Contains full information and beautiful to help readers approach the problem clearly, thereby attracting customers and quickly conveying information to stimulate future borrowing desires . Along with modern media, word of mouth also needs to be focused on. When existing customers are satisfied with the quality of the bank, they will automatically introduce it to friends and people around them to use when they need to borrow capital.
3.2.5 Strengthening credit risk prevention measures
Consumer lending activities of banks often face credit risks, in which consumer lending activities without collateral are more risky. This directly affects the revenue, profit as well as the reputation and future operating capacity of TTCVTDMB. In particular, in the context of the current volatile economy, TTCVTDMB needs to further strengthen risk prevention measures. In addition to regularly monitoring and managing loans and setting aside risk provisions according to state regulations, TTCVTDMB needs to promote loan insurance services. This is considered an effective measure and stimulates the customer's responsibility to repay the debt and their commitment to the loan.
3.3. Recommendations
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Based on the limitations in the process of providing consumer loans without collateral at the Northern Consumer Loan Center - VPBank, in order to contribute to the effective implementation of the proposed solutions, along with the basis for the State Bank as well as VPBank headquarters to have timely and appropriate support measures for the increasingly better development of the center, I would like to propose the following recommendations:
3.3.1. Recommendations for the State Bank
The State Bank is the agency representing the State in the banking sector, directly directing the activities of banks, so the State Bank plays a key role.
important in promoting banking activities in general and consumer lending activities in particular. Completing the system of legal documents will create the necessary foundation for the development of consumer lending activities. There should be specific documents on the subjects and types of consumer lending without collateral, creating a complete legal corridor for this activity, carefully studying the market situation to issue accurate documents and long-term effectiveness. The State Bank needs to coordinate with relevant ministries and branches in consumer lending activities to issue inter-ministerial circulars to create favorable conditions to promote the development of consumer lending activities.
The State Bank needs to develop an interbank information system, the State Bank should strengthen its relationship with commercial banks and between commercial banks, establish close relationships to grasp information about banking activities as well as information about domestic and foreign customers. Currently, to assess whether customers are eligible for loans or not, business specialists must seek help from the State Bank by looking up the customer's CIC information on the national data portal. Through that, the person reviewing the application can know the outstanding debt situation, loan developments as well as check whether the customer is in bad debt or not in the last 5 years. With unsecured loan products (without collateral), the credit situation of the bank is very large. Therefore, the State Bank needs to regularly and quickly collect information on the credit history of commercial banks and credit institutions, provide quick responses to the banking unit and increase the customer's search time from 2-3 years. In fact, the return of results between banks is still not consistent, the same search time but the results received are not simultaneous. Therefore, it greatly affects the time to evaluate customer records of commercial banks in general and TTCVTDMB - VPBank in particular.
3.3.2. Recommendations for VPBank
For TTCVTDMB - VPBank to develop day by day, the role of VPBank Headquarters is very important. Standing as the central apparatus to manage, supervise the implementation as well as evaluate the operational progress and efficiency in lending activities at the center or branch, the Headquarters needs to:
- Develop and monitor the implementation of plans and business targets issued to TTCVTDMB. In reality, the targets set by the Head Office for TTCVTDMB are not very close to reality. KPI targets are set too high and are not close to reality. The quality of employees in the consumer lending market without collateral is regularly provided with information on the economic situation and information on possible risks to guide the operations of TTCVTDMB, helping to make timely and correct decisions and directions.
- Together with the product department, improve the process, develop products suitable to the needs of customers, and quantify the risks of the products. The main product that the product department sells is consumer loans based on the salary of the group of customers who work for a salary and pay social insurance. However, the majority of customers who are business owners, online businesses or family businesses that do not pay social insurance have very good incomes and a huge demand for consumer loans, so VPBank's non-secured consumer loan products have not reached this market because the income level has not been quantified.
- Support business units in training their workforce, designing working models and reasonable operating procedures to promote closer linkages between departments. A part of credit staff, especially new employees at TTCVTDMB, are still vague about the professional training system, lacking close follow-up from the Head Office on professional training and testing.
- Always stand by and support TTCVTDMB on new issues that have not been resolved. In fact, in the process of customer appraisal, there are many cases where determining the customer's income source is quite complicated, such as the customer's income is settled annually or quarterly, requiring a longer time to verify income. The Appraisal Department and the Head Office Policy Department need to closely follow and have a more flexible mechanism for credit officers to improve the product mechanism to promptly meet customer needs and still comply with credit risk calculation.
- Organize regular training, recruitment, promotion, and rewards for employees in the entire industry to strengthen the knowledge of the workforce, especially the new inexperienced workforce. This is not a new issue but is most easily neglected in the operation of the banking system. The lack of professional knowledge of credit staff will lead to potential credit risks in the future. Management staff at TTCVTDMB need to closely monitor and improve the professional skills of employees.
CONCLUDE
Non-secured consumer lending is an activity that plays an increasingly important role in the operations of commercial banks, especially banks oriented towards developing retail services. In recent years, domestic credit activities have developed strongly, banks and financial companies have been established one after another, competition is increasingly fierce and looking for ways to increase scale and profits. In the trend of economic integration and openness along with the development of society, non-secured consumer lending has become an inevitable trend in banking operations. This activity brings many benefits but also contains many risks for banks that need to be resolved, overcome and improved.
As an employee working in the credit industry of the Northern Consumer Lending Center - VPBank, I directly implemented the procedures and better understood the lending activities here. In addition to the achievements, the non-secured personal consumer lending activities at the Northern Consumer Lending Center in the period of 2017 - 2019 encountered many limitations.
With the current situation, I realize that evaluating the quality and finding suitable solutions for the development of unsecured personal consumer lending activities is very important for the growing development. With practical experiences and financial knowledge learned, I decided to choose the topic "Quality of consumer lending at Vietnam Prosperity Joint Stock Commercial Bank - Northern Consumer Lending Center".
This article analyzes the current situation of personal consumer loans without collateral at the Northern Consumer Loan Center - VPBank. Through calculating financial indicators, I have discovered the results achieved.
The benefits of non-secured consumer lending activities at TTCVTDMB are the increase in the number of employees, the increase in marginal interest income from the increase in net interest income. In addition, I also discovered the limitations of non-secured consumer lending activities at TTCVTDMB, which is that the quality of non-secured consumer lending is not good, which is shown in the increase in the ratio of overdue debt/ outstanding loans, along with the increase in bad debt ratio. The causes of these limitations come from two sides: from the subjective side, TTCVTDMB's customer appraisal process is not good, the communication process has not been promoted, market research activities have not received due attention, the headquarters has loose regulations on products, and the quality of staff training is not good; from the objective side, it is the fierce competition in the market as well as the increase in the number of customers.
From the above advantages and limitations, I propose some specific solutions to contribute to the development of lending activities of TTCVTDMB as well as VPBank in general, which are to improve the quality of customer appraisal, strengthen training and improve the quality of human resources, strengthen communication activities, pay more attention to market research and strengthen credit risk prevention measures. In particular, there are two solutions that need to be done immediately: improving the quality of customer appraisal and strengthening training and improving the quality of human resources. These are two urgent solutions to reduce overdue debt and bad debt, thereby improving the quality of personal consumer loans without collateral of TTVCTDMB.
In addition, the support of the State Bank such as issuing a system of legal documents and developing an interbank information system is an extremely important condition for consumer lending activities to develop in the right direction.
This is a new topic when going into a product with many benefits but containing many risks for the bank, it has important meaning and is the result of what I have done during the past time.
Through this article, I hope to help readers better understand the non-assets lending activities at the Northern Consumer Lending Center - VPBank, thereby providing assessments and comments so that I can improve my article.
LIST OF REFERENCES
1. Report on business results for 2017-2019 and business plan for 2020 of VPBank Northern Consumer Lending Center.
2. Report on 2019 business results and 2020 business plan of Vietnam Prosperity Bank
3. VPBank's documents regulating consumer lending activities, policies, regulations, and procedures on products related to the research topic.
4. Do Thi Phuong Vy (2015), Perfecting consumer lending activities at Vietnam Joint Stock Commercial Bank for Investment and Development - North Dak Lak Branch, Master's thesis in Business Administration, Danang University
5. Luu Thuy Linh (2015) “Improving the quality of personal customer loans at Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Da Branch”
6. Ho Dieu, Banking Management (2002) and Bank Credit (2016), Statistical Publishing House.
7. Khuat Duy Tuan (2005), Promoting consumer lending - An inevitable trend of banking activities in a market economy (No. 9/2005), Banking Magazine - State Bank.
8. Le Ngoc Hong Nhung (2013), Solutions to improve the efficiency of lending to individual customers at the transaction office of the Joint Stock Commercial Bank for Foreign Trade of Vietnam - Hanoi branch, Scientific research, Hai Phong Private University
9. Mai Van Ban (2009), Commercial Banking Course, Statistical Publishing House.
10. State Bank (2016), Circular “Regulations on lending activities of credit institutions and foreign bank branches to customers”, Circular 39/2016/TT-NHNN dated December 30, 2016