the retail market; using retail banking activities of BIDV in the period of 2015-2017 as the object of assessment; finding the achievements, limitations and causes of of limitations in BIDV’s competitive advantages on the retail banking market - Proposing solutions to build up and strengthen BIDV's competitive advantages on the retail market at present and in the future Research subject and scope The subject of the thesis was BIDV’s competitive advantages on the retail banking market Research scope: - In terms of time: The research was conducted from 2015 to 2017 - In terms of space: The number of commercial banks being reviewed, compared and analyzed was banks with the largest chartered capital in the Vietnamese market - In terms of contents: The research focused on analyzing BIDV’s competitive advantages in banking services for individuals and households in the period of 20152017 on the basis of comparing BIDV with other commercial banks in the market Research methods With a focus on how to determine competitive advantages in BIDV's retail banking activities, the thesis employed the following research methods: - Methods of statistics, comparison, synthesis, interpretation and induction The thesis studied retail banking activities of the five largest commercial banks in Vietnam in the period of 2015-2017 as a basis for comparing and drawing conclusions about BIDV’s competitive advantages - Data sources used in analysis included data collected from the reports of Vietnam’s commercial banks in the period of 2015-2018, data from surveys, interviews customer and data from secondary sources (the study also referred to the data BIDV hired Nielsen to conduct a survey on customer satisfaction with BIDV in 2015-2017) - Research conducted primary data collection by issuing a total of 350 survey forms via counters and google driver tools, including 150 questionnaires of BIDV’s customers, and 200 questionnaires of other banks The survey results collected total 280 questionnaires, including132 BIDV clients, 148 from other banks The data collected from these surveys were aggregated and analyzed for the content of BIDV's competitiveness with other banks Organization of the thesis Apart from the Introduction, Conclusion, List of references, the thesis was divided into chapters: Chapter 1: Theoretical framework on competitive advantages of commercial banks in the retail market Chapter 2: Reality of competitive advantages of BIDV in the retail banking market Chapter 3: Solutions to develop competitive advantages of BIDV in the retail banking market CHAPTER 1: THEORETICAL FRAMEWORK ON COMPETITIVE ADVANTAGES OF COMMERCIAL BANKS IN THE RETAIL BANKING MARKET 1.1 Retail banking market and retail banking services of commercial banks 1.1.1 Concepts, characteristics and role of retail banking market 1.1.1.1 Concepts of retail banking market Therefore, retail banking market is the market providing small value banking services mainly for individuals and households Buyers in the retail banking market are individuals and households who have demand for banking products and services to meet the needs of life, consumption, small business or to implement other personal plans in accordance with the law Sellers in the retail banking market include commercial banks and non-banking financial institutions Retail banking products are usually small, simple and attached to the life of customers 1.1.1.2 Characteristics of the retail banking market 1.1.1.3 Role of retail banking market in the business operations of commercial banks 1.1.2 List of retail banking products of commercial banks 1.1.2.1 Deposit products 1.1.2.2 Retail credit products 1.1.2.3 Payment products 1.1.2.4 Electronic banking products 1.1.2.5 Other service products 1.2 Competitive advantages of commercial banks in the retail banking market 1.2.1 Viewpoint on competitive advantages of commercial banks in the retail market 1.2.2 Criteria for evaluating competitive advantages of commercial banks in the retail banking market 1.2.2.1 Evaluation through financial results of retail banking activities 1.2.2.2 Evaluation through the number of customers 1.2.3 Benefits of competitive advantages for commercial banks 1.2.4 Competitive advantages of commercial banks in the retail market 1.2.4.1 Competitive advantages thanks to good prices 1.2.4.2 Competitive advantages thanks to differentiation 1.2.5 Factors affecting the competitive advantages of the banks in the retail banking market 1.2.5.1 Internal factors 1.2.5.2 External factors CONCLUSION OF CHAPTER In chapter 1, the thesis provided detailed explanations of retail banking activities and competitive advantages of commercial banks in the retail market The author systematized and developed the theories on competitive advantages in the retail banking market including the concept of competitive advantages in the retail market, the role of competitive advantages, the contents and criteria for evaluating competitive advantages of commercial banks in the retail market At the same time, the author clarified the factors affecting competitive advantages of commercial banks in the retail banking market The theoretical contents in Chapter were the basis for the author to analyze the reality of competitive advantages in the retail banking market of BIDV in the next chapter CHAPTER 2: REALITY OF COMPETITIVE ADVANTAGES OF BIDV 2.1 Introduction of the bank 2.1.1 History of foundation and development 2.1.2 Business results of the bank Table 2.1: Business results of the bank Unit: billion VND Difference 2016/2015 Difference 2017/2016 Indicator 2015 2016 2017 Amount Proportion Amount Proportion Net interest 19,314 23,434 31,021 4,120 21.3% 7,587 32.4% income Operation 11,087 13,526 15,368 2,439 22.0% 1,842 13.6% expenses Total income 7,948 7,708 8,800 (240) -3.0% 1,092 14.2% before tax Total profit 6,376 6,228 7,059 (148) -2.3% 831 13.3% after tax Total 850,669 1.006,404 1,201,661 155,735 18.3% 195,257 19.4% assets (Source: Annual report of BIDV in the period of 2015-2017) 2.1.3 Organization model of retail banking of BIDV 2.2 Reality of competitive advantages of the bank 2.2.1 Key elements of competitive advantages of the bank 2.2.1.1 Competitive advantages in prices 2.2.1.2 Competitive advantages in products 2.2.1.3 Competitive advantages in place (distribution channels) 2.2.1.4 Competitive advantages in advertising and promotion 2.2.1.5 Competitive advantage in process 2.2.1.6 Competitive advantages in image of the bank and serving styles of the staff 2.2.2 Results of criteria showing the competitive advantages of the bank 2.2.2.1 Sales of retail banking Table 2.8: Results of capital mobilization of the bank Unit: trillion VND Difference 2016/2015 Indicators 2015 2016 2017 Difference 2017/2016 Absolute Relative Absolute Relative Number number Number number Total mobilized 790.48 830.57 884.96 40.09 5.07% 54.39 6.55% capital Capital mobilized from 394.68 407.39 523.12 12.71 3.22% 115.73 28.41% retail banking Proportion of capital mobilized from retail banking/ 49.93% 49.05% 59.11% -0.88 -1.76% 10.063 20.52% Total mobilized capital (Internal reports on business results of the bank over the years) Structure of capital mobilized from retail banking Annual outstanding retail credit In the operation process, BIDV has strictly followed the directions of the State Bank of Vietnam on credit activities in general and retail credit in particular The bank tightly controlled credit growth in each period, regularly inspected and evaluated the value of assurance assets, reviewed and classified loans and set up risk provisions in accordance with Circular 02/2013/ TT-NHNN dated 21 January 2013 (and amendments and supplements) of the SBV and rated enterprise credit in accordance with regulations Thanks to the strict implementation of credit regulations, the outstanding retail credit of BIDV increased steadily over the years, namely: Table 2.10: Outstanding credit of the bank Unit: trillion Difference 2016/2015 Indicators 2015 2016 Difference 2017/2016 2017 Absolute Number Relative number Absolute Number Relative number Total outstanding 619.60 737.13 862.57 117.53 19% 125.44 17% loans Closing outstanding retail 140.52 179.49 238.52 38.97 28% 59.03 33% loans Proportion of closing outstanding 22.7% 24.2% 27.5% 1.5% 3.3% retail loans /Total outstanding loans Proportion of retail 1.27% 1.22% 1.44% -0.06% 0.23% loans in group Proportion of retail 1.40% 1.07% 1.05% -0.33% -0.02% bad loans With the goal of expanding market share in the banking market and meeting the highest needs for retail customers, BIDV continuously increased its outstanding loans over the years In 2015, the outstanding retail loans of BIDV were VND 140.5 trillion In 2016, the outstanding retail loans increased by VND 38.9 trillion and reached VND 179.49 trillion (correspondent to 27%) In 2017, the outstanding retail loans increased by VND 58.7 trillion and reached VND 238.52 trillion (correspondent to 33%) Outstanding retail credit of other banks: Table 2.11: Outstanding retail credit of other banks Unit: trillion, % 2016 2017 Banks Outstanding loans 179.49 BIDV 152.70 Vietinbank 116.46 VCB 86.42 ACB 61.64 TCB 45.05 MB 104.07 STB 89.97 VPB Proportion 25.2 23.1 25.7 52.9 43.2 30.3 52.3 62.2 Average years Outstanding Outstanding Proportion Proportion loans loans 238.52 28.0 138.73 23.3 195.02 24.7 118.46 21.1 177.77 33.2 92.21 23.6 107.16 54.0 71.35 49.6 64.77 40.3 45.94 40.6 60.10 33.0 33.84 26.7 118.16 53.0 82.58 48.8 117.37 64.3 65.83 57.2 10 In the period of 2015-2017, the growth rate of BIDV's retail credit reached 39% (76% in 2015 and 33% in 2017) The quality of retail credit in the period of 2015-2017 (bad loan ratio) was well controlled, always lower than 2% Until 2017, the ratio of bad loans was 1.06% In 2015, BIDV's outstanding credit reached VND 58.62 trillion and started to overtake Vietinbank to become the commercial bank with the largest scale of outstanding loan balance and maintain its position so far Moreover, BIDV far exceeded the scale of the second largest commercial bank (Vietinbank) By 2017, the scale of BIDV’s retail credit exceeded Vietinbank by VND 43.50 trillion Thus, the results showed that the strategy to promote retail credit activities with the focus on offering loans to retail customers was built suitably and properly This helped increase BIDV's competitive advantages in the retail market Structure of outstanding credit in terms of each credit product Revenue from card issuance Sales of other retail banking services 2.2.2.2 Retail banking market share 2.2.2.3 Profits from retail banking business Table 2.17: Comparison of ratio of profits from retail services of banks Unit: % Banks 2015 2016 2017 BIDV 24.73 26.42 26.03 Agribank 29.05 28.74 28.31 Vietcombank 27.02 28.73 28.96 Vietinbank 24.04 24.89 26.86 In the period of 2015-2017, the ratio of profits from retail services of BIDV was 24.73%, 26.42% and 26.03%, respectively It can be seen that the profits as well as the proportion of profits from retail banking services tended to increase This was one of the successes in BIDV's retail business in the past few years However, when comparing BIDV's retail profits with commercial banks of the same size such as Vietcombank, Vietinbank and Agribank, it was found that BIDV’s proportion of retail banking was still low In 2017, the ratio of profits from retail services of Vietcombank, Agribank and Vietinbank was 28.96% (leading the market), 28.31% (ranking second) and 26.86% (ranking third), respectively Thus, it can be seen that although proportion of retail profits of BIDV continuously increased over the years, it was still low when being compared with that of direct competitors This indicated that BIDV's competitive advantages and its competitive capabilities were low 2.2.2.4 Number of customers using retail services 2.2.3 Resources creating competitive advantages of the bank in the retail market 2.2.4 Factors affecting competitive advantages of the bank 11 2.2.4.1 Internal factors Business strategy of the bank Staff quality The quality of the staff has a direct impact on the competitive advantages of commercial banks in the retail market as they are directly involved in deploying service business activities When researching the quality of the staff at BIDV, the author obtained the following table: Table 2.19: Structure of the bank’s staff 2015 2016 2017 Indicators Number Proportion Number Proportion Number Proportion Leadership Unit leadership Department leadership Staff University College Vocational school Total Structure by position 0.13% 28 0.11% 32 28 0.11% 1058 4.30% 1041 4.15% 1027 4.02% 5923 24.07% 5941 23.68% 5727 22.41% 18,777 73.46% 22,985 965 89.9% 3.8% 17,594 22,023 640 71.5% 18,078 72.06% Structure by staff level 89.5% 22,723 90,6% 2.6% 865 3,4% 1,944 7.9% 1,500 6,0% 1609 6.3% 24,607 100.0% 25,088 100% 25,559 100% However, according to the general assessment in the annual report of BIDV, the managerial and executive skills of managers and leaders were still limited Many managers dis not have a good understanding about the market as well as the competitors, so they could not build a cohesive and efficient operation system This influenced the development of banking services in general and retail banking services in particular Table 2.20: Training of the bank’s staff Indicators Number of training courses Number of trained staffs 2015 2016 2017 389 22,008 404 24,823 435 25,112 Over the years, the number of training courses as well as the number of staffs sent to train general knowledge of banking products and services increased steadily The number of trained staff was 22,008 in 2015, 24,823 in 2016 and 25,112 in 2017 Especially in 2016, thanks to the increase in cooperation with international partners in the field of training and 12 development, BIDV was the only company in Vietnam to be awarded the certificate of “Recognized Employer Partners - REP” by Certified Practicing Accountants Australia, which marked its success in the field of Recruitment - Training - Human resources development and brought many benefits to the employees when they attend courses for CPA certificates Financial capacity The bank's financial capacity is expressed through the total assets and Return On Equity (ROE) of the bank When these targets are high, the bank will have opportunities to invest in business development activities and the bank's sales from services are improved and vice versa In the period of 2015-2017, the financial capacity of BIDV was as follows: Table 2.21: Financial capacity of the bank Indicators Total assets (billion dong) Return On Equity (ROE) Ratio of Nonperforming loans (NPL) 2015 2016 965 1.007 15.40% 14.19% 2017 1.122 14.82% 0.63% 0.78% 0.66% Over the years, the total assets showing BIDV’s financial capacity tended to increase, from VND 965 billion in 2015 to VND 1,122 billion in 2017 In addition, the ROE ratio decreased from 15.4% to 14.82% The ratio of Non-performing loans decreased from 0.78% to 0.63% in the period of 2015-2017 To sum up, the business situation of BIDV in the period of 2015-2017 was constantly growing The financial situation was increasingly healthy This showed the increase in BIDV’s financial capacity These results created favorable conditions for BIDV in developing services and enhancing its competitive advantages in the retail banking market Research and development capacity 2.2.4.2 External factors Economic environment - Influence of economic growth In the period of 2015 - 2017, the country's economy gradually recovered and prospered The GDP steadily increased over the years The FDI increased sharply both in terms of registered and disbursed value The trend of international economic cooperation became stronger and a number of FTAs were signed These advantages helped our economy overcome the deadlock and achieve positive results The stable economic situation helped BIDV get good business results, including retail banking, since the demand for banking services and demand for capital of the economy increased 13 Moreover, the stable economic situation made people's living standard increase, and the demand for personal consumption also increased Residential customers tended to borrow money from the bank for consumption more As a result, the retail banking revenue of BIDV also increased This enabled BIDV to improve its competitive advantages in the retail banking market - Influence of integration and competition The financial and banking market is growing strongly with the participation of more and more commercial banks Apart from commercial banks, a number of other non-bank financial institutions also participate such as insurance companies, financial companies and postal savings In the current context when our country has fully integrated with the international economic market, there is also participation of foreign banks and foreign financial institutions As a result, the level of competition in the banking sector has become increasingly fierce The pressure of competition forces commercial banks to mobilize their financial resources, technological human resources, develop more services with better quality, and prices (interest rates) tend to decrease Retail banking products are selected to develop by commercial banks (including BIDV) due to the low level of risks, diverse customer base and large product demand To sum up, economic integration and competition have given impetus for commercial banks in general and BIDV in particular to pay more attention to the development of retail banking business However, competition also reduced the market share of the bank’s services and reduced the competitive advantages of BIDV in the retail market Technology environment The technology platform of our country is being invested and improved thanks to technology transfer applications from foreign countries The modern system of technology infrastructure will create favorable conditions for commercial banks in retail banking business including BIDV as retail banking is a type of service that requires the application of high technology in exploiting products Based on the current development of technological environment, BIDV will have favorable conditions to apply these technologies in its business operations in general and retail business operations in particular This will improve the efficiency of the bank's retail business operations and enhance its competitive advantages Legal and political environment Laws are the basis for commercial banks in general and retail operations in particular to be carried out safely and sustainably At present, the State Bank and our legislative bodies have issued many regulations on banking activities In particular, the State Bank has paid special attention to the development of retail banking services to reduce risks for commercial banks This was specified in Resolution No 35/NQ-NHNN of the State Bank of Vietnam on pushing consumer loans to support and develop retail banks Thus, the focus on developing retail banking services of the State Bank and related agencies have created favorable conditions for commercial banks to develop these services, including BIDV However, since the legal system of our country has not had many legal 14 documents regulating the business of retail banking, its causes many difficulties for commercial banks As a result, the development of retail banking services of BIDV was not effective and the bank could not create many competitive advantages Socio-cultural environment In recent years, although the level, habits and demand for retail banking services of the people nationwide have increased sharply, these factors have still become a big challenge for the retail banking business of BIDV Due to the uncertainty about the safety, stability and confidentiality of online retail banking services, the number of customers using these services at the bank was still limited According to reports at the branches and transaction offices of BIDV, the number of customers conducting transactions at the counter was still quite large (About 40% of customers conducted at the counter once a month) The number of customers registering to use banking services has increased, but most of them did not carry out transactions (about 42% of customers registered to use cards but did not carry out transactions) Thus, it can be seen that socio-cultural factors have become factors that limited the development of retail banking services at BIDV Therefore, in order to overcome this situation, in the coming time, the bank should make more efforts in the propaganda work to change customers' awareness as well as increase investment in the technology system to improve customers’ use of services This will create opportunities for BIDV to improve its competitive advantages in the market 2.3 General assessment of BIDV’s competitive advantages in the retail market 2.3.1 Achievements Competitive advantages in prices The prices of retail banking services applied at BIDV were quite reasonable and strictly adhered to the state’s regulations and BIDV's orientations and objectives Competitive advantages in products BIDV's retail banking products were diversely designed, suitable for the needs of each customer group and were constantly updated on features and utilities Competitive advantages in place (distribution channels) BIDV had more competitive advantages in distribution channels than other commercial banks The bank had a wide network of branches located in convenient and easy-to-find locations At the same time, the system of ATMs and POS machines of the bank were in good condition Competitive advantages in promotion and advertising The advertising programs of the bank were carried out regularly and widely, which helped customers easily access information about the bank Competitive advantages in operation process The information on the process of implementing retail banking services of BIDV was fully provided to customers In addition, customers could easily find information about BIDV's operation procedures 15 Competitive advantages in image, serving style of the bank staff The image and logo of BIDV were impressively designed to make good impression on customers Customers will immediately think of BIDV brand when they see the bank’s logo 2.3.2 Limitations Limitations in price competition The prices of retail banking services of BIDV were not competitive compared to other banks The deposit interest rates of BIDV were quite low in the market (lower than the interest rates of small and medium-sized banks) although they were higher than some large banks in some terms At the same time, BIDV's lending rates were always high and were not appreciated by customers in terms of attractiveness Limitations in product competition Although the retail products and services of BIDV were highly evaluated, there were not many differences compared to other banks There were no competitive advantage in the utilities and convenience in use Limitations in the place competition Although, BIDV's distribution channel were highly appreciated by customers and had superior competitive advantages compared to other banks, there were limitations in terms of transaction space and attractiveness of modern retail system (Internet, mobile), which made BIDV less competitive than other banks Limitations in promotion and advertising The promotion programs of BIDV were not as frequent as medium-sized commercial banks The bank did not have care programs to strengthen customer loyalty such as point accumulating program, exchange of reward points to encourage customers to deal with the bank more often The result was competitive advantages of BIDV were not appreciated Limitations in operation process BIDV's retail banking process was still inferior to other commercial banks, especially small and medium-sized private banks The process of implementing process was complicated and cumbersome, causing many difficulties for customers Limitations in image and serving service style of the staff Although customers appreciated the serving styles of BIDV’s staff, the staff failed to make a difference in their serving styles compared to other banks The staff lacked enthusiasm in counseling and guiding customers to use the services 2.3.3 Causes of limitation The limitations in building competitive advantages in the retail market of BIDV came from the following reasons: - Although the retail business strategy was clearly defined, the diversification in the strategy made the bank’s resources spread out, making it difficult to achieve the planned objectives - The administration and management skills of BIDV’s managers and leaders were still limited Leaders did not have a good understanding about the market as well as the 16 competitors, thus failed to build a cohesive and effective operation system This influenced the development of banking services in general and retail banking services in particular - The annual investment capital for research and development activities at BIDV was still low and was not equal to the scale and potential of the bank This affected the diversification of the bank’s products and services - The legal system of our country did not have many legal documents guiding and regulating the retail banking business, causing many difficulties for commercial banks This made the development of retail banking services of BIDV ineffective and affected the competitive advantage of the bank - Although the level, habits and demand for retail banking services of customers in the country increased sharply, customers were still worried about the safety, stability and confidentiality of information in the online retail services As a result, the number of customers using this service at the bank was limited CONCLUSION OF CHAPTER Chapter gave a brief overview of the business situation of the BIDV In this chapter, the author evaluated the competitive advantages of BIDV through a survey with customers on BIDV's prices, products, place (distribution channels), process, serving styles and image compared to other commercial banks Moreover, the author also analyzed the factors affecting BIDV’s competitive advantages, presented the achievements as well as the limitations in the competitive advantages of the bank The conclusions of chapter will be the premise for the author to propose solutions to build competitive advantages for BIDV in the next chapter 17 CHAPTER 3: SOLUTIONS FOR BUILDING COMPETITIVE ADVANTAGES OF BIDV IN THE RETAIL MARKET 3.1 Orientations and objectives for developing retail banking services of BIDV 3.1.1 Orientations for developing retail banking services of BIDV 3.1.2 Development objectives of retail banking services of BIDV 3.2 Solutions to build competitive advantages of BIDV in the retail market 3.2.1 Building a focused, specific business strategy The current situation shows that at BIDV, although the strategies on the business of retail services have been planned suitably for each business stage and the Bank's development objectives, they were built in the direction of diversification, causing the resources of the bank to be spread out and making it difficult for the bank to achieve the planned objectives Therefore, in order to increase the competitive advantages in the retail market, BIDV needs to “Build a focused and specific business strategy” with the aim to concretize the retail business strategies including customer expansion strategy, policy dissemination strategy, human resources strategy, etc The solutions are implemented as follows: - Strategy of disseminating retail product policy: BIDV should organize seminars to talk directly with customers who want to use retail products, or actively disseminate product policies to new customers and traditional customers - Strategy of attracting and expanding customers: In the context of increasing competition to expand retail customers, BIDV needs to focus on improving the quality of customers’ life and improving communication policy to satisfy the needs of customers This will facilitate the expansion of customers - Strategy of changing the image of bank staff: BIDV needs standard and beautiful uniforms for the staff in the whole system to create a good impression on the dressing and working style, serious and professional attitude, fast working speed and make customers feel pleased with the bank staff Customers are easily affected by the initial impression They form the assessments of the bank through what they see and then how they deal with the bank staff These uniforms create a consistent and harmonious working environment for the bank staff and improve the working efficiency 3.2.2 Enhance the bank's financial capacity BIDV can take the following measures to improve its financial capacity: - Increase own capital: The bank’s own capital is from internal sources, mainly retained profits This source of capital helps the bank not be dependent on the capital market, not have to bear the high costs due to seeking external financing and not dilute its control Only if the bank retains their profits to maintain their own capital, which is reasonable and stable over the years and corresponding to the growth rate of assets, it will have good signs of stable development - Improve the quality of assets: Accelerate the settlement of non-performing loans; Actively handle over-due loans and bad loans by the credit risk reserve fund Continue to 18 increase measures to handle loans, initiate lawsuits, seize secured assets and sell assets to recover capital 3.2.3 Improve the quality of human resources, serving style of the bank’s staff 3.2.4 Enhance the capacity of research, development and application of technology In the retail business, with the aim of applying new technologies and tools to support and increase competitive advantages, BIDV should enhance research and development activities, especially research of new technology to apply in the retail business The measures can be implemented as follows: - Study new technology and tools to apply in developing and improving the quality and diversification of retail banking products/ services; Research and develop systems of customer management and support as a basis to help BIDV support its customers better; Upgrade and complete the Management Information System (MIS), Multi-dimensional Profitability Analysis (MPA) These systems support the management of branches in general and the retail business in particular Apply new security standards and technologies to prevent risks, enhance security and confidentiality for card transactions, e-banking, merchant, ATM and POS - BIDV needs to invest more in researching the transmission system The bank should have a separate line for the ATM system to avoid network congestion The unstable operation of ATMs cause unfortunate cases such as extracting money from customers’ accounts while customers don’t not receive money The bank should actively cooperate with the post and telecommunications industry to avoid the interruption or network congestion of ATM system at peak time - There needs to be coordination and communication between technical and professional staff to study and solve problems arising Technicians should be trained the knowledge related to retail business to better assist in solving technical problems arising in the process of operating or implementing new retail services - Continue to revise and improve the existing equipment system; ensure the smooth operation of the machines with no damage, loss of data or transmission problems during the operation process to meet the requirements of customers as well as the staff working at BIDV - Research and apply new management software in line with the operation of retail banking In order to enhance competitive capabilities and competitive advantages, BIDV needs to invest more in technology to support, increase utilities for customers and assist in management Therefore, the research and application of new management software are very necessary 3.2.5 Group of solutions to build competitive advantages through competitive tools 3.2.5.1 Solutions to build competitive advantage in products 3.2.5.2 Solutions to build competitive advantages in prices 3.2.5.3 Solutions to build competitive advantages in distribution channels and customer service experiences 19 3.2.5.4 Solutions to build competitive advantages in advertising promotion and programs 3.2.5.5 Solutions to build competitive advantages in service process 3.3 Recommendations 3.3.1 To the State Firstly, the State should have policies to encourage the penetration of banking services in the economy There is a fact that the number of people that not use banking services in Vietnam is much higher than that in the regional countries The proportion of adults with bank accounts is less than 30% (according to World Bank’s statistics in 2011) The increase in the penetration of the retail banking services will contribute to improving people’s living standards, making transactions transparent and making the banking system of Vietnam as strong as other countries in the region Secondly, the State should have programs to stimulate production and consumption through support packages to improve people’s living standards When the retail activities are developed, the banks will have good conditions to develop their retail services efficiently Thirdly, the State should have policies to promote non-cash payments The State should have incentive mechanisms and even force some services fees to be charged by bank transfer, such as electricity, water, apartment management fee, and traffic penalty for car owners This will gradually change the habit of using cash of people, reduce the social costs for printing and circulation of paper money, and bring efficiency to the retail operations of commercial banks 3.3.2 To the State Bank of Vietnam First, the State Bank needs to improve the capacity of managing monetary policy, stabilize interest rates and exchange rates and minimize inflation This is a very important condition for commercial banks to develop their retail operations A healthy and stable economy will create more confidence for people and encourage them to use more banking services Secondly, the State Bank should issue and complete the legal framework to regulate banking activities in general and retail banking activities in particular Specifically, the law on credit institutions and sub-law documents must supplement and complete the rights of creditors such as the right to conduct and handle secured transactions on order to pave the way for the development of personal lending activities of commercial banks In the context where Vietnam integrates deeply and widely into the international financial market such as joining bilateral and multilateral trade agreements, foreign banks can provide banking services in the Vietnamese market without having a branch in Vietnam Similarly, Vietnamese banks can expand their service provision to foreign customers Commercial banks need legal documents related to the provision of services in foreign countries to take initiative in planning their business in the context of financial integration nowadays Thirdly, the State Bank should create conditions for commercial banks to develop new products and services, new process or new distribution channels by applying a quick and convenient approval process Currently, Vietnam still lacks many modern banking products 20 such as investment products, financial derivative products, trust products and property management Fourthly, the State Bank should also have risk management solutions in the retail sector, especially risks in payment and credit activities, to create the security for the whole system as well as healthy competition among commercial banks At the same time, the State Bank should strengthen the credibility of commercial banks to creating customer’s confidence when they use banking services Fifth, the State Bank should organize more seminars or courses for leaders, managers and related departments within the banking system to provide knowledge about international and domestic theory and experience related to the organization and operation of the retail banking services Sixth, the State Bank should also increase the inspection and supervision and playing the role as the credit information center of banks The State Bank should build a full and timely database, ensuring both quality and quantity (not only information on credit but also other information related to customers) to meet the demand for searching and updating information of banks, minimize and prevent credit risks and detect potential problems in banking operations CONCLUSION OF CHAPTER Based on the analysis results of BIDV’s competitive advantages in the retail banking market in chapter and the orientations and targets for retail banking activities for the period of 2015-2020, vision to 2030, the author proposed six solutions to build the competitive advantages of BIDV in the market The solutions focused on innovating aspects of retail banking business of the bank such as prices, products, distribution channels, process, advertising and promotion programs, image of the banks and serving styles of the staff The solutions were explained in the application conditions of the bank in short and medium terms The solutions were also interlinked to ensure consistency and feasibility In addition, the author also proposed some recommendations to the State and the State Bank to facilitate the development of competitive advantages of BIDV in the retail banking business 21 CONCLUSION Competitive advantages are one of the important factors that bring success to commercial banks in their Owning and exploiting effectively competitive advantages will help banks achieve outstanding business results in the market, both in terms of finance and customer satisfaction The topic “Competitive advantages of Joint Stock Commercial Bank for Investment and Development of Vietnam in the retail banking market" was a difficult and abstract subject with deep research scope and high application All three chapters of the thesis focused on the following contents: The thesis analyzed and clarified the basic problems of competitive advantages and building of competitive advantages of commercial banks in the retail market The author outlined the characteristics of the retail banking market, presented detailed contents of competitive advantages, indicators for evaluating competitive advantage and factors affecting the competitive advantages of commercial banks in the retail market The author also looked at the reality of building competitive advantages in the the retail market of BIDV based on the theoretical framework The data used in the thesis was collected through bank reports and surveys with customers who were using retail banking services of BIDV and other commercial banks After analyzing, the author summarized the achievements, limitations and causes of limitations in the competitive advantages of BIDV The thesis proposed a system of solutions to build competitive advantages for BIDV based on the orientations and objectives of the bank The solutions focused on renovating the aspects of retail banking business such as: 1) Solutions to build competitive advantages in products, 2) Solutions to build competitive advantages in prices, 3) Solutions to build competitive advantages in place (distribution channels), 4) Solutions to build competitive advantages in advertising and promotion programs, 5) Solutions to build competitive advantages in service process, 6) Solutions to build competitive advantages in serving styles In addition, the thesis also proposed some recommendations to the State and the State Bank to facilitate the development of competitive advantages of BIDV in the retail banking business In conclusion, the thesis achieved the research objectives However, since the scope of the study was wide and the topic was relatively new while the author's level was limited, the author hoped to receive comments and contributions from friends, teachers and colleagues so that the thesis would be more complete 22 ... in Vietnam, lots of consumer financial companies and financial technology companies (Fintech) According to the research of consultancy companies, individual and household customers in Vietnam have... services Michael Porter's (2011) point of view on the retail banking market of Vietnam is that commercial banks in Vietnam are the same in the directions, strategies, products, services, technology,... position, especially when Vietnam's banking market is deeply integrated into the world’s financial market Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), with more than