Banking Academy Graduation Thesis STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty GRADUATION THESIS IMPROVING THE QUALITY OF RETAIL BANKING SERVICES IN ASIA COMMERCIAL JOINT-STOCK BANK Student : Tran Thi Hong Nhung Class : ATCA – K12 Lecturer : Mrs. Can Thuy Lien (MA) Ha Noi – June, 2013 ACKNOWLEDGEMENTS Tran Thi Hong Nhung Class: ATCA – K12 Banking Academy Graduation Thesis After a long time of hard work, my thesis would not have been completed without the support of many people. First of all, I would like to express my deepest gratitude to my supervisor - Mrs. Can Thuy Lien who was abundantly helpful and offered me invaluable suggestions and contribution.
Moreover, her enthusiastic instructions and corrections helped my graduation thesis be better. In addition, I wish to say sincere thanks to all the lecturers of Banking Academy in general and teachers of Foreign Language Faculty in detail for conveying precious knowledge to me to become a well-educated student. Another appreciation is given to managers and staff of Asia Commercial Bank, Den Lu Transaction point who created me favorable conditions to fulfill my internship period. Last but not least, I am very thankful to my friends and my beloved family members for their great support and understanding.
It is their encouragement during my research that give me a spiritual foundation and strength to complete this task and make it successful. Tran Thi Hong Nhung Class: ATCA – K12 Banking Academy Graduation Thesis LIST OF TABLES AND FIGURES Table 3.1: Rewards ACB received from 2006 to 2012 .2: ACB’s retail fund mobilization in the period 2009 – 2012 .3: ACB’s retail loans between 2009 and 2012.4: Number of cards issued of ACB in 2011, 2012 .1: ACB’s retail fund mobilization in the period 2009 – 2012 .2: Structure of retail deposit by types of money in 2012 .3: ACB’s retail loans in the period 2009 – 2012 .4: The number of branches and transaction points from 2009 to 2012. 19 Tran Thi Hong Nhung Class: ATCA – K12 Banking Academy Graduation Thesis LIST OF ABBREVIATIONS ACB : Asia Commercial Bank ASEAN : Association of South East Asian Nations ATM : Automatic Teller Machine Eximbank : Vietnam Export Import Bank GPRS : General Packet Radio Service ID card : Identity card ISO : International Standards Organization IT : Information technology POS : Point of sales R&D : Research and development RBS : Retail banking services Sacombank : Saigon Commercial Bank SBV : The State Bank of Vietnam SMEs : Small and medium enterprises SWIFT : Society for Worldwide Interbank Financial Telecommunication Techcombank : Vietnam Technological and Commercial Bank VIP : Very important person WTO : World Trade Organization Tran Thi Hong Nhung Class: ATCA – K12 Banking Academy Graduation Thesis TABLE OF CONTENTS CHAPTER 1: INTRODUCTION .2 CHAPTER 2: THEORETICAL FRAMEWORK .1 Definition of retail banking services .2 Characteristics of retail banking services .3 Roles of retail banking services .1 To the economy .4 Some main retail banking services .1 Fund mobilizing services .6 Other retail banking services .5 The quality of retail banking services.1 Overview of the quality of RBS .2 The importance of enhancing the quality of RBS .7 CHAPTER 3: RETAIL BANKING SERIVES IN ASIA COMMERCIAL BANK .1 Introduction of ACB .3 Vision and Mission .2 Analysis of ACB's the retail banking activity over the period 2009 – 2012 12 3.1 ACB’s performance of some main RBS.1 Fund mobilizing services .16 Tran Thi Hong Nhung Class: ATCA – K12 Banking Academy Graduation Thesis 3.5 Customer care policies .3 Evaluating the quality of ACB’s RBS .1 Comparing the quality of RBS in ACB with that of some other banks 22 3.2 Some ACB’s achievements in the retail services section .3 Some ACB’s limitations in the retail services section .4 Causes resulting in limitations .25 CHAPTER 4: SOLUTIONS TO THE IMPROVEMENT OF THE QUALITY OF RETAIL BANKING SERVICES IN ASIA COMMERCIAL BANK .1 Promoting research and development of RBS .1 Strengthening and improving existing retail services: .3 Developing new RBS: .2 Expanding the distribution network .1 Developing traditional distribution channels .2 Developing modern distribution channels .3 Upgrading facilities and equipments.3 Investing in technology development .4 Enhancing the quality of human resources .1 Fulfilling the recruitment process .2 Raising the training quality .3 Maintaining suitable reward policies. Concentrating on professional style of retail staff .5 Strengthening the customers care.6 Promoting Marketing activities .7 Improving the quality of inspection of the service quality .8 Recommendations to the Government and the the State Bank.1 Recommendations to the Government .2 Recommendations to the State Bank.
39 REFERENCES Tran Thi Hong Nhung Class: ATCA – K12 Banking Academy Graduation Thesis CHAPTER 1: INTRODUCTION 1.1 Background International integration has opened up many opportunities as well as challenges for organizations providing banking services in Vietnam. They have to face with fierce competition with foreign banks who have not only strong financial ability but also experience in development of modern banking services. Although Vietnam’s population is estimated to reach 89 million in 2012, the citizens’ income and educational level is increasing, only 20% of them use banking services. Thus, Vietnam is considered as a potential market for retail banking services.
Under the pressure of competition of bank services and the rapid development of information technology, commercial banks are paying attention to modernization and application of scientific advances in exploiting the retail market. It is understandable that Asia Commercial Bank (ACB) is not excluded from this indispensable trend. Therefore, the strategy of ACB will focus mainly on providing diverse, professional and convenient retail products to suitable customers, with the aim of building up a high quality, safe and economically efficient retail banking services system. To meet the increasing need of using banking services of customers, and to compete with other commercial banks, without doubt, ACB is expanding the network, diversifying retail products, improving their quality of services and enhancing the serving manner to customers to achieve the goal of being a top retail bank in Vietnam and developing the retail banking services system which has the same level with that of other banks in the area.
In addition, the bank is boosting its competitiveness, prestige and reputation gradually in international financial market. For this above reality, the assessment of the quality of retail banking services in ACB as well as proposing some measures to improve the quality services help the bank gain the customers’ satisfaction. Therefore, I decided to choose and do research entitled “Improving the quality of retail banking services in Asia Commercial Bank”.2 Objectives The thesis aims at evaluating the actual quality of retail banking services and proposing some solutions to improve the quality of retail banking services in Asia Commercial bank. Tran Thi Hong Nhung 1 Class: ATCA – K12 Banking Academy Graduation Thesis 1.3 Research questions The discussed problem will answer the following questions: What are RBS and their roles? Why the quality of RBS should be enhanced? How was the performance of RBS in ACB from 2009 to 2012? What were achievements an limitations of the bank over that period? What solutions should be proposed to promote the quality of RBS of the bank? 1.4 Scope At present, commercial banks in general and ACB in detail offer a wide range of retail banking services.
However, due to limited time, the thesis will concentrate on five main retail services provided by ACB. They are Fund mobilizing services, Lending services, Card services, Settlement services and E-banking services.5 Methodology To find out the performance of retail services in ACB over the period 2009 – 2012 , the secondary data (such as financial reports, annual reports, introduction of the bank and information from the Internet sources) was used. After that, factors affecting the bank’s retail performance were analyzed and then, solutions for improvement will be suggested.6 Disposition Chapter 1: Introduction Chapter 2: Theoretical framework Chapter 3: Retail banking services in Asia Commercial Bank Chapter 4: Solutions to improve the quality of retail banking services in Asia Commercial Bank. Tran Thi Hong Nhung 2 Class: ATCA – K12 Banking Academy Graduation Thesis CHAPTER 2: THEORETICAL FRAMEWORK 2.1 Definition of retail banking services Depending on different points of view and approaches, there are now some concepts of “Retail banking services” (RBS): According to economists of The Asian Institute of technology (AIT), RBS are to provide products and banking services for individuals, small and medium enterprises (SMEs) through network of branches, telecommunications and modern technology.
As it stated by World Trade Organization (WTO), RBS are typical services of banks where retail customers can come to branches or transaction points to carry out transactions, such as depositing, checking accounts, mortgaging, borrowing money, and other services. In summary, retail banking services can be defined as follow: “Retail banking services are banking services provided for personal customers, SMEs through network of branches or telecommunications”.2 Characteristics of retail banking services a. Customers of RBS are individuals, households and SMEs. RBS are diverse and the value of each transaction is not high, so the level of risk is relatively low.
RBS require the building of many distribution channels to provide services for customers on a large scale. RBS base mainly on modern information technology and professional staff in order to improve the quality of products and bring them to each customer. RBS are simple and easy to be implemented because the main services are deposits, payments, loans and card services. The business development base primarily on the quality of services, so high quality products will definitely be an important factor for boosting revenue and attracting customers.
Average operating costs are quite high. Although the customers quantity is considerable, they are widely dispersed which make the transactions not convenient. Besides, banks’ investment in online trading is still costly. Tran Thi Hong Nhung 3 Class: ATCA – K12 Banking Academy Graduation Thesis h.
Because customer networks are national wide, the management and marketing forms are diverse and complicated.3 Roles of retail banking services 2.1 To the economy RBS change a cash economy directly to a non-cash one, enhance the efficiency of State management as well as reduce the social costs of payment. In addition, with RBS, cash cycle process is enhanced and more effective, the potentiality of capital was exploited to promote business, consumption and improve the people’s lives.2 To banks RBS take a part in diversifying of products, expanding the market, improving the competitiveness, creating medium and long-term capital for banks, altering the income structure of banks, minimizing risks and strengthening the national finance.3 To customers RBS bring convenience, safety and efficiency to customers in their payment process and in using their own income. Currently, RBS creates a stable income, risk diversification and a solid foundation for banks. Therefore, commercial banks have initially considered RBS as core activities in order to build up, consolidate and develop a good customer base; afterwards, they can enlarge other banking activities.
Commercial banks in Vietnam have been improving the quality of RBS as an inevitable trend, consistent with the common trend of banks in region and around the world.4 Some main retail banking services 2.1 Fund mobilizing services It is obvious that one of the most function of commercial banks is mobilizing fund for lending loans and investments. They can raise capital from personal customers and SMEs in the forms of term deposits, issuing valuable papers (promissory notes, bank bonds…) and other forms of deposits. Although idle capital of individual customers and SMEs is not much, banks can still mobilize a potential and plentiful fund because of large number of customers. Tran Thi Hong Nhung 4 Class: ATCA – K12 Banking Academy Graduation Thesis Nowadays, beside traditional deposit products, commercial banks have offered a variety of savings products with flexible terms and interest rates to not only develop their brand names but also meet the need of customers.