Bank Card Business Evaluation Criteria

Today, commercial, service and goods transactions take place anytime, anywhere, beyond distance limits. From many perspectives, when payment activities in society are still commonly carried out in cash, it can lead to some disadvantages and risks such as: Social costs for organizing payment activities (such as the Government's costs for printing money; transportation, storage, checking and counting costs of the banking system and of the entities participating in payment transactions) are very expensive; making payment transactions in cash is easily exploited by criminals to commit fraud, evade taxes, delay or not fulfill debt repayment obligations to banks or creditors; security issues in payment, storage and transportation of cash always pose many potential dangers; using cash in payment transactions in society will create a favorable environment for criminals to circulate counterfeit money, directly threatening the interests of organizations, individuals and national security.

Thus, developing bank card products is necessary. But how to develop cards with the current capital, human resources, socio-economic conditions and legal corridor? Ensure that investment banks are profitable and increase competitiveness.

1.4. CRITERIA FOR EVALUATING BANK CARD BUSINESS

* Number of cards:

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With a fairly large network of operations nationwide. Banks will attract a large number of customers if they deploy card services. Currently, when opening a personal account for operation, many customers mention card services and consider it an essential content to convince customers. The convenience of existing card customers is a factor that promotes attracting new customers. Through card services, customers will know other services of the bank, so the number of potential customers of other important products will also be larger.

By comparing the number of cards issued over the years, it is also possible to evaluate whether the card business is developing or not. The increasing number of cards also means that the bank's issuance activities have been effective.

* Balance on payment account and card account

All types of bank cards are linked to a certain account at the bank. When customers really trust and are fully introduced to the features

With the card's features, customers will not use cash and leave a large balance in their bank account. This is a stable, low-cost source of capital for business banks.

* Card service fee - Source of income for banks :

Card business brings a large source of income for banks. That is the annual fee that cardholders have to pay for the card usage contract, cash withdrawal fee, transaction fee for paying for goods and services by credit card at card accepting establishments, trade discount and some other fees such as: Checking fee or card reissuance fee. In recent years, all revenues from card business have brought a profit rate of up to 20%/year for banks, so the card business sector is attracting special attention from commercial banks.

* Profit:

The income from cards that banks get includes: card acceptance facility fees, annual fees, card issuance fees, interest on credit that the cardholder is late paying and cash withdrawal fees for credit cards. There are also revenues from accompanying banking services.

Profit is equal to income minus expenses and capital investment. The development of card business can be assessed by comparing profits between years: if the following year is higher than the previous year in absolute terms, it means that the business has become more effective.

* Service network nationwide and worldwide.

Through card issuance, banks will expand their service network nationwide and worldwide. With advanced customer service methods such as depositing money in one place and withdrawing in many places (via Debit Card or ATM) or cashless payment services at card-accepting establishments. Thus, by issuing and paying cards, banks' areas of operation have been expanded, creating conditions for their growth and development.

* Competitiveness in card business

Card business also enhances competitiveness, providing a

new image for the bank, increasing the stock value of the Joint Stock Commercial Bank.

The card business market is a fiercely competitive market. The international integration process of the Vietnamese economy is taking place rapidly. Vietnam has joined the WTO, which means that foreign banks have entered Vietnam. Card payment activities have become popular and common all over the world, especially in countries with developed economies. This trend is gradually showing clearly in Vietnam. The good implementation of card business operations will create competitive advantages for banks with other banks and prepare for the integration and development process of the economy. Along with this advantage is the increase in image value, brand, and most clearly, the increase in the value of shares of joint stock banks, bringing economic benefits to shareholders, and business strength to banks.

1.5. FACTORS AFFECTING CARD PRODUCT DEVELOPMENT ACTIVITIES OF COMMERCIAL BANKS

1.5.1. Internal factors

1.5.1.1. Technology investment

In the stage of international economic integration, legal barriers are no longer present, and the services of banks are almost equivalent. The application of more advanced technology has become a decisive factor in the race to gain customer trust . Electronic money transfer services, card payments, ATM payments, and online payments are creating conveniences to attract customers. Card payments are associated with modern machinery and equipment. If this machinery system has problems, it will cause congestion in the entire system. Therefore, when introducing card services, banks must ensure a modern payment technology that keeps up with the world's requirements. Moreover, only with high technical level can the operation, maintenance, and maintenance of the machinery system serving card issuance and payment be effective, reducing service costs, thereby attracting more users. Bank cards are a product associated with modern technology. Therefore, the technical technology system plays a very important role for the development and effective operation of card services. The solution for each bank's technology system is selected in accordance with the strategic development orientation of that bank.

Banks implementing card services must invest in a technical technology system according to international standards, including a customer information management system, a card usage and payment management system that meets the requirements of international card organizations. This system will connect online with the data processing system of international card organizations. In addition, banks must also invest in a system of equipment serving card issuance and payment such as automatic card payment machines, fingerprint card payment devices, card printers, ATM automatic transaction machines, CAT card payment authorization machines, system connection devices, and terminals. This system must be synchronous and have high integration capabilities because the speed of card transactions depends on the synchronization and processing speed of the system.

According to experts, the application of new technology will make payment easier and that is the basis for people to be more "interested" in the card. When the service is not really developed, users will have to face many worries such as: having money in the account but not being able to spend it because the machine is out of money, network congestion, security issues, getting used to payment procedures in shopping,... That is also the reason why many people often withdraw all the money in their account into cash to spend or go far away in case "they cannot find an ATM".

1.5.1.2. Human resource level

Human is an indispensable factor in any activity, holding a central position, deciding the success or failure of a process, a project. The human factor is reflected in the level of management, use of foreign languages, expertise, access to new technologies. Card payment is associated with modern technology, which also means large investment costs requiring a team of skilled professionals to be able to access and exploit the full value of technology as well as create new technology.

The human element is also reflected in the ability to cross-sell products. That requires

Staff must be knowledgeable about the product and trained in sales skills.

1.5.1.3. Card product characteristics

* Development strategy

When participating in any field, banks must set their own goals.

Market entry objectives, development plans and strategies for market development

That. With clear strategic planning will bring high efficiency to the bank in investment activities. Especially with the card market, a relatively new market, setting short-term and long-term plans will help the bank be more successful in exploiting the market. Specific strategies are expressed through marketing activities to advertise products, expand the network of card issuance and payment. Banks with good marketing activities will be more successful in expanding market share and increasing revenue. Just like other business areas, new products always attract the attention of customers. Continuously introducing new products with more outstanding utilities will be an important factor in card business activities to improve the efficiency of this activity.

In addition to existing card products, banks can develop many new accompanying services such as electronic payment services..., then consumers will see that cards really bring many benefits and will prefer cards more.

1.5.1.4. Pricing policy:

Including card issuance costs, annual fees, cash withdrawal fees... while banks are using cheap and stable capital from customers' accounts. The basis of the fee policy is the fact that investing in an ATM is currently too costly while the compensation fee is too little. For example, for each ATM, in addition to the cost of installation, equipment maintenance, convenient location rental, security costs... and the amount of money loaded into the machine, the bank must reserve a further amount of capital with a total amount of up to 500 million VND/machine. This amount, after being multiplied by the total number of ATMs, will not be small and this is capital that does not generate profit for the bank, therefore, it can cause difficulties for the bank's working capital, especially at times when the bank is "thirsty for capital".

* Customer service.

In order for card business to develop, it is necessary to focus on customer service. It is necessary to actively introduce card products and services widely so that everyone knows and understands the bank's products. The perspective in card marketing is not only to identify market needs and satisfy those needs like the traditional model, but must be developed to a higher level. The task of card marketing is to create demand and create desire for the product.

1.5.1.5. Card issuance process at Southeast Asia Bank

Since the implementation of card issuance, SeABank has built a unified card issuance process throughout the system and adjusted and modified to suit the actual conditions of the bank and the increasing demands of customers. Currently, SeABank is applying a card issuance process with simple operations, shortening the issuance time because the right to approve card issuance is very flexible, the responsibilities of related departments are quite clear, and there is no overlap. Ensuring security as well as ensuring convenience in customer service.

1.5.1.6. Tangible facilities

* Card issuing network

The issuing bank must have a large scale of operation and high reputation not only in the domestic market but also in the international market. It must have relationships as an official member of the most famous international card organizations in the world, and have a system of fast, modern and safe means of updating. Only then can it compete strongly in the market.

* Card usage network

The card usage network is measured by the number of card acceptance units. The number of these units plays a very important role in the card payment business, as a bridge for payment activities between banks and cardholders. If in an environment there is no diverse and quality card acceptance network, it will not be possible to ensure the supply to stimulate people at home and abroad to use cards. Therefore, an environment with a dense network of card acceptance facilities will be the condition for card payment activities to develop strongly.

1.5.1.7. Product promotion

Sales promotion and media advertising policies include a set of activities to stimulate the attraction of more and more customers to card products. At the same time, it increases the loyalty of current customers, attracts future customers, facilitates customers to participate in the service provision process, especially increases the prestige and image of the Bank in the market. Right from the launch of card products, SeABank has always paid attention to the purposes of promoting and communicating the products.

With its card products, many partners and many communication programs are launched to make customers feel close and want to try and stick with the Bank's ATM cards.

1.5.2. Objective factors

1.5.2.1. Demographic environment

The first environmental force to monitor is population, because people make up markets. The demographic environment includes the size and growth rate of populations in different cities, regions, and countries, age distribution and ethnic composition, education levels, household patterns, and regional characteristics and movements.

The world population explosion

The world population explosion is a major concern for governments and various organizations around the world. This concern is based on two factors. The first is that the earth's resources are limited and cannot sustain the lives of the majority of people. The second cause of concern is that the highest population growth occurs in those countries and communities that are least able to sustain their lives.

The age structure of the population determines the needs

The population can be divided into six age groups: preschoolers, school-age children, teens, young adults (25 to 40), middle-aged adults (40 to 65), and seniors (65 and over). These are indicators of what types of products and services will be in high demand over the next few years. Each group has certain product and service needs, media preferences, and retail formats.

Nation

Countries have very different ethnic and racial makeups. Each population group has certain desires and certain shopping habits.

Educational attainment groups

In any society the population must be divided into five educational levels: illiterate, high school dropout, high school graduate, university graduate, and professional graduate.

Types of households

Everyone thinks of a traditional household as consisting of a husband, wife, and children (sometimes including grandparents). Today's households consist of single people living alone.

single-parent families, childless couples, and empty nesters. There is therefore a growing need to study the special needs of such nontraditional households, as their numbers are growing faster than those of traditional households.

Moving from mass markets to micromarkets

The impact of all these changes has resulted in the fragmentation of the mass market into many different micro-markets based on age, gender, ethnicity, education, geography, lifestyle, etc., each with distinct preferences and consumer characteristics and reached through increasingly targeted information and distribution channels.

1.5.2.2. Economic environment

Markets require purchasing power and people. The purchasing power available in an economy depends on current income, prices, savings, debt, and credit availability. It is therefore necessary to closely monitor major trends in income and consumer spending patterns.

Income distribution

Countries vary greatly in their income levels and distribution. The basic determinant is industrial structure.

In a subsistence economy, the vast majority of the population engages in simple agriculture. They consume most of what they produce and exchange the rest for simple goods and services. They provide few opportunities for marketers. “Raw material” economies are rich in one or more natural resources but poor in others. Most of their income comes from exporting those resources.

In a developing economy, manufacturing begins to account for about 10 to 20 percent of the country's gross national product. Industrialization creates a new, wealthy class and a small but growing middle class, both of which demand new types of goods, some of which must be imported. In industry, the main exporter of manufactured goods and capital,

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