STATE BANK OF VIETNAM BANKING ACADEMY FOREIGN LANGUAGES FACULTY. GRADUATION THESIS DIGITAL PAYMENT AT VIETNAM PROSPERITY BANK Supervisor: Ms. Pham Thi Hoang Anh (Assoc. Dr) Student: To Bao Ngoc Class: K17ATCC Student code: 17A7510130 May, 2018 DECLARATION I, student of the Faculty of Foreign Languages of Banking Academy, aware of and understand the plagiarism policy of Banking Academy, declare and certify with my signature that this thesis is an original report of my own work and has not been submitted for any previous degree or qualification from this or any other university or institute of learning.
Signature To Bao Ngoc ACKNOWLEDGEMENT I would like to send my profound gratitude and sincere thanks to my thesis advisor, Assoc. Pham Thi Hoang Anh, for her glowing ardour in assisting me in the preparation and execution of this thesis. Secondly, I am greatly indebted to all lecturers of the Faculty of Foreign Languages for having expertly instructed me and afforded me golden opportunities to accumulate essential knowledge, experience and skills. Last but not means least, I would also like to express a special thank to my parents and my friends, who have helped me a lot in finalizing this thesis in a limited time frame.
TABLE OF CONTENTS CHAPTER 1: INTRODUCTION .1 Rationale to the research. Objectives of the study .3 Scope of the study .4 Methodology of the study .5 Significance of the study .6 Structural organization of the study .4 CHAPTER 2: THE THEORITICAL FRAMEWORK OF DIGITAL PAYMENT IN BANKING SECTOR .1 The concept of technology application .2 The impacts of technology in banking system .3 The reality of digital payment on the global scale .1 Roles of digital payment on the global scale .2 Problems of digital payment on the global scale .4 The reality of digital payment in Vietnamese banking system .1 Roles of digital payment in Vietnamese banking system .2 Problems of digital payment in Vietnamese banking system .3 Achievements of Vietnamese banks in digital payment .17 CHAPTER 3: REAL STATUS FOR THE APPLICATION OF TECHNOLOGY AT VIETNAM PROSPERITY BANK (VPBANK) .1 Introduction of VPBank .1 Brief history and development of VPBank .2 Core values and cultures of VPBank .3 Significant achievements of VPBank .2 Real status for digital payment at VPBank .1 Digital payment products and services at VPBank .3 Technology in Self-inquiry facility .2 Overall assessment of digital payment at VPBank .1 Achievements of VPBank in digital payment .2 Weaknesses of VPBank in digital payment and causes .35 CHAPTER 4: SOLUTIONS FOR DIGITAL PAYMENT AT VPBANK .1 Opportunities and challenges of VPBank in digital payment .1 Opportunities of VPBank in digital payment .2 Challenges of VPBank in digital payment .2 Solutions for digital payment at VPBank .1 Solutions to tackle financial problems .2 Solutions to enhance technological infrastructure .3 Solutions to increase competitiveness.4 Solutions to enhance quality of digital payment services .49 LIST OF TABLES, FIGURES AND PICTURES Table Number Name of Table Table 2.1 Online-Banking Services users in Vietnam Table 3.1 Top 10 Assets Growth in 2016 Table 3.2 Significant achievements of VPBank in 2015-2017 Table 3.3 Card issuance in VPBank (2014-2017) Table 3.4 Payment card and credit card issuance (2014-2017) Table 3.5 VPBank' payment cards Table 3.6 VPBank' credit cards Figure Number Name of Figure Figure 2.1 Channels used for investment transactions Figure 2.2 Preference for banking method Figure 2.3 Major Payment Methods of Online shopping Figure 3.1 Autolink Card Figure 3.2 International mc2 Debit MasterCard Figure 3.3 Vietnam Airlines - VPBank Platinum MasterCard Figure 3.4 International Platinum Debit MasterCard Figure 3.5 Mc2 Credit Mastercard Figure 3.6 Platinum Credit Mastercard Figure 3.7 VPBank StepUP credit card Figure 3.8 VPLady Credit Card Figure 4.1 Vietnam Consumer Spending Figure 4.2 Smartphone Penetration in Vietnam LIST OF ABBREVIATIONS VPBank Vietnam Prosperity Bank ADSL Asymmetric Digital Subscriber Line Agribank Vietnam Bank for Agriculture and Rural Development ATM Automatic Teller Machine BIDV Bank for Investment and Development of Vietnam E-banking Electronic Banking E-commerce Electronic Commerce EMV Europay - MasterCard – Visa E-wallet Electronic Wallet HSBC The Hongkong and Shanghai Banking Corporation IT Information Technology POS Point of Sales RAS Remote Application Server SBV State Bank of Vietnam SMS Short Message Services USD United States Dollars Vietcombank Join Stock Commercial Bank for Foreign Trade of Vietnam VietinBank Vietnam Joint Stock Commercial Bank for Industry and Trade VNBC Vietnam Bank Card VND Vietnam Dong WPR The World Payment Report CHAPTER 1: INTRODUCTION 1.1 Rationale to the research As one of the core sectors influencing the economy on the global scale, the great importance of banking has been attached to the stability and sustainable growth of the market. In the era of advanced technology, when cutting-edge innovations are the precursor to the development and evolution of human being, the application of technology in all life aspects including banking field is indispensible. In recent years, Vietnamese government has highly appreciated the crucial role of high-tech advances in banking practices, especially in payment process.
We have been experienced an upward trend in non-cash payment, which is considered a sign of modern transaction for its convenience and safety. Banks are aware of the potential prospects of this payment method, offering their customers multiple payment options by dint of modern technology, namely E-banking and smart cards. The banking sector has embraced the utilization of technology to serve its clients fasters and to enhance the effectiveness of banking services with less resources, labours or costs required. As one of pioneers in establishing electronic banking system, Vietnam Prosperity Bank does not resist to involve in the procedure to promote their banking services.
When doing research, I have found out that the bank has various worth-recognizing achievements in the use of technology in payment services. However, it is also noticeable that there are still some restraints in the payment system which may be the root cause to the unsatisfactory services. Aware of the necessary nature of technology in payment services, the researcher chose the application of technology in payment services in Vietnam Prosperity Bank, one of the banks successful in adopting Non-cash payment services, as the topic of graduation thesis. Hopefully, this thesis can provide readers with elaborate information related to the case study while digging deepper into real status, reasons for limitation and measures to tackle them.
Objectives of the study 1.1 General objectives 1 The general objectives of the study are to evaluate the reality and assess the competitiveness of the application of technology in payment services in Vietnamese commercial banks in general and in Vietnam Prosperity Bank in particular.2 Specific objectives The specific objectives of the study are to measure the effectiveness of technology application in payment services of Vietnam Prosperity Bank, and the possible difficulties the bank has dealt with. Therefore, as a result, the thesis will come up with potential causes and actionable solutions with a view to upgrade the quality of payment services with the assistance of technology performed by Vietnam Prosperity Bank.3 Scope of the study The thesis focuses on the current situation and the performance of Vietnam Prosperity Bank in applying technological advances when offering banking services related to payment process. General and detailed description on existing electronic payment services as well as solutions to improve and potential services that should be applied will also be mentioned.4 Methodology of the study Qualitative research with deductive approach will be used in this thesis. All datas, graphs and charts are from different sources including books, journals, websites, articles and reports.
The empirical part uses information from observation and discussion, while the theoretical parts provide readers with fundamental knowledge of technology, banking system, payment services and digital transactions. My research methodology requires gathering relevant datas from reliable sources to analyze the material and arrive at a complete understanding of technological application in payment services. Through my thesis, I expect to shed light on the related questions by following several steps: 2 1. To analyze datas: After searching for reliable sources, I will collect useful datas such as the number of digital transaction users, the number of card owners,… to analyze the reality on national and international scale.
To ask questions: Specific questions will be made to dig into problems. To do background researches: Researches on domestic banks, foreign banks, and especially on VPBank are carried out. To construct hypothesis: hypothesis will be constructed as the result of researches 5. To identify problems: Researches reveal potential problems when applying technology in payment services.
To implement solutions: Actionable solutions and recommendations to address all discovered difficulties Analyze Datas Construct Identify hypothesis possible problems Resources Do Implement background solutions researches Ask questions Research methodology 3 1.5 Significance of the study From the research, to identify strengths, weaknesses, potential abilities as well as difficulties of VPBank when adapt technology in payment services, the thesis concentrates on existing digital payment services at VPBank and potential technologies to promote non-cash payment. The practical solutions to tackle problems will act as the catalyst to VPBank’ better performance in payment services.6 Structural organization of the study The thesis includes four main parts as follows: Chapter 1: Introduction Chapter 2: Theoretical framework of digital payment in banking sector Chapter 3: Real status for digital payment at Vietnam Prosperity Bank Chapter 4: Solutions 4 CHAPTER 2: THE THEORITICAL FRAMEWORK OF DIGITAL PAYMENT IN BANKING SECTOR 2.1 The concept of technology application In the history of human race, technology revolution is one of the most significant factors that change the entire world. To understand how important it is to make the best use of technology in our daily life, it is a need to understand the definition of technology application. According to Wikipedia, technology is the collection of techniques, skills, methods, and processes used in the production of goods or services or in the accomplishment of objectives, such as scientific investigation.
Technology can be the knowledge of techniques, processes, and the like, or it can be embedded in machines to allow for operation without detailed knowledge of their workings. Therefore, technology is a catch-all term referring to all know-how, and in the simplest form, technology application means the use of tools in production lines and in daily activities. However, specifically, technology mentioned in this thesis is the inventions such as electronic devices, internet and other technical means (Mifflin, 2002). In the latter definition, we can understand that applying technology means to conduct activities with the help of machines and other forms of modern techniques.
By virtue of these advanced innovations, human can increase the efficiency of their work and study, while saving a great deal of time and energy. We can also see technology in various forms including machines like computer, devices like phone, and digital form like the internet. These techniques are allocated and oriented by human, complying with rules and instructions.2 The impacts of technology in banking system In the past, without the assistance of technology, the banking industry were full of paper and branch based banks only. It was required for customers to go directly to the banks for any banking services which wasted plentiful time and was probably not safe in case of cash transaction (Ramey, 2012).
Moreover, in the history of banking sector, there have been deliberate frauds commited by bank staff or clients owing to limited supervision and orientation while practicing banking services. On the account of these dismerits and popularity on a small scale, banks could not 5 approach more customers and provide better services to them. Nevertheless, tremendous improvements in banking services have been seen, making banking one of the top sectors nowaday, thanks to modern technology. Technology has enabled banks to performed digitalized and network services.
Today, customers are benefitted by technological banking services in a wide range of forms like online trading, online money transfer, online bill payment,… All transactions are recorded in the computer system to ensure safety, thus reducing the risk of fraud and protecting profits and personal information of customers.