For the economy: The business of mobilizing individual customer deposits increases savings for the economy when idle capital sources are used effectively and profitably instead of being stored in the form of unprofitable cash. On the other hand, through individual transactions with the Bank, the Government can monitor and regulate the economy more proactively.
1.2.3. Criteria for evaluating the effectiveness of deposit mobilization activities of commercial banks
In the balance sheet of a commercial bank, capital is formed from checkable deposits; Non-transaction deposits; Savings deposits; Loans; Other bank loans and Equity. To maximize profits and improve competitiveness, commercial banks often seek low-cost capital sources such as demand deposits and high stability such as residential deposits. If a commercial bank has a large ratio of residential capital mobilization to total mobilized capital, the stability will be higher and if a bank has a high ratio of demand capital, the average interest rate of mobilized capital will be lower and income from deposit mobilization will increase. From this advantage, banks will be able to lend to good and reputable customers when the competitive pressure between banks and credit institutions is increasingly fierce as it is today.
1.2.3.1 Scale of capital mobilization from deposits
The scale of capital mobilization plays a very important role for commercial banks. Mobilized capital is one of the factors that make up the total assets of a bank. To increase total assets, one of the safest ways for commercial banks is to increase mobilized capital and equity capital. To increase market mobilized capital, banks often use interest rate policies or promotional policies to stimulate and attract customers to deposit money. To increase equity capital, banks often
Commercial banks request competent state agencies to retain profits during business operations or, for joint stock banks, issue additional shares to existing shareholders, to employees or to strategic shareholders.
The scale of capital mobilization is also one of the criteria for evaluating and ranking transaction offices and branches annually in the commercial banking system as well as calculating the ratios of capital safety in operations and payment capacity during the period, so banks also pay special attention to capital mobilization.
The scale of capital mobilization is calculated by the total capital mobilized by a bank at a time. This indicator is used by banks to evaluate financial indicators, operational indicators... by month, quarter or fiscal year.
1.2.3.2 Deposit mobilization structure
The capital structure of commercial banks is often divided by object, currency type and term. This division is periodically evaluated by quarter, 6 months and one year to compare the growth rate, capital structure and currency mobilized during the period to find out the advantages and disadvantages in capital mobilization, thereby proposing solutions to implement in the next planning period.
Periodically evaluating the capital structure as above helps banks maximize profits, identify target customers, target markets that banks need to target by offering competitive products as well as the best sales policies on the market. Normally, commercial banks will identify individual and corporate customers as target and potential customers to focus on capital mobilization.
The structure of mobilized capital sources can be evaluated through the proportion of each mobilized capital source in the total mobilized capital structure, accordingly:
capital mobilized
Proportion of each sourceVolume of each source of capital mobilized |
X 100 % |
Total mobilized capital |
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This indicator reflects the proportional relationship between types of capital mobilization for different subjects such as individuals, organizations, financial institutions..., the rationality between the structure of short-term, medium-term and long-term capital sources, between domestic and foreign currencies... Thereby helping banks have appropriate and timely adjustment plans to ensure proactiveness and efficiency in the operation process.
- Structure of mobilized capital by subject:
object
Proportion of operating capital according toVolume of activities by subject |
X 100 % |
Total mobilized capital |
- Capital structure mobilized by currency:
currency
Proportion of operating capital according toVolume of transactions by currency |
X 100 % |
Total mobilized capital |
1.2.3.3 Term of mobilized capital
In capital mobilization, commercial banks offer many terms to attract customers. The capital mobilization terms are: No term; Short-term mobilization under 12 months; Medium and long-term mobilization from 12 months or more; Long-term is issuing bonds or promissory notes... Corresponding to the capital mobilization terms are lending activities including short-term loans and medium and long-term loans.
According to the law of interest rate curve, long-term capital mobilization and lending will have high interest rates and vice versa. Commercial banks differentiate capital mobilization and lending to maximize the needs of customers for deposits and loans in actual business and customers' idle money.
The classification of mobilized capital by maturity also plays a very important role in implementing business plans, balancing the maturity of mobilized capital and the use of bank resources. The maturity structure of mobilized capital can be assessed through the following indicators:
term
Proportion of operating capital according toVolume of HDV by term |
X 100 % |
Total mobilized capital |
1.2.3.4 Income from capital mobilization deposits
Currently, most large commercial banks implement a centralized capital management mechanism. That is, when a branch mobilizes capital, it sells the capital to the head office and when the branch has a customer to borrow, it buys capital from the head office to lend. This is a superior capital management mechanism. Specifically:
The balance of capital mobilization and capital use belongs to the whole system. Capital flow can go from places where capital is mobilized with low interest rates and little competition to places where there is a large demand for loans and a lot of competition in capital mobilization.
The interest rate in the centralized capital purchase and sale will be an effective tool for commercial banks to manage the mobilization and lending activities of each period to maximize profits, avoid excess capital as well as lack of capital for lending or violating the lending ratio on total mobilized resources that is too high according to the regulations of the State Bank.
Promote the strengths and local advantages of each branch in capital mobilization and lending.
Implement liquidity risk and credit risk management for capital mobilization and lending activities.
For commercial banks that have implemented a centralized capital management mechanism, monitoring and evaluating the effectiveness of deposit mobilization activities is carried out through the income indicator from capital mobilization activities.
Income from capital mobilization = Average capital mobilization x NIM (net interest rate on capital mobilization) In which: NIM on capital mobilization = FTP selling capital HO - FTP buying capital HO
Income from capital mobilization will depend on the average capital mobilization scale and Nim from capital mobilization. If the NIM factor changes according to the interest rate management mechanism of each commercial bank in each period, the average capital mobilization is a factor that branch banks can proactively manage to increase income from capital mobilization in particular and the business efficiency of the unit in general.
1.2.3.5 Forms and products of capital mobilization
Currently, commercial banks offer many forms and products of capital mobilization. Specifically:
- Forms of capital mobilization include:
Raising capital from owners, issuing shares to employees, issuing shares to strategic shareholders.
Issuance of securities
Mobilizing deposits from organizations and individuals Payment deposits
Borrow from credit institutions in the interbank market or borrow from international and foreign financial institutions.
- Capital mobilization products: Commercial banks offer a wide variety of capital mobilization products. They focus on products that are convenient, diverse and easy for customers to transact such as: online savings, ATM deposits, savings with insurance, cumulative deposits, partial withdrawal deposits... In general, capital mobilization forms and products are designed by banks in a customer-oriented way, rich in utilities and easy to transact.
1.2.4. Some factors affecting capital mobilization activities at commercial banks
1.2.4.1 Subjective factors
- Interest rate: most customers when depositing money at the bank are interested in interest rates, so to achieve the goal of satisfying customers when depositing money, commercial banks must offer a reasonable interest rate and accompanying services to be able to mobilize capital at a reasonable cost while still satisfying customers. Interest rate is an important factor leading to customers' deposit behavior, although it is not the deciding factor.
- Banking technology: Today, we are entering the 4.0 industry, so the application of technology in banking transactions in general and capital mobilization in particular is very important. Most banks have determined: Without technology application, there is no banking service, so applying advanced technology and cooperating with Fintech to serve transactions with customers at the counter and remote transactions 24/7 is vital for commercial banks in the current period.
- Bank marketing strategy: In marketing, banks often focus on brand recognition and customer incentives. Marketing stimulates demand for services and banks sell more products than customers need.
- Bank staff:
Currently, in the market, commercial banks have relatively similar products and services. To increase competitiveness, the biggest difference is the staff, especially the sales staff.
Commercial banks all focus on training their staff in the direction of professional sales, including skills such as: sales, negotiation, customer care... This is the secret to success in the environment.
fierce competition as it is today.
- Products and services:
Currently, commercial banks have designed an ecosystem to provide banking services to fully meet the needs of customers. This ecosystem includes credit services, non-credit services, traditional services, modern banking services and links with online supermarkets and shops selling goods and services. Any bank with a rich and diverse ecosystem has an advantage in competition and attracting customers.
- Customer policy
Customer policy is one of the important steps in selling banking products and services. Most banks build customer policies based on business strategies and target customers in each business stage. For example, policies for large corporate customers, policies for small and medium-sized corporate customers, customer policies for foreign customers and customer policies for retail customers....
All of the above customer policies aim to develop new customers who have no relationship and retain existing customers and VIP, VVIP, important customers, loyal customers, potential customers in all customer segments.
- Technical infrastructure system:
Facilities include headquarters and transaction offices, commercial banks identify as an investment, so they often choose beautiful, prime locations that are convenient for transactions with customers. In addition to choosing a location, banks also focus on building and equipping internal facilities in a customer-centric direction and a professional working environment for staff.
Therefore, most headquarters and interiors are built according to the brand identity to increase competitiveness and be easily recognized in the eyes of customers, thereby creating trust and customer loyalty when coming to transact.
On the other hand, commercial banks are interested in network development, meaning that transaction points must cover all areas according to each bank's business strategy because this is an extended arm and enhances the competitiveness of each bank in serving customers.
Besides facilities, the application of information technology in transactions with customers is also given special attention by commercial banks, especially in the period of explosive results of industry 4.0.
- Bank reputation
Reputation and brand are extremely important factors in deciding to establish relationships and transactions with banks, along with factors such as brand, facilities, professional qualifications of staff, diversity and richness of the ecosystem of banking products and services...
To build credibility, commercial banks first focus on fulfilling their commitments to customers. These commitments, no matter how small, are respected and seriously implemented by banks. Reputation also reflects the fact that banks disclose information in a transparent and objective manner, such as interest rates, fees, exchange rates, and interest rate calculation methods. The final thing that reflects the level of credibility of a bank is that all bank activities must be built on the basis of customer-centricity.
1.2.4.2 Objective factors
a. Legal environment.
Capital mobilization operations of commercial banks are greatly regulated by the legal environment. There are Laws that have a direct impact that we often