GRADUATION THESIS EVALUATING THE QUALITY OF ELECTRONIC BANKING SERVICES IN BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM BIDV Supervisor : Dr... Solutions to improve the quality of elec
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In recent years, the rapid advancement of information technology has transformed production and business methods across all socio-economic activities As economies modernize, the development of e-banking services has emerged as a key strategy prioritized by banks globally, including in Vietnam This shift is driven by the widespread use of technology devices such as smartphones, tablets, and laptops in the 4.0 era E-banking offers numerous benefits for both the economy and consumers, facilitating quick and easy transactions like money transfers, bill payments, and online purchases through user-friendly applications Recognizing these advantages, Vietnamese banks are fiercely competing to leverage information technology in enhancing their services and products.
As a prominent bank in Vietnam, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) is dedicated to enhancing its e-banking services and accelerating digital transformation In response to the 4.0 technology revolution, BIDV continuously innovates and expands its e-banking offerings to cater to the diverse needs of customers, thereby improving its competitiveness and boosting overall business efficiency In recognition of its efforts, BIDV received accolades in 2019.
“Outstanding Electronic Banking” Award for the third time by the Vietnam Banking
BIDV has received recognition from the Association and IDG International Data Organization for its significant advancements in the e-banking sector Despite this achievement, the bank continues to encounter challenges in its digital transformation efforts While e-banking services offer numerous advantages, they also necessitate stringent safety and security measures, posing considerable risks Therefore, identifying the factors that influence the quality of BIDV's e-banking services is essential for developing solutions to enhance performance, thereby reinforcing the bank's success and competitive position in the e-banking market.
Improving the quality of e-banking services is crucial for BIDV, making the evaluation of electronic banking service quality both necessary and urgent This importance has led me to select "Evaluating the Quality of E-Banking Services at the Joint Stock Commercial Bank for Investment and Development of Vietnam" as the focus of my thesis research.
2 Research purposes The thesis is examined to achieve the following objectives:
Synthesize the basic complications of e-banking services and the quality of e- banking services
Evaluate the quality of e-banking services from the customer's point of view, in order to identify the main factors affecting e-banking service quality at BIDV.
Proposing some solutions and recommendations to improve the quality of e-banking services at BIDV in the coming time.
To achieve the above objectives, the research is based on the following questions:
What is Electronic Banking Service? Features of e-banking service? The concept of service quality in Electronic Banking?
How has the status of e-banking service quality at BIDV been over the years? What are some other limitations?
What are the factors that currently affecting the quality of e-banking service at BIDV?
What solutions are needed to improve the quality of e-banking services at BIDV in the coming time?
3 Object and scope of the study
Study subject: The study thesis focuses on research on e-banking service quality at BIDV Research scope:
Scope of space: The study thesis is conducted at BIDV Vietnam Joint Stock Commercial Bank
Scope of time: The study thesis is researched in the period from 2015 to 2020 The survey time was from 10/2/2021 to 10/4/2021
During the research process, the thesis uses specific methods as follows:
Statistical method: data is collected from annual reports of BIDV, financial statement, yearly business report, magazines specialized in economics, finance and banking and many articles, other scientific research papers.
According to the SERVPEREF service quality measurement model established by Cronin and Taylor (1992), service quality is assessed through five key factors: reliability, responsiveness, assurance, empathy, and tangibles.
The author surveyed 180 customers, both Vietnamese and international, who utilize BIDV's e-banking services Using SPSS for statistical analysis, the study evaluated various factors affecting the quality of BIDV's banking services and electronic systems Based on the findings, the author formulated conclusions and recommendations aimed at enhancing the quality of e-banking services offered by BIDV.
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This research systematically analyzes fundamental theories related to e-banking services and their quality within commercial banks It enhances the SERVPERF scale for measuring and evaluating the quality of e-banking services, thereby clarifying the significant role these services play in the operations of commercial banks.
The research topic serves as a scientific foundation for BIDV to assess the strengths and weaknesses of its e-banking services, which have not developed as robustly as those of competing banks These services not only generate fees but also decrease counter transactions, thereby enhancing the bank's reputation and brand image among customers To boost profitability, it is essential to further improve the quality of e-banking services Additionally, this research can provide valuable insights for future studies in this area.
In addition to the introduction, conclusion, references and appendix, the thesis is structured into 4 chapters:
Chapter 1: Literature review of electronic banking services
Chapter 2: Theoretical basis for evaluating electronic banking services in commercial bank
Chapter 4: Current status of electronic banking services at Joint Stock CommercialBank for Investment and Development of Vietnam (BIDV)
LITERATURE REVIEW OF ELECTRONIC BANKING SERVICES
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Tran Thi Hoa (2019) applied the SERVPERF model to assess the quality of e-banking services at the Joint Stock Commercial Bank for Foreign Trade of Vietnam - Vung Tau Branch Utilizing tools such as Cronbach's Alpha for reliability and EFA Factor analysis, the study confirmed the reliability and validity of the model The findings revealed that the model accounts for 65.2% of customer satisfaction with e-banking services Five key factors influencing satisfaction were identified: service capacity, responsiveness, reliability, tangible means, and empathy Notably, service capacity had the most significant impact on customer satisfaction, while empathy had the least influence, as indicated by the research results.
Luong Nguyen Yen Nhi (2017) conducted a comprehensive study on the development of e-banking services at the BIDV-Tien Giang branch, employing SPSS 20.0 for various statistical analyses, including descriptive statistics, reliability scale assessments, exploratory factor analysis (EFA), multivariate regression, and ANOVA The research identified key factors influencing the quality of e-banking services and provided actionable solutions and recommendations aimed at enhancing e-banking at BIDV-Tien Giang, ultimately positioning the branch to achieve superior business performance within the BIDV network.
Duong Thi Bich Ngan (2015) conducted a survey of customers utilizing e-banking services and interviewed banking experts to evaluate the successes and challenges faced by MSB in enhancing its electronic banking offerings The study highlights the essential role that e-banking services play for customers, the banking sector, and the broader economy Additionally, the article employs computational formulas for effective data analysis.
11 measure the qualities of e-banking services at MSB based on 6 criterias: empathy, reliability, facilities, service capacity, responsiveness and perceived price.
In 2016, Tran Thi Thom conducted a study at the SCB-Binh Thuan branch, surveying 300 individual customers to assess service quality using a combination of qualitative and quantitative methods The research was based on the SERVPERF model by Cronin & Taylor (1992), tailored for this context, and employed exploratory factor analysis alongside multiple regression analysis The study identified eight key factors influencing customer satisfaction: sympathy, corporate image, responsiveness, reliability, price, tangible facilities, service capability, and convenience Based on the findings, the author proposed targeted solutions to enhance personal customer satisfaction regarding service quality at SCB-Binh Thuan Branch.
Ho Diem Thuan (2012) developed a model to examine the relationship between e-banking service quality and individual customer satisfaction at the Vietinbank-Da Nang branch, utilizing the SERVPERF model and the Technical Quality/Functional Quality framework The research revealed that customers expressed dissatisfaction with the bank staff's service methods and their overall concern, highlighting these areas as needing immediate improvement Additionally, customers undervalued the pricing and fees associated with e-banking services, as well as the physical facilities Furthermore, the transaction processing speed of the automated system for electronic transactions did not meet customer expectations Conversely, the components of "Guarantee," "Tangible facilities and service capacity," and "Response to customer service and reliability" received positive ratings from customers.
Salva Daneshgadeha (2014) conducts an empirical study on the factors influencing internet banking usage among Turkish bank customers The study identifies ten key factors: usefulness, ease of use, control, social influence, compatibility, risk, website features, alliance service, awareness of service, and personalization Findings indicate that customers are more inclined to use internet banking due to its perceived usefulness and ease of use, with compatibility with their lifestyles being a significant driver Additionally, personalized services and alliances are recognized as important factors that further encourage the adoption of internet banking.
Ozlem Altun's research explores the relationship between Internet banking factors, customer satisfaction, and positive word of mouth among university students and academics in Northern Cyprus The findings indicate that perceptions of security, accessibility, ease of use, and awareness significantly enhance customer satisfaction and contribute to positive word of mouth Additionally, the study reveals that higher customer satisfaction correlates positively with the likelihood of university students and academics sharing favorable recommendations.
Sisay Abebe Balcha (2016) found that customers were generally satisfied with the quality of electronic banking services, particularly in the assurance dimension While the study highlighted strong customer satisfaction in reliability, responsiveness, and tangibility, it noted lower satisfaction levels in the empathy dimension of service quality Overall, the research concluded that electronic banking has a positive and significant impact on customer satisfaction.
Goh Mei Ling et al (2016) conducted a study to identify the key factors influencing customer satisfaction in Internet banking Their research revealed five critical factors: service quality, web design and content, security and privacy, convenience, and speed These elements significantly impact how customers perceive their online banking experience.
13 that web design and content, convenience and speed are the top three factors that influence customer satisfaction toward Internet Banking.
THEORETICAL BASIS FOR EVALUATING ELECTRONIC
Home banking 8ọ
Home banking is a distribution channel of e-banking, allowing customers to sit at work and perform most transactions on their deposit accounts at the bank.
Vietnam is home to over 90 commercial banks, including foreign bank branches, with most investment banks offering advanced e-banking services These services enable customers to access banking news, check exchange rates, interest rates, and service charges remotely Additionally, customers can monitor their account balances, review transaction details, view statements, and manage loans The platform also facilitates payment transactions from home, allowing customers to compose and send wire transfers for processing.
Home banking serves as an effective communication channel between customers and banks, facilitating the exchange of information during transactions It allows users to confirm, cancel, or modify telegram codes, while also providing access to statistics on telegram statuses This functionality enables customers to efficiently search for wire transfers and generate payment reports, enhancing the overall banking experience.
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Mobile Banking, often referred to as Smart Banking, enables customers to conduct transactions conveniently using their smartphones with an Internet connection It is the most widely used electronic banking product, with every bank offering its own mobile application, such as BIDV Smart Banking, VietinBank iPay, and Techcombank's F@st Mobile The competition among banks to develop mobile e-banking applications is highly intense Once the Mobile Banking app is installed, customers can access a majority of banking services seamlessly.
- Track your bank account wherever you are
- Make money transfer, bill payment, top up phone, open saving account easily and quickly
- Register to use more facilities from the bank
With centralized data management, customers can access comprehensive information about products, services, and personal account details by calling the center's fixed number, regardless of their branch Unlike Phone Banking, which offers only pre-programmed responses, the Call Center provides flexible, real-time answers to customer inquiries Available 24/7, the Call Center ensures assistance is always within reach.
2.1.4.5 Electronic banking services via ATM/ POS
ATM services provide customers with convenient access to various transactions, including checking account balances, withdrawing cash, paying bills, and transferring money using debit or credit cards With an extensive network of ATMs mirroring the bank's branches, customers can avoid long lines at transaction counters However, ATM overload is common during peak times, such as holidays and Tet, when the demand for cash withdrawals significantly rises.
POS Banking is an electronic banking service that utilizes POS machines to facilitate card payments at various retail locations Customers can easily complete transactions by swiping their debit or credit cards, allowing for automatic deductions from their bank accounts Commonly found in convenience stores, business outlets, and commercial centers, POS machines streamline the payment process and promote a cashless future, enabling customers to shop without the need for cash.
2.2 The quality of electronic banking services
Parasuraman et al (1985) defined service quality as the gap between customer expectations and their perception of the service's outcomes They argue that service quality is influenced by the difference between what customers expect and what they actually experience, which can be mathematically represented.
Understanding and identifying customer expectations is crucial for developing an effective service strategy Establishing a system to define these expectations is essential, as it lays the groundwork for delivering quality service.
According to Gronroos (1984), service quality must include 3 aspects: technology quality (technical), performance quality (function), and influenced by corporate image. According to the author:
Service quality is defined as the sum of technical quality and functional quality According to Cronin and Taylor's SERVPERF model (1992), customer perceptions of a company's performance are the most accurate indicators of service quality This model emphasizes that understanding these perceptions is crucial for evaluating and improving service delivery.
Service quality is defined as the perceived level of performance by customers Among the various definitions available, Cronin and Taylor's (1992) definition is widely accepted by researchers Therefore, the quality of e-banking services is best represented by customers' perceptions of the bank's performance in delivering these services.
=> E-Banking service quality = Perceived level of e-banking services
Criteria for evaluating the quality of electronic banking serVvIces
Evaluating service quality factors is crucial for commercial banks to deliver top-notch e-banking services to customers The intangible nature of these services complicates the quantitative assessment of their specifications Consequently, measuring and evaluating service quality requires a distinct approach compared to physical products To understand customer perceptions of service quality, the work of Parasuraman is instrumental.
(1985) built a mixed measurement tool called SERVQUAL This service quality model originally had 10 components:
(1) Reliability: refers to the ability to deliver appropriate and timely service right from the first time.
(2) Responsiveness: refers to the willingness of staff to perform services to customers.
Competence refers to the expertise required to deliver a service effectively It encompasses the ability of employees to engage with customers, perform the necessary tasks, and gather relevant information to enhance customer service.
Improving access to services is essential for enhancing customer experience This involves reducing waiting times and ensuring that service locations and operating hours are convenient for customers By prioritizing these factors, businesses can streamline the process and make it easier for customers to obtain the services they need.
(5) Courtesy: Demonstrating personality of serving, respectful and friendly with customers.
(6) Communication: Related to communicating and interacting with customers in a language they understand easily and listening to issues as well as resolving complaints questions.
Credibility is essential for building customer trust in a company, and it is demonstrated through the company's name and the demeanor of its service staff during direct interactions with customers.
(8) Security: Related to the ability to ensure the safety of customers, reflected in physical and financial security as well as information confidentiality.
(9) Understanding/ Knowing the customer: Demonstrated through the ability to understand the needs of the customer by acknowledging the customer's requirements, paying attention to them personally and identifying regular customers.
(10) Tangibles: Showing through the appearance, costumes of the service staff, the service equipment.
The initial model for measuring service quality was complex, prompting Parasuraman and colleagues to simplify it by reducing the components from 10 to 5: (1) tangibles, (2) reliability, (3) responsiveness, (4) assurance, and (5) empathy They developed the SERVQUAL scale, which includes 22 observed variables to effectively assess customer expectations and perceived service quality.
2.2.3.1 Technical and functional quality model of Gronroos (1984)
The technical-functional quality model by Gronroos evaluates service quality by comparing the anticipated value customers expect prior to using a service with the actual value they experience during the service.
Research issues: How does technical and functional quality affect services provided and how do customers perceive those factors?
The functional-technical quality model of Gronroos states that the service quality of an enterprise is determined by three components, including: technical quality, functional quality and image.
Traditional marketing activities (advertising, field selling, PR, pricing): and external influence by traditions, ideology and word-of-mouth
Figure 2.1 Technical and functional quality model of Gronroos (1984)
- Technical quality: the value that the customer actually gets from the supplier's service (what does the customer receive?).
- Functional quality: Shows the service provider's way of delivering the service to consumers (how does the customer receive that service?).
A corporate image is crucial for service providers, primarily shaped by two key components: technical quality and functional quality Additionally, factors such as tradition, word of mouth, pricing strategy, and public relations also contribute significantly to building a strong corporate image.
2.2.3.2 Service quality gap model of Parasuraman et al (1985)
Parasuraman et al (1985) said that Service quality is the distance between the expectations of the customer and their perception when used the service.
Research Problem: How do different levels of distance be measured using a standard measuring tool? What factors influence those distances? Is there a difference in distance between industries?
The model offers 5 service quality gaps:
GAP 1: Gap between Management Perception and Customer Expectation This gap arises when the management or service provider does not correctly analyze what the customer wants or needs It also arises due to insufficient communication between contact employees and managers There is a lack of market segmentation This Gap occurs due to insufficient market research For Instance- A café owner may think that the consumer wants a better ambience in the café, but the consumer is more concerned about the coffee and food they serve.
GAP 2: Gap between Service Quality Specification and Management Perception This gap arises when the management or service provider might correctly comprehend what the customer requires, but may not set a performance standard It can be due to poor service design, Inappropriate Physical evidence, Unsystematic new service Development process.
An example would be restaurant Managers who may tell the waiters to provide the order of the consumer quick, but do not specify “How Quick”.
GAP 3: Gap between Service Quality Specification and Service Delivery
Service gaps can occur among personnel due to inadequate training, inability to perform tasks, or a lack of motivation to adhere to established service standards.
24 due to inappropriate evaluation and compensation systems Ineffective Recruitment is the main cause of this gap.
A mismatch between supply and demand can lead to significant gaps in service quality, often exacerbated by a lack of empowerment and perceived control among staff For instance, a restaurant may have clear standards for food quality, but if the staff is not adequately trained or instructed on how to meet these standards, it can result in inconsistencies and customer dissatisfaction.
GAP 4: Gap between External Communication and Service Delivery
Consumer expectations are significantly shaped by the claims made by company representatives and advertising efforts A gap occurs when these anticipated expectations are not met during the service delivery process.
A restaurant claiming to serve 100% vegetarian food while actually offering non-vegetarian options fails to meet consumer expectations This discrepancy between advertised and actual menu items can lead to customer dissatisfaction and mistrust.
GAP 5: Gap between Experienced Service and Expected Service This gap arises when the consumer misunderstands the service quality For Instance, A Restaurant Manager may keep visiting their consumer to ensure quality check and consumer satisfaction, but the consumer may interpret this as an indication that something is fishy or there is something wrong in the service provided by the restaurant staff.
Communications to Customers i Translation of GAP 1 Perceptions into Service
Figure 2.2 Service quality gap model
2.2.3.3 Evaluation model based on performance of Cronin and Taylor (1992)
Cronin and Taylor (1992) were amongst the researchers who levelled maximum attack on the SERVQUAL scale.
Critics of the SERVQUAL scale have raised concerns about its conceptual clarity, particularly regarding its overlap with service satisfaction As a result, they recommend eliminating the expectation (E) component and focusing solely on the performance (P) component This led to the development of the 'SERVPERF' scale, which emphasizes performance as the key metric for assessing service quality.
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Customer satisfaction is defined as the response to the perceived gap between a customer's expectations and their actual experience with a service (Parasuraman et al., 1988) It reflects the overall attitude of the customer towards a service provider and encompasses their emotional response to the discrepancy between anticipated outcomes and the actual service received, ultimately addressing a specific need, goal, or desire (Hansemark and Albinsson, 2004).
Kotler & Keller (2006) define satisfaction as the extent to which a person's sensory experience aligns with their expectations of a product This concept of satisfaction can be categorized into three distinct levels.
- Ifthe customer's perception is lower than expected, the customer feels dissatisfied.
- Ifthe customer’s perception level equals expectation, customers feel satisfied.
- Ifthe customer’s perception is greater than expected, the customer feels satisfied or interested.
Customer satisfaction with e-banking service quality is defined as the level of contentment experienced by customers when they compare their actual experiences with e-banking services to their initial expectations.
2.3.2 Relationship between the quality of services and customer satisfaction
Research by Zeithaml and Bitner (2000) highlights that customer satisfaction is significantly influenced by service quality, product quality, and pricing Additionally, both situational and personal factors play a crucial role in shaping overall satisfaction levels This relationship is visually represented in Figure 2.3.
Figure 2.3 Relationship between the quality of services and customer satisfaction
Cronin and Taylor (1992) explored the causal relationship between service quality, customer satisfaction, and repurchasing intention Their findings indicate that the sequence of Quality of Service leading to Satisfaction and then to Repurchasing Intention is statistically significant In contrast, the reverse sequence—Repurchasing Intention leading to Satisfaction and then to Service Quality—showed no significant regression coefficients.
Service Quality Customer Repurchse satisfaction intention
Figure 2.4 Relationship between services quality and customer satisfaction
According to Cronin & Taylor (1992), service quality is fundamental to customer satisfaction, acting as the primary factor influencing it The authors emphasize that service quality precedes and shapes customer satisfaction, highlighting a significant causal relationship between the two This connection is a crucial aspect of many studies focused on understanding customer satisfaction.
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The research process is divided into two stages: preliminary research and formal research Qualitative approaches are used in preliminary research, whereas quantitative methods are used in formal research.
The following is how the study is carried out:
Theoretical basis and building ,| Qualitative research and draft research model scale
| Quantitative research * Building official scale Ỷ
Building survey questions and collecting data from survey Ỷ
Only accept when Corrected Items-Total Correlation > 0.3 and Alpha > 0.6 Ỷ
EFA analysis Accept when Factor loading > 0.5 Ỷ
Correlation analysis and multivariate regression >| Show the result and solutions
Sources: The author self-synthesized 3.2 Details of Research Methodology
The sample size refers to the number of valid survey questionnaires collected, which significantly impacts the reliability of the information obtained While a smaller sample size may be more cost-effective and quicker to gather, it often leads to less reliable results Conversely, increasing the sample size enhances the trustworthiness of the data, though it also demands more time, money, and resources to achieve.
30 implement it As a result, it is important to consider and select the appropriate number of samples for the analysis.
The sample size obtained for this subject was 150 samples.
This study's scale is built on a theoretical foundation and employs scales that have been used by many researchers in the past.
On a 5-point Likert scale, survey sets of observed variables are rated from: Below average - Average - Fair — Good — Very good
The SERVPERF model contains 24 observed variables on the scale of e-banking service efficiency On the inside:
- Reliability scale: including 5 observed variables from RE1 to RES REI: BIDV always informs you of when the electronic banking service is performed
RE2: BIDV provides e-banking services at the promised time
RE3: BIDV provides e-banking services exactly as committed to customers
RE4: BIDV always satisfies when you have any questions or complaints about e-banking services
RES: You feel secure when using BIDV's e-banking services
- Responsiveness scale: including 3 observed variables from RS1 to RS3 RS1: BIDV's staff are always dedicated to guiding customers to register and use e-banking services and solve feedback questions
RS2: Electronic banking transactions are done quickly and accurately right after receiving orders
RS3: The products of BIDV's e-banking services that you use can meet your needs
- Empathy scale: including 4 observed variables from EP1 to EP4 EP1: BIDV's employees are always polite, respectful, and warm to you
EP2: BIDV's employees always show their attention for you
EP3: BIDV has programs to show their interest in you (promotions, congratulation messages, gifts on holidays, special days )
EP4: BIDV's staff understand your request
- Tangible scale: including 5 observed variables from TA1 to TAS
TẠI: BIDV's staff are neat and polite
TA2: BIDV's e-banking service fee is appropriate and acceptable
BIDV has established well-organized transaction counters and modern facilities to enhance the convenience of e-banking services The bank's physical infrastructure, including its website, mobile applications, and access devices, is designed to be appealing and user-friendly, ensuring a seamless digital banking experience for customers.
TAS: BIDV has modern equipment, spacious and convenient facilities, and convenient transaction points for customers
- Assurance scale: including 4 observed variables from AS1 to AS4
BIDV offers electronic banking services that prioritize safety and security, ensuring a reliable experience for users These services are designed for quick and accurate transactions, allowing customers to manage their finances efficiently Additionally, BIDV's knowledgeable staff are proficient in handling e-banking tasks, providing prompt and effective support to enhance the overall banking experience.
AS4: BIDV's staff serve customers enthusiastically so that customers get the best benefits when using e-banking services
- Scale of customer satisfaction on e-banking service quality: including 3 observed variables from CS1 to CS3 CS1: You will introduce BIDV's e-banking services to relatives and friends
CS2: In the coming time, you will continue to use BIDV's e-banking services
CS3: Are you satisfied with the quality of BIDV's e-banking services?
The author used SPSS 20 tools to analyze the data after obtaining it.
The research utilizes diverse data analysis methods, such as descriptive statistical analysis and Cronbach's Alpha coefficient testing It incorporates exploratory factor analysis (EFA) to assess data suitability, followed by the development of a regression model to test the formulated hypotheses.
Descriptive statistical analysis to evaluate gender attributes, age, education level,income, priority of customers who want to use BIDV's e-banking services, utilities
A study involving 32 customers who regularly utilize e-banking services revealed key statistical insights into their usage patterns The analysis determined the mean duration of e-banking usage, alongside
Cronbach's Alpha coefficients are used to assess reliability.
Cronbach's Alpha coefficient is a statistical measure used to assess the consistency and similarity among observed variables It evaluates two key aspects: the correlation between the variables themselves and the relationship between each variable's scores and the scores of all other variables for each respondent.
Variables with a Corrected Item-Total Correlation greater than 0.3 and a Cronbach's Alpha coefficient above 0.6 are deemed acceptable for further analysis Generally, scales with a Cronbach's Alpha ranging from 0.7 to 0.8 are considered usable Researchers suggest that a Cronbach's Alpha of 0.8 or higher indicates a strong scale, correlating with increased reliability As noted by Nguyen Dinh Tho and Nguyen Thi Mai Trang (2007), a higher Cronbach's Alpha signifies greater scale reliability.
The Exploratory Factor Analysis (EFA) helps us to evaluate two important values of the scale: convergent value and discriminant value.
According to Hair & ctg (1998), in EFA analysis, Factor loading coefficient is the criterion to ensure the practical significance of EFA:
- Factor loading> 0.3 is considered minimum
- Factor loading> 0.4 is considered important
- Factor loading> 0.5 is considered practical The condition for EFA is to satisfy the following requirements:
The Kaiser-Meyer-Olkin (KMO) coefficient is a crucial statistic in factor analysis, with acceptable values ranging from 0.5 to 1.0 A KMO value below 0.5 indicates that factor analysis may not be appropriate, while a KMO of 0.9 or higher is considered excellent Values between 0.5 and 0.9 are deemed satisfactory for conducting factor analysis.
In addition, factor analysis also relies on Eigenvalue to determine the number of factors.Only factors with an Eigenvalue greater than 1 will be retained in the model The quantity
An Eigenvalue indicates the extent of variation a factor explains, with values below 1 failing to summarize information more effectively than the original variable Additionally, each observed variable must have a factor loading exceeding 0.5 The analysis concludes when the Eigenvalue surpasses 1 and the total variance explained by each factor exceeds 50% (Gerbing & Anderson, 1988).
After performing descriptive statistical analysis, analyzing the scale to determine which factors are suitable and remove unsuitable observed variables to build a general research model.
Step 1: Analyze the Pearson coefficient to determine the multicollinearity phenomenon between the variables.
The Pearson correlation coefficient measures the strength of a linear relationship between two quantitative variables, with values closer to 1 indicating a stronger correlation In multiple regression analysis, SPSS assesses multi-collinearity through Collinearity diagnostics, specifically examining the Variance Inflation Factor (VIF) of independent variables A VIF value below 10 suggests that the model is free from multiple collinearities.
In the second step of the thesis, a multivariate linear regression model based on Ordinary Least Squares (OLS) is employed to evaluate the relationship between customer satisfaction and e-banking service quality After constructing the regression model, it is essential to assess its suitability for the dataset by examining the R-squared value To determine the overall appropriateness of the regression model, the null hypothesis that the coefficient R* equals zero is tested using the F-statistic A low probability value for F indicates that the null hypothesis can be rejected, confirming the model's relevance.
The hypothesis test for the significance of the coefficients involves assessing whether the coefficients are equal to zero This is conducted using the t-statistic, which follows a Student's t-distribution with N-2 degrees of freedom.
CURRENT STATUS OF ELECTRONIC BANKING SERVICES AT
Business performance of BIDV in period 2015 - 2020 .-‹-+-ô<+<<<2 37 4.2 Evaluating the quality of electronic banking services in Vietnam Joint Stock
From 2015 to 2020, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) consistently delivered remarkable business performance, establishing itself as Vietnam's largest listed bank by total assets and lending market share It leads the banking sector, followed closely by state-owned banks Vietinbank and Vietcombank Additionally, private banks have experienced significant growth in recent years, further expanding their market share.
Since 2015, BIDV has consistently expanded its asset size, starting with total assets of 850.67 trillion VND in 2015 By the end of 2020, BIDV's total assets surged to over 1,516.68 trillion VND, solidifying its status as Vietnam's largest commercial bank by assets The growth in interest-earning assets has been particularly notable during this period.
In recent data, customer loans have surged, with this asset group now representing 80.1%, the highest level in two years Additionally, retail lending has shown impressive growth, making up 35.7% of BIDV's total loans, a significant increase from 13.7% in 2019.
Table 4.1 Asset of BIDV in period 2015 — 2020
Placements with and loans to other credit institutions
Derivatives and other financial assets
Source: The author self-synthesized from the BIDV’s annual report
Table 4.2 Liabilities and Equity of BIDV in period 2015 — 2020
Deposits and borrowings from other credit institutions
Grants, trusted funds and borrowings at risk of the credit institution
Total liabilities and owners’ equity
In 2019, BIDV achieved a significant milestone by securing a historic merger and acquisition deal, which involved raising capital through the issuance of shares to its new strategic partner, KEB Hana Bank Despite this advancement, BIDV recognizes the necessity of further capital enhancement to support its ongoing growth and development.
BIDV is enhancing its tier 1 capital to meet the new capital adequacy standards (CAR) mandated by Circular 41, which requires banks to maintain a minimum CAR of over 8% The strategic partnership with KEB Hana Bank has facilitated this capital increase, allowing BIDV to comply with the updated regulations that introduce changes in asset risk weightings Banks must boost their equity capital, focusing primarily on tier 1 capital, as tier 2 capital is capped at 50% of tier 1 Key components of tier 1 capital include charter capital, reserve funds, retained earnings, and share premiums, while tier 2 capital consists mainly of long-term debt instruments As one of the 10 pilot banks selected by the State Bank to implement Circular 41/2016, BIDV is poised for significant capital growth from 2021 onwards.
4.2 Evaluating the quality of electronic banking services in Vietnam Joint Stock
Commercial Bank for Investment and Development (BIDV)
4.2.1 Overview of electronic banking services in Vietnam Joint Stock Commercial Bank for Investment and Development (BIDV)
In response to the global trend of electronic banking and the rising demand for e-banking in Vietnam, BIDV established its Digital Banking Center in March 2019 Since then, the center has launched 29 new functional groups and services across 9 systems to meet customer transaction needs Key offerings include the electronic Bill Payment Gateway (BIDV Pay Gate), 24/7 money transfers, and digital banking platforms for both corporate (i-Bank) and individual customers (Smart Banking, BIDV Mobile) Additionally, the center has introduced an online customer registration application (e-Zone) for opening payment accounts and accessing digital banking services, along with advanced security features like Smart OTP and card security measures to ensure the highest level of safety for customers.
In 2020, e-banking transactions surged as users transitioned from traditional channels like counters, ATMs, and POS systems to internet and mobile banking E-banking accounted for 53% of total financial transactions, with mobile banking applications for individual customers experiencing significant growth, representing 72% of BIDV's e-banking transactions Additionally, the service revenue structure saw positive changes, reflecting strong growth in modern service lines.
The Covid-19 pandemic significantly impacted payment services, particularly international money transfers, due to declines in tourism, manufacturing, and agricultural exports Despite these challenges, payment service fees grew impressively, reaching over VND 2,057 billion, a 12.76% increase from 2019 This growth was driven by BIDV's proactive measures to enhance connectivity, automate payment channels, and introduce innovative international remittance products like HanaEZ and Korona Pay.
In 2020, fee collection from digital banking services, or e-banking, is projected to exceed 900 billion, reflecting a significant 61% increase from 2019 and accounting for 18% of total net service revenue, excluding guarantees, which is a 4.5% rise from the previous year's 13.5% This impressive growth is attributed to BIDV's successful research and implementation of various solutions in digital distribution channels, as well as the introduction of modern banking products and services, including BIDV Home, online payment for national level 4 public services, and interbank offset payment with Napas.
In 2019, BIDV experienced a significant surge in customers utilizing internet and mobile banking, attributed to the introduction of innovative technologies The bank integrated artificial intelligence (AI) into its Smart banking application, enabling voice-activated transaction orders Additionally, BIDV expanded its services to smartwatch devices and developed a comprehensive suite of Smart banking applications for various smart devices Furthermore, BIDV became the first bank in Vietnam to adopt Swift GPI (Global Payments Innovation), enhancing its digital banking capabilities.
SWIFT's global payment innovation initiative enhances internet banking by enabling customers to monitor the status of international wire transfers from initiation to crediting in the beneficiary's account BIDV is leveraging advanced technology in its Smart Banking applications, incorporating features like smart keyboards, an international credit card management system, automatic notifications for periodic payments, and Smart OTP integration This demonstrates BIDV's commitment to investing in the development of electronic banking technology As a leading player in Vietnam's banking sector, BIDV excels in payment services, consistently ranking high in income from this sector To further expand its payment capabilities, BIDV has partnered with over 22 Fintech companies, including MOMO, Airpay, VINID, Viettel Pay, and the VNPAY payment gateway.
BIDV has enhanced its e-banking services by introducing social insurance payment options and expanding its bill payment services to include over 580 providers and 1,230 services by the end of 2020 The bank's diverse e-banking ecosystem supports online merchants with various card payment solutions, enabling them to accept payments through multiple channels, including E-Merchant, m-POS, BIDV Pay+ QR, Samsung Pay, and traditional POS systems Additionally, BIDV offers three types of cards: international debit, international credit, and domestic debit cards, allowing merchants to broaden their market reach with modern payment methods.
BIDV offers a comprehensive mobile banking experience through three key products: the automatic message service and BSMS inquiry, the BIDV Bank-plus application, and the widely used BIDV Smart Banking app The BIDV Smart Banking app enables users to access information, transfer funds, make payments, top up accounts, manage cards, and handle online deposits seamlessly from their mobile devices, providing convenient access to BIDV services anytime, anywhere Additionally, BIDV has introduced BIDV Online, allowing customers to enjoy a consistent banking experience on both personal computers and mobile devices The bank also leverages advanced technology with offerings like the BIDV Home app, which supports home loan applications for BIDV-sponsored projects, and the BIDV Samsung Pay service, enabling cardholders to make contactless payments using their Samsung devices Furthermore, the BIDV Pay+ app facilitates payments via QR codes and allows cardless ATM withdrawals, enhancing the overall banking experience for customers.
A comprehensive assessment of e-banking service quality at the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) was conducted through a customer survey The survey, held between February 10 and April 10, 2021, successfully gathered 150 valid responses, providing valuable insights into customer perceptions of BIDV's e-banking services.
4.2.2.1 Descriptive statistics of research samples
The result of age statistics revealed that the number of customers aged 25-45 who used
EB services are utilized by 70 out of 150 individuals, representing 46.7% of users who are highly responsive to technological advancements These individuals actively seek innovative applications to enhance their lives, demonstrating adaptability to rapid changes and a willingness to take risks Consequently, BIDV should proactively engage this demographic to facilitate the expansion of its e-banking services.
Chart 4.1 Proportion of Age of Survey Participants
Opportunities and challenges ceeesccesseeceeseeeseneeceeeeceeeeeesaeeceeneeceeneeeesaeeess 61 4.3.2 Solutions to improve the quality of electronic banking services in Joint Stock
In the era of Technology 4.0, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) has significant opportunities to enhance its e-banking services The ongoing advancements in information technology, both domestically and globally, provide a solid foundation for BIDV to innovate and develop new electronic banking products Additionally, supportive initiatives from the Government and the State Bank of Vietnam aim to foster an e-banking ecosystem, promoting a cashless payment environment across the country This evolving landscape also allows Fintech companies in Vietnam to expand, creating collaborative opportunities for banks seeking growth.
Vietnam's commitment to developing an e-banking ecosystem is bolstered by its participation in international trade agreements, which enhance BIDV's prospects for growth in this sector The increasing competition from international integration compels domestic banks to innovate and improve their e-banking services, particularly in retail banking where BIDV excels Furthermore, significant investments in modernizing both the banking and payment systems reflect the industry’s commitment to progress The evolving lifestyle of Vietnamese youth, characterized by a strong affinity for the latest technology trends, presents a crucial opportunity for banks to strategically advance their e-banking initiatives.
BIDV faces several challenges in developing its e-commerce banking services, despite the numerous opportunities available The legal framework for e-banking in Vietnam remains incomplete, with ongoing amendments and decrees from the Government and State Bank of Vietnam failing to clarify existing laws Additionally, the Vietnamese population, particularly middle-aged individuals, continues to prefer cash transactions, complicating the transition to electronic payments, especially in traditional market settings Furthermore, BIDV relies on third-party technology providers for its e-banking systems, which introduces risks such as royalties, legal discrepancies, and data security concerns As the leader in internal bad debts within the banking sector, BIDV's investment in e-banking is constrained by the need to allocate significant profits to cover credit losses Lastly, BIDV's marketing efforts for its e-banking services lag behind competitors like Vietcombank, which actively promotes its digital brand initiatives.
VCB Digibank has consolidated 63 banking services into a single online platform, replacing its previous Internet Banking and Mobile Banking offerings The launch was promoted through reputable websites, and MB Bank invested 500 million VND in rewards for customers who engaged with their e-banking services However, BIDV's e-banking application lacks pioneering features compared to other banks in Vietnam, indicating that its technological advancements in e-banking are not as innovative or groundbreaking as those of its competitors.
4.3.2 Solutions to improve the quality of electronic banking services in Joint Stock
Commercial Bank for Investment and Development of Vietnam (BIDV)
- Regularly train to improve the ability of bank staff to handle transactions with customers, allocate human resources reasonably to reduce work pressure to avoid errors in transactions.
BIDV must prioritize customer care by swiftly addressing inquiries and complaints Simplifying procedures and reducing the time required to resolve issues related to e-banking services will enhance customer satisfaction and trust in the bank.
To enhance professional trading practices and improve transaction procedures, it is essential to boost employee productivity while fostering a modern, customer-friendly trading environment that reflects the positive culture of BIDV The effectiveness of any business strategy hinges on human factors, particularly in the rapidly evolving e-banking sector in Vietnam, which relies heavily on advanced technology and expertise Therefore, it is crucial for managers, executives, bank employees, and customers to possess the necessary knowledge for effective operation Regular staff training, incorporating short-term courses and knowledge updates, should be implemented in both directions to ensure continuous improvement.
+ For the bank's staff in charge of information technology, it is advisable to train basic banking knowledge to better apply it to their work In addition, because
Embracing innovation is crucial in today's fast-paced tech landscape, and the banking sector is no exception To stay ahead of the curve, it's essential for banks to implement a policy of continuous learning and professional development, such as sending staff abroad for training or hiring top experts to share their knowledge and expertise with employees By doing so, banks can ensure their workforce is equipped with the latest skills and knowledge, driving business growth and success in an increasingly competitive market.
To enhance customer engagement with e-banking services, it is essential for bank employees to receive comprehensive training in information technology By equipping staff with the necessary skills, they can effectively demonstrate the features and benefits of e-banking to customers Moreover, for successful service development and customer attraction, it is crucial that bank personnel actively use these digital services themselves, enabling them to promote e-banking more authentically and effectively.
To enhance customer confidence in its e-banking services, BIDV must prioritize building trust among users, as confidence is crucial for the successful adoption of these services By focusing on transparency, security, and customer support, BIDV can significantly improve customer perceptions and encourage more individuals to utilize their e-banking offerings.
To provide services as committed, fast, easy to use, save costs and time to create trust with customers.
Increase availability or responsiveness and prompt response in service.
When utilizing BIDV's services, customers often have inquiries regarding e-banking It is essential for the information technology department and counter tellers to collaborate effectively to address these questions promptly and efficiently This approach minimizes wait times and helps maintain customer confidence in the bank.
Completing procedures in the direction of simplifying, shortening transaction time and improving professionalism.
Modernize banking technology and ensure information security for customers.
At BIDV, we prioritize customer interests while strictly adhering to legal provisions and internal regulations during service delivery Understanding that customers seek maximum benefits from our products and services, we emphasize the importance of professional and dedicated service among our staff Additionally, we implement a commendation system to reward employees who demonstrate exceptional performance and efficiency in their roles.
- Inthe age of digital banking, customers are less and less likely to come to the bank.
BIDV should strategically redeploy personnel to align with the specific needs of its branch operations Additionally, establishing a dedicated team of switchboard staff at each branch will enhance the effectiveness of transaction handling and improve the resolution of customer inquiries.
As the primary target audience for BIDV's e-banking services is individual customers, a customer-centric approach is crucial in driving the adoption of suitable e-banking products To achieve this, BIDV must prioritize a robust customer care policy that effectively caters to the needs of its individual customers, thereby fostering a loyal customer base and promoting the bank's e-banking services.
BIDV should establish a dedicated customer care department with preferential policies for key clients and close partners It is essential that employees in this department possess strong communication skills, actively listen, and demonstrate genuine care to understand customer challenges By fostering trust and capturing customer insights, BIDV can effectively advocate for timely policy adjustments to meet clients' legitimate needs and expectations.
To enhance corporate culture and leave a lasting impression on customers, it is essential for transactors to undergo regular training in customer care This training ensures they provide professional and polite service, which is crucial for fostering positive customer experiences.