CHAPTER 3: SOLUTIONS TO IMPROVE CONSUMER LENDING ACTIVITIES IN SAI GON JOINT STOCK
3.2 Solutions to improve consumer lending activities in Sai Gon Joint Stock Commercial Bank – Dong Da branch
3.2.1 Improving marketing activities in the branch - With product policy
In order for the product to meet the needs of consumers, the Bank needs to survey, study, and study models of consumer lending products from abroad, and improve and develop product strategies to suit the needs of consumers. demand
51
of the Vietnamese market and the needs of customers. Because in terms of short- term benefits, the Bank sells its own benefits in the short term, but the Bank that cares about customer needs will have a long-term advantage. And SCB Dong Da branch needs to pay attention to the following issues:
Firstly, expand existing consumer loan products such as home loans, car loans, study abroad loans, etc. with more flexible terms, especially loans for employees. is a type of loan with a low rate of overdue debt because customers are usually government employees or civil servants. Banks need to promote, expand, and find customers from joint ventures and associates... although the value is small, this is a relatively safe loan product.
Secondly, with the type of joint venture and association lending, the bank is not without risks. So, in order to limit risks, the bank re-evaluates the customers that companies and agents introduce. In order to limit damage to banks, it is necessary to choose reputable companies and agents to provide indirect credit, and still have to regularly monitor these debts.
- With price policy
Although the bank has come up with pricing strategies, it is still not really reasonable. Interest rates on consumer loans are quite high. Therefore, banks must have more flexible prices for all customers, meeting all customers' needs.
- With distribution channel
For consumer loans, the best distribution channel policy is the traditional distribution system, with the expansion of transaction offices, branches and combination with other modern distribution channels.
- With promotion strategies
At present, the economy is quite stable, people have stable incomes and consumer demand will increase, the number of customers will also increase. The bank also needs to take measures to meet the needs of customers in the coming time:
Firstly, build a specialized marketing department to introduce the image and reputation of SCB - Dong Da branch professionally to attract customers in general and individual customers in particular.
Secondly, regularly update information on SCB’s website, publish specific information about consumer loan products on the website, and build advertising
strategies in newspapers and television when providing a new consumer loan product.
Third, regularly poll customers to find feedback from customers, find out customer's evaluations of the bank about its products to improve products, and satisfy customer needs.
3.2.2 Strengthening risk management and recovery of overdue debts and bad debts
Risk management is very important for banks, especially credit risk, because risks are created by many factors, especially the human factor inside the bank and customers applying for it. get a loan. Therefore, one measure that can be taken to reduce the risk stemming from the human factor is to use face-to-face interviews. The bank establishes a loan application appraisal council, the credit officer directly accepts the application, and the customer must defend his/her loan repayment plan before the appraisal council. The bank only decides to lend when there is an approval result from the Appraisal Council.
It is also for the Branch to strengthen internal control. In the past, SCB Dong Da branch has effectively overcome the cases of loan irregularities, minimized risks and losses, and ensure safe operation, including a significant contribution. of the internal inspection and control department. During the inspection, it was timely to detect shortcomings, drawbacks and unreasonableness in the operating mechanism, and at the same time check the debt classification of the customer’s department to calculate the provision for risks.
53 Risk identification
Risk assessment
Risk mitigation Risk
monitoring Risk
reporting
Figure 3.12 The recommended risk management process for SCB Dong Da branch
To better the risk control and management, SCB Dong Da branch should establish an effective risk management process with five steps including: Risk identification, Risk assessment, Risk mitigation, Risk monitoring and Risk reporting. The diagram is shown in Figure 3.1.
In specific, the stages in the recommended risk management process for Dong Da branch can be presented as follows:
Risk identification: Finding the risks to which the Bank is exposed in its operating environment is the first step in the risk management process. There are many different kinds of hazards, including: Regulatory risks, market risks, environmental risks, and legal risks. The majority of these risk variables should be found, if at all possible. In a manual setting, these risks are manually recorded.
All of this information is entered immediately into the system if the firm is using a risk management solution. The benefit of this strategy is that any organization stakeholders who have access to the system can now see these risks.
Risk reporting: A risk must be examined after being detected. Determine the risk's extent first. Understanding the relationship between risk and various organizational characteristics is also crucial. It is necessary to look at how many banking operations the risk affects in order to gauge the risk’s degree and severity. While some risks will just result in minor annoyances in the analysis, others have the potential to bring the Bank to a complete halt if they come to pass.
Risk assessment: It is necessary to rank and prioritize risks. Depending on the risk’s intensity, the majority of risk management solutions have multiple types of risks. Risks that could result in little discomfort are ranked lower than risks that could cause significant loss, which are rated highest. Ranking risks is crucial because it gives the business a comprehensive understanding of its overall exposure to risk.
Risk mitigation: It is essential to minimize or completely eliminate any risks. Connecting with subject matter experts in the area where the risk is present enables this. In a manual setup, this requires getting in touch with each and every stakeholder before scheduling meetings where everyone may express their concerns.
Risk monitoring: Not all risks can be eliminated – some risks are always present. Market risks and environmental risks are just two examples of risks that always need to be monitored. Under manual systems monitoring happens through diligent employees. These professionals must make sure that they keep a close watch on all risk factors. Under a digital environment, the risk management system monitors the entire risk framework of the organization (Langohr &
Langohr, 2009).
3.2.3 Improving the quality of human resources
The economy of Vietnam is deeply integrating into the global economy.
Therefore, one of the key variables affecting the survival of businesses generally and the banking sector in particular is the creation of high-quality human resources. However, the banking sector has not paid enough attention to its high- quality human resources, which are still underdeveloped and insufficient. The fact also demonstrates that SCB Dong Da’s existing human resource quality still has a lot of issues. It is vital to take the following actions in order to raise the caliber of SCB’s human resources in general and SCB Dong Da Branch in particular:
- Training and retraining bank employees: Employees must be regularly trained and retrained in a variety of skills, including law, sales, management, and communication, in addition to the fundamental knowledge of specialized fields, professional procedures, directive documents for the banking industry, and the BIDV system. They should focus more on employee foreign language training at the same time.
- Creating an innovative emulation and reward mechanism that is based on the productivity, quality, and efficiency of the assigned job in order to construct and assess the work completion level. On this premise, provide a suitable system for allocating salaries to employees in order to reward those who work productively and well while also making significant contributions to the bank.
Additionally, there is a system in place for disciplining workers who violate company policies or whose morale or way of life harm the Bank’s reputation with penalties or even termination.
- Setting up a dedicated organization to forecast human resources in order to prevent an overabundance or shortage of human resources in general and high- quality human resources in particular.
55
- The bank should collaborate with academic institutions and research organizations to actively participate in human resource training. In addition to offering scholarships to students with strong academic records and hiring competent candidates immediately after graduation, they can send banking specialists to teach a variety of topics.
- Recruitment of human resources: The bank should establish a scientific recruitment plan to draw in truly excellent human resources based on the system’s overall human resource development strategy and recruitment requirements. When hiring, it is important to consider the people capacity for each position, identify each candidate’s talents, and place them in the right role so they can develop to their maximum potential. To hire truly qualified human resources to work in the financial system, recruitment must be done in an open, transparent, democratic, objective, and fair manner.