Building customer strategy for the development of a commercial bank. Based on the researched theory, the thesis analyzes the current status of building customer strategy of Vietnamese commercial banks in chapter 2.
CHAPTER 2: CURRENT STATUS OF CUSTOMER STRATEGY BUILDING OF VIETNAMESE COMMERCIAL BANKS IN PAST TIME
2.1. General situation of operations of Vietnamese commercial banks in recent times.
2.1.1. Domestic and international business environment of Vietnamese commercial banks
Banking is a “high-level” product of the market economy, with great sensitivity, so all fluctuations in the economic and social environment impact and influence banking activities. The macroeconomic environment is no longer limited to the economic environment of a single country or nation, but in many cases, it also includes the international economic environment, the general economic growth or recession of the whole world. Therefore, in the context of international integration, in addition to the challenges caused by the internal causes of the Vietnamese commercial banking system, commercial banks are also affected by the domestic and international economic environment.
2.1.1.1 Domestic environment
After nearly 20 years (since the 4th Party Congress in 1986) of economic innovation and development towards a socialist market economy under the management of the State, our country's economy has had positive changes, changing the face of the country. The annual GDP growth rate is high compared to other countries in the region. The policy of encouraging import and export, domestic and foreign investment develops in the right direction, import and export turnover grows rapidly, foreign economic relations, joint venture cooperation develop and expand. The economic structure has shifted in the right direction, creating conditions to promote the cause of Industrialization - Modernization in the coming years. The multi-sector economy has mobilized resources and promoted economic growth.
Vietnam is strategically located in Southeast Asia, a dynamically developing region with the highest growth rate in the world. The expanded Pacific Rim relationship has had a positive impact on Vietnam's development, especially after the US Government lifted the embargo on our country, we have more opportunities to consolidate, expand and officially establish relations with other countries. Because the State's foreign policy is in line with the trend of the times, countries around the world, especially countries in the region, want to do business with us. Economic cooperation between Vietnam and other countries in the world has increased significantly in recent years. Foreign economic relations have been developed in many aspects: expanding trade markets, diversifying and multilateralizing international economic relations. The above situation has contributed significantly to the development of the domestic economy and integration with the community of countries in the region and the world.
In the financial sector, currency has also made significant progress:
- Our country has stopped the situation of hyperinflation, pushed back and controlled inflation while still having to deal with many serious difficulties.
- The subsidy regime in credit and price activities for state-owned enterprises has been basically eliminated, ensuring equality among economic sectors.
- Monetary and credit activities have made important changes. A two-tier banking system has been established. The State Bank controls the monetary system. Commercial banks have matured and developed rapidly.
- The scale of social investment has increased rapidly. There has been a strong shift from the subsidized investment allocation mechanism from the budget to investment credit for production and business enterprises.
- Foreign exchange reserves gradually increase, creating conditions for the State to intervene in the market to stabilize the currency value.
Despite great achievements in recent years, our country's economy still has some major weaknesses:
Our country's economy is still in the group of underdeveloped economies, the economic growth rate and socio-economic progress are not commensurate with the potential. Weak infrastructure, poor and outdated technology, lack of experience in production management and professional skills, low labor productivity create disadvantages in international competition.
The embryonic money market and the under-formed capital market have limited the ability to mobilize capital, especially medium and long-term capital for the country's economic development.
The pace of economic reform towards the development of a market economy under State management is slow. Market economic institutions have not developed proportionally and synchronously. The slow and ineffective reform of State-owned enterprises has affected the efficiency and speed of reform in the financial and banking sector. Other economic sectors have not yet fully developed their capacity and have not been truly equal in rights and obligations, leading to a situation where competition is distorted by the shortcomings and incompleteness of mechanisms, policies and the legal system.
The investment and business environment is still not attractive due to many obstacles, not creating favorable conditions and good support for economic sectors to develop production and business. State management agencies still deeply intervene in business activities of enterprises.
The unsynchronized legal environment, weak legal effectiveness, and unstable macro-management policies are major concerns for banks.
2.1.1.2 International environment
The world economy in recent times has tended to shift to a “soft” economy and the rapid pace of change in science and technology. In recent decades, the world has undergone rapid technological change. If in the past it was mainly “chimney” technology, today the world economy is oriented towards the development of “gray matter” industry, with electronics, information technology, telecommunications, biotechnology, and new materials developing rapidly. Therefore, the demand for capital and capital structure have also changed.
The trend of globalization and regionalization has taken place and is taking place strongly in all continents at all levels: global, inter-regional, regional, sub-regional. It is a turning point in global free trade when the World Trade Organization (WTO) officially came into operation on January 1, 1995, replacing the General Agreement on Trade and Tariffs (GATT), and it has accelerated the pace of international economic growth, making capital flows easier and self-regulating in the market.
In the increasingly open market, competition becomes more intense, requiring economic linkages between countries and the implementation of the internationalization process. Only then can countries promote all resources, exploit their advantages to participate in linkages, fight against competition and support development.
The world financial and monetary markets are moving according to the following basic trends:
+ Capital transfer trends on a global scale
+ Trends in changing international capital flow structure
+ Trends in correlation changes of strong currencies
+ Rapid growth trend of Asia Pacific countries Merger and acquisition trend: To enhance competitiveness
Competition, a fairly developed trend in recent times is the merger of companies.
(voluntary or acquisition) for the purpose of restructuring the organization, reducing costs, increasing investment capital, and reducing competitors.
With the above advantages and disadvantages of the business environment, there are opportunities and challenges in the process of building general operational strategies and customer strategies in particular for Vietnamese commercial banks. Banks have many business opportunities in a stable political environment, with more customers and a favorable socio-economic context for the development of banking activities. Banks have opportunities for exchange, cooperation, capital mobilization, faster access to new banking technology, and the most advanced bank management and operation, thereby creating momentum and strength to expand domestic banking activities in general and foreign banking activities in particular. However, there are many challenges for Vietnamese banks in the process of international economic integration, competition will inevitably become more and more fierce. Besides, although the Vietnamese economy is considered to be developing, we have a low starting point and an unreasonable economic structure, low efficiency, small economic scale, and an incomplete legal environment for business activities. This will also be a significant challenge for the operation of the Vietnamese banking system.
2.1.2. Size of Vietnamese commercial banks
2.1.2.1 Development process of Vietnam's commercial banking system
Since the establishment of the National Bank of Vietnam (now the State Bank of Vietnam) on May 6, 1951, the Vietnamese banking system was organized according to a one-tier model in the North before 1975 and throughout the country from 1975 to 1990. This model was modeled after the former Soviet Union and former socialist countries, according to which there was only the State Bank, which was monopolized by the State - and performed the management function of the central bank.
directly conducts monetary and credit business of commercial banks. The one-tier banking system is consistent with the centralized subsidy management mechanism with the view that the State must have a monopoly on banking and foreign trade. Implementing the economic renovation from the centralized subsidy mechanism to the market mechanism with many economic sectors under the State's management in the direction of socialism, the renovation of the banking system is considered a breakthrough and key because banks are the lifeblood and at the same time a mirror reflecting the economy. Since 1988, implementing Decree 53/HDBT of the Government, specialized banks have been established separate from the State Bank. By May 1990, the State Bank Ordinance, the Ordinance on Banks, Credit Cooperatives and Finance Companies were officially issued, marking the formation of a two-tier bank; the State Bank is the State management agency for monetary and credit, the issuing bank, and the bank of banks in Vietnam. Commercial banks and credit institutions operate in currency business and banking services according to market mechanisms within the legal framework.
After 15 years of construction and development, the Vietnamese commercial banking system has grown, affirming its great role in the economy and its constant upward trend.
Table 2.1 : Number of Vietnamese commercial banks as of December 31 each year
Bank Year
91 | 92 | 93 | 94 | 95 | 96 | 97 | 98 | 99 | 00 | 01 | 02 | |
Joint Stock Commercial Bank | 4 | 22 | 41 | 45 | 48 | 51 | 51 | 50 | 48 | 48 | 43 | 36 |
QD Commercial Bank |
4 | 4 |
4 |
4 |
4 |
4 |
5 |
5 |
5 |
5 |
5 |
5 |
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Over the years, the banking industry has made progress in many different aspects. In terms of quantity, our country's commercial banking system accounts for 63.9% of the total number of commercial banks operating in Vietnam, while this figure for foreign bank branches is modest.
More than: 26 foreign bank branches and 5 joint venture banks. The number of joint stock commercial banks has decreased from 50 at its peak to 36 today due to the process of restructuring these banks through arrangement, consolidation, merger, dissolution, and resale.
2.1.2.2. Size of Vietnamese commercial banks Size of State-owned commercial banks
The State-owned commercial bank system has a very large network, distributed throughout the country. Of which, the state-owned commercial banks have the largest network. The Bank for Agriculture and Rural Development has over 1,600 branches; the Industrial and Commercial Bank has 113 branches, the Investment and Development Bank also has 98 branches and the Foreign Trade Bank has 40 branches.
With a large network of branches across the country and a history of development, Vietnamese state-owned commercial banks have built a much larger market share than foreign bank branches. These banks account for 78% of the mobilized capital market and 73% of the credit market in the entire system.
The Vietnamese banking staff is quite large and experienced. Most bank staff want to serve their bank for a long time.
Despite the above advantages, the state-owned commercial banking system is still in its early stages of development, and the financial capacity of many Vietnamese commercial banks is still weak. The growth rate of total assets is quite high, but the total asset size of banks is still quite small compared to other countries in the region. This is a major limitation for state-owned commercial banks when participating in integration.
According to international standards on operating capital safety, the ratio of equity capital to total assets of banks must reach at least 8%. But the amount of