MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS- HOCHIMINH CITY PHUNG NGUYEN THUC KHUE DETERMINANTS OF CUSTOMER SATISFACTION ON MORTGAGE SERVICE: A CASE STUDY OF ANZ BANK VIETNAM LIMITED MASTER THESIS Ho Chi Minh City- 2010 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS- HOCHIMINH CITY Phung Nguyen Thuc Khue DETERMINANTS OF CUSTOMER SATISFACTION ON MORTGAGE SERVICE: A CASE STUDY OF ANZ BANK VIETNAM LIMITED MASTER THESIS In Finance- Banking Ology Code: 60. Nguy n Minh Ki u Ho Chi Minh City- 2010 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT First of all, I would like to express my deepest gratitude and sincerest thanks to Dr. Nguyen Minh Kieu, my thesis tutor, for his valuable and patient guidance, advice and support during my research. Second, I would like to thanks all professors, tutors and my classmates who gave me the academic knowledge, support, encouragement and sharing experience to help me complete this research successfully.
I also express my sincere thanks to my old colleagues at ANZ Bank Vietnam Limited and all the respondents who helped me to build the qualitative research and complete the survey. Personally, I am deeply indebted my parents who always expect and encourage me much during the last three years. I could not make it without them. Ho Chi Minh City, December 2010 Phung Nguyen Thuc Khue LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT Recently banking industry has become severely competitive environment than ever before.
When the banking products are easy to imitate, then the service quality becomes important and significant for banks to increase their competitive capacity. This research, therefore, focused on measuring customer satisfaction on mortgage lending service which occupies a large portion in retail lending market. ANZ Bank Vietnam Limit was chosen for a case study in consideration of their strong foothold in retail lending market after seventeen years of officially operating in Vietnam. This research attempted to figure out the most important factor influenced mortgage customer satisfaction.
Based on that, the research findings provided meaningful recommendations and managerial implications for ANZ Bank Vietnam Limited’s management board. Sample of 150 respondents was selected, it was executed mostly in email and telephone interview. Collected data was analyzed by using SPSS 16. Main analyses were exploratory factor analysis, correlation, reliability with Cronbach’s Alpha, multiple linear regression.
The result addressed that the key satisfactions of mortgage customers at ANZ Bank Vietnam Limited were Core Dimension, Relational Dimension, Price, Tangible Dimension and Customer Expertise respectively. Managerial implications for management board of ANZ Bank Vietnam Limited were provided. Subsequently, limitations of the research were discussed for future studies in related field. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS ACKNOWLEDGEMENTS.
TABLE OF CONTENTS. LIST OF FIGURES. LIST OF TABLES. LIST OF ABBREVIATIONS .3 RESEARCH QUESTIONS AND OBJECTIVES .5 SCOPE AND LIMITATION .6 THE STRUCTURE OF THE STUDY.
5 CHAPTER 2: LITERATURE REVIEW .1 OVERALL ON CUSTOMER SATISFACTION .2 OVERALL ON CUSTOMER SATISFACTION IN MORTGAGE LENDING .3 DETERMINANTS OF CUSTOMER SATISFACTION IN MORTGAGE LENDING .4 RESEARCH MODELS AND RESEARCH HYPOTHESES OF CUSTOMER SATISFACTION IN MORTGAGE LENDING. 15 CHAPTER 3: RESEARCH METHODOLOGY .1 QUALITATIVE RESEARCH STAGE. 18 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 General result of the survey .2 Result on Core Dimension determinant .3 Result on Relational Dimension determinant .4 Result on Tangible determinant .5 Result on Competitive price determinant .6 Result on Customer Expertise determinant .2 QUANTITATIVE RESEARCH STAGE .1 Target population and sampling method .3 The questionnaire design .4 Data analysis method .3 Assessment of Unidimensionality, Convergent validity and Discriminant validity .4 Multiple regression analysis. 25 CHAPTER 4: DATA ANALYSIS AND FINDINGS .3 Evaluation the measurement scale by using exploratory factor analysis .4 Assessment of convergent validity and of discriminate validity .5 Factor analysis of dependant factor .6 The adjusted research model.3 TESTING OF HYPOTHESES.
35 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 Multiple regression formula.2 Multiple regression result .1 Application of theoretical conceptual framework .1 The relationship between service quality and customer satisfaction .2 The relationship between price and customer satisfaction .3 The relationship between customer expertise and customer satisfaction.2 The result of measuring ANZ mortgage customer satisfaction .3 Outcomes of hypothesis test. 42 CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS .3 LIMITATION AND DIRECTION FOR FURTHER STUDIES. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1.1: Conceptual framework proposed by Mc Dougall and Levesque.2: The conceptual framework proposed by Naser and Jamal .3 The conceptual framework proposed by Nguyen Dinh Tung.1: The proposed research model .1: The adjusted research model. 35 LIST OF TABLES Table 3.1: General result of agreement on selected factors .2: General result of agreement on Core dimension factor .3: General result of agreement on Relational dimension factor .4: General result of agreement on Tangible dimension factor .5: General result of agreement on Price factor .6: General result of agreement on Customer expertise factor .1: Age of customer .2: Monthly income of customers .5: Final result of Reliability testing of the whole mod.
30 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.6: Final result of Reliability testing of each factor .7: The final result of Unidimensionality testing.8: The analysis result of Convergent validity.9: The result of factor analysis for Customer satisfaction .14: ANZ mortgage customer perception. 41 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF ABBREVIATIONS ANZ: ANZ Bank Vietnam Ltd. CLM: Customer Lending Manager COR: Core dimension EFA: Exploratory Factor Analysis EXP: Customer expertise H: Hypothesis HSBC: Hongkong and Shanghai Bank of China INT: Price KMO: Kaiser – Meyer – Olkin No.: Number REL: Relational dimension SAF: Customer satisfaction SPSS: Statistical package of social science Std. Deviation: Standard Deviation TAN: Tangible dimension VIF: Variance Inflation Factor LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: INTRODUCTION 1.1 BACKGROUND With the characteristic of young population and high urbanization, Vietnam has high demand in accommodation, especially in big cities such as Ho Chi Minh City and Ha Noi City.
Each year, thousands of immigrants from other provinces come to Ho Chi Minh City and Ha Noi City for working and studying while just a small part of them come back to the hometown. Some recent studies have predicted that in 2020, urban population will come up to 70 million. Besides that, the young occupies bigger portion in the existing population of Ho Chi Minh City and Ha Noi City which also push the occupation demand higher. Yearly increasing construction projects in Ho Chi Minh City and Ha Noi City is an obvious evidence for the occupation demand of urban people.
As statistics, in 2009, the average urban living area in Vietnam is 12.5 m2 per head, Ha Noi City is 8 m2 and Ho Chi Minh City is 13. This is a very low rate in comparison with the world’s average rate, in which Ha Noi City has the smallest living area per head in the country. The Construction Ministry has planned to increase the average living area in Ha Noi City up to 12 m2 per head and 14 m2 for Ho Chi Minh City and therefore, 30-32 million m2 living area need to be constructed each year. With the above reasons, mortgage loan in Vietnam in general and big cities such as Ha Noi City and Ho Chi Minh City in particular is very potential.
In truth, not many people can purchase a home whether it is a house, flat, apartment or penthouse without taking a mortgage loan. A mortgage loan is a loan secured by real property through the use of a document which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan. However, the word mortgage alone, in everyday usage, is most often used to mean mortgage loan (source: Wikipedia). Mortgage is one of long standing products in Vietnam banking, however, for above reasons, it has never been unessential.
Mortgage has grown rapidly for recent years in Ho Chi Minh City and Ha Noi City. As per Dr. Le Xuan Nghia, Vice President of National Finance Supervisor Committee, in 2009, banking capital invested in real estate market is around VND 200,000 billion, equivalent to USD 10.1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com billion which occupies 14.5% total outstanding loan of banking and 11.76% which of the economy, in which, Ho Chi Minh City holds 51% and Ha Noi City holds 14. For recent years, competition in mortgage lending among banking become more fiercely than ever before.
Banks traditionally have relied on differentiation in product category and service to attract and retain customers. However, it’s not easy as it’s quickly replicated by competitors and often fails to directly address customer needs. The most critical solution for banks in the violent competitive and rapidly changing environment of mortgage lending is the deep understanding of customer and gaining their trust. Customer satisfaction now becomes the determining factor in mortgage competition among banks in Vietnam and Ho Chi Minh City in particular.2 PROBLEM STATEMENT The fast growing-up progress of banking industry in Vietnam has accompanied with the economic development since renovation and reform for 20 years ago.
The most prominent aspect during this progress is the loosening of market entry restrictions. After two decades since “Banks and banking, cooperative – Law and legislation – Vietnam” (1991), now Vietnam banking sector comprises five state-owned commercial banks, thirty-nine joint stock commercial banks, forty foreign bank braches, five 100% foreign owned banks, five joint venture banks and two development and policy banks established. The establishment and operation of many foreign banks has also brought a new face to Vietnam banking industry, especially when foreign banks not only concentrate in wholesales banking, but introduce many retail products such as HSBC, ANZ, Standard Chartered Bank, Commonwealth Bank of Australia… In which mortgage is one of their most important target products to occupy retail market which is considered very potential in Vietnam. ANZ was one of the first foreign banks setting up business in Vietnam with the first branch in Ha Noi City in 1993.
At that time, it was “the first English-speaking bank in Vietnam”. In 1996, the second branch in Ho Chi Minh City went into operations and in 2004 business was expanded to Can Tho Province with a representative office due to the limitation on permitted branches number. After 15 years in Vietnam, in October 09th, 2008, ANZ was granted the license of the LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com bank with 100% foreign capital which brings much advantage to its long-term development in Vietnam. Beginning with 28 staff only, now it has more than 400 employees and five branches and transaction offices in Ho Chi Minh City, six branches and transaction offices in Ha Noi City.
Targeted to be the best foreign bank in Vietnam, ANZ is trying its best to build up the bank’s image as well as a sufficient product portfolio. Instead of focusing in wholesale banking products and corporate customers as in the past, now ANZ has built up a new strategy for occupying retail lending market. Their retail lending product portfolio is diversified with many products such as auto finance, mortgage, credit card… In which, mortgage is considered the most important product in the portfolio. It was firstly introduced in the end of 2007 with four sub-products: Home loan, Investment loan, Equity loan and Line of Credit.
Since then, mortgage has grown fast and reached more than 2,300 customers in 20 December 2010. Although being granted many awards such as “The Best Retail Bank in Vietnam”, “The Most Favorite Bank” or “The Best Customer Oriented Bank” by popular magazines like Vietnam Economics Times, The Asian Banker and Finance Asia, ANZ has no official research on customer’s satisfaction on its services, what is the key factor mostly effect customer’s satisfaction and what to improve to increase the mortgage service quality.