INTRODUCTION
Introduction
According to the census of Vietnam, as of April 2019, the total population of Vietnam was more than 96 million people and is expected to reach 100 million by
By 2025, the growing population and the swift expansion of supermarkets, commercial centers, and convenience stores have positioned the retail market as a primary focus for all businesses, including banks This presents a significant opportunity for banks to diversify their revenue streams by developing innovative utility banking products and services.
Currently, the improvement of retail banking services is being focused on by commercial banks for accelerating the cash flow process, market expansion, the enhancement of competitiveness and stable income.
Vietnam is rapidly advancing its international economic integration, attracting major foreign banks like HSBC, ANZ, and Shinhan Bank, which possess substantial financial resources and cutting-edge technology This expansion, particularly in the retail banking sector, intensifies the competitive landscape within Vietnam's banking system.
In the highly competitive Vietnamese business landscape, commercial banks are compelled to adapt their strategies by exploring new investment opportunities and diversifying their customer base This article examines effective and practical solutions aimed at enhancing retail operations within these banks, ensuring they remain competitive and responsive to market demands.
Background of the study
Retail banking is essential to banking operations, generating stable profits and expanding market reach while boosting competitiveness Its significance is especially recognized in the context of economic development, underscoring its vital role in the financial landscape.
Commercial banks are enhancing their retail banking services through strategic investments and plans, focusing on expanding their business networks, innovating technology, improving service quality, and diversifying their range of retail banking products and services.
According to Stephen Timewell (2006), banks that capitalize on the opportunity to provide retail banking services to underserved populations in emerging economies are poised to become future global leaders By catering to a diverse customer base, including individuals, families, and small to medium-sized enterprises (SMEs) lacking access to financial services, these banks can swiftly gain market dominance To achieve this, it is essential to regularly evaluate the quality of retail banking services at branches and implement timely adjustments to enhance their performance This research focuses on the retail operations of the Joint Stock Commercial Bank for Investment and Development of Vietnam - East Hanoi branch to explore these dynamics further.
Objectives of the study
This thesis focuses on assessing the current state of retail banking services at the East Hanoi branch of the Joint Stock Commercial Bank for Investment and Development of Vietnam It also proposes practical strategies to improve these services, aiming to enhance customer satisfaction and operational efficiency in the retail banking sector.
This research identifies six specific objectives alongside broader goals, focusing on the definition, roles, and key products of retail banking services It evaluates customer satisfaction with retail banking services at BIDV East Hanoi and analyzes the growth of retail customers, distribution channels, and product offerings over the past three years The study further investigates the capital mobilization, lending practices, and revenue generation of retail operations at BIDV East Hanoi from 2018 to 2020 It highlights the bank's achievements and limitations, concluding with practical solutions and recommendations to improve retail banking services at BIDV East Hanoi.
Significance of the study
This article analyzes the current retail operations at BIDV East Hanoi, identifying existing limitations and proposing comprehensive solutions to address these shortcomings The findings aim to assist the Board of Directors in enhancing retail banking services, while also providing the researcher with a deeper understanding of BIDV East Hanoi's retail operations, laying the groundwork for future studies.
Scope and limitation of the study
Retail banking operation at Joint Stock Commercial Bank for Investment and Development of Vietnam - East Hanoi branch.
1.5.2 Scope and limitation of the study
This thesis studies the retail operation of Joint Stock Commercial Bank for Investment and Development of Vietnam East Hanoi branch from 2018 to 2020.
Due to time constraints, limited resources, and the author's inexperience, this thesis may not fully address the competitive factors among regional banks, the perceptions of local retail customers influencing their banking service choices, specific issues related to each service offered, or the challenges faced by branch staff, all of which require further investigation.
Definition of terms
Retail operation is the activity of selling goods directly to the public, usually in small quantities of a business (Collins dictionary, n.d).
A transaction is a completed agreement between a buyer and a seller to exchange goods, services, or financial assets (Investopedia, 2019).
Capital mobilization is the activity that commercial banks, by adopting different methods and using different tools, mobilize monetary capital in the economy (Trinh The Cuong, 2018).
Credit is generally defined as a contract agreement in which a borrower receives a sum of money or something of value and repays the lender at a later date, generally with interest (Investopedia, 2021).
Customer relationship management (CRM) is a strategic approach that enables businesses to systematically engage and communicate with their customers By effectively managing customer data, including account details and contact information, CRM helps organizations enhance their service and improve customer satisfaction.
REVIEW OF RELATED LITERATURE
Literature review
Numerous research projects worldwide are dedicated to enhancing retail banking services at commercial banks, primarily concentrating on predicting the overall trends in retail banking development Notable studies in this field highlight key advancements and future directions for retail banking.
Md Abdul Muyeed (2012) conducted a study on customer perceptions regarding the quality of retail banking services in developing countries, with a specific focus on Bangladesh The research evaluates and analyzes the standards of these banking services as perceived by customers in the region.
Mohammed Hossain, Shirley Leo (2017) published research under the title
In the Middle East's retail banking sector, customer awareness of service quality is crucial for success The author emphasizes that prioritizing high-quality customer service is essential for meeting client needs, which in turn facilitates rapid growth and expansion of banking activities.
In the research paper "Top 10 Retail Banking Trends and Predictions for 2019," Jim Marous highlights essential trends that banks should focus on for future success Key among these are the importance of forming partnerships with financial technology firms, the necessity of investing in innovative initiatives, and the adoption of advanced technologies to enhance banking services.
Recent research on retail banking activities has highlighted its crucial role in the evolution of Vietnamese commercial banks Scholars have focused on defining retail banking services, their development, and the criteria for evaluating their growth in Vietnam These studies have identified both the benefits and challenges associated with retail banking service expansion, offering effective solutions for improvement Notable contributions in this field have emerged, enriching the understanding of retail banking dynamics in the country.
Pham Thuy Hang (2018) researched on "Solutions to develop retail banking services at Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong
The study conducted by the Da Hanoi branch analyzes the pricing strategies and product utility of various banks, while also suggesting practical solutions to enhance product promotion, develop infrastructure, invest in information technology, ensure customer information confidentiality, and improve human resource capabilities While some of these recommendations are applicable to all joint-stock commercial banks in Vietnam's industry and trade sector, they may not be feasible for implementation at the branch level.
In his 2019 study, Do Huu Thuan examined the development of retail banking services at the HSBC Private International Bank's Hanoi branch The research assessed the current state of these services by evaluating deposit mobilization, retail credit, and card business performance Utilizing the SWOT analysis framework, the study proposed strategic solutions to enhance retail banking services at HSBC Vietnam's Hanoi branch.
In her 2019 research, Nguyen Thi Ngoc Chau examined the development of retail banking at the Joint-Stock Commercial Bank for Investment and Development of Vietnam's Lam Dong branch She concluded that retail banking services provide a secure and stable revenue stream while reducing risks for the bank Utilizing statistical methods and data analysis, she proposed effective strategies to expand retail banking services and improve customer satisfaction regarding service quality at BIDV - Lam Dong branch.
Theoretical and Conceptual framework of retail banking services
Retail banking represents an innovative approach in the financial sector, offering individuals direct access to a variety of banking products and services This model fosters a dynamic and diversified market by enabling direct sales to end users, enhancing customer engagement and satisfaction.
The ultimate borrower refers to the individual who directly utilizes a loan for investment purposes, rather than lending it to others Presently, there exists a wide array of retail banking concepts, each approached from various perspectives.
Firstly, classified by the category of customer types, in the conference document
The "Strategy for the Development of Retail Banking Services for the Foreign Trade Bank of Vietnam" (2003) outlines retail banking services as transactions conducted between banks and individual customers, as well as small and medium-sized enterprises (SMEs).
Retail banking, as defined by 1997 research, provides small credit solutions to small and medium enterprises (SMEs), households, and individuals According to the Scientific and Economic Publishing House (1999), these services are delivered through bank branches specifically catering to individual customers.
Retail banking services, as defined by the World Trade Organization (WTO), encompass a range of typical banking activities where customers can visit branches or transaction points to perform tasks such as deposits, account inquiries, mortgages, and loans (Banking reviews, 2019) Additionally, economists from the Asian Institute of Technology (AIT) emphasize that retail banking caters to individuals and small to medium enterprises (SMEs) through a comprehensive network of branches, telecommunications, and advanced technology.
Retail banking involves offering financial products and services to individuals, households, and small to medium-sized enterprises through a network of branches and electronic communication channels.
2.2.2 Characteristic of retail banking services
Retail banking services cater to a diverse clientele, including individuals, households, and small to medium enterprises, as noted by Hoang Thi Ngoc Thuy (2021) This diversity spans various age groups, social statuses, literacy levels, and consumer behaviors, resulting in a wide range of banking product and service demands According to Dao Thi Hoi (2019), customers with higher academic backgrounds and financial knowledge prioritize the utility and added value of banking offerings In contrast, less frequent bank users typically focus on pricing, interest rates, and the bank's reputation when selecting services.
The rapid growth of emerging economies and the increasing global population are driving the demand for banking services among low- and middle-income individuals and small to medium-sized enterprises, which conduct a high volume of transactions Although the value of these transactions is generally lower than those of large corporations, banks face minimal risks when offering retail transactions Furthermore, the consistency and stability of retail transactions provide banks with significant income and sustainable growth while mitigating potential risks.
Retail banking offers a variety of products and services, including lending, deposit, and payment solutions Common credit products encompass home loans, car loans, shopping loans, student loans, and business development loans For deposit options, customers can choose from demand deposits, time deposits, and online deposits Additionally, retail banking services extend to payment processing, remittances, foreign currency trading, guarantees, trade finance, and insurance.
Banks cater to a diverse range of customers by offering a comprehensive portfolio of retail banking products tailored to meet various financial needs For individual and household clients, consumer credit options include overdrafts, credit cards, personal loans, and mortgages, addressing everyday expenses and significant purchases like homes and cars Small and medium enterprises benefit from services designed to facilitate daily operations, including lending, factoring, and payment solutions Additionally, banks provide various deposit products with specific terms for principal and interest withdrawal, such as demand deposits and time deposits with unique interest rates for different durations, including six-month and one-year options.
2.2.2.4 Vast branch network and distribution channel
Commercial banks utilize a vast distribution channel system to deliver products and services to a diverse customer base across various locations, effectively addressing customer needs while reducing unnecessary costs In addition to traditional transaction methods, banks are increasingly adopting modern technology to enhance convenience for customers Even in areas lacking direct banking facilities, customers can perform regular transactions via the Internet and mobile phones, highlighting a key aspect of retail banking services.
2.2.3 Role of retail banking services
Retail banking operations enhance the payment process, making it more convenient, reliable, and beneficial for customers The diverse capital mobilization offers significant advantages to idle capital owners, ensuring income and capital integrity Additionally, retail credit products cater to small customers' needs for consumption and product development, while modern payment facilities in retail banking services reduce risks, minimize costs, and save time, ultimately improving social life.
Retail banking services play a crucial role in fostering economic growth and sustainable development by enhancing cash flow processes and optimizing capital utilization By reducing transaction times between banks and customers, these services facilitate quicker cash movement and minimize cash transactions Furthermore, the expansion of retail banking promotes economic restructuring towards modernity, leading to the emergence of new economic sectors with high added value.
Retail banking generates consistent income and mitigates risks in banking operations by catering to a large customer base This sector provides sustainable revenue streams and facilitates rapid capital circulation through short-term transactions, thereby reducing risks associated with capital mobilization and lending Moreover, retail banking is crucial for market expansion, boosting competitiveness, and establishing a reliable source of medium and long-term capital, which further diversifies banking operations (Le Duc Anh, 2020).
2.2.4 Major retail services of commercial banks
Capital is a fundamental element that showcases an enterprise's capabilities and influences entrepreneurial success In the banking sector, where operations are intricately tied to currency and payment systems, effective capital mobilization is even more essential.
To mobilize capital from individuals and households, banks often have forms of following capital mobilization (Eric Reed, 2019). a Deposits for payment
Experience in developing retail operations in commercial banks
2.3.1 Experience of commercial banks in other countries in the world
2.3.1.1 The Bank of New York Mellon in the United States
The Bank of New York, one of the largest banks in the U.S., offers a range of services including trust and investment solutions for banks, corporations, financial institutions, and individuals both domestically and internationally Notable experiences of the bank include providing complex financial solutions such as portfolio asset management and securities advisory services Additionally, the bank emphasizes its credit card business by implementing a low-interest rate strategy and offering appealing promotional programs Furthermore, it excels in customer consulting services, tailoring policies to meet the specific needs of each client.
2.3.1.2 The Standard Chartered Bank branch in Singapore
Singaporean banks are progressively enhancing their retail banking strategies, with Standard Chartered Bank emerging as a leader in this sector The integration of technology has been pivotal, as over 60% of bank transactions are projected to occur through automated channels by 2020 Key lessons from the retail banking landscape include the importance of a comprehensive branch network, which aids in effective capital management and boosts market share for local banks Additionally, initiatives focused on money management empower customers to better oversee their finances Furthermore, banks have developed a robust network of automated service channels, including deposit-taking machines and various online banking options, significantly improving efficiency and convenience for customers.
2.3.1.3 The Bangkok Bank in Thailand
Bangkok Bank, the largest bank in Thailand, serves one in six Thai citizens with its extensive operational network, significantly enhancing business efficiency The bank prioritizes web development to support small and medium enterprises, leading to a remarkable sevenfold revenue increase and a 60% rise in customers from 2002 to 2006 Alongside Bangkok Bank, other Thai banks are also focusing on retail banking services Key factors contributing to their success include improved information technology systems for better internal efficiency and customer service, cost-cutting measures such as reducing excess labor and unnecessary expenses, the expansion of processing centers for cards, checks, and online services, and ongoing enhancements in marketing performance and internal controls, which are crucial for successful retail banking.
2.3.2 Experience of commercial banks in Vietnam
In Vietnam, all banks provide retail services and have unique strategies for business expansion This article focuses on Vietcombank as a representative of state-owned commercial banks, along with Techcombank and Sacombank representing joint-stock banks These leading banks, recognized for their extensive experience in retail banking, have all been awarded the "Best Retail Bank in Vietnam" by The Asian Banker Additionally, Sacombank was honored with the "Typical Retail Bank" award at the Vietnam Outstanding Banking Awards 2019, organized by IDG International Data Group and the Vietnam Banks Association (VNBA).
2.3.2.1 Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)
In 2019, Vietcombank emerged as the leading bank in profit and capitalization, with ambitious plans to become the top retail bank by 2025-2030 By the end of 2019, it operated 111 branches and 472 transaction offices across 54 out of 63 provinces in Vietnam The bank has established correspondent relationships with 1,361 financial institutions in 102 countries, marking a significant global presence Notably, retail credit surpassed wholesale credit for the first time, accounting for 51.8% of the credit structure, with retail credit growing by 32.3% compared to a modest 2.3% increase in wholesale credit In line with its customer-centric approach, Vietcombank initiated the Retail Transformation Operation Model (RTOM) in 2019 to enhance digital experiences and customer engagement.
A key aspect of this model is the introduction of a Service Ambassador (SA) position at branch exchanges, serving as the initial point of contact for customers upon entering The Service Ambassador is an experienced transaction agent with a strong understanding of lobby operations, adept in marketing, and skilled at observing customer needs Their primary responsibilities include greeting customers, managing transaction flows, promoting services, addressing customer inquiries, and assisting with automatic queuing systems.
The Personal Banking Officer (PBO) role was established to differentiate between service and sales functions within the transaction hall The primary responsibility of the PBO is to enhance customer awareness of available banking products and facilitate sales Meanwhile, transactors focus on expediting transactions and refer customers to the PBO when additional assistance is required.
Tellers in Ho Chi Minh City are increasingly tasked with cross-selling additional products to customers; however, this practice faces a major challenge The success of cross-selling is inversely related to customer transaction time, meaning that the longer tellers spend trying to promote a product, the more it delays subsequent customers As a result, the average waiting time for customers at these branches can significantly impact the overall customer experience before any successful conversion occurs.
In just 13 minutes for the main branch and approximately 8 minutes for the Hanoi branch, PBO operates as a specialized team dedicated to cross-selling Their focus includes promoting additional cards, insurance products, and fund investments, while leveraging a large customer base to facilitate daily transactions in the lobby.
The implementation of the pilot model yielded significant results, with waiting times at the Hanoi branch decreasing from 13 minutes to 10.7 minutes, while the Ho Chi Minh City branch saw a reduction from 8 minutes to just 3.7 minutes Customer satisfaction improved notably, achieving an average rating of 4.9 out of 5 Additionally, all incoming customers were presented with an expanded range of retail products and services, including loan, insurance, and investment offerings.
2.3.2.2 Technological and Commercial Joint Stock Bank of Vietnam (Techcombank)
Techcombank is committed to developing its retail banking sector as a key strategy for building a sustainable customer base and enhancing its reputable brand image The bank initially targeted high-income individual customers when launching its retail system Furthermore, Techcombank pioneered the establishment of a specialized Transaction Banking Division, designed to manage money management and trade finance products, thereby facilitating SMEs in securing bank loans and navigating foreign trade contracts.
The bank has launched the 'TCWealth' tool, specifically tailored to support clients in achieving their long-term investment objectives through advanced personal financial management capabilities This innovative tool offers a wide array of fully tradable online investment products, complemented by professional customer care and expert analysis to guide clients throughout their investment journey.
Techcombank's innovative Big Zero Fee strategy eliminates fees for all e-banking transactions, significantly boosting the number of new account openings and enhancing cross-selling opportunities.
2.3.2.3 Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank)
In recent years, Sacombank has significantly expanded its retail services by diversifying its product offerings and enhancing customer care The bank has also focused on building and digitizing its banking ecosystem to improve competitiveness, evidenced by initiatives like the implementation of a customer management system (CRM) and the upgrade of its T24 core banking system from version R11 to R17 Additionally, Sacombank has enhanced its e-banking services across both Internet and Mobile Banking platforms, prioritizing high technology and security A notable highlight is the launch of the Sacombank Pay financial management application, which integrates the latest modern banking features and utilities.
Sacombank focuses on expanding its network distribution in suburban areas to attract individual customers In 2019, the bank opened four new branches in Thai Binh, Ninh Binh, Nam Dinh, and Lao Cai, increasing its total transaction points to 570 This strategic expansion has enhanced retail activities and significantly raised the revenue proportion from retail banking services.
RESEARCH METHODOLOGY
Locale of the study
The research subject is the Joint-stock Commercial Bank for Investment andDevelopment of Vietnam - East Hanoi branch It is located in Dong Anh, Hanoi.
Research design
Primary data was gathered through online and face-to-face surveys involving 202 retail banking service users at BIDV East Hanoi The questionnaire consisted of two main sections: the first aimed to gather information on the duration of customers' use of retail banking products, ensuring that only those with at least one year of experience were included It also collected data on the percentage of customers using various BIDV East Hanoi products and the reasons for their choices The second section focused on customer reviews based on five factors—reliability, empathy, assurance, responsiveness, and tangibility—to analyze customer satisfaction All collected responses were subsequently analyzed using statistical methods.
The study employed a quantitative approach to evaluate the scale and theoretical model Reliability of the questionnaire items was determined using Cronbach's Alpha Coefficients, as outlined by Pallant (2007) This coefficient ranges from 0 to 1, indicating that values closer to 1 signify higher reliability, while values approaching 0 indicate lower reliability.
Based on the S ERVQUAL model of Parasuraman et al (1988), the study used five factors to assess customer satisfaction with retail products and services of BIDVEast Hanoi.
This research employed qualitative methods to explore the limitations of retail banking services at BIDV East Hanoi Through synthesis, analysis, and comparison, the study aimed to provide objective conclusions regarding the current landscape, achievements, and challenges faced by BIDV East Hanoi in the retail banking sector.
Data gathering procedure
Survey questionnaires are distributed through two primary methods: first, by sharing them on Facebook within private and public groups formed by customers of BIDV East Hanoi, and second, by printing and directly handing them out to customers during their transactions at the bank.
The data for this study was sourced from the primary reports of BIDV East Hanoi, specifically the income statement and financial reports, alongside valuable information from professional sources such as Master's and PhD theses, reputable magazines, reliable websites, and journal articles The data was processed using Microsoft Excel 2010 to derive the results, ensuring high reliability due to the use of official and reputable sources.
Respondents of the study
The study focuses on customers utilizing retail banking services at BIDV East Hanoi, deliberately excluding age, gender, and occupation from consideration This choice is made to ensure that the questionnaire effectively gathers insights into customer perceptions, as these demographic factors do not align with the research objectives.
Part I Components Number of questions
The percentage of the customer using each retail banking services and products and the reason for using
Research instruments
The first tool used to collect primary data is a survey questionnaire that consists of
31 closed questions divided into 3 main parts.
Part 2 of the questionnaire employs a 5-Point Likert Scale, ranging from (1) Strongly disagree to (5) Strongly agree Additionally, the analysis of the primary data is conducted using the Statistical Package for the Social Sciences (SPSS) software, which facilitates effective data processing and analysis.
The study used financial statements, income statements, professional sources,Master's and PhD theses, trustworthy magazines, reliable websites and journal articles to summarize, analyze and compare data and information.
DC1 The bank has preferential policies for customers facing financial difficulties
DC2 Customers can save time doing transaction in the branch DC3 The staff treat customers fairly
Staff often support customers when customers encounter problems in using the bank's products, services, and utilities
Staff actively notify customers when there are changes related to products and services such as fees, interest rates,
TC1 Customer information is well protected TC2 The bank's brand reputation is highly appreciated TC3
Credit officers handle transactions accurately and competently
Statistical treatment
After collecting the data, the questionnaire was translated into English, and responses were reviewed to exclude participants who indicated "under 1 year" of retail banking service usage Out of 202 respondents, 90 were removed for this reason, resulting in a final sample size of n2.
The processed data from part I of the questionnaire was compiled and calculated as a percentage.
The processed data from the part II survey questionnaire was imported into the SPSS software Version 20.0 for coding and analysis.
Table 3.2 Building and coding the scale
TC4 Products and services are more prominent than other banks in the area TC5 The paperwork process is fast and straightforward TC6 Pricing policy is flexible
DB1 Staff have good communication skills DB2 Staff enthusiastically advice
DB3 Staffs are knowledgeable and highly qualified
NL1 The bank is always ready to meet the needs of customers (such as check balance, reset password) NL2 Customers can easily access bank information NL3
The bank always send transaction results via e-banking quickly
The bank quickly solves the errors caused by the negligence of the employees
PT1 The bank has modern equipment and facilities
PT2 The bank has a convenient ATM and transaction office system
TM1 The bank's retail products and services meet the needs of customers
TM2 You will continue to use the bank's retail banking products
TM3 You are satisfied with the price of the bank's retail banking products and services
TM4 You are satisfied with the quality of retail banking products and services
TM5 You will recommend to friends about retail products and services of the bankTM6 You are satisfied with the bank staff attitude
The 5-Point Likert Scale was coded as follow
Then, the data will be analyzed through mean statistics, Cronbach's Alpha coefficient, Exploratory Factor Analysis (EFA) and multivariate regression.
Mean statistics describe in general how much the survey subject's rating on the scale used and shows the minimum, maximum and standard deviation of each observed variable.
Cronbach's Alpha coefficient is essential for assessing the reliability of a scale, as it evaluates the consistency of observed variables within a parent factor According to Nunnally and Bernstein (1994) and Nunnally (1978), a reliable scale should have a Cronbach's Alpha coefficient of at least 0.6, along with an item-total correlation of all variables exceeding 0.3.
Exploratory Factor Analysis (EFA) investigates the connections among variables across various groups, identifying observed variables associated with multiple factors To ensure the validity of EFA results, five key criteria must be met during the analysis.
Firstly, the KMO coefficient (Kaiser-Meyer-Olkin) must be at least greater than or equal to 0.5 (0.5 ≤ KMO ≤ 1).
Secondly, sig Bartlett’s Test is less than 0.05.
Thirdly, the eigenvalue must be greater than or equal to 1
Fourthly, total variance explained must be greater than or equal to 50%.
Fifthly, according to Hair & ctg (2009), there are three levels of factor loading evaluation.
• Factor Loading at ±0.3: Minimum condition for the observed variable to be retained.
• Factor Loading at ± 0.5: The observed variable has good statistical significance.
• Factor Loading at ± 0.7: The observed variable has very excellent statistical significance.
Multivariate regression determines which factors contribute more / less do not contribute to the change of the dependent variable.
FINDINGS AND DISCUSSION
Overview of Joint-stock Commercial Bank for Investment and Development
4.1.1 The process of formation and development of Joint - stock Commercial Bank for Investment and Development of Vietnam - East Hanoi branch
Full name: Joint Stock Commercial Bank for Investment and Development of Vietnam - East Hanoi branch
Abbreviated name: BIDV East Hanoi
Address: No 46, Cao Lo Street, Group 2 - Dong Anh Town, Dong Anh District, Hanoi.
The Joint Stock Commercial Bank for Investment and Development of Vietnam - East Hanoi Branch (BIDV East Hanoi) was established on December 1, 2005, by upgrading Dong Anh Branch II, as per Decision No 241/QD-HĐQT issued by the Board of Directors of the Bank for Investment and Development of Vietnam On November 12, 2008, the branch was renamed to better reflect its operational area, with the approval of Chairman Tran Bac Ha under Decision No 983/QD-HĐQT Furthermore, BIDV successfully transitioned to an equitized model on December 28, 2011, and subsequently adopted the name East Hanoi Investment and Development Branch on May 1, 2012, in line with its evolving business strategy.
BIDV East Hanoi is a branch of the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), operating with independent accounting and its own seal This branch specializes in monetary business, credit, and financial services As an authorized representative of BIDV, BIDV East Hanoi has the autonomy to conduct business as decentralized by its parent organization while remaining under its direct management.
The Hanoi branch of the Joint Stock Commercial Bank for Investment and Development of Vietnam - East specializes in currency trading, credit services, and more A key aspect of the bank's operations includes accepting customer deposits, which are then utilized for personal loans and lending to both domestic and non-state enterprises, primarily focused in the Dong Anh district of Hanoi.
BIDV East Hanoi is located in Group 2, Dong Anh Town, Hanoi, and operates five transaction offices throughout the city The branch employs over 150 staff members, organized into 16 units, each assigned specific roles and responsibilities This workforce operates under the direction of a Board of Directors, which includes one director and three deputy directors, alongside various subordinate transaction offices managed by the departments and the board.
Figure 4.1 The organizational structure of Joint- stock Commercial Bank for Investment and Development of Vietnam - East Hanoi branch
(Source: Human resources report of BIDV East Hanoi in 2019)
Each department within the bank has distinct functions and responsibilities, yet they are interconnected and must adhere to the policies of the Party and State, as well as industry regulations The bank's structure comprises several key departments that work collaboratively to fulfill these obligations.
The Board of Managers at BIDV is composed of one director and three deputy directors, tasked with overseeing and managing all banking operations in accordance with established procedures.
The Customer Relations Department 1 & 2 is responsible for advising and proposing policies to enhance customer relations while actively engaging in marketing and selling products Additionally, this department oversees the inspection and supervision of loan capital and security assets, with a critical focus on identifying and managing risky loans.
The Personal Customer Relations Department is tasked with advising and proposing policies to enhance the development of retail customers This department actively seeks out potential clients to promote banking products and is responsible for expanding retail credit operations while managing outstanding debts effectively.
The Risk Management Department plays a crucial role in evaluating loans alongside the customer relations team, focusing on identifying and analyzing potential risks This department is uniquely empowered to directly propose strategies to the director aimed at reducing bad debts for both the branch and its customers Additionally, it is responsible for restructuring customer loans in compliance with regulatory standards.
The Transaction Office is responsible for account management and direct customer interactions, ensuring efficient handling of customer information in accordance with BIDV's established business processes Additionally, the department actively gathers customer feedback on products, services, and transaction procedures to inform leadership decisions.
The Treasury Management and Service Department is responsible for executing complex fund management and import/export operations It plays a crucial role in safeguarding the vault, securing currency, and protecting the assets of both the branch and its customers Additionally, the department is tasked with organizing the collection of funds across relevant units.
The Credit Administration Department is responsible for managing loan operations and delivering guaranteed services to customers in accordance with BIDV's regulations and procedures Additionally, the department calculates risk provisions based on the debt classification results provided by the customer relations department, adhering to BIDV's established guidelines.
The Organization and Administration Department plays a crucial role in advising the director on organizational and human resource matters They oversee staff management and ensure internal political protection within the branch, in line with decentralized authority Additionally, the department handles administrative and logistical tasks essential for the branch's operations Furthermore, they are responsible for managing employee records and safeguarding documents and reports related to the branch.
The financial accounting department is responsible for managing and executing detailed and general accounting tasks It also conducts post-audit reviews of the branch's financial and accounting activities A key function of the department is to ensure the accuracy, correctness, and reliability of all accounting data, reports, and financial statements.
The Integrated Planning Department is responsible for advising on the creation of business and development plans, coordinating with relevant departments to introduce capital-raising products, and supporting other business units in product sales Additionally, the department serves as the secretary for the board of directors, ensuring effective communication and organization within the company.
Current situation of retail operation at Joint-stock Commercial Bank for
Customers are essential for the existence and growth of banks, making their satisfaction a critical factor in the success of retail banking services To thrive in a competitive landscape, banks must focus on maintaining and enhancing service quality while effectively meeting customer needs Ultimately, customer satisfaction serves as a key indicator of success in developing these services.
4.2.1.1 The results of testing the reliability of the Cronbach Alpha scale
The analysis of Cronbach's Alpha indicates that all variables exhibit item-total correlations exceeding 0.3, confirming their inclusion in the study Furthermore, the Cronbach's Alpha coefficients for all five factors surpass 0.6, demonstrating acceptable reliability for the scale Notably, four factors—reliability, empathy, tangibles, and responsiveness—show exceptionally high reliability with coefficients greater than 0.8.
Table 4.1 Summary of the results of testing the reliability of the Cronbach Alpha scale
4.2.1.2 The results of exploratory factor analysis (EFA)
Exploratory factor analysis (EFA) was analyzed through the use of Principal Component Analysis method with Varimax rotation to reduce observed variables into different sets of factors.
The KMO coefficient, or Kaiser-Meyer-Olkin index, is a crucial measure for assessing the appropriateness of factor analysis In this study, the KMO coefficients for the independent and dependent variable groups were found to be 0.88 and 0.903, respectively, indicating values greater than 0.5 and less than 1 Therefore, the results confirm that exploratory factor analysis (EFA) is suitable for the research dataset.
Table 4.2 The results of KAIO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of
Bartlett's Test of Sphericity Approx Chi-Square 1.391.712
Kaiser-Meyer-Olkin Measure of
Bartlett's Test of Sphericity Approx Chi-Square 475.669
Bartlett's test of sphericity assesses the correlation among observed variables within a factor The analysis indicates a significant result, with a Bartlett's Test significance value of 0.000, which is below the 0.05 threshold, confirming that the observed variables are indeed correlated.
This study employs Principal Component Analysis with Varimax rotation, revealing four factors with Eigenvalues exceeding 1, as per Hoang and Chu (2008) The analysis accounts for a total variance extraction of 67.8%, indicating that these factors collectively explain over 67% of the data variation.
Factor loading indicates the correlation between an observed variable and a specific factor, with higher coefficients signifying stronger relationships The analysis revealed that the variables PT2 and TC3 had factor loading coefficients below 0.5, which does not meet the minimum threshold for inclusion Consequently, these two variables will be excluded from the scale, as shown in Table 4.3 The model will be re-evaluated after the removal of these variables.
Table 4.3 The results of Rotated Component
(Reliability) [Customer information is well protected] 0.871
(Reliability) [The bank's brand reputation is highly appreciated] 0.821
(Reliability) [The paperwork process is fast and straightforward] 0.729
6 (Reliability) [Pricing policy is flexible] 0.717
(Reliability) [Products and services are more prominent than other banks in the area] 0.705
(Tangibles) [The bank has a convenient ATM and transaction office system]
(Reliability) [Credit officers handle transactions accurately and competently]
(Responsiveness) [The bank is always ready to meet the needs of customers (such as check balance, reset password)]
(Responsiveness) [The bank quickly solves the errors caused by the negligence of the employees]
(Responsiveness) [Customers can easily access bank information] 0.750
(Responsiveness) [The bank always send transaction results via e-banking quickly] 0.721
(Tangibles) [The bank has modern equipment and facilities] 0.606 variables, the results show that the KMO coefficient is equal to 0.865; sig BartlettTest equals 0.000 and the remaining variables are qualified.
(Empathy) [Customers can save time doing transaction in the branch] 0.820
(Empathy) [Staff actively notify customers when there are changes related to products and services such as fees, interest rates, ]
3 (Empathy) [The staff treat customers fairly] 0.675
(Empathy) [Staff often support customers when customers encounter problems in using the bank's products, services, and utilities]
(Empathy) [The bank has preferential policies for customers facing financial difficulties] 0.544
(Assurance) [Staff have good communication skills] 0.918
(Assurance) [Staffs are knowledgeable and highly qualified] 0.881
Table 4.4 The results of Multivariable linear regression
4.2.1.3 The results of multivariable linear regression analysis (MLR)
This study investigates the relationship between various components (Xi) and customer satisfaction (Y) using multiple regression analysis This method effectively evaluates the significance of the studied concepts in relation to the dependent variable The model's fit is assessed using R2 and adjusted R2 coefficients, with values ranging from 0 to 1 The regression equation is derived from survey data collected from a sample of 112 participants.
The Adjusted R Square value indicates the extent to which independent variables explain the dependent variable in the model As shown in Table 4.4, the index is 0.693, exceeding the 0.5 threshold, which demonstrates the model's adequacy Additionally, the Sig index value of 0.000, being less than 0.05, confirms that the multiple linear regression model is a suitable fit for the data set.
The Sig value is crucial for assessing the significance of regression coefficients In the analysis, the Sig values for empathy and assurance were found to be 0.412 and 0.231, respectively, both exceeding the 0.05 threshold This indicates that these independent variables do not significantly influence the dependent variable, customer satisfaction, leading to the rejection of the hypothesis concerning their impact.
Table 4.5 The results of linear regression model
In addition, the variance exaggeration factor VIF of each factor is less than 10, which proves that the regression model does not violate the phenomenon of multicollinearity (Trong & Ngoc, 2008).
The final linear regression model is expressed as follows
4.2.1.4 The results of average descriptive statistics
Table 4.6 indicates that the majority of variables have average results exceeding the mean value of 3 However, four variables—transaction processing capabilities (TC3), product and service characteristics (TC4), pricing policy flexibility (TC6), and staff professional qualifications (DB3)—fall below this threshold, with mean values of 2.12, 2.67, 2.65, and 2.03, respectively These factors are undervalued by customers, highlighting a critical area for BIDV East Hanoi to address and improve upon promptly.
Table 4.6 The results of average descriptive statistics
Recent research indicates that empathy and responsiveness were excluded from the model, while reliability, assurance, and tangibles emerged as the three key factors significantly influencing customer satisfaction This finding contrasts with Nguyen Lan Anh's (2020) study, which identified reliability, assurance, empathy, and responsiveness as highly valued factors by customers.
Reliability significantly impacts customer satisfaction with BIDV East Hanoi's retail products and services, evidenced by a strong regression coefficient of 0.63 Key elements influencing this reliability include customer information security, the bank's brand reputation, a streamlined paperwork process, competitive service costs, reasonable loan interest rates, and high-quality product service Notably, customer information security and brand reputation are the most crucial factors linked to reliability To attract more customers, BIDV East Hanoi must focus on enhancing these aspects Additionally, the branch's pricing policy lacks flexibility, and its products and services do not stand out compared to competitors, hindering brand recognition Furthermore, inaccuracies and incomplete handling of transactions by some credit officers have led to significant shortcomings in customer service.
Assurance plays a crucial role in customer satisfaction with retail banking products and services at BIDV East Hanoi, influenced by staff qualifications, communication, and enthusiasm EFA analysis reveals that employee enthusiasm and qualifications have the strongest correlation with assurance, with factor loading coefficients of 0.923 and 0.918, respectively However, the average score for bankers' qualifications is only 2.55 out of 5, indicating a lack of in-depth knowledge among some staff members.
In "Improving Retail Banking Services at Eximbank," Nguyen Phu Vy (2020) highlights the challenges posed by inexperienced staff lacking professional knowledge to effectively address customer inquiries To enhance service quality, BIDV East Hanoi should implement comprehensive training programs for its employees and collaborate with BIDV Skills Training & Consultancy to ensure a well-trained workforce Additionally, prioritizing the recruitment of candidates with relevant banking qualifications will alleviate the financial burden associated with retraining efforts.
Tangibles play a significant role in customer satisfaction for BIDV East Hanoi's retail banking services, with a regression coefficient of 0.165, indicating that a 1-unit increase in tangibles leads to a 16.5% rise in customer satisfaction The exploratory factor analysis (EFA) revealed that modern facilities and equipment are the key components of this factor Therefore, enhancing equipment and facilities is crucial for attracting more customers to BIDV East Hanoi's retail banking services.
Assessment of the present context of retail operations at the Bank for
After analyzing the current status of retail activities of BIDV East Hanoi, the author would like to put some remark on the following.
The retail operations of BIDV East Hanoi have shown consistent profit growth over the years, with a significant portion of income derived from lending activities This trend highlights the branch's sustainable development and ensures the benefits for its staff.
BIDV East Hanoi has achieved remarkable success in capital mobilization, with significant growth in balances from individuals, households, and SMEs over the past three years, ensuring stability for the bank's capital and supporting its lending activities Notably, term deposits are the most favored option among retail customers, making up over half of the total mobilized capital This indicates that fundraising products from retail clients are providing a substantial source of capital for the bank's operations.
BIDV East Hanoi has experienced remarkable success in capital utilization, particularly in lending, which generates substantial income from loan interest The most popular products among retail customers include home loans, loans secured by valuable papers and savings books, and business loans The bank maintains a safe level of outstanding loans relative to total assets and mobilized capital, ensuring strong liquidity.
The significant increase in customers utilizing retail banking products and services highlights the growing appeal of BIDV East Hanoi's offerings, thereby fostering the development of its retail operations.
The expansion of the distribution channel network is essential for BIDV East Hanoi to effectively reach and satisfy customer demand for retail products and services.
BIDV East Hanoi is enhancing and diversifying its retail banking products and services, introducing innovative features to traditional offerings while developing new, technology-driven solutions These advancements not only provide greater convenience for customers but also create promising revenue streams for the bank.
In recent years, the advancement of retail activities at the BIDV East Hanoi has focused principally on investment in size and quality Nevertheless, there are still several limitations following.
Retail banking at BIDV East Hanoi faces challenges due to a lack of intense competition and brand recognition, which hinders its ability to fully tap into market potential Additionally, the slow pace of product and service upgrades fails to address the evolving financial needs of customers Furthermore, the inflexible pricing policy contributes to heightened price sensitivity among clients, especially during economic prosperity, where aggressive price competition among banks is prevalent.
The BIDV East Hanoi branch faces challenges due to limitations in the professional expertise and processing experience of its staff, resulting in significant shortcomings in customer service Many consultants lack the specialized knowledge necessary to effectively address and clarify customer inquiries.
4.3.3 The cause of the limitations
The reasons for the drawbacks in the development of retail operations of the BIDV East Hanoi are considered on two aspects including objective reasons and subjective reasons.
The legal environment poses challenges for BIDV East Hanoi's retail operations, despite the State's support for the growth of commercial banks in this area Current legal frameworks are primarily designed for traditional transactions, involving numerous paperwork and complex procedures, which hinder BIDV East Hanoi's ability to enhance its retail services.
As the economy develops and living standards rise, customer expectations for retail products and services are becoming increasingly stringent This shift necessitates continuous improvement and innovation in retail offerings to effectively meet the evolving needs of consumers.
The retail banking sector is experiencing intense competition as commercial banks expand their offerings, resulting in a fragmented market share To remain competitive, domestic banks are investing heavily in technology to improve their products and services Additionally, the entry of foreign banks equipped with advanced technology is further challenging local institutions, making retail banking products quickly obsolete and eroding the competitive edge of traditional commercial banks.
The retail banking sector currently faces a significant gap in a comprehensive development policy for its products and services Furthermore, there has been insufficient investment in the creation of new retail banking offerings, and existing research on this topic remains inadequate.
BIDV East Hanoi faces challenges in the quality of its human resources, particularly in product distribution and promotion The branch lacks a well-trained team of experts with comprehensive knowledge and experience in retail banking products and services This deficiency hinders their ability to offer thorough advisory services to customers, ultimately limiting customers' access to and utilization of the branch's retail banking services.
The marketing performance of commercial banks has been largely overlooked, despite the similarity of their products A bank's brand that resonates closely with customers holds a competitive edge However, despite investments in promotional efforts, BIDV East Hanoi's marketing activities have yielded unsatisfactory results.