BASIS FOR PERSONAL CUSTOMER
THE BASIS OF REASONING ON THE LENDING ACTIVITIES OF
Lending by commercial banks refers to the process where a bank provides a customer with a specific amount of money for designated purposes and timeframes, based on an agreement that includes the repayment of both the principal and interest.
As the economy evolves, the lending business is becoming more diverse and comprehensive, necessitating banks to expand their lending activities to meet the growing demand for loans across various sectors This expansion requires a stringent management process to ensure safety and align with the bank's overarching goals Banks provide capital to customers, who then utilize these funds for profitable production and business investments, ensuring timely repayment of both principal and interest.
Lending is the most profitable yet risky activity for commercial banks, making it essential for them to conduct lending safely and effectively to ensure survival and growth Key principles include ensuring that borrowers use loans for their intended purpose to minimize credit risk, guaranteeing timely repayment of principal and interest as outlined in the contract, and lending only to feasible and effective projects with the capacity to repay debts By adhering to these principles, banks can achieve profitability through their lending activities.
Utilizing loans for their intended purpose is crucial for socio-economic development at various stages For economic organizations, it is essential that credit aligns with specific production and business objectives, enabling them to effectively achieve their operational goals and enhance overall productivity.
To ensure the stability and normal operation of commercial banks, it is essential that loans, including both principal and interest, are fully repaid within the agreed-upon timeframe outlined in the credit contract This principle is crucial as the bank's loan capital primarily consists of mobilized funds, which are essentially the property of the account holders that the bank temporarily manages Timely repayment is necessary for the bank to meet the withdrawal demands of its customers; failure to do so can significantly impact the bank's financial health and its ability to fulfill its obligations.
Loan guarantees must adhere to government regulations, as the provision of short-term credit by commercial banks enhances societal purchasing power and increases the money supply in the economy This rise in credit capital stimulates market demand and is closely linked to the movement of goods and the production activities of businesses It is essential to ensure the value of goods supplied alongside existing credits Loan guarantees can be established through various means, including mortgages, third-party guarantees, or by securing the loan with the property acquired through its use.
1.1.3.1 According to the loan term
- Short-term loans are loans with a term of less than one year.
- Medium-term loan: Is a type of loan with a term of 1 to 5 years.
- Long-term loan: Is a type of loan with a term of more than 5 years.
1.1.3.2 For the purpose of capital use
- Lending for production and business: Banks lend to organizations, businesses or companies to do business services or implement investment projects and production plans.
- Consumer loans: Banks lend to individuals or households to meet the needs of shopping for durable consumer goods such as houses, means of transportation
1.1.3.3 In the form of guarantees
Secured loans are financial products that require collateral, such as a mortgage or third-party assets, to mitigate the risk of default Banks often mandate collateral to protect against potential losses due to unexpected events that may hinder a borrower's ability to repay This requirement is particularly important for customers who do not have a strong credit history, as it provides the bank with an additional source of repayment beyond the borrower's business income As a result, the majority of loans today necessitate secured assets to ensure financial security for lenders.
Unsecured loans are financial products that do not require collateral, relying solely on the borrower's creditworthiness and reputation These loans are typically extended to well-established customers with a strong financial history and consistent profitability However, they pose a significant risk to banks, which must conduct thorough assessments of borrowers before approving such loans.
1.1.3.4 According to the nature of reimbursement
- Direct repayment loan: Is the type of bank loan in which the borrower is the one who has to repay the debt directly to the bank.
Indirect repayment lending refers to a loan where the borrower does not directly repay the debt This type of financing typically involves discounting coupons or valuable documents with a specified payment term or fulfilling factoring obligations.
- Installment loans: Loans are paid in many periods, re-contributed when enough principal and interest debt under the credit contract is terminated.
- One-time repayment loan: The loan and interest are paid once upon payment due.
- On-demand repayment loan: The loan is paid at the request of the lender or borrower.
1.1.3.6 In the form of loans
Loan by item is a lending method where customers must complete necessary credit procedures for each loan transaction with the bank This approach, often referred to as a loan each time, requires customers to submit a loan application tailored to a specific capital use purpose whenever they need funding.
Lending based on a credit line allows businesses to apply for a loan initially, after which they can borrow and repay funds as needed according to a pre-established contract This type of financing is ideal for companies that require regular capital replenishment and quick turnover of funds The bank sets a credit limit and opens a dedicated loan account to effectively monitor the borrowing and repayment activities of the business.
- Other lending methods include: Advance lending, overdraft lending, co- financing and other types of lending.
Lending is a fundamental banking activity and a key asset for banks, encompassing a range of options from short-term to long-term loans Longer loan terms typically carry higher risks, which is reflected in the increased interest rates for long-term loans compared to short-term lending Short-term loans are primarily utilized for household expenses, purchasing materials, paying wages, and supplementing working capital to address immediate financial needs.
Short-term lending offers greater liquidity, serving as a safeguard for banks against insolvency In contrast, medium and long-term loans are typically directed towards expansion, infrastructure development, and technological innovation, which often do not yield immediate profits Consequently, these loans have lower liquidity and higher risks, necessitating the highest interest rates among various credit types.
The quality of medium and long-term loans significantly enhances bank profitability, with specialized banks holding a competitive edge due to their capital strength and focus on these types of lending While multipurpose banks can also engage in medium and long-term loans through capital and sponsorship contracts for large projects, they must navigate the challenges of capital misappropriation and interest costs during the loan period Consequently, a balanced approach in the bank's business plan is essential, prioritizing both general lending and medium to long-term lending needs.
The bank aims to strengthen its relationship with customers beyond lending activities by offering services such as payment deposit accounts, payment services, and guarantees This approach enables customers to enhance their production and business operations while fostering a more dynamic credit relationship with the bank As a result, this sustainable partnership not only benefits customers but also contributes to the expansion of the credit market.
THEORETICAL BASIS FOR LENDING ACTIVITIES FOR
1.2.1 Concept of personal customer lending of commercial banks
An individual customer is a person who has is will use the service and use banking products and services for their personal or family purposes.
1.2.1.2 Concept of personal customer lending
Personal customer lending involves a bank providing capital to an individual for consumption, small-scale production, or business activities, under specific contractual conditions.
CHARACTERISTICS OF PERSONAL CUSTOMER LENDING
The duration of short loans
Business customers typically utilize loans to finance fixed assets or construct factories In contrast, the majority of loans for individual customers are short-term, with very few options available for medium- or long-term financing.
Individual customer loans are typically secured by the borrower's income; however, unforeseen circumstances like illness can lead to a decline or total loss of that income Central banks have historically been cautious about lending to individuals due to these risks, which are challenging to manage and assess Nevertheless, recognizing the significant revenue potential from lending to individual customers, central banks are now shifting their focus towards this market and enhancing their risk management strategies.
The loan is of small value but the number of loans is large.
IC borrowing is a crucial aspect for households aiming to enhance their export capabilities, often requiring small amounts for effective management Compared to other businesses, IC's borrowing clauses are significantly more frequent, though they typically encounter challenges Despite these hurdles, IC remains a key player in the market The borrowing clauses often face issues related to delivery and timing, which can hinder growth Given the high volume of borrowing clauses, it is essential for IC to adopt proactive measures to ensure effective management and maximize the benefits of their borrowing strategies.
To mitigate risks in lending, banks invest significant time and resources into thorough loan appraisal and supervision Additionally, the challenge of obtaining accurate personal information often leads central banks to incur high costs, balancing the need for safety in loans against the inherent risks involved.
The interest rate is usually higher than the interest rate of other loans.
Interest rates for individual customers are typically higher than those for other loans from the central bank This is due to the smaller loan sizes and the significant costs associated with processing these loans, including time, human resources, appraisal, and management expenses To counterbalance these costs, central banks implement elevated interest rates for individual borrowers.
1.3.1 Classification of individual customer loans
Individual customers often borrow small amounts for production and consumption purposes.
- Short-term loan: Is a credit of less than 1 year and is used to supplement the temporary shortage of working capital of customers for the purpose of family living.
- Medium-term loan: Is a credit with a term of 1-5 years, usually to provide, buy fixed assets, serving the high-value production and business needs of the household.
- Long-term loan: Is a credit with a term of 5 years or more, in order to meet the needs of households such as large production, buying high-value housing.
1.3.1.2 Classification by capital use purpose
- Consumer loans: This is a form for individuals wishing to purchase assets for family activities.
Lending for production and business is a specialized form of credit designed to support production and business establishments This type of financing facilitates the procurement of machinery and equipment, as well as the provision of essential working capital, ultimately promoting business growth and operational efficiency.
- Secured loans with assets: Are the form of mortgage loans, collateral or third-party guarantees.
- Secured loans have no assets: also known as trusts, no collateral or third- party guarantees.
1.3.2 The role and necessity of lending to individual customers
Personal loans play a crucial role in stimulating economic sectors by providing essential capital support for individuals to meet both basic and luxury needs, ultimately enhancing their quality of life As customer demands rise, economic sectors are compelled to increase production, leading to job creation and fostering competitiveness against both domestic and international rivals during the integration phase.
Personal lending plays a crucial role in enhancing social stability by effectively utilizing idle capital within society It facilitates the smooth and efficient circulation of funds, transferring excess capital to areas in need and optimizing resource allocation from low to high efficiency.
Personal lending plays a crucial role in boosting economic demand and enhancing capital efficiency, which in turn fosters domestic production This financial support encourages a diverse workforce to engage in job creation, aligning with social objectives such as eradicating hunger, alleviating poverty, increasing income, and mitigating social issues, ultimately contributing to the stability of social order.
Contribute to improving the brand for the bank
The expansion of personal loans significantly enhances the bank's brand image by attracting a large customer base These loans not only provide financial support to customers but also enable banks to effectively cross-sell various retail banking products and services, including savings accounts, payment transactions, salary transfers, card issuance, and e-banking solutions By offering a comprehensive personal financial services package that caters to diverse customer needs, the bank can distinguish itself from competitors, ultimately strengthening its brand presence in the market.
Contributing to the dispersion of risk to the bank
Focusing solely on lending to corporate clients with significant capital requirements can pose risks for a bank, as any challenges these businesses face in meeting their financial obligations can severely impact the bank's overall performance.
To mitigate risk, banks adhere to the principle of "not putting all eggs in one basket" by diversifying their personal lending portfolios By serving a large number of individual customers with relatively small loan amounts, the impact of any single customer or a few customers defaulting on their loans is minimized, ensuring the overall stability of the bank's operations.
Human life encompasses both material and spiritual needs, which have become increasingly diverse and elevated due to economic development The fulfillment of these needs, ranging from basic essentials to luxury items, is contingent upon current financial capability.
Personal credit provides consumers with greater flexibility in addressing their needs by allowing them to access funds without needing to save upfront This approach enables individuals to fulfill their immediate requirements while managing repayment over time By opting for bank loans, consumers can prioritize their current consumption and subsequently focus on accumulating resources to repay the borrowed amount.
This role is crucial for purchasing high-value essential items like homes and cars, as well as for urgent expenses related to health issues or weddings Rather than resorting to expensive loans from external sources, customers can opt for secure bank loans that offer reasonable interest rates and flexible repayment terms.
OF PERSONAL CUSTOMER LENDING
OVERVIEW OF BIDV BANK – HAI VAN BRANCH
2.1.1 History of establishment and development of BIDV Bank – Hai Van Branch
The Vietnam Investment and Development Bank – Hai Van branch was established on November 25, 2014, under regulation No 294/QD_HQT by the bank's Board of Directors This level 1 branch was created by separating and upgrading the former level 2 branch of The Inter-Chieu Investment and Development Bank, which was previously part of the Bank for Investment and Development of Da Nang City.
On April 23, 2012, the Vietnam Investment and Development Bank transitioned to a joint stock model, leading to the renaming of its Hai Van Branch to Vietnam Investment and Development Joint Stock Bank – Hai Van Branch (BIDV Hai Van) Located at 339 Nguyen Luong Bang, Lien Chieu District, Da Nang City, BIDV Hai Van has made significant progress despite facing intense competition from other banks and the challenges posed by the economic recession in 2008, as well as the tough business environment in 2012.
The branch operates three transaction offices in Thanh Khe district and one in Hoa Vang, facilitating easy access and marketing to customer partners, particularly residential clients in the downtown area By leveraging modern banking technology, the branch continually enhances and diversifies the quality of its banking products and services.
Since October 2008, BIDV Hai Van has embraced a "customer-oriented" approach under the new TA2 model, aiming to establish itself as a leading retail bank dedicated to meeting the needs of each customer The branch is committed to leveraging its strengths and capabilities to achieve its economic and political objectives, thereby contributing to the overall development of the city.
2.1.2 Organizational structure of BIDV Bank Hai Van branch
BIDV Hai Van operates under an online model, with a direct CEO overseeing all bank activities The Deputy Directors assist the CEO in managing various branch operations and specific professional departments as designated by the CEO Each department head is responsible for guiding their teams to function effectively in line with the tasks and responsibilities assigned by the CEO.
BIDV Hai Van has 10 departments, including 4 transaction offices: Thanh Khe transaction office, Hue Fork trading office, Le Dinh Ly transaction office, Hoa Vang transaction office.
Organizational model of BIDV Hai Van
(Source: BIDV Hai Van Administrative Organization Department)
Diagram 2 1 Organizational structure model of BIDV Hai Van
(In charge of enterprises and fans)
Deputy Director (PT Operations & QLRR)
Deputy Director (PT Retail and Online)
P.TradingVang District Flower DistrictDIRECTOR
2.1.3 Functions and tasks of departments at BIDV Hai Van
- Director: general management and operation of the branch's business activities, responsible for all business results of the bank.
The Deputy Director, appointed by the Director, is responsible for managing specific tasks and overseeing professional departments within the Branch's organizational structure In the absence of the CEO, the Deputy Director assumes the role of the Executive Director and is accountable to the Director for all decisions made during this time.
The Corporate Client Department focuses on establishing and nurturing marketing relationships with business customers, providing marketing support, consulting, and guidance based on customer records This includes analyzing customer feedback and credit insights to recommend loans, guarantees, trade finance, and capital mobilization solutions Additionally, the department is responsible for monitoring the capital loaned to clients and managing their credit relationships and guarantees.
- Personal customer room: functions and tasks are the same as the corporate customer room But the customer is individual.
- Credit administration department: disbursement, notification of debts due, coordination of risk provisioning, debt classification, credit record keeping, guarantee, information management, making credit reports and statistics, managing customer information records.
The risk management department is responsible for overseeing credit management through comprehensive supervision, analysis, and appraisal of potential risks This includes conducting credit ratings, evaluating proposals for approval of credit limits, and suggesting adjustments to credit lines to mitigate bad debt Additionally, the department collects and classifies credit information, manages operational risks, and implements anti-money laundering measures, including first-aid laundering prevention and handling suspicious activities Furthermore, it ensures compliance with ISO quality management standards and conducts internal and professional inspections to uphold operational integrity.
- + Manage accounts and transactions with customers, transfer money,international payments, check deposit transaction documents and secure transaction activities The audience is all the customers.
+ Monetary and treasury functions: functions as a parent fund, manages revenues, spends cash transactions, the situation of bank revenues and expenditures, manages the records of collateral, mortgages of customers.
The Administrative Organization Department plays a crucial role in managing human resources activities, including personnel and salary management It is responsible for organizing training and retraining programs for staff, handling administrative correspondence, and ensuring that professional departments have the necessary support to perform their tasks effectively.
Transaction offices play a crucial role in the banking sector by marketing directly to customers and offering a range of deposit products and services They focus on personal credit, customer care, and actively engage in receiving and processing customer feedback Additionally, transaction offices provide expert advice and guidance to customers while mobilizing capital and extending credit Their services also encompass various banking operations, including payments, money transfers, wire transfers, and foreign currency exchange.
+ Management of business plan, announcement of interest rate, capital situation, implementation of foreign currency trading activities with the Central Bank, statistical report on summary of business activities of branches
+ Synthesize and report on activities related to finance and accounting of branches, perform internal expenditure accounting Organization, guidance on implementation, inspection of accounting and accounting and accounting reporting regime
2.1.4 Results of operations of BIDV Hai Van Bank in the past time
Table 2.1: Bidv Hai Van's capital mobilization situation in the period of
% Amount of money % Amount of money %
(Source: BIDV Hai Van Financial Planning Department)
BIDV Hai Van prioritizes capital mobilization as a key strategy for achieving significant growth, focusing particularly on low-cost capital From 2019 to 2021, the branch has successfully implemented a diverse range of products, leading to a consistent upward trend in mobilized capital.
In 2020, there was a significant increase of VND 1,305 billion, reflecting an 11.77% rise compared to 2019 The following year, 2021, also saw growth with an increase of VND 1,273 billion, which corresponds to a 10.27% increase from 2020 These figures highlight the fluctuations in various types of capital raised during this period.
In 2020, residential deposits emerged as the primary source of capital for banks, totaling VND 6,208 billion, a 3.92% increase from 2019 This trend continued into 2021, with deposits rising to VND 6,543 billion, reflecting a 5.4% growth Despite the challenges posed by the Covid-19 pandemic, the bank implemented various capital mobilization strategies, including attractive deposit packages through Smart Banking, BIDV Online, and BIDV Bankplus, offering an additional 0.2% interest for terms of 3-11 months These initiatives not only provided convenience and health safety during the pandemic but also included incentives such as high-value lottery prizes for customers maintaining a minimum balance.
In 2020, deposits from the stock market totaled VND 4,543 billion, marking a 23.48% increase from 2019, or an additional VND 864 billion In 2021, this figure rose to VND 4,751 billion, reflecting a 4.58% increase compared to the previous year, which is an increase of VND 208 billion This data indicates that the demand for depositing stock market earnings into banks remains relatively stable.
BIDV Hai Van has implemented a range of attractive policies aimed at securing a stable influx of deposits from the stock market These include the option for customers to freely choose aesthetically pleasing 4-digit digital accounts, a 50% discount on selecting appealing 7-digit accounts, and the elimination of annual fees and money transfer charges on e-banking services Additionally, the bank offers free salary payments and list-based transactions, along with complimentary integration of the customer's system.
GENERAL ASSESSMENT OF PERSONAL LOANS ACTIVITIES AT
- Hai Van Branch Vietnam Investment and Development Joint Stock Bank has created a certain reputation and trust for customers, promoting the operation of the branch growing.
- Customers continue to increase, outstanding debt continues to increase over the years.
- Management of science, priority of human resources work, policy issues to ensure transparency and publicity in IC lending activities
Lending to individual business customers aligns with the bank's operational environment, ensuring consistency and synchronization with the overarching goals of the personal credit segment.
The Branch has successfully enhanced its income and business efficiency by promoting lending to individual customers By implementing various credit programs and preferential policies, the Branch offers competitive interest rates and service charges, facilitating timely access to capital This support helps customers overcome challenges and invest in the expansion of their production and business activities.
Lending to individual customers is integral to the development of various banking products and services, including capital mobilization, ATMs, and e-banking solutions To enhance these offerings, the branch has consistently explored innovative policy proposals and credit products, ensuring full compliance with regulatory standards in lending practices.
Consumer loans at bank branches are generally lower than business loans due to the risks associated with large consumer lending and the high costs of managing these loans Banks prioritize production and business lending to optimize branch costs and minimize expenses related to lending Although the lending process for production and business loans is more complex and time-consuming, banks continue to promote these loans to enhance their operational efficiency.
Between 2019 and 2021, short-term loans were typically lower than medium-term loans, primarily as a strategy to mitigate risks associated with lending, especially as customers faced numerous challenges The ongoing complexities of the COVID-19 pandemic have heightened the demand for loans among current and post-pandemic clients, who require funding for production, business operations, liquidity management, payroll, rent, and supplier payments Consequently, banks must prioritize strategic planning to address these needs Additionally, the pandemic's impact on socio-economic activities has made it crucial for banks to increase their charter capital, thereby bolstering reserves and minimizing the risk of rising bad debts.
For loans in the form of guarantees
Banks prefer lending with collateral over unsecured loans to significantly mitigate the risk of default, ensuring greater security in case customers are unable to repay their debts.
For lending by lending method
+ The form of overdraft lending and credit limit is lower than the loan by item. Because
- Debt management is still difficult, bad debts show a slight increase.
The current KPI assessment criteria for evaluating human resources are not yet fully developed or standardized, failing to meet the specific requirements for each position held by staff and employees This lack of a systematic approach undermines the effectiveness of the evaluation process.
The post-lending inspection and supervision by credit officers remains insufficient, leading to a lack of focus on core products and their associated benefits Additionally, the product names are often generic and unremarkable, failing to generate interest among potential customers in the area.
- The cause of the bad debt increase is partly due to the customer rating and credit appraisal still showing the manifestation of the form.
- Due to chasing sales, credit officers still loosen the lending conditions leading to bad debts still many
- Although there is a set of criteria for evaluating quotas for employees, but at the branch is not really completed, so many officials still do not really do their ability
- The post-loan inspection is still limited, so the debt revenue has not increased much over the years
Chapter 2 briefly introduced the history of formation and development, organizational structure as well as business activities of BIDV Hai Van, including capital mobilization, capital use, a number of activities service activities, and business results of the branch over the three years 2019, 2020, 2021.
Chapter 2 evaluates the quality of lending activities to individual customers at BIDV Hai Van, utilizing data tables and graphs to analyze key metrics such as loan turnover, debt collection turnover, average outstanding balance, bad debt, and bad debt ratio This analysis reveals the current state of lending quality, identifies existing limitations, and examines their underlying causes These insights will serve as a foundation for proposing solutions and recommendations aimed at enhancing the quality of loans for individual customers at BIDV Hai Van in Chapter 3.
CHAPTER 3SOLUTIONS TO COMPLETE CUSTOMER LENDING ACTIVITIESINDIVIDUALS AT INVESTMENT AND DEVELOPMENT JOINT STOCK
VIEWS AND ORIENTATIONS OF INDIVIDUAL CUSTOMER
Vietnam Investment and Development Joint Stock Bank Hai Van branch. 3.1.1 Orientation of personal customer lending activities at Vietnam Investment and Development Joint Stock Bank Hai Van Branch until 2030
BIDV Hai Van is committed to comprehensive innovation in its business activities, aiming to maintain and enhance its achievements amid the fluctuating banking and finance market The bank is focused on establishing a clear direction for its IC lending activities in the near future.
Bidv Hai Van target market is da Nang city, which in recent years has seen quite high growth compared to the provinces in the region Per capita income in
2021 reached VND 83 billion, the economic structure shifted positively, the industrial, construction and service sectors played a leading role Budget revenue is always in the top 5 highest cities in the country.
The potential for expanding IC loans, encompassing both consumer and business loans, is significant in the current market Evidence from the IC loans sector indicates that customers are open to increasing their loan amounts, provided that banks address existing issues in their service delivery processes.
Despite the presence of numerous credit institutions offering IC lending services in BIDV Hai Van's target market, competition remains intense However, BIDV Hai Van's market share in IC loans is steadily growing, though it has yet to fully reflect its potential capabilities.
The specific operation orientation of BIDV Hai Van in the coming time is as follows:
BIDV aims to evolve into a modern retail bank by offering a wide range of multipurpose banking services designed for the convenience of individuals and households The bank plans to expand its network by opening transaction offices and points in residential areas and businesses, thereby increasing its operational scale and competitiveness to dominate the market.
Since 2015, BIDV Hai Van has been actively modernizing its information technology systems, leading to effective project implementation While some aspects are still in progress, the bank's robust technology platform enables the deployment of modern applications This advancement facilitates the introduction of innovative credit products, providing significant benefits to individual customers and enhancing operational management efficiency.
BIDV Hai Van has established a diverse customer base, encompassing a significant number of depositors, loan clients, and users of various services The bank focuses on retaining its existing customers while actively attracting new ones and enhancing the range of products and services offered to each client.
+ Improve the operational efficiency of the staff related to retail credit, especially the staff of individual customers.
To maintain financial health, the goal is to lower the bad debt ratio to below 1% by 2022 Additionally, it is essential that the growth rate of income from retail credit activities surpasses the increase in operating costs associated with retail credit.
+ The average growth rate over the years reached 20% - 25%, increasing both in credit balance and the number of customers but still ensuring safety, efficiency and quality.
The overdue debt ratio remains at less than 1%.
To effectively shape our business strategy for the upcoming period, it is essential to analyze customer tastes and needs We will continue to prioritize the development of our production and business lending services, particularly focusing on car loans and housing loans Additionally, we will ensure the availability of overdraft loans and salary advances for individuals in the administrative and business sectors.
3.1.2 Views on innovation of individual customer lending activities at Vietnam Investment and Development Joint Stock Bank Hai Van Branch.
In the near future, BIDV Hai Van aims to broaden its operational scope and attract new individual customers by enhancing outstanding loans The strategy includes targeting potential markets in surrounding areas, improving service quality, and refining loan products tailored for individuals This approach will create a comprehensive system of products and services designed to maximize the benefits of banking technology for individual customers.
To enhance the lending experience for individual customers, it is essential to refine the regulatory process and elevate the professionalism of customer service Establishing distinct areas for business and personal clients will create a dedicated personal client room, serving as a central hub for interactions between the bank and individual customers.
Diversify the product portfolio offered to individual customers in a way that suits the needs of the target market and selected market segments.
- Establish more transaction offices in areas with economic potential, densely populated areas to develop personal customer lending activities.
- Continue to renovate the structure of IC lending
- Continue to improve the quality of service provision.
- Conduct a thorough study of the mayor, actively and actively seek out to customers.
SOME SOLUTIONS TO COMPLETE PERSONAL CUSTOMER
Vietnam Investment and Development Joint Stock Bank - Hai Van Branch 3.2.1 Main solution
To enhance customer engagement, businesses should adopt a proactive approach by reaching out to individual customers rather than waiting for them to initiate contact at headquarters or transaction points Given the diverse characteristics of individual customers, actively engaging with them is crucial for stimulating their credit needs Consequently, credit officers must take the initiative to reach out, offer suggestions, and provide guidance on loan options tailored to this customer segment.
To build an effective direct sales team, it is essential to train employees in specific skills that enable them to engage with customers both at work and home, acting as intermediaries between clients and the bank This team should focus on problem-solving, fostering long-term relationships, and cross-selling products Key training areas include effective communication of technical information, understanding all offered products, and managing time efficiently Additionally, implementing reward and incentive policies based on performance can strengthen the bank's brand in the target market.
3.2.1.2 Improve the quality of technology.
To enhance customer engagement and service delivery, banks should leverage electronic communication channels such as Internet Banking, Home Banking, and Mobile Banking, while integrating traditional distribution methods A key focus should be on improving the bank's image and positioning in the eyes of individual customers Establishing a robust system of technical facilities is crucial for an effective banking marketing strategy The bank's headquarters serves as a critical touchpoint, influencing customer perceptions of safety, financial strength, and the variety of products and services offered To foster customer satisfaction, banks must invest not only in an attractive physical presence but also in advanced equipment and technology Upgrading software and establishing comprehensive internal information systems will enhance operational efficiency, accuracy, and convenience, ultimately providing timely and precise information that supports effective bank management.
The integration of information technology in personal customer lending and infrastructure investment is crucial for success While having suitable products is important, ineffective technology can hinder deployment Effective technology enables rapid and efficient implementation of systems, significantly saving time Additionally, it allows bank officials to easily manage, track, and analyze products, enhancing overall operational efficiency.
Vietnam Investment and Development Joint Stock Bank boasts a modern technology system that efficiently analyzes key metrics for various professional departments, including outstanding debts, overdue debts by groups, and loan terms categorized by product This comprehensive database enables the product development team to create market-responsive financial products.
BIDV Hai Van should leverage modern technology by offering high-tech financial products, such as overdraft loans linked to customer accounts This allows customers to withdraw funds via ATM cards that exceed their deposit account balance, while the bank monitors these transactions online through its advanced computer system.
+ Personal business loans: customers with a limit at the bank, can withdraw money automatically via ATM card for their business activities.
Customers can conveniently manage their accounts, check outstanding debts, and make payments online using secure access codes, eliminating the need for in-person bank visits A bank's modern and spacious facilities enhance its image, instilling a sense of trust and professionalism that attracts more clients Currently, BIDV Hai Van is standardizing its facilities and updating its brand identity to strengthen its market presence By expanding its network, BIDV aims to improve customer accessibility and increase brand visibility, ultimately encouraging more individuals to utilize its services and establish loan relationships.
3.2.1.3 Improving the quality of staff
To enhance the quality of staff lending to individual customers and reduce the risk of bad debts while increasing customer satisfaction, it is essential to prioritize human resources, which are pivotal to the success of any banking activity In IC lending, the quality of credit and service delivery is heavily influenced by the capabilities of credit officers Therefore, organizations must implement comprehensive training programs that focus on professional expertise, marketing, sales skills, contract negotiation, and business culture Standardizing credit officers and removing those who display weak moral character, dishonesty, or lack of professional knowledge is crucial A competent credit officer, characterized by a swift working style, solid qualifications, and a positive service attitude, can significantly enhance customer retention and attract new clients In today's competitive market, where banking products are largely similar, the differentiation between banks lies in the service style and customer interactions of credit officers and employees To elevate the quality of staff in IC lending, adopting these fundamental measures is imperative.
+ Organize the design and regular implementation of technical training programs capacity for each specific job and professional for all employees doing personal customer relations work.
+ Strengthening knowledge training on retail credit products, skills
Marketing for personal customer relations officers to directly introduce and advise for customers to choose and use appropriate and special IC lending products Especially close and important customers.
Linking training outcomes with the appropriate assignment of personnel is crucial for optimizing workforce efficiency By ensuring that the right individuals are placed in roles that match their skills, organizations can enhance productivity and foster a culture of innovation among staff Additionally, implementing a systematic rotation of positions allows for a more effective alignment of tasks with professional capabilities, ultimately driving organizational success.
Regular training sessions for customer relations officers on retail banking products and services are essential These sessions should include assessments of retail credit activities to identify challenges and obstacles in product implementation By combining training with surveys, banks can effectively address issues and implement timely remedies to enhance service delivery.
To enhance the performance of credit officers in IC loans, it is essential to implement motivating policies that focus on both the material and spiritual well-being of employees Attractive recruitment, training, and incentive strategies are crucial for retaining quality officials and fostering a culture of self-improvement Banks must establish clear requirements and reward systems to encourage employees to develop their moral qualities and maintain a professional, customer-focused working style Although BIDV Hai Van prioritizes university education for recruitment, many young officers lack practical banking skills Therefore, continuous training and professional development are vital for credit officers to meet the demands of their roles effectively.
3.2.1.4 Strengthening credit risk control measures
The core solutions that need to be implemented by the bank include:
Implementing a scoring and rating system for individual customers is essential, particularly for business clients with substantial loan amounts Currently, the credit rating process at the branch is limited to corporate customers, which hinders employee performance and risk management To better meet customer needs and enhance overall service quality, it is crucial to adopt a comprehensive credit scoring system for individual customers.
BIDV Hai Van evaluates individual customers seeking credit by implementing a grading and ranking system based on a suitable model To enhance the effectiveness of this approach, the bank must continually analyze and adapt to real-world changes.
Individual customer loan departments need to set up inspection plans in accordance with the regulations with all the basic contents such as:
+ Appropriateness in the purpose of customers using loans
+ Implementation of commitments under credit contracts
+ The current status of assets formed from loans, balance of assets with outstanding loans, signs of incompetence related to the financial and non-financial situation of customers.
This content is very important for assessing usability.
Capital and goodwill to repay the customer's debts.
To enhance the quality of loan appraisals, BIDV Hai Van must prioritize correcting appraisal processes and addressing superficial manifestations Emphasizing the reliability of information is crucial, as the quality of loan appraisals significantly impacts both the bank and its customers Implementing targeted solutions in the near future will be essential for improving appraisal quality.
Appraisal work demands bank officials to possess not only strong professional skills but also a comprehensive understanding of various fields and practical knowledge across multiple industries to accurately assess borrowers Additionally, credit officers must have a thorough grasp of relevant laws and regulations at both state and local levels Consequently, ongoing training and retraining of employees are crucial for enhancing the quality of appraisal services.
SOME PROPOSALS AND RECOMMENDATIONS
3.3.1 For Vietnam Investment and Development Joint Stock Commercial Bank
- Firstly, strengthen marketing for branches in the same system
Joint Stock Commercial Bank for Investment and Development should enhance its marketing efforts at each branch by establishing independent marketing departments or increasing budgets for marketing and customer care This investment is crucial for expanding lending activities and other services, enabling branches to effectively implement strategies for attracting individual customers and successfully achieve the business objectives outlined by the Head Office.
- Secondly, develop and train resources to receive resources
To enhance the quality of its workforce, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) should focus on expanding training programs for capable and promising staff across the organization This includes organizing additional training sessions and inviting experts to help elevate employee qualifications Implementing reward and recognition programs will motivate staff to pursue professional development, while reasonable incentive structures will encourage adherence to rules and discipline Regular, unscheduled evaluations of employee performance and behavior should be conducted to establish a clear reward and accountability system Moreover, effective recruitment strategies are essential for building a strong team of professionals within the bank.
To enhance operational efficiency and meet increasing planning targets, ST Bank for Investment & Development of Vietnam must address the staffing challenges faced by its branches Currently, branch personnel are overwhelmed with multiple tasks, which hampers their ability to achieve goals and maintain high work quality To resolve this issue, it is essential to gather feedback from branches regarding personnel needs, enabling the bank to strategically plan recruitment and training efforts that align with the demands of their assigned responsibilities.
- Third, build an advanced and modern credit management system
BIDV Bank must establish effective credit management systems to streamline loan appraisal and approval processes, ensuring timely decision-making It is essential to develop a comprehensive credit documentation system that aligns credit limits with specific industries, products, and customer groups, while managing credit lines effectively for each credit officer Additionally, enhancing the credit risk limitation mechanism for personal loans through clear decentralization of judgment levels and departmental functions is crucial Implementing suitable policies will further mitigate credit risks Strengthening inspection and supervision of credit activities is vital for early detection and intervention To foster healthy bank growth, reducing overdue debt is imperative, facilitating smooth capital turnover between the bank and its customers By adopting targeted measures, BIDV Bank can effectively limit overdue debt, thereby enhancing its operational efficiency and credit growth.
To ensure financial stability within the system, it is essential to establish comprehensive and effective credit policies for all branches Implementing a robust debt renewal policy, along with strategies for debt reduction and repayment term adjustments, is crucial These measures should be initiated upon customer requests for extensions, necessitating regular monitoring of their debt status Timely reminders for repayment should be issued, and if customers encounter difficulties, they should be encouraged to apply for extensions to manage their debt effectively The credit department must review these requests and present them to the board of directors, ultimately facilitating support for customers facing temporary economic challenges.
Effective management of overdue debt requires regular monitoring to ensure that banks have an accurate understanding of their outstanding debts Tailored solutions should be implemented based on the specific status of each debt, recognizing that while immediate repayment may not be feasible for some customers, economic recovery can enable them to fulfill their obligations in the near future It is important to avoid permanently liquidating assets for debt recovery, as many customers may eventually be able to repay their debts.
BIDV Bank should focus on creating a diverse portfolio of innovative products and services powered by modern technology, emphasizing the development of competitive offerings that distinguish it from other banks and enhance its brand identity This includes establishing a range of standardized retail products tailored to specific customer segments, alongside a comprehensive system of regulations and internal processes for risk management and interdepartmental operations Particular attention must be given to developing credit handbooks, customer loan assessment guidelines, and strategies for managing bad debts, all aimed at facilitating quicker loan processing for customers.
SB should enhance professional qualifications by organizing additional training sessions and facilitating experience exchanges within the banking industry This approach will deepen understanding of both theoretical concepts and practical applications for ICOs while fostering collaboration among employees Furthermore, it is essential to regularly synthesize and analyze market information to make objective and scientific judgments about retail credit activities This will provide employees with a solid foundation for developing informed credit policies, ensuring sustainable growth while mitigating risks.
To foster the development of iLending, SB must establish a comprehensive framework of legal documents In the near future, SB should release specific guidelines for the various products and services offered by CB, alongside supportive documents that encourage CB's growth This initiative will create a clear legal framework that safeguards employee rights and promotes the advancement of this sector.
SB must enhance its credit information center by integrating advanced technology and consistently updating customer data This will ensure that when individuals or businesses encounter issues with a credit institution, other institutions are promptly informed Such improvements will help eliminate unfair competition and prevent the concealment of information among credit institutions.
To propose the State Bank to develop a separate regulation on IC lending of
The introduction of a dedicated law on IC lending will empower banks and credit institutions to expand their customer lending capabilities in this promising market By providing comprehensive guidance documents on various types of IC loans, this legislation will serve as a crucial foundation for fostering growth and development in the lending sector.
3.3.3 For governments and local authorities
To enhance economic stability, it is essential for the State to effectively manage macroeconomic regulations while respecting market economy principles This involves ensuring adequate capital and liquidity, fostering investment growth, controlling inflation, and safeguarding the banking and financial systems A stable financial and monetary framework, supported by a robust legal system, creates equal and comprehensive development opportunities for all economic participants.
The government must instruct local committees and relevant state agencies, such as the Department of Natural Resources and Environment, to expedite the issuance of home ownership and land use rights certificates for households and individuals This initiative will enable citizens to use these assets as collateral for bank loans By effectively implementing this process, banks will likely see an increase in secured loans, as borrowers will have tangible assets backing their financial requests.
Provincial and city People's Committees must establish housing price brackets that align with current market rates to protect the rights of consumers and financial institutions during the real estate valuation process for debt collateral.
The government must promote the advancement of information technology, as it plays a crucial role in modernizing the banking sector By implementing modern information technology in administrative management, the government can effectively manage individual data related to employment and identity A robust personal information management system would enable banks to offer unsecured personal loans to customers, including managers and employees, by quickly verifying income sources and personal credibility This approach would reduce investigative costs, streamline loan application processes, and minimize paperwork.