STATE BANK OF VIETNAM BANKING ACADEMY Banking Faculty GRADUATION THESIS DEVELOPING E-BANKING IN VIETNAM TECHNOLOGICAL AND COMMERCIAL JOINT STOCK BANK Student Bùi Cẩm Thanh Class K18CLCB Course 2015-2019 Student ID 18A4000640 Thesis supervisor Associate Professor, Ph.D Nguyen Thuy Duong Hanoi, April 21st, 2019 STATE BANK OF VIETNAM BANKING ACADEMY Banking Faculty GRADUATION THESIS DEVELOPING E-BANKING IN VIETNAM TECHNOLOGICAL AND COMMERCIAL JOINT STOCK BANK Student Bùi Cẩm Thanh Class K18CLCB Course 2015-2019 Student ID 18A4000640 Thesis supervisor Associate Professor, Ph.D Nguyen Thuy Duong Hanoi, April 21st, 2019 DECLARATION I declare that this Barchelor's Thesis has been composed solely by myself and that it has not been submitted, in whole or in part, in any previous application for a degree. Except where states otherwise by reference or acknowledgment, the work presented is entirely my own. Hanoi, May 26th, 2019 Signature Bui Cam Thanh i ACKNOWLEDGEMENTS First, I express my sincere gratitude to Associate Professor, Ph.D Nguyen Thuy Duong for allowing me to conduct this research under her auspices. I am especially grateful for her confidence and the freedom she gave me to do this work.
As a thesis supervisor, Associate Professor, Ph.D Nguyen Thuy Duong supported me in all stages of this work. I am extremly thankful and indebted to her for sharing expertise, and sincere and valuable guidance and encouragement extended to me. She always gave me constant encouragement and advice, despite her busy agenda. Without a coherent and illuminating instruction, this thesis would not have reached its present form.
I extend my sincere thanks to all members of the Banking Faculty, and all those who contributed directly or indirectly to the thesis. Thanks to all of my friends, my company for helping all the time. However, because of limited professional knowledge and lack of practical experience, the limit of content of the research is inevitable, I really hope to receive comments and further advice from teachers. ii Table of Contents DECLARATION .
LIST OF TABLES AND FIGURES . 1 Statement of the problem and rational for the study . 5 Scope of the study . 5 Data collection and methodology .
6 Organization of the thesis . 6 CHAPTER 1: OVERVIEW OF E-‐BANKING IN COMMERCIAL BANK .1 History of electronic banking .2 Definition and characteristic of E-‐banking .3 Types of electronic banking used in banking sector .4 Role of electronic banking .2 Indicators reflecting developing e-‐banking services .3 Factors that affecting the development of electronic banking . 27 CHAPTER 2: DEVELOPING E-‐BANKING OF TECHCOMBANK .1 Business performance of Techcombank in recent years .2 The development of e-‐banking of TCB by indicators .1 Developing the scale of e-‐banking .2 Diversifying types of banking products and services .3 Quality of E-‐banking .4 Risks in electronic banking at Techcombank . 46 CHAPTER 3: IMPLICATIONS AND RECOMMENDATIONS .2 Recommendations to develop e-‐banking at Techcombank .1 Adding more functions to the existing products .2 Enhancing customer experience .3 Mitigating risks of E-‐banking services .
54 CONCLUSIONS iv ABBREVIATIONS Number Short Form Long Form 1 Techcombank Vietnam Technological and Commercial Joint- stock Bank 2 Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam 3 BIDV The Joint Stock Commercial Bank for Investment and Development of Vietnam 4 VietinBank Vietnam Joint Stock Commercial Bank for Industry and Trade 5 Agribank Vietnam Bank for Agriculture and Rural Development 6 E-banking Electronic banking 7 ATM Automatic trading machine 8 POS Point of sale 9 SMEs Small and medium enterprises v LIST OF TABLES AND FIGURES No. Titile Page No.1 Techcombank Structure of Total Assets (VND million) 30 Figure 2.2 Techcombank Credit Growth from 2013 to 2017 (VND 31 Billion) Figure 2.3 Techcombank Profit before Tax from 2013 to 2017 31 (VND Billion) Figure 2.4 Techcombank Return on Equity from 2013 to 2017 32 (VND Billion) Figure 2.5 Techcombank Return on Assets from 2013 to 2017 32 (VND Billion) Figure 2.S adults who own each of the following 34 devices Figure 2.7 Unique Registered E-banking Customers 2015-2017 35 Figure 2.8 E-banking Transactions volume from 2015 to 2017 36 Figure 2.9 E-banking Transaction Value 36 Table 2.1 Electronic Fund Transfer Fees 37 Figure 2.10 The proportion of planned expenditure of TCB 41 Figure 3.1 Things will change in regard to products and services 50 offered vi INTRODUCTION Statement of the problem and rational for the study Along with the development of the market economy, competition pressure among financial institutions are getting tougher, the requirements of customers are getting higher, especially because of the rapid development of information technology, constantly improving banking services. In a dynamic economy, a developed society, the need to use e-banking services is huge. For developing countries like Vietnam, it can be seen that this demand is rising, and in the long-term orientation, this demand is predicted to constantly increase according to the socio-economic development process.
Sales and profit of this segment will gradually make up a significant proportion and become an important part in the business activities of commercial banks. Demand on web based banking products increased as a result of expanding customer focused service understanding. E-banking helps to decrease cost, create competitive market structure because consumers’ wish is to reach banking products in a fast, effective, productive way. On the other hand, the expansion of trade over the Internet and secured payment system for shopping in the virtual environment is another factor that increases the demand for e-banking services.
However, as many different e-services, the adoption level of e-banking services in developing countries such as Vietnam is fantastically low compared to developed countries. Meanwhile, in recent years a new round of technological and industrial revolution is beginning – the digital and economies have developed rapidly, accompanied by an explosion of artificial intelligence (AI), big data and cloud computing. Fintech is a deeply integrated combination of finance and technology, and is becoming the focus of global financial innovation and development. By using technology to make the finding, registering and lending to new customers quicker and easier, these Fintech companies have forced the traditional banking industry, which is famously slow to adapt, to react.
It is not possible to keep out the developments for Vietnamese banking system in the globalizing world. Therefore, in order to provide superior consumer satisfaction, local banks in Vietnam need to 1 be cautious about their technology selections and roadmap, ensuring their decisions offers long-term scalability and flexibility in a fast-changing environment. This study examines the development of e-banking services offered by Techcombank - one of the biggest commercial banks in Vietnam with a wide range of customers using their e-banking services. Techcombank is trying its best to catch up with the development of modern banking services, focusing on e-banking services, meeting the requirements of enhancing competitiveness, integration and development.
However, finding solutions to implement and improve the efficiency of e-banking services as well as helping Techcombank to affirm its position is still an urgent problem. The thesis also includes recommendations on developing e- banking services at Techcombank Literature Reviews In recent years, information technology, communication, science technology, new technologies such as Internet, mobile phone, websites are developed in tremendous speed. As a result, e-banking of commercial banks in Vietnam is also growing fast and changing the way people using banking products and services. It has become an integral part of modern banking.
Peter and Keng (2004) stated that the Internet has already revolutionized the banking industry. However, if some banks, particularly in certain segments of the industry, are not taking full advantage of available technology, they would fall behind their competition. One of the most effective ways for banks to compete within Vietnam banking industry is to invest money on developing e-banking products and services. In order to promote the integration process, attracting customers as well as taking opportunities in business, most banks in the world always offer convenient, fast and strongly supported services of modern technology.
Some notable services are automatic trading machine (ATM), payment point at point of sale (POS), network providing banking service through telephone network, personal computer. In fact, from the analysis and synthesis of the data collected during the research process, it can be seen that improving the operational sufficiency of internet 2 banking and mobile banking is the top priority, especially internet banking. Batu Tunay et al. (2015) research shows that the more advanced Internet banking practices in European countries, the more performance of the strongest banks.
But relatively less developed European countries in such a relationship could not be determined. According to a report by Five degree - a company supports financial institutions in digital transformation, it costs the bank $0.19 for a transaction of online banking and mobile banking respectively on average. But the bank has to spend $4.00 on average for a branch transaction. At commercial banks in Vietnam, most customers using e-banking are retail banking and the minority of them are corporate customers.
The exploitation of the advantages and absolute advantages of an electronic bank is to provide new, diversified, convenient and high-quality products and services with fast, accurate transactions. A large number of banks in Vietnam are now developing their e- banking to meet the customers' need and change of technology. Therefore, the development of electronic banking services has gained much attention and evaluation of many reseachers. The thesis uses some of the following research results to serve as a foundation for theory and proof for the statements presented in the thesis.
Specifically as follows: Pham Thu Huong (2012), "Developing electronic banking services in Vietnam in international economy" - Doctoral thesis at Foreign Trade University. The author has systematized fully and rigorously the overview of e-banking such as e-banking services, model of factors that affect customer perception of e-banking services. In addition, the author also provides analysis and comparison of experience of applying e-banking services in some developed countries such as Malaysia, Singapore. At the same time, the thesis analyzed the status of applying e-banking services in Vietnam and the advantages and disadvantages, giving solutions and recommendations to improve e-banking services at its early stages.
Ngo Thi Lien Huong (2011), "Diversifying services at commercial banks in Vietnam" - Doctoral thesis at National Economics University. The research analyzed the service groups provided by the bank to customers, gave the concept of 3 diversification, identified diversification methods and indicators to evaluate the diversification of e-banking services. Factors affect the diversification and significance of diversification for commercial banks in Vietnam. The study has shown experience of service diversification of commercial banks in the world to draw lessons to implement the strategy of service diversification for commercial banks in Vietnam.
The research output shows the status of service diversification at commercial banks in Vietnam and gives some solutions to successfully implement the strategy of service diversification. The study only focus on diversifying e- banking services, provides only an overview of the orientation of developing banking services in the future. Group of scientific works, articles about service development of commercial banks such as: Truong Thi Ngoc Thuan. The scientific works have mentioned some practical experiences in developing banking services at some domestic commercial banks such as Vietcombank, Agribank.
Since then draw lessons of price management experience for the development of e-banking services of Vietnamese commercial banks. In addition, there are some scientific works, articles on the development of e- banking services in Vietnam commercial banks. The research analyzed the situation and found appropriate directions to develop the banking services in international economic integration and the blooming of information technology: Luu Thanh Thao "Development of electronic banking services at Asia Commercial Joint Stock Bank". The above scientific works, although mentioned a lot about the development of e-banking services, but each scientific work, each article only mentioned a certain aspect of development.
The above studies have contributed to solving the theoretical and practical issues of the development of e-banking services at commercial banks: addressing the limitations and causes of these limitations.