Competitiveness Points of Commercial Bank Branches

create a comparative advantage over its competitors. Thanks to this advantage, the bank can better satisfy the demands of its target customers as well as attract

competitors' customers, expand service market to gain high and sustainable profits.

The concepts have been institutionalized into evaluation criteria, the competitiveness of enterprises and commercial banks, other banks, for a branch of a State-owned commercial bank in Vietnam, the competitiveness also shows the effective implementation of the parent bank's planning criteria and strict compliance with the State's management and regulation principles represented by the State Bank. To further study the competitiveness of a specific enterprise - a State-owned commercial bank branch, the thesis unifies the following concepts:

The competitiveness of a commercial bank branch is the ability to rely on human resource advantages, modernize equipment technology, business process systems and management organization models to operate stably and firmly in terms of: Capital, outstanding loans and services... to achieve the ultimate goal of safety and efficiency.

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Regarding the competitive tools of commercial bank branches, there are some differences from the competitive tools of commercial banks themselves. Some branches have to compete with other branches of commercial banks, but they also compete internally in attracting customers, gaining market share and increasing sales. However, due to the limited independence in business decision-making, the tools used are narrower than the competition between commercial banks. There are 4 common groups of tools of branches in competition:

- Compete on product price, service/interest rate within the scope of authorized decision.

- Compete by products, product differentiation and service quality provided to customers.

- Compete by optimizing the distribution system (network of transaction counters and service methods).

- Compete by promotional measures, sales promotion: approaching customers, propaganda, customer care, applying incentive programs...

2.1.2. Competitiveness characteristics of commercial bank branches

2.1.2.1. Competitiveness characteristics of Commercial Bank Branches

Business activities in the field, especially in the monetary sector, so competition between commercial bank branches has its own characteristics and depends on the decentralization of the parent bank. Therefore, the competitive capacity of commercial bank branches has the following characteristics:

Firstly, commercial bank branches compete fiercely with each other but also cooperate closely with each other, not merging or eliminating each other but together aiming for a stable business environment, system safety and risk limitation to create a healthy money market . This is the most prominent and unique feature that distinguishes competition in the banking industry from competition in other industries. Commercial bank branches often support each other through non-term and short-term, medium-term and long-term deposit accounts or current payment accounts to meet capital needs for their own business and to serve customers. Therefore, if a commercial bank branch has a big fluctuation, there is a risk of bankruptcy, it will have a chain effect on the entire commercial bank system, even affecting non-financial organizations and of course no commercial bank branch wants that to happen. Therefore, on the one hand, commercial bank branches always compete fiercely with each other to win customers, dominate market share, increase income and profit, on the other hand, they always have to cooperate closely with each other, together creating a healthy and safe business environment to avoid systemic risks. Even when commercial banks compete by mergers and acquisitions, they often apply flexible measures such as acquiring the entire bank, buying controlling shares while still maintaining the service network and debt-credit relationships. Moreover, in the organization of the two-tier banking system of the market economy, the Central Bank (in Vietnam, the State Bank) has the right to deeply intervene in the business and management activities of commercial banks with the aim of maintaining the stability and safety of the system. The State Bank uses administrative measures, laws, regulations... to regulate the system of commercial banks to compete freely but must comply with the law and absolutely ensure the safety of the system.

Second, as enterprises, commercial banks are not only regulated by the Enterprise Law but also by the Banking Law and compete with each other in an environment closely supervised by the Central Bank (in Vietnam, the Supervisory Committee). Enterprises can be acquired or go bankrupt in the market, but commercial banks, especially state-owned commercial banks, cannot go bankrupt in the current economic context of Vietnam. The business activities of commercial bank branches directly affect the entire economy.

economic risks of commercial bank branches will lead to the risk of collapse of the entire system and

This has led to serious consequences for the entire national economy. Therefore, the State Bank often closely monitors the operations of commercial bank branches in the market and regularly issues warnings when there are signs of adverse fluctuations to prevent and limit risks. In case of risks, in many cases, the State Bank also has to take rescue measures to avoid system collapse. Therefore, commercial bank branches in the market economy have less freedom in business decisions such as strategies, investment in production and business sectors... compared to other industries. However, commercial bank branches receive more support from the State and parent banks in business. That stipulates that the banking industry often does not have too high a profit (super-profit), but in return, the profit of commercial bank branches is often stable and quite sustainable, and rarely goes bankrupt if they do business seriously.

Third, the competition of commercial banks is directly affected by the international financial and monetary markets and scientific and technological factors, especially the strong impact of the current 4.0 industrial revolution . Commercial banks are considered an important intermediary artery in the financial system. Through capital mobilization, lending, financial investment, payment, money transfer, etc., commercial bank branches have created the most important channel for the process of money circulation, domestic and international capital circulation. Currently, countries are applying trade liberalization, so the circulation of capital and currency has no borders. Associated with this activity is the institutional system of the capital market, banking business practices of each country, international practices, banking technology, and the international financial market, which are always evolving in a complex manner, forcing banks to constantly change their strategies and appropriate operating mechanisms to compete. Which bank is less likely to be able to?

adapt to the development and fluctuations of the international financial market, not updating banking technology will be fired. Thus, competition between commercial bank branches requires meeting the strict standards of the international financial market more than in any other field.

Fourth, the competition of commercial bank branches is very sensitive to changes in the business environment. Currency trading is a business field that is extremely sensitive to the business environment. Every change in a political, social,

Economic, psychological... even if very small will impact and spread very quickly, affecting the operations of commercial bank branches. For example, the surplus crisis of the iron and steel or cement industry will affect the construction industry and make the business of enterprises more difficult and directly affect the commercial bank branches due to receivables, payables... Therefore, banks cannot compete at all costs, by all means to weaken and annex competitors from each other. Because, the weakening and collapse of competitors will bring unpredictable disasters to themselves and the entire commercial bank system, even leading to their own collapse due to a chain reaction. This is also the fundamental difference between business competition and banking competition.

Fifth, the competition of commercial bank branches is strongly and directly affected by the State's macro and micro economic policies, especially monetary policy . The main source of business capital of commercial bank branches is capital mobilized from organizations and individuals in the socio-economic sector, while equity capital is only secondary (accounting for a small part).

about 7-10% of total assets) and is mostly used to equip facilities and techniques to serve business activities. Meanwhile, the State uses policies such as exchange rates, import-export support... to regulate at the macro level. These policies directly affect competition between banks, causing fluctuations in the financial market, demand - supply of currency, purchasing power and savings, investment... In which, monetary policy is a specialized policy in regulating the monetary market that has a direct impact on business and competition of commercial bank branches. Some policy measures have a direct impact through rigid regulations on competition factors such as interest rates, credit limits, credit granting rights, conditions for transferring money in and out of the country, internationally and regionally.

2.1.2.2. Competitiveness characteristics of branches of state-owned commercial banks

Like other commercial bank branches and enterprises, in addition to business activities, State-owned commercial bank branches also perform the functions, tasks, goals and policies of the Party and the State. On the other hand, State-owned commercial banks in Vietnam often decentralize management too much for their branches, so the competitive advantage of State-owned commercial bank branches is not complete in decentralization and legal relationship under the Head Office. Specifically:

Firstly, the level of autonomy in competition (or the ability to improve competitiveness) of branches of state-owned commercial banks is more limited than that of other enterprises. The regulation process of the State Bank to control inflation, mandatory safety regulations, and systematic

make commercial banks dependent on each other. Commercial banks always compete fiercely, increase market share, expand the market to compete for customers with each other, but when operating, they cooperate closely with each other due to systemic functions such as clearing, information on fraudulent customers, preventing chain effects that cause system collapse to prevent and limit risks... In other words, commercial banks compete with each other in the dialectical relationship of the system's components to stabilize, be transparent and minimize risks for the entire system. Otherwise, the collapse of this bank will lead to the collapse of many other banks and affect businesses, so commercial banks need to support each other and save each other, not eliminate each other.

Second, competition between branches of state-owned commercial banks within the system.

Level of decentralization, branch business delegation, proactive operation

Business with three main contents:

- Regarding management and operation. Based on the actual business performance of each branch, the Head Office annually decentralizes and assigns planning targets to each branch in each area to implement each year and quarter, including: Capital; outstanding debt; bad debt ratio; service revenue; loan interest revenue; debt collection after risk handling; expenses; profits; fixed labor;...

- Regarding decentralization of business operations (mainly credit granting). Branches that are decentralized to grant large credit are a great advantage to expand the customer network.

customers, NLCT will increase. The Head Office decentralizes the total maximum credit level for each customer, each project according to the following hierarchy: Board of Directors (NHNN&PTNT is the Board of Members) -> General Director -> Level 1 Branch -> Level 2 Branch and Transaction Office. Depending on each period and specific conditions, the Board of Directors authorizes members, the General Director authorizes the Deputy General Director, the Branch Director authorizes his/her deputy, the Hamlet 2 Branch and the Transaction Office, each level has the authority to decide on granting credit to each customer. In case the customer has a loan demand beyond the branch's judgment, the branch submits the request to the Head Office according to the hierarchy to provide loans to meet the diverse needs of the customer. This assignment of credit authorization is the fundamental difference between a commercial bank branch and a state-owned commercial bank branch, creating conditions for its branches to develop banking services, capture market share, expand customers, and enhance their competitive edge. Branches and transaction offices are proactive in implementing business plans, meeting a variety of needs.

customers, business lines to complete the plan. In addition, to operate business safely and effectively, the Head Office also gives branches the right to conduct transactions, foreign payments, foreign exchange trading...

- Regarding internal personnel relations. In the organizational model of the State-owned commercial bank, the Board of Members, on behalf of the owner of the State-owned commercial bank, has the maximum power to decide on the implementation of its rights and obligations according to the provisions of law and the charter. The Board of Members decides to appoint, re-appoint, dismiss... members of the Board of Members, the Board of General Directors, heads (deputy) of affiliated units such as: Heads (deputy) of Departments under the Head Office, Directors (Deputy Directors) of type 1 branches, Chairmen and Board of General Directors (Deputy General Directors) of affiliated subsidiaries. The General Director is the highest executive, responsible to the Board of Members and the law for the implementation of his rights and obligations such as planning, appointing, reappointing, and dismissing positions such as Director (Deputy Director) of type 2 branches and some Heads of Departments of type 1 branches. The Director of level 1 branches has the right to plan, appoint, reappoint, and dismiss positions under his management such as:

Head (Deputy) of professional department; Deputy Director of level 2 branch and Director (Deputy Director) of transaction office.

Third, compete with branches outside the system of state-owned commercial banks.

- Branches of State-owned commercial banks are entitled to use more capital from the Head Office if their business capacity is good and effective. This is the biggest advantage of a branch of a commercial bank, with large capital easily accessible to large customers to expand the customer network, increasing service revenue from banking products and services. Branches are proactive in organizing activities, performing accounting, managing personnel and other activities according to the decentralized authorization regime and specified in internal documents of each branch of a State-owned commercial bank. In lending activities under their jurisdiction, branches are entitled to choose potential customers to choose to lend effectively, in accordance with the provisions of law and regulations of the industry. In case the capital source is insufficient, the capital source of the parent bank can be used and vice versa, the parent bank can borrow if there is excess capital. If a State-owned commercial bank lacks capital for lending, it will be lent by the State Bank in the form of re-lending according to the State Bank's regulations. This is also a difference from other commercial banks and a strong advantage in the lending sector of State-owned commercial banks. Because currently, large enterprises need a lot of capital to expand production and business activities and this is also an opportunity for State-owned commercial banks to expand their customer network.

- The State Bank branches also carry out the tasks of the Party and the State.

To stabilize the socio-political economy, the State often assigns the State-owned commercial banks to perform economic development tasks such as supporting agricultural and rural loans to solve social security issues such as loans to support low-income people, offshore fishing loans. In case of risks, the State will forgive debts or support interest compensation... This feature creates advantages for the State-owned commercial bank branches assigned with the State's tasks to be provided with business capital, compensate for losses, and repay debts if there are risks. However, that also limits the competitive capacity of the branches because the business mechanism is often rigid, business procedures must comply with State regulations, and the lending sectors often have high risk coefficients and are prone to losing capital.

Thus, it can be seen that the competitive capacity of the State-owned commercial bank branch is not complete but has certain competitive advantages. Compared with other

Commercial banks and branches of state-owned commercial banks have the ability to respond more sensitively to authorized business decisions and must rely mainly on the advantages, reputation, market share and resources of the parent bank.

Fourth, the competitiveness of a branch of a State-owned commercial bank depends on the psychology and expectations of depositors.

The asymmetric information situation between banks and customers makes it impossible for customers to control the business situation of the bank. Therefore, any rumor that makes depositors lose confidence in the banking system in general and a specific branch of a State-owned commercial bank in particular, they immediately rush to withdraw money and ask the bank.

This makes banks face difficulties in capital mobilization as well as in using banking services of customers. Taking advantage of this characteristic, many bank leaders due to pressure of bank development or lack of professional ethics, greed and risk-taking can compete unfairly by spreading rumors... affecting the psychology of depositors, which will reduce capital and profit and direct competitiveness for the branch of State-owned commercial banks.

2.2. INDICATORS AND FACTORS AFFECTING THE COMPETITIVENESS OF COMMERCIAL BANK BRANCHES

2.2.1. Competitiveness assessment criteria

In banking business activities, all management and operational activities such as organization, policies, planning targets... of commercial bank branches depend on the parent bank, the branches only perform business tasks. To specify the system of indicators to evaluate the competitiveness of commercial bank branches, the thesis proposes a set of indicators to evaluate the competitiveness of commercial bank branches including 10 indicators, of which, six indicators of the branch: Capital, outstanding debt, bad debt, service, market share and finance and four indicators of the parent bank directly affect the entire business activities and impact the competitiveness of commercial bank branches: business strategy, technology, profitability and human resources, management and operations).

2.2.1.1. Capital is the biggest competitor of commercial bank branches.

Capital of commercial bank branches is mobilized from idle money or other sources.

Investment channels: Economic - political - social organizations, financial organizations, enterprises