CHAPTER 2: CURRENT STATUS OF THE DEVELOPMENT OF NON-CREDIT
2.3 Evaluation of non-credit service development results of Techcombank in the 2013-2017 period
2.3.1 Non-credit service development achievements of Techcombank in the 2013- 2017 period
Techcombank has affirmed its strong brand and created a beautiful and prestigious image in the eyes of all customers. The survey shows that customers understand the strengths of Techcombank and vice versa, Techcombank has gained the trust of customers. More and more customers used more services. Throught business expansion to related areas by linking with strong domestic and international strong brand partners such as Vingroup, Manulife, Novaland and Massan, Techcombank provided its customers with complete advanced services for different customers.
TCB has successfully deployed Zero Fee transfer service on e-banking.
Other electronic banking services, especially the free e-banking program, free money transfer in Techcombank as well as outside Techcombank attracted many new customers using the account, thereby increasing the proportion of demand deposits and its revenues. The annual customer policies gave customer zero fee for card issuance and annual charges.
The quality of non-credit services has been gradually improved on the basis of modern technology to meet the increasing demand of customers. Deposit, account and payment services and other related banking services best met the payment needs of customers and the economy quickly - accurately - safely, enhancing the capital use efficiency in the whole economy. Banks focus on exploiting the potential retail banking market.
Non-credit services bring a large source of revenue to Techcombank at low risk. Non-credit service income significantly contributed to total Operating revenues of Techcomnank in the current context of risky credit activities and many difficulties in securities investment and trading activities. Non-credit activities are a profitable and less risky activity for Vietnamese commercial banks in general and Techcombank in particular.
2.3.2. Weaknesses and causes of limiting non-credit service development of Techcombank in the 2013 – 2017 period
2.3.2.1. Weaknesses
The new services have been researched but have not been widely deployed by Techcombank and there have not been any leading service, dominating market share clearly.
Firstly, the research into new products has not been improved and the list of some non-credit service products was not diversified. Although Techcombank has expanded many non-credit services, after all, the implementation of new products and services only ensured no shortage of products compared to other commercial banks. Techcombank has not researched and tested the products that have been accepted by the market. Currently, Techcomank’s services such as information, consultancy, management and capital investment have not been implemented yet.
Distribution channels were not very convenient to serve customers.
Secondly, the quality of some products failed to meet customer expectation:
+ Overseas remittance: The transaction counter has not met the requirements, it is essential to assign the specialized international payment officers. The processing of orders was not fast and the payment methods such as checks, electronic payment still limited.
+ Foreign currency trading: was still monotonous and has not been fully exploited. The quality and utilities have not met the requirements of users, not really had any outstanding utilities compared to other commercial banks.
+ Card service: Although the information technology infrastructure met the needs of customers, the demand for ATM card service of Techcombank, especially the withdrawal of salary through ATM, money transfer, etc was increasingly high.
However, there were not enough Techcombank’s ATMs to meet the requirements of customers. Moreover, there was no investment in upgrading the transmission line to prevent undue incidens, affecting the interests of customers and reputation of the bank. ATMs were located at some public places such as supermarkets, restaurants, airports, railway stations, industrial parks, universities, etc. , which also causes time
constraints. Because ATMs can not be located at open places for the security goal, ATMs can only be operated during office hours (if located in banks) or until 9-10 p.m (if located in supermarkets, restaurants, commercial centers, etc.). As a result, there are no ATMs that operate 24/24 hours nowadays. In addition, the inspection of ATMs for customers was still slow due to the low flexibility and rigid handling of Techcombank when disputes occur between customers and it (ATM “swallowed money”, the transactions was unsuccessful but money was still reduced.).
Thirdly, Techcombank’s customer policy was still unreasonable in terms of human resources and customer care. Techcombank has not synchronized among customers and between traditional services and modern services.
+ For human resources: Techcombank has had a dedicated team to take care of specialized customers but the quality of human resources was not enough to meet the actual requirements of customers, thus affecting the service deployment at the branches. Techcombank’s modern service has been just developed recently, so staff’s professional experience and knowledge and product quality have not met the expected requirements.
+ For customer care: the customer care and management has had certain innovations through the adjustment of the organizational structure towards each group of customers but not developed an effective customer strategy yet. As a result, customers could not capture all the information of potential customers and the feedback of customers who have been having transactions at Techcombank. For example, for the POSs, Techcombank has not had any policy to encourage POSs in all types of services besides reduction in charges for POSs. Techcombank has only focused on the development of quantity but has not really focused on improving product quality, which leads to the ineffective improvement of non-credit product quality and customer care to build and maintain the loyalty of customers to its branches.
2.3.2.2. Causes
a. Subjective causes
Limitations in organizing, directing, administering services and customer care.
The directions of developing services in many transaction offices and branches wer
not active. Techcombank failed in pioneering in the implementation of new services. Therefore, the current customer policies are not diversified and the benefit to customers still limited.
Inappropriate arrangement of operation network: Techcombank has actively expanded its customer service network. At present, Techcombank has 315 branches and transaction offices but they were mainly located in big cities and provinces. The density of transaction points was not reasonable, creating unhealthy competition among commercial banks, even competition among branches in the same banking system, which makes it difficult for new offices and branches to attract customers, promote and introduce their products.
Limited human resource quality: Although Techcombank’s staff are highly educated, most of them are young, dynamic and enthusiastic and want to dedicate themselves in their work but lack experience and skills in marketing and attracting customers. The number of employees is not enough to meet the workload, thereby failing to meet the demand for high-tech non-credit service development such as e- banking, trust, etc.
b. Objective causes
Firstly, the socio-economic environment with negative developments has affected the banking service business. The economy has had many difficulties and fluctuations for recent years,. The continuous increase in the prices of key domestic commodities, especially petrol and oil, the main raw material inputs of the production process, has led to the higher price of consumables, raising the general price, which will affect the income of the population and the banking services.
Secondly, the regulatory environment was limited, supervision and management of banking service provision was not appropriate. Although the regulatory system formation was quite synchronous and increasingly perfect but still failed to meet the development requirements and law enforcement guidance in some banking activities was insufficient and not timely. In addition, the management and supervision mechanism of banking activities has not kept pace with the modernization of banks and has not been in line with international practices
and standards. Currently, the management and licensing mechanisms for banking services are implemented by the State Bank of Vietnam (SBV) in two channels:
establishment and operation license of credit institutions which specifies licenced business type and the regulations on each specific banking operation. In fact, this mechanism is not consistent with the dynamism of credit institutions and management requirements of the State Bank of Vietnam. SBV also has limited its ability to supervise banking service provision as it has not set up an effective supervision system yet, especially without the early warning of risks in banking operations. Therefore, it has not really given effective support to banks in services in general and non-credit services in particular.
Thirdly, banking technology was not synchronous: Techcombank is one of the pioneering banks in technology innovation but many other banks have no similar technology. Technologies and the mechanism for managing clearing centers was not up to the requirements, not ensuring the time and quick and convenient speed of payment for commercial banks. Therefore, payment was limited when the customer needs to transfer money outside the banking system.
Fourthly, the citizen’s perception of banking services was still limited. When using banking services, some customers did not believe in the service safety or the security of the bank and preferred to store cash. They did not understand that cash has high risks. Currently, about 90% of card transactions are merely cash withdrawals at ATMs and 10% are for POS payments that limit service development. Although Techcombank provided a lot of non-cash payment services, the amount of cash in daily transactions was still relatively large. This habit and psychology has hindered the development and expansion of banking services in general and non-credit services in particular.