THE BASIC THEORY OF COMPETITIVENESS IN BANK
Competition and roles of competition
The concept of competition in the economy originates from commodity production, becoming increasingly prominent with the rise of the capitalist commodity economy As Karl Marx (1978) noted, competition represents the fierce struggle among capitalists to secure advantageous conditions for the production and consumption of goods, ultimately aiming to achieve excess profits.
Competition, as defined by the British Business Dictionary (1992), refers to the fierce rivalry among business professionals striving for the same resources and customers This intense battle highlights the challenges businesses face in attracting and retaining their target audience.
According to the Vietnamese dictionary (2002), competition is defined as the effort to outperform others among individuals and organizations seeking similar benefits Researchers suggest that competition involves one party striving to excel over others, which can include individuals, businesses, or countries While the primary goal of competition is to achieve victory, it also encompasses elements of cooperation, ensuring that competitive activities yield reasonable benefits for all participants and stakeholders involved.
Economic competition originated from commodity production and encompasses various interpretations Generally, competition is defined as the vigorous rivalry among market participants offering similar or identical products, aiming to capture market share and enhance revenue and profits.
With the constant change in demand and the greedy nature of human, competition in the market economy has brought about the leaps and bounds of human society
Competition has some basic roles as follows: a Roles on national economy
Competition serves as a vital catalyst for the advancement of economic components within a market economy, fostering the elimination of monopolies, irrational practices, and inequalities in business It accelerates scientific and technological progress while enhancing labor allocation Furthermore, competition drives product diversification to meet society's evolving demands, stimulates development needs, creates new market opportunities, and ultimately improves the quality of social life and economic growth.
While competition can drive innovation and growth, it also gives rise to significant challenges such as counterfeit products, trafficking, and tax evasion These issues contribute to market instability and result in losses for both the state and consumers Additionally, enterprises play a crucial role in navigating these challenges and ensuring a fair marketplace.
Competition acts as a filter for enterprises, enhancing their competitiveness and playing a crucial role in their survival and growth It serves as a driving force that compels businesses to seek solutions for improving production and operational efficiency To thrive, enterprises must conduct thorough market research to understand consumer demand, enabling informed decisions regarding production and business strategies Additionally, businesses are required to enhance their service offerings and invest in advertising, promotions, and guarantees to effectively meet market needs.
In a competitive market, businesses must deliver high-quality products to meet the ever-evolving demands of consumers To achieve this, companies should integrate the latest scientific and technological advancements into their production and business processes, enhance management practices, and elevate the skills and capabilities of their workforce This strategic approach is essential for fostering enterprise growth and development.
Competition drives enterprises to reduce expenses and lower product prices while leveraging technological advancements to enhance labor productivity This competitive environment fosters improved production quality and a diverse range of products, benefiting both consumers and businesses As a result, companies are motivated to innovate and develop new offerings, such as Domestic and International Debit Cards, International Credit Cards, ATM services, and POS services, to meet the ever-increasing demands of consumers.
Entrepreneurs thrive in markets where consumer demand exists and profit potential is high The dynamic interplay between consumer needs and a business's competitive response drives prices for goods and services to their lowest possible levels Ultimately, consumer demand shapes the strategic direction of business activities.
Competition drives improvements in product quality, design, and diversity, allowing consumers to select items that best fit their preferences and budgets As a result, consumers enjoy enhanced benefits, including superior pre-sale, during-sale, and post-sale services, which cater to their needs more effectively This competitive environment not only satisfies consumer demands but also encourages the integration of scientific and technological advancements in business practices.
To meet market demands effectively, businesses are increasingly leveraging advanced scientific innovations to enhance product quality and minimize production costs The rapid evolution of information technology underscores the significance of competition in driving scientific and technical advancements.
In accordance with Hoang Trung (2015a), based on the different concepts and roles of competition, competition can be classified into various form: a Based on the subjects participating competition
Competition between buyers and sellers is driven by the desire to maximize benefits, with sellers aiming to sell at the highest price for optimal profit and buyers seeking the lowest price while ensuring quality Ultimately, the final price is determined through mutual agreement between both parties.
Competition among buyers arises when demand exceeds supply, resulting in shortages in the market To fulfill their needs, buyers are often willing to pay higher prices, intensifying competition among them Consequently, this heightened rivalry drives up the prices of goods.
In a market economy characterized by an oversupply, competition among sellers becomes exceptionally intense, as businesses strive to attract customers who hold significant power In this environment, customers are regarded as the lifeblood of enterprises, essential for their survival and growth.
Competitiveness and the necessity to promote the competitiveness
1.2.1 Concept of competitiveness of the enterprise
Vietnamese scholars have yet to reach a consensus on the terms "competitiveness," "competing capability," or "competing power," leading to inconsistencies in their usage Despite this ambiguity, management science acknowledges that absolute precision in concepts is challenging Therefore, any of these terms can be employed interchangeably to effectively describe the competitiveness of individuals, businesses, or nations.
The term "competitiveness" is more precise in both language and reasoning, as it encompasses various business competencies, such as production and marketing capacities, that, when effectively combined for specific goals, foster competitiveness Additionally, leading research, international organizations, and reputable scholars predominantly utilize the term "competitiveness," aligning with its established definition in most dictionaries.
Competitiveness is the degree to which individuals, businesses or countries use the capacities needed to achieve the desired results
Businesses compete primarily through their unique products and services, yet the competitiveness of a product differs from that of the business itself due to varying goals and development cycles While a product may become obsolete after its development phase, a business can maintain its competitive edge as long as it possesses essential resources such as factories, capital, technologies, and skilled leadership with the drive and talent to innovate.
The competitiveness of enterprises refers to their strengths and advantages over rivals in fulfilling customer needs, which ultimately leads to increased profits and enhanced market share.
Competitiveness is assessed through various criteria such as technology, finance, human resources, and corporate governance, particularly in relation to rivals within the same market It is important to note that no business can meet every customer requirement; instead, each company typically has its own strengths and limitations.
Competitiveness is a dynamic concept shaped by various factors and influenced by both micro and macro environments Dr Hoang Dinh Phi, through an analysis of theoretical perspectives on national competitiveness and observations of entrepreneurial processes, defines the fundamental concept of business competitiveness.
Business competitiveness refers to the ability to produce high-quality products and services efficiently in free and fair markets It involves maintaining competitive pricing, addressing market challenges, and fulfilling customer demands, all while striving to grow market share and enhance profitability.
(Source: Study and technological innovation, Hoang Dinh Phi, 2009)
The enterprise competitiveness pyramid model consists of four key components, highlighting essential internal factors that enhance a company's competitiveness This model emphasizes that a strong foundation of effective investment management is crucial for building and developing the necessary capabilities Ultimately, this approach enables enterprises to produce products and services that satisfy the growing demands of customers.
Figure 1.1: Enterprise competitiveness pyramid model
Competitiveness, a concept introduced in the USA during the early 1980s, refers to an enterprise's ability to deliver superior quality products and services at lower prices than both local and international rivals The Aldington Report (1985) emphasized that competitiveness encompasses the long-term benefits for the enterprise, ensuring sustainable income for both employees and owners This definition was reiterated in the White Book on the Competitiveness of England (1994), highlighting its enduring relevance In 1998, the Ministry of Commerce and Industry in England further elaborated on this essential concept.
Investment in production and business (factory, technology, human resources, training, )
Products and value for customers
Market share reflects a company's competitiveness, defined by its ability to produce the right products and set appropriate prices at the optimal time This involves meeting customer demands more effectively and efficiently than its competitors.
1.2.2 Concept of competitiveness of the product
The pyramid model illustrates that "product competitiveness" is a crucial internal factor influencing a company's overall competitiveness It refers to how a product stands out as superior to similar offerings in the market Key elements contributing to product competitiveness include quality, pricing, design, consumer appeal, advertising, and sales strategies.
Product competitiveness is a multifaceted characteristic influenced by numerous interconnected factors Companies must consistently enhance product competitiveness and boost sales volumes within their market segments by improving the quality of existing offerings or introducing new products that align with consumer needs at a superior competitive level.
Different perspectives exist regarding enterprise competitiveness, but it is largely linked to the competitiveness of their products Typically, businesses compete through their specific products and services In this research, the author will utilize relevant criteria, including product competitiveness and enterprise competitiveness, to evaluate the competitiveness of BIDV's card products.
1.2.3 Criteria to evaluate competitiveness of enterprise/product a Group of criteria reflecting business results and efficiency:
This is a Group of quantitative criteria , including:
Revenue represents the total income generated by a business from selling its products or services It serves as a crucial indicator of a company's competitiveness, allowing for the assessment of business performance over various periods By analyzing revenue trends, one can determine whether a business is experiencing growth or decline, reflecting its overall health and market position.
In the digital era, BIDV is focusing on enhancing the competitiveness of its card services by leveraging advanced digital technologies This strategic approach aims to differentiate BIDV's card offerings from those of other banks in Vietnam, ensuring that they meet the evolving needs of customers in a rapidly changing financial landscape.
Market share is the portion of market that the business holds in the total market size
Bank Cards and Bank Card Services
Bank cards serve as a convenient method for non-cash payments, evolving alongside retail purchasing trends and advancements in information technology within the banking and finance sectors These payment instruments, issued by banks, enable customers to purchase goods or services and withdraw cash up to their available balance or credit limit at ATMs.
According to the State Bank of Vietnam's regulations outlined in Decision No 20/2007/QD-NHNN, a bank card is defined as a financial instrument issued by a card issuer, designed to facilitate card transactions based on mutually agreed terms and conditions between the involved parties.
Depending on their nature, bank cards can be classified into several categories, such as:
+ Classification according to the territorial scope of card use, including: domestic card (domestic card is a card issued by a card issuer in
In Vietnam, transactions can be conducted using domestic cards issued by local financial institutions for activities within the country, as well as international cards that are either issued by Vietnamese banks for both domestic and international transactions or by foreign organizations for use within Vietnam.
When sorting by financial source, there are three main types of cards to consider: Debit cards, which enable users to conduct transactions based on the funds available in their deposit accounts; Credit cards, which allow cardholders to make purchases up to a predetermined credit limit; and Prepaid cards, which permit transactions up to the amount loaded onto the card, without requiring a bank account Each card type offers distinct features tailored to different financial needs.
Banking card services encompass a range of offerings from commercial banks that enable customers to utilize cards for payments and various financial needs, including cash withdrawals, balance inquiries, and transfers These services are increasingly popular worldwide and are experiencing significant growth in Vietnam The variety of card products includes debit cards, credit cards, and prepaid cards, along with POS payment services and enhanced ATM functionalities With a focus on customization, these card products are often high-tech and necessitate continuous updates and improvements to keep pace with rapid technological advancements in the market.
1.3.3 The Role of Bank Card Service a For the Bank
Card services provide banks with a cost-effective source of deposits, as clients' trading accounts typically yield low interest rates By increasing the number of trading accounts, banks can further expand non-cash payment options, enhancing their overall financial services.
Card issuers generate income through various fees, including issuance, annual, transaction, credit granting, foreign exchange, and interest from overdrafts on credit and debit cards Additionally, payment banks can enhance profitability by earning commissions from intermediaries and introducing new payment services that cater to existing customers, thereby fostering customer loyalty.
To effectively implement card services, banks need to modernize their IT and payment systems, allowing them to leverage advanced technologies This modernization not only enhances the overall banking experience but also elevates the professionalism of card services, ultimately benefiting the institution as a whole.
Increase distribution channels of banking products: The development of
ATM / POS systems is the development of distribution channels for banks
This distribution channel is not limited to working hours and can provide 24/24h banking services, helping customers to trade quickly, reducing transaction at bank counters
Help save time and effort in tallying, sorting, storing and shipping cash Avoiding mistakes in counting money, distinguishing real money from counterfeits and being more transparent in financial transactions
Participating in bank card payments enables banks to diversify their services and attract new customers, fostering long-term and stable partnerships This involvement not only enhances the bank's position and prestige but also promotes its brand image, ultimately elevating the overall banking brand.
Bank cards enhance convenience and flexibility for customers by enabling them to purchase goods and services at numerous acceptance points, both domestically and internationally Cardholders can also withdraw cash as needed and access various services like account inquiries and bank transfers at ATMs anytime, ensuring seamless financial management.
Bank cards offer a secure and convenient method of payment, ensuring that only cardholders have access to their cards Furthermore, advancements in technology have led to the development of smart cards, which enhance security features and provide added protection for users.
In today's fast-paced shopping environment, consumers benefit from the convenience of compact and efficient payment cards, eliminating the need for cash and time spent counting money These easy-to-carry cards enhance the shopping experience, even for larger transactions Additionally, customers can take advantage of indirect purchasing methods such as phone orders and online shopping, further streamlining the buying process and contributing positively to the economy.
Positively contributes to changing the habit of non-cash payment by the public, reducing the amount of cash in circulation, speed up the flow and payment in the economy
Most card transactions are processed through electronic systems managed by banks, which enhances the quality of trade and payment for individuals and the economy This setup supports the effective implementation of monetary policy by the State Bank of Vietnam (SBV) and promotes transparency in economic transactions Additionally, it assists financial agencies in combating money laundering, virtual transactions, and the operation of ghost companies.
In today's climate, where the government is promoting increased consumer spending, card payments serve as a vital tool for implementing state measures to stimulate demand Furthermore, the acceptance of card transactions fosters a welcoming environment for tourists and investors, enhances the commercial landscape, and boosts the visibility of consumer goods, while also educating the public about the integration of information technology in daily life.
1.3.4 Criteria for assessing the competitiveness of bank card services
According to State Council Ordinance No 38-LCT/HDNN8, dated May 23, 1990, commercial banks are defined as monetary trading organizations primarily engaged in accepting customer deposits, with the obligation to repay these deposits They utilize these funds for lending, discount operations, and facilitating payments, positioning themselves as profit-driven entities specializing in credit services.
Concepts of digital technology, capacity of technology and digital
Technology is solutions, processes, know-how (with or without attachments to tools, means) used to transform resources into products (according to the Law on Technology Transfer 2006 of Vietnam
In today's global landscape, including Vietnam, the term "technology" encompasses various fields such as politics and economics To encapsulate its essence across these domains, technology can be defined as the rational application of machinery, scientific knowledge, and operational skills to produce goods or deliver services in the market.
Digital encompasses all electronic forms and the application of information technology, extending beyond traditional enterprise IT It includes technologies utilized beyond the organization's control, such as intelligent devices operated by customers and employees, as well as social networks.
Embedded technology in the product (for example, cars); Integration of information technology and operational technologies such as telecommunications networks, energy networks); Internet of Things (IoT);
1.4.2 Digital Capability a Capacity of Technology
Technological capability refers to the effective use of technology, which encompasses the selection of appropriate technologies, the implementation of processes, and the production of globally competitive products According to Ramanathan, K (1995), a distinguished professor at the Asian Institute of Technology, technology capabilities can be categorized into four key groups: trading capabilities (managing technology purchasing mechanisms), operational capabilities, innovative capabilities (the ability to innovate and develop new technologies), and support capabilities (enhancing purchasing, operational, and innovative processes) Ultimately, the capacity to create new technology is crucial for businesses to establish and sustain competitive advantage (Hoàng Đình Phi, 2009).
Digital technology, which emerged in the mid-20th century, has significantly transformed various sectors It encompasses two main aspects: digitization and the management and processing of digitized data Often associated with information technology, digital technology focuses on the efficient handling of digitized information.
Digital capability refers to the ability to effectively leverage digital technology to gain and sustain a competitive advantage in today's digital landscape It plays a crucial role in enhancing the competitiveness of enterprises and banks by enabling them to innovate, streamline operations, and respond swiftly to market changes Emphasizing digital capability is essential for organizations seeking to thrive in an increasingly technology-driven environment.
Figure 1.1: Comparative competitive model (to illustrate and analyze, clarify the role of technology capacity):
Mitchell (1985) emphasizes that businesses that integrate technology strategies with their overall business strategies will enhance their competitiveness in the global market For business owners, it is essential to merge effective business strategies with technological approaches to successfully reach their objectives This integration highlights the critical role of technology in driving the competitiveness of enterprises and underscores the necessity of incorporating technology strategy into the broader corporate strategy.
As the world becomes increasingly interconnected through international economic integration, global collaboration and competition are on the rise, fostering both vertical and horizontal development among nations, businesses, and individuals This shift has created a more level playing field, enabling foreign companies to expand their reach and tap into new markets, while also presenting opportunities for local businesses to compete and thrive on a global scale.
TRADING CAPABILITY often use core technology capabilities to enhance the competitiveness of their products in particular and of the enterprise in general
The model highlights the crucial role of innovative capabilities, particularly through digital technology and intelligent devices, in enhancing the competitiveness of enterprises Without the ability to innovate technologically, businesses risk falling behind and losing their competitive edge In today's digital era, rapid technological advancements and increasing market competition pose significant threats to the survival of companies that fail to adapt.
In today's digital landscape, businesses face intense competitive pressure that jeopardizes their survival, as customers increasingly seek higher quality products at lower prices To thrive, companies must enhance production methods, innovate processes, and develop new products that deliver greater value at reduced costs Digital products offer significant advantages over traditional ones, primarily due to their lower costs and the ability to provide round-the-clock customer service without geographical limitations Consequently, it is essential for enterprises to effectively leverage digital technology to sustain their competitive edge.
In the knowledge economy, technological capacity is crucial for success, with digital technology significantly influencing the existence and competitiveness of businesses.
1.4.3 The concept of digital banking and digital banking trends
Digital banking refers to the modern practice of conducting banking activities through digital platforms, catering to customers who increasingly rely on technology for their financial needs This evolution in banking enhances customer connectivity and provides a more convenient banking experience in the digital era.
Internet and connect more chanel via Digital Technology
Chris Skinner, president of the European Financial Services Club and author of "Digital Banking," emphasizes that digital banks are designed for continuity, leveraging advanced digital technology to enhance customer reach These banks ensure consistent customer access, whether through physical counters or digital platforms Their organizational structure prioritizes digital engagement, utilizing online social media and video consultations to strengthen customer relationships Furthermore, digital banks possess an intrinsic understanding of their customers' emotions and needs Ultimately, they cultivate a corporate culture that embraces digital business at the board level.
According to the State Bank of Vietnam, digital banking is a technology-driven banking model that delivers all banking services through digital devices, utilizing the internet, telecommunications networks, or self-service branches This definition is outlined in Decision No 488/QD-NHNN, issued on March 27, 2017, which details the Information Technology Application Plan for Credit Institutions from 2017 to 2020.
Digital banking is undergoing a significant shift from a product-centric approach to a customer-centric model, necessitating adaptations within banks to align with evolving customer behaviors in the digital space In Asia, four key trends are emerging that highlight this transformation in customer behavior, driving banks to rethink their strategies and services to enhance customer experience and engagement.
Customers are increasingly leveraging digital technologies via the Internet and smartphones, which is transforming their shopping habits This shift includes a growing trend of online shopping and utilizing social networks for exploring, discussing, and evaluating banking products.
The Content Research of Thesis
American economist Michael Porter from Harvard University highlights that economic competition revolves around gaining market share and maximizing profits He underscores the importance of differentiation and meeting consumer needs as essential for competing effectively today To achieve market dominance and profit growth, a company's competitiveness is rooted in various factors, including product quality, service distribution, distribution networks, financial strength, technological advancement, labor skills, management capacity, and the strategic combination of resources to offer unique products at reasonable costs while maintaining high quality.
In the digital era, enhancing the competitiveness of BIDV's card services is crucial for maintaining a strong market position among Vietnamese banks This research focuses on leveraging digital technology to improve BIDV's card offerings, ensuring they meet the evolving needs of consumers while outperforming competitors By integrating innovative solutions, BIDV aims to elevate customer experience and drive growth in its card services, positioning itself as a leader in the banking sector.
The research evaluates the competitiveness of BIDV's card services by examining key criteria, including market share, product and service quality, brand strength, marketing strategies, network systems, technological capabilities, and labor skills Through a SWOT analysis, the study identifies the strengths, weaknesses, opportunities, and challenges faced by BIDV It also proposes solutions to leverage digital technology to enhance the competitiveness of its card services.
This research analyzes data from 2016 to the present to assess the current landscape and propose solutions centered on digital technology The goal is to enhance competitive advantages from now through 2020.
CARD SERVICE OF BIDV AND COMPETITIVENESS OF
About BIDV and Card Services of BIDV
2.1.1 BIDV’s General information a General information
- Full name: Joint Stock Commercial Bank for Investment and Development of Vietnam
- Address: BIDV Tower, 35 Hang Voi Street, Hoan Kiem District, Hanoi
+ Credit activities (lending, discount, guarantee, credit card issuance, etc) + Fund mobilization (savings, bond, debenture)
+ Payment services (domestic and international payment)
+ Other services under the Certificate of Business Registration, etc
BIDV is at the forefront of the Vietnamese banking sector, pioneering the use of modern technology Since 2007, it has consistently ranked as the top bank in Vietnam for its readiness to implement IT solutions, showcasing its commitment to innovation and development in the financial industry.
BIDV is one of the first banks established in Vietnam The history and development of the Bank can be summarized as follows:
- For the period from 1957 to 1981: Bank for Construction of Vietnam
Established on April 26, 1957, during Vietnam's economic recovery phase, the Bank for Construction of Vietnam played a crucial role in managing and allocating capital for construction projects In its inaugural year, the bank financed hundreds of initiatives, significantly aiding in account balancing, market management, and price stability.
From 1975 to 1981, the Bank played a crucial role in revitalizing the South's economy and developing new infrastructure post-war It allocated funds for essential projects across various sectors, including industry, agriculture, transportation, and public welfare, focusing on initiatives vital for the national economy.
- For the period from 1981 to 1990: Bank for Investment and Construction of Vietnam
In 1981, the institution was renamed the Bank for Investment and Construction of Vietnam Between 1981 and 1990, the bank successfully navigated challenges and enhanced its operational mechanisms to foster ongoing development This era marked significant advancements in alignment with the national renovation and the banking sector's transformation, establishing the bank as one of the leading specialized financial institutions in Vietnam.
- For the period from 1990 to 2012: Bank for Investment and Development of Vietnam
In 1990, It renamed Bank for Investment and Development of Vietnam (BIDV)
In the period 1990 – 2000, BIDV made positive developments, such as:
It was proactive and pioneering to employ ways to mobilize capital denominated in VND and foreign currencies
The Bank made strong IT developments during the period 1990 – 2000 Many new products and servives have been developed and received positive feedbacks, such as Home Banking, ATM,
BIDV has sustained high, safe and effective growth In the period 2006 -
2010, total assets increased more than 25% per year on average, capital mobilization up 24% per year, outstanding loans up 25% per year and pretax profit up 45% per year
BIDV has been a pioneer in adopting international standards, beginning in 1996 when it underwent audits by independent international auditors In 2006, BIDV became the first bank to receive a credit rating from Moody's Investor Services.
BIDV continuously expanded its network to serve business activities
As of 25 November 2015, the bank had 180 branches, 780 transaction offices and thousands of ATMs and POS in all 63 provinces and cities across the country
BIDV always pays attention to people development BIDV continued to recruit young human resources with knowledge and skills to meet the integration requirements
- For the period from 2012 to Present: Joint Stock Commercial Bank for Investment and Development of Vietnam
BIDV was equitized according to the direction of the Government, ensuring the harmony in the interests of the State, enterprises, investors and employees
On 27 April 2012, BIDV officially transformed into the Joint Stock Commercial Bank for Investment and Development of Vietnam and has been listed on the stock exchange since January 2014
On 25 May 2015, BIDV officially merged with Mekong Housing Bank (MHB), marking a milestone in the network expansion
As the pioneer in foreign operations, by the end of 2014, BIDV established correspondent relationship with over 1,700 banks and bank branches in 122 countries and territories around the world
As of December 31, 2017, BIDV emerged as Vietnam's largest commercial bank, boasting total assets exceeding VND 1.176 trillion (approximately USD 51.9 billion) With extensive experience in the Vietnamese banking sector, BIDV offers a comprehensive suite of modern and convenient banking products and services, including deposits, loans, trade finance, payment and account services, and card services, among others.
According to BIDV annual report 2017, BIDV has expanded its wide network across Vietnam as of 31 December 2017, BIDV’s network consisted of:
- 190 branches in Vietnam and 01 branch in Myanmar (Yangon)
- 02 subsidiary units (IT Center, BIDV Training School)
- 03 representative offices in Vietnam (Ho Chi Minh city, Da Nang and Can Tho)
- 06 representative offices in foreign countries (Cambodia, Myanmar, Laos, Czech Republic, Taiwan (China), Russian Federation)
Wide operating network helps BIDV to access a large customer base nationwide; to provide various services for diverse customer segments from individuals, households to different types of enterprises and organizations
Diagram of BIDV’s Organizational Structure
BIDV operates through 11 subsidiaries, including BIDV Asset Management Company (BAMC), BIDV Securities Company (BSC), BIDV Insurance Corporation (BIC), BIDV International Company Limited (BIDVI), and Mekong Housing Bank Securities Company (MHBS), among others.
Representative offices (local and abroad)
Vietnam-Russia Joint Venture Bank
BIDV Tower Joint Venture Company
BIDV MetLife Life Insurance Limited Company
Vietnam Aircraft Leasing Joint Stock Company
Joint Stock Commercial Bank for Investment and
The Development Company (IIDC) and the Cambodia Investment and Development Company (IDCC) are key players in Cambodia's economic landscape, alongside the Bank for Investment and Development of Cambodia Plc (BIDC) Additionally, the Lao-Viet Insurance Joint Venture Company (LVI) and the Lao-Viet Joint Venture Bank (LVB) contribute to the region's financial services, while BIDV-SuMi TRUST Leasing Co., Ltd (BSL) enhances investment opportunities in the area.
Credit Committee Board of Management and Chief Accountant
2.1.3 BIDV’s Card Center Organization Structure a At the Head Office
The Card Center operates as a key division within retail banking, overseeing essential functions like business administration, product development, risk management, and centralized management at its head office This operational model aligns with that of similarly sized banks, including Vietcombank, Agribank, and Vietinbank.
To enhance product research and development, the Card Center at the Head Office has been organized into 13 specialized groups, each responsible for distinct aspects of the card business These groups include the Strategic Group, International Card Group, Domestic Card and ATM Group, Credit Card Acceptance and Partner Management Group, Marketing and Communications Group, Credit Management and Collection Team, Trading Licensing and Fraud Control Group, and Complaints Review Group This division ensures clear responsibilities at every level of staff involvement in promoting the card business.
(9) Settlement group; (10) Card Support Group; (11) Card issuance group;
(12) Development Research Group; (13) Card Center in the South b At the branch
BIDV has successfully organized its Card Sales Department and integrated the promotion of card products across all business function departments The sales of card products are primarily focused within the branches, where the performance of card product managers is assessed based on the KPIs assigned to each staff member.
The current status of BIDV's card service competitiveness in Vietnam 45 1 General assessment of card business activities in Vietnam
2.2.1 General assessment of card business activities in Vietnam
As of 2017, the Vietnam Bank Card Association reported that over 60 banks were active in Vietnam's card market, with more than 132 million cards issued, surpassing the country's population of 95 million This total includes 90% domestic debit cards, over 4.5% international debit cards, more than 4% international credit cards, and approximately 1.5% other types of cards However, the actual number of active cards may be about 30% lower than the issued total due to many banks reporting closed or canceled cards Among the 70% of cards still in circulation, a significant portion remains inactive or has not been used for transactions over an extended period.
On average, Vietnamese citizens aged 15 and older possess more than 1.5 cards each, with a significant growth rate of nearly 19% from 2014 to 2017 Domestic debit cards dominate the market, representing approximately 88% of all cards, while international debit and credit cards make up only 4% Additionally, card revenue has seen impressive growth, averaging 24% annually.
As of 2017, Vietnam had over 17,500 ATMs, with each machine facilitating an average cash withdrawal of more than 82 trillion VND annually However, from 2013 to 2017, the growth rate of ATM installations by banks significantly declined to an average of 3% per year, a stark contrast to the 22% growth seen from 2009 to 2012 This shift highlights the impact of digital banking trends and the collaboration between banks, which have led to a strategic reduction in individual ATM network investments as banks increasingly rely on shared networks.
According to the report of the Banking Association, there are about 270.000 POS machines in the market, the annual growth rate of POS from
2013 to 2017 is high, reaching over 26%, with average payment volume 900 million / machine / year This proves that banks are actively promoting the expansion of POS networks to promote non-cash payments
In 2017, ATM and POS transactions saw a significant increase, with a 34% rise compared to 2016 The trend of cash withdrawals at ATMs continued to decline, dropping from 15.7% in 2016 to approximately 7% POS transactions surged to nearly 136 million, marking a 40% increase, while the trading value exceeded 318 trillion dong, reflecting a 27% growth Additionally, the issuance of bank cards and the value of card transactions experienced rapid growth during this period.
The credit card market in Vietnam is becoming increasingly competitive, with a diverse range of products available from major international brands like Visa, MasterCard, American Express, JCB, Diners Club, Discover, and UnionPay This growth reflects the expanding involvement of banks in issuing a wider variety of card offerings.
2.2.2.Evaluating competitiveness of BIDV's card services in comparison with competitors in Vietnam market a Overall rating, comparable to competitors
Since 2017, BIDV has focused on a card business strategy aimed at developing high-tech card solutions, leading to the introduction of innovative products and services that have garnered several awards from reputable national and international organizations Despite these achievements, BIDV's card services remain limited compared to those of three comparable banks in Vietnam: Vietcombank, Vietinbank, and Agribank.
By 2017, BIDV experienced significant growth in its card services, with a 25% increase in card payments, surpassing the market average of 21%, and a remarkable 40% rise in credit card sales compared to 2016 However, despite this growth, BIDV ranked fourth in the card market according to the Vietnam Bank Card Association, trailing behind the top three banks: Vietcombank, Vietinbank, and Agribank Given the current growth rate, it appears challenging for BIDV to enhance its short-term rating in the competitive banking landscape.
In 2017, BIDV surpassed Techcombank and Sacombank to secure the second position in International Debit Cards and the third position in International Credit Cards However, BIDV holds the fourth position in Domestic Debit Cards and faces challenges in improving its rankings over the next five years, as leading banks possess one to two times more cards than BIDV.
Regarding the brand name, BIDV's portfolio of international card products is less competitive than its counterpart in comparison with other banks (Vietcombank, Vietinbank)
BIDV offers a diverse range of card classes tailored to various customer segments, including Classic, Gold, Platinum, and exclusive options for the affluent and ultra-wealthy, such as Infinite and WorldElite cards.
In terms of POS card payment, BIDV more than 44.000 POSs, currently holding the third position in terms of scale with a growth rate of 28%, equal to
BIDV's current growth rate suggests it could surpass Vietinbank within five years, positioning itself as the second-largest bank in Vietnam While POS has experienced a significant turnover growth of 60%, it still lags considerably behind the leading banks, Vietcombank and Vietinbank.
BIDV ranks fourth in ATM card acceptance, operating over 1,800 ATMs Despite no new installations in 2016 and minimal growth in 2017, BIDV plans to enhance its ATM capabilities by optimizing its network alliances and repositioning ATMs for improved transaction efficiency A comparative analysis with competitors will focus on each card product.
Table 2.1: BIDV’s Competitiveness - Compared to total number of
(source: Vietnam Bank Card Association, 2017)
Vietinbank's E-Partner card offers a range of essential features, including the ability to make payments for goods and services at various merchants and online Users can conveniently withdraw cash from ATMs, perform wire transfers, and access 24/7 money transfer services The card also supports bill payments for utilities, air tickets, telecommunications, and insurance directly at ATMs Additionally, customers can check their account balance, print transaction statements, receive overseas remittances, purchase prepaid cards, and even withdraw money without a physical card.
Vietcombank offers the Connect24 card in standard, gold, and special classes, featuring a range of services including payment for goods and services at merchants and online, cash withdrawals in VND from ATMs, and 24/7 money transfers The card also supports bill payments for utilities, air tickets, telecommunications, and insurance through ATMs, along with account balance checks and transaction statement printing Additionally, cardholders can benefit from exclusive offers from brand partners.
BIDV offers a diverse range of cards, including Harmony, Etrans, Moving, Student Links, BIDV - Coopmart, and BIDV - Satra Their domestic debit card products are compatible with ATMs and POS systems, similar to offerings from other banks, and include options for the general market as well as partnerships with schools and salary businesses However, BIDV's Domestic Debit Card lacks several features found in competitors, such as ATM transfer capabilities, internet payment (E-Merchant), cardless ATM withdrawals, contactless payment options, and fingerprint authentication.
Review: Growth over the same period in 2016 is 23% In terms features of Domestic debit card, BIDV similar as competitors, such as:
Basic features: Account balance inquiry, summary statement, withdrawal, transfer, PIN change
Request for account statement, checkbook issuance request, transfer money to term deposit account, pay invoice, print transaction invoice at ATM
Payment for goods and services, withdrawal, balance inquiry at POS, Online payment (E-commerce)
BIDV should expedite the implementation of interbank transfers through ATMs using domestic debit cards while diversifying its product offerings to cater to specific demographics, including female and young clients Additionally, developing co-branded card products in partnership with retail brands like Co.op and Vinmart can enhance sales opportunities, especially as competitors like Vietcombank and Vietinbank have successfully launched similar initiatives with Saigon Co.op, AEON, and Big C.
Table 2.2: Evaluate competitiveness of BIDV - Compared to total number of International Debit Card Bank Amount (cards) Market share Ranking
@ Growth over the same period in
(source: Vietnam Bank Card Association, 2017)