CHARTER II: THE REAL SITUATION OF CARD BUSINESS OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM
4. Card Sale Strategy in the period 2010 to 2015
4.2. Analysis of external factors affecting Vietcombank’s business activities
4.2.1. Macro environment analysis following PESTLE model
* Demographic Environment.
Vietnam is one of the most densely populated countries. According to the report of the Steering Committee, up to 0 hours on April 1st , 2009, Vietnam's total population is 85,789,573, of which the urban population is 25,347 .262 (accounting for 29.6%) and 60,415,311 people (accounting for 70.4%) in rural areas. With this population, Vietnam is the 3rd most populous country in Southeast Asia (after Indonesia and Philippines) and ranked 13th among the world's most populous country. After 10 years, our country's population increased by 9.470 million (average annual increase of 947 thousand people).
The rate of population growth per year, between the two censuses of population and housing in 1999 and in 2009 was 1.2% per year.
This is one of the factors that appeal to the general business activities and providing banking products and services in particular, which truly can be the factor
mean market increase, unless there is enough purchasing power. If the population increase excessively pressures on economic growth and causes poverty, also born shrinking market. Vietnam’s population is so dense and growing over the years, in which domestic market for banks is found much potential, but also untapped.
Furthermore, to fully exploit the domestic market is also a strategic and important task for banks to stabilize currency markets, compete with foreign banks and also expand market worldwide.
* Political and legal environment.
Political
- According to the international community, Vietnam is one of the nations with security situation, political stability, which is a precondition for economic development and trade, attract investment flows directly and indirectly from abroad.
- Party and State’s views of innovation on economic and trade liberalization - the investment and equitization of state enterprises (especially the equitization of state- owned commercial banks) ,in recent years has created favorable conditions for Vietnam commercial bank system strengthening the financial capacity, improve transparency in the operation, active integration and application of international practices in banking sector .
With the independent foreign affair, autonomy, readiness to make friends with all countries on over the world base on peace, friendship, stability and cooperation.
About the law
Legal basis for card selling have been increasingly strengthened. To meet the development requirements of the economy in general and banking activities in particular, in 2007, the Government and the State Bank have issued many policies to promote cards issuance and payment activities such as the scheme of non-cash payment, salary payment regulation via accounts, Decision No. 20/2007 / Decision – SB on promulgating the issuance Regulation, payment, usage and provision services supporting to bank card operations, decisions on the balance quota for prepaid cardholders, regulation on providing and management Pin code... The timely issuance of policies from Government and central bank has helped card business environment more open, create favorable conditions for card business organizations to work, and the habit of non-cash payments among population.
- Despite of significant progress in improving the system of legal documents, but the legal framework for the operation of the banking system, including cards have not been completed and uniformed. The legislation has not fully specified security, card security, disputes and risks handling, breaching of card payment and quoting estimated risk in cards business.
* Economic environment.
Table 2.9: GDP growth rate of Vietnam for the period 2005 to 2010
Years 2005 2006 2007 2008 2009 2010
GDP growth (%
pa) 8,43 8,17 7,8 6,23 5,32 6,78
(Source:General Statistics Bureau)
Although being influenced by the global financial crisis, Vietnam's GDP growth has been lower than the previous year for 3 recent years but recovering gradually. In 2010, GDP growth rate reached 6.78%, nearly 0.3% higher than the plan approved by Congress early this year. Growth rates were also increased in the quarters and highest in the fourth quarter (approximately 7.3%) ... in which industry and construction take 7.7%, services 7.4%, agriculture 2.9 % ( chart Figure 2.l).
Figure 2.9: GDP growth in the period 2005 - 2010
(Source:General Statistics Bureau)
In 2006, Vietnam integration into the WTO and a new wave of direct investment and portfolio investment inflows have shown that the economic reform process is very
brought economic success, which is the average annual growth of 7.5% over the past decade, one of the fastest growth rates in Asia (Figure 2.2).
Figure 2.10: GDP growth and GDP per capita from 1998 to 2007 (1)
(Source: General Statistical Bureau and AD Bank staff’s estimates)
According to official statistics of economy in 2008 announced by the General Statistics Bureau on 31/12/2008, absolute GDP of the country in 2008 reached 1487 trillion Dong. With Vietnam's population of 86 million, the average GDP per capita reaches about 17 million Dong. Accounted average price of USD in 2008 was 16,700 Dong per Dollar, the average GDP per Vietnamese has reached $ 1,024 per person.
Fast economic growth, improved living standard have created more favorable conditions for the Banks of sustainable development and to more fully exploit potential domestic service market .
Global economic cautiously recovered in 2010 with halting steps, and not so optimistic prospects. Many emerging threat has puzzled economists and governments:
public debt crisis at European countries, the problem of evaluating currency (exchange rate) or as many people’s conception of "currency war", inflation in China and other emerging economies,
Vietnam's economic growth rate that was quite high (6.78%) were exchanged by inflation rate exceeded 2 figures. Exchange rates, continuously rising gold prices,
“thin foreign currency reserves”. Hot interest rates market in the last months of 2010,
GDP/person (USD, culum of valid on the left)
Rate of growth GDP (%, culum of valid on the right)
Figure 2.11: Exchange rate movement of USD / VND from 2006 to 2010
(Source: State Bank of Vietnam)
* Science and technology Environment
Banking technology development speed is very fast on over the world, facilitating the expansion of products and services. For business development with rapid access to international practices, investment and information technology platform development for management and business administration is a pressing need. Especially, the ongoing trend of strong investment on technology platform to provide high quality services and convenience to customers such as automatically transaction (Auto bank); Electronic Bank (Internet banking, phone banking), payment card device (POS) in the trade centers and shops.
Besides, the technology development has changed the connection among commercial banks, customers and enterprises, by which commercial banks can develop markets abroad conveniently.
However, the technology investment of each bank that still is independent and not accompanied or shared resource, exchanged information together yet, which reduce the effectiveness of multibank information. Now, it is difficult for one bank to know their customers’ credit status at other banks. Since then, leading to the grant limit for customers in many different banks will increase the level of risk for banks.
In addition, connection information in card system among banks was set long ago;
despite of Central Bank’s leading, commercial banks is still inconsistency. The situation
banks and reduces the customer's interests in the use of the card. Another factor is the IT and telecommunications infrastructure is still inadequate. National data transmission network is not stable quality, slow speed, high costs affecting the IT and network quality of banking services.
Card payment has not been secured, causing distrust for many card users.
Currently, situation of using counterfeit cards to withdraw money from customer's card account also appears. Partly because the level of payment network management is weak, the card production technique is not high. Currently the world's most moving to use chip cards, however, in Vietnam, mostly magnetic card. As we know, the security of chip card is much higher than magnetic ones.
Socio-cultural environment.
In recent years, Vietnam’s economy has been growing stably, living standard has improved, the demand for overseas study has developed, tourism grows highly, the infrastructure services of information technology and telecommunications investment is also thriving. This is a favorable environment for the development of credit card services. System of restaurants, supermarkets, large-scale stores continuously growing demand for shopping, dining and entertainment on the increase of urban population with good incomes. This also means that card payment through is preferred.
The biggest obstacle that the card number is lower than the market potential is due to customary use of cash. Statistics of the Visa International organizations show that money supply in circulation in the developed countries, only 10-25%, while in developing countries is 75-90%. Particularly in Vietnam, according to Gordon Cooper, Visa Representative, cash is still the king, with over 99% of personal consumption expenditures made by this method. ATM system itself is now in Vietnam; almost all transactions were to withdraw cash, even though the machine has many facilities such as transfer, insurance billing services, electricity, telephone charges...
Vietnam is a populous country with more than 85 million people, about 65% are in working age, a high literacy rate of about 94% which is in high rate compared to region. Young population, high educational level is an opportunity to exploit market development services credit card's price. According to calculations of economic experts, Vietnam's market now will have more than 20 million people have the ability to use debit cards when customers use the card only to reach nearly 10 million, of which only
On an intellectual level to help improve Vietnamese have a better understanding of the role and activities of banks, increases the likelihood of receiving new products and services of the bank and demand for banking services people are also increasingly more complex. Each year there are millions of college students, colleges and secondary vocational schools, tens of thousands of students ... will be the potential market for banks to develop commercial retail services.
Besides, the number of international tourists to Vietnam has constantly increased, which has a small part of long-term guests staying and working in Vietnam.
This is also a potential market for the development of retail banking activities, especially the product card, payment account, but also poses major challenges to developing and improving products - as well as network services for the distribution of commercial banks in Vietnam
Global Environment.
The process of opening, economic innovations has shown great advantage of international economic integration in promoting economic growth, improving people's living standards and facilitate development of a strong banking sector firm.
International economic integration and WTO accession to cause a significant impact on the economy and the commercial banking system. The process of market opening in services will force banks VIETCOMBANK facing competitive pressure is growing, revenues will be shared while the potential risks of a growing market.
According to the BTA, in the period 2001-2009, U.S. banks may operate in Vietnam as a joint venture with Vietnam partner to contribute capital in proportion to 30% -49% by 2010, U.S. banks will have a level playing field as banks in Vietnam.
Under WTO commitments, Vietnam removes stronger protection for the financial services and banking. 01/4/2007 detail from U.S. banks and foreign banks will be established 100% subsidiaries of foreign capital, foreign securities companies which contributed 49% foreign ownership. After five years, investors can own 100% company stock.
4.2.2. Micro-environmental analysis: five forces model of competition Michael E.
Porter.
4.2.2.1. Potential competitors.
On 28/2/2006, the Prime Minister issued Decree No. 22/2006/ND-CP on the organization and operation of foreign bank branches, joint-venture banks, banks with 100% foreign capital, representative offices of foreign credit institutions in Vietnam according to which foreign banks are operating in Vietnam steel forms of foreign bank branches, joint venture banks and banks with 100% foreign capital.
Besides Since 1/1/2011, the commitment to join the World Trade Organization (WTO), Vietnam will allow foreign banks to provide services and products such as domestic banks. Thus, from 2011, foreign banks and domestic banks will have the same playing field fair. To allow foreign banks to establish branches, representative offices and created special casino simulation play in providing products and services and retail activities are activities that the foreign banks before may be involved here has created a huge challenge for commercial banks in the country in general and in particular Vietcombank.
With a long history of formation and development, major brands, the resources, the foundation of modern technology. The product offers retail banking services in general and business cards in particular when foreign banks to establish in Vietnam will create huge challenges for domestic commercial banks Vietcombank general and in particular
* Bank in the country:
Currently the market has 63 banks (commercial banks, banks, credit funds) are active, but have 40 banks operating in the area of the card.
4.2.2.2. Competitors in the industry.
Market share of domestic card issuance: Agribank market leader in card issuance, with nearly 21% domestic market share, followed by East Asian banks with nearly 20% market share. With the aim not to follow the amount of attention that focuses on developing customers have a high rate card, Vietcombank is no longer leading in number of local card, but still account for outstanding sales history cards.
Figure 2.12: Market share of domestic card issuance
(Source: Vietcombank card center)
Market share of international cards issued: Vietcombank market continues to lead the international card issuer with 34% market share, including international credit card and international debit cards. ACB is the largest competitor's price with 25%
market share. In addition, joint-stock banks such as factoring, Techcombank, Eximbank is also competing with Vietcombank. In particular, the participation of foreign banks like HSBC, ANZ ... will be a challenge for Vietcombank.
Figure 2.13: Market share of international cards issued
(Source: Vietcombank card center)