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Evaluation of the quality of savings deposit services at the Bank for Agriculture and Rural Development, Thua Thien Hue branch - 2


1.1.2.2. Types of capital mobilized by commercial banks


According to Decree 49/2000/ND-CP dated September 12, 2000 of the Government on the organization and operation of commercial banks to specify the implementation of the Law on Credit Institutions, commercial banks are allowed to mobilize capital in the following forms:

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- Deposit mobilization: receiving deposits from organizations, individuals and other credit institutions in the form of demand deposits, term deposits and other types of deposits.

- Issue deposit certificates, bonds and other valuable papers to mobilize capital from domestic and foreign organizations and individuals when approved by the Governor of the State Bank...

Evaluation of the quality of savings deposit services at the Bank for Agriculture and Rural Development, Thua Thien Hue branch - 2

- Borrow capital from other credit institutions operating in Vietnam and from foreign credit institutions.

- Short-term loans from the State Bank of Vietnam according to the provisions of the Law on the State Bank of Vietnam.


1.1.3. Theoretical basis of banking service quality 1.1.3.1. Concept of service

Nowadays, there are many debates about the concept of service. Up to now, there are more than ten concepts of service.

In the Oxford dictionary, service is defined as: “providing services, not goods” or “providing something intangible”.

According to Dr. Phan Van Sam: "Services are activities that create products that do not exist in physical form to promptly satisfy production needs and people's daily life." (Service enterprises - operating principles, Social Labor Publishing House, 2007).

According to Philip Kotler: “A service is any act or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. The performance of the service may or may not be related to the goods in their physical form.” (Basic Marketing – Principles and Marketing, Ho Chi Minh City Publishing House, 1995).


1.1.3.2. Concept of banking services

The bank itself is a type of business that provides monetary services, collects fees from customers, and is considered a service industry. Banking activities do not directly create specific products, but by meeting the needs of monetary, capital, and payment services for customers, banks indirectly create service products in the economy. Currently, there are two different understandings of banking services:

- Banking services are the total activities of the banking industry as a sector of the service sector (the remaining sectors of the economy are agriculture, industry, construction). This is the understanding used when referring to the banking system as an economic sector.

- Banking services are non-credit products. The second understanding is not scientifically rigorous but has a certain meaning and is used quite commonly in practice. Therefore, to avoid unnecessary confusion and especially to have a basis for building a system of indicators reflecting and monitoring, reporting statistics on the results of banking services. It is necessary to unify concepts to be able to distinguish new service products from traditional service products. For this purpose, it is necessary to build criteria for building new service products in a scientific manner.

According to some authors, banking services should be understood in two aspects: broad and narrow. In the broad sense , banking services are all monetary activities, credit payments, foreign exchange... of the banking system, all of which are activities providing services to the economy. This concept is consistent with the banking service sub-sectors in Vietnam, the United States, as well as many developed countries. In the narrow sense , banking services only include activities outside the functions of financial intermediary institutions in capital mobilization and lending.

1.1.3.3. Service quality

“Service quality is the level of customer satisfaction in the process of perceiving and consuming services. It is the comprehensive service of the enterprise that brings a chain of benefits and fully satisfies the expected value of customers in the production, supply and distribution of services at the output”. (Luu Van Nghiem (2001), Marketing in service business, Statistical Publishing House).


1.1.3.4.Quality of banking services


“The quality of banking services is the capacity of the bank, provided by the bank and expressed through the level of satisfaction of the needs and desires of target customers”. (Collective authors of Banking Marketing - Banking Science Institute (1999), Statistical Publishing House) .

Service quality is perceived by customers, not determined by banks. Banking service quality represents the suitability to the needs and desires of target customers.

1.1.3.5. Concept of banking products and services


The concept of products in general is very complicated, the concept of banking products and services is even more complicated because of the synthesis , diversity and sensitivity of banking business activities. From the perspective of satisfying customer needs, we can understand:

“Banking products and services are a collection of characteristics, features, and functions created by banks to satisfy certain needs and desires of customers in the financial market .” (Dr. Nguyen Thi Minh Hien (2002), Banking Marketing Textbook, Statistical Publishing House.)

More specifically, banking services are understood as banking operations on capital, currency, payment... that banks provide to customers to meet the needs of business, profit, life, asset storage... and banks collect interest rate differences, exchange rates or fees through that service. In the current trend of banking development in developed economies, banks are considered as a service supermarket, a financial department store with hundreds, even thousands of different services depending on the classification and the level of development of the bank.

1.1.4. Capital mobilized from commercial bank deposits


- Concept of deposit


In banking activities, this concept is used to refer to deposits at credit institutions in many different forms of many different entities. According to the Law on Credit Institutions, in Article 20, deposits are defined as follows: “Deposits are the amount of money that organizations and individuals deposit at credit institutions or other organizations with banking activities.


Banks in the form of demand deposits, savings deposits and other forms. Deposits may or may not earn interest and must be returned to the depositor. It can be understood that deposits are customers' money deposited in banks for the main purpose: payment transactions, a safe place to keep money and generate profits.

Deposits are the foundation of a bank's prosperity and growth. They are the only item on the Balance Sheet that distinguishes a bank from other types of businesses. The ability of the bank's staff and management to attract transaction and savings deposits from businesses and individuals is an important measure of the bank's public acceptance. Deposits are the mainstay of lending and therefore the ultimate source of bank profits and growth.

- Deposit classification:


- Payment deposits (transaction deposits or payment deposits): this is money that businesses or individuals deposit in the bank for the bank to collect and pay on their behalf. Within the allowable balance, the individual's payment needs are all carried out by the bank. Cash receipts from businesses and individuals are all entered into payment deposits upon request. In general, the interest rate of this loan is very low or zero, instead, the account holder can enjoy banking services with low fees. The bank opens a payment deposit account for customers. The bank's requirement is that customers must have money and only pay within the balance. Some banks combine deposit accounts with loan accounts. Some banks use many "transformations" of payment deposit accounts to increase the interest rate of this type of deposit to compete with other credit institutions.

- Term deposits of enterprises and social organizations: many cash receipts of enterprises and social organizations will be paid after a certain period of time. Although payment deposits are very convenient for payment activities, the interest rate is low. To meet the demand for increasing revenue of depositors, banks have introduced term deposits. Depositors are not allowed to use payment methods for payment deposits to apply this type of deposit. If they need to spend, they must go to the bank to withdraw money. Although not as convenient for consumption as payment deposits, term deposits have higher interest rates depending on the length of the term.


- Savings deposits of the population: All classes of people have temporarily unused income. In conditions of being able to access banks, they can deposit savings to achieve the goals of preserving and generating profits for savings, especially the need for safety. In order to attract more and more savings, banks try to encourage people to change the habit of keeping cash and gold at home by expanding the mobilization network, offering diverse forms of mobilization and attractive competitive interest rates. Banks can open many savings accounts (or savings books) for each saver for each term and each different deposit. This savings book is not used to pay for goods and services but can also be mortgaged to borrow capital if approved by the bank.

- Deposits from other banks or credit institutions: For the purpose of payment on behalf of others and some other purposes, this commercial bank can deposit money at other commercial banks. However, the scale of this source is usually not large.

1.1.5.Research model:


1.1.5.1. SERVQUAL model and SERVPERF variant


For a long time, many researchers have tried to define and measure service quality. For example, Lehtinen & Lehtinen (1982) suggested that service quality should be assessed on two aspects, (1) the service delivery process and (2) the service outcome. Gronroos (1984) also proposed two areas of service quality, which are (1) technical quality and (2) functional quality. However, Parasuraman et al. (1985) proposed a model of five gaps and five dimensions of service quality, abbreviated as SERVQUAL.Parasuraman et al. (1985, 1988) proposed a model of five gaps of service quality.

The first gap appears when there is a difference between what customers expect from service quality and what service managers perceive to be the customers’ expectations. The basic point of this difference is that the service company does not fully understand what characteristics make up the quality of its service and how to deliver them to customers to satisfy their needs.


The second gap appears when the service firm has difficulty in translating its perception of customer expectations into service quality characteristics. In many cases, the firm may perceive customer expectations, but it cannot always translate these expectations into specific quality criteria and deliver them in accordance with customer expectations and service quality characteristics. The main causes of this problem are the professional competence of the service staff as well as the large fluctuations in service demand. There are times when the service demand is so high that the firm cannot meet it.

The third gap appears when service employees do not deliver services to customers according to the established criteria. In service, employees have direct contact with customers, playing an important role in the process of creating quality. However, employees cannot always complete tasks according to the established criteria.

Advertising and communication media also influence customer expectations of service quality. Promises made in promotional advertising programs may raise customer expectations but will also lower customer perceptions of quality when they are not delivered as promised . This is the fourth gap.

The fifth gap appears when there is a difference between the quality and expectation by customers and the quality they perceive. Service quality depends on this fifth gap. Once customers perceive no difference between the quality they expect and the quality they perceive when consuming a service, the quality of the service is considered perfect.

Parasuraman & ctg (1985) stated that service quality is a function of the fifth gap. This fifth gap depends on the previous gaps. That is, gaps 1, 2, 3, 4. Therefore, to shorten the fifth gap and increase service quality, service managers must make efforts to shorten these gaps.

The service quality model according to these researchers can be represented as follows:


CLDV = F((KC_5 = f (KC_1, KC_2, KC_3, KC_4))


In which, CLDV is service quality and KC_1, KC_2, KC_3, KC_4, KC_5: are quality gaps 1, 2, 3, 4, 5.

Service quality factors:


The service quality model of Prasuraman & ctg (1985) gives us an overall picture of service quality. Parasuraman & ctg (1985) believes that, for any service, the service quality perceived by customers can be modeled into 10 components, which are:

1. Reliability refers to the ability to perform the service correctly and on time the first time.

2. Responsiveness refers to the willingness and readiness of service staff to provide service to customers.

3. Service competence (competence) indicates the level of expertise to perform the service. Service competence is expressed when the employee contacts customers, the employee directly performs the service, the ability to research to grasp relevant information necessary for customer service.

4. Access involves making it easy for customers to access services such as shortening customer waiting time, service locations and opening hours that are convenient for customers.

5. Courtesy refers to the character of serving customers with respect, friendliness and friendliness.

6. Communication involves communicating with customers in a language they can easily understand and listening to their concerns such as explaining services, costs, and resolving complaints and questions.

7. Credibility refers to the ability to create trust with customers, making customers trust the company. This ability is shown through the company's reputation and the personality of the service staff who directly interact with customers.


8. Security is related to the ability to ensure customer safety, expressed through physical and financial safety as well as information security.

9. Understanding/knowing the customer is demonstrated through the ability to understand customer needs through understanding customer requirements, caring about them individually and identifying regular customers.

10. Tangibles are shown through the appearance, uniforms of service staff, and equipment used for the service.

The ten- factor service quality model mentioned above has the advantage of covering almost all aspects of service. However, this model has the disadvantage of being complicated in measurement. Moreover, this model is theoretical, there may be many factors of the service quality model that do not achieve discriminant value. Therefore, these researchers have repeatedly tested this model and come to the conclusion that service quality includes five basic factors, which are:

1. Reliability: demonstrated by the ability to perform the service appropriately and on time the first time.

2. Responsiveness: expressed through the desire and readiness of service staff to provide timely service to customers.

3. Service capacity (assurance) is demonstrated through professional qualifications and polite, enthusiastic service to customers.

4. Empathy: showing concern and care for each individual and customer.

5. Tangibles: expressed through the appearance, uniforms of employees, and equipment used for the service.

When the SERVQUAL scale (Parasuraman et al., 1988) was published, there was a debate about how best to measure service quality. Nearly two decades later, many researchers have attempted to demonstrate the validity of the SERVQUAL scale.


After many studies and applications , SERVQUAL is recognized as a scale with theoretical and practical value. However, according to the assessment of researchers, the measurement procedure of SERVQUAL is quite lengthy. Therefore, a variation of the SERVQUAL model has appeared, which is the SERVPERF model.

Cronin and Taylor (1992) with the SERVPERF model, argued that the level of customer perception of the service performance of the business best reflects the quality of service. According to the SERVPERF model:

Service quality = Perception level

This conclusion has been agreed by other authors such as Lee et al. (2000), Brady et al. (2002). The SERVPERF scale also uses 22 statements similar to the customer perception question in the SERVQUAL model, omitting the question about expectations.

1.1.5.2. The relationship between service quality and satisfaction

The relationship between service quality and customer satisfaction has been a topic of ongoing discussion among researchers over the past decades. Many studies on customer satisfaction in service industries have been conducted (e.g. Fornell, 1992) and generally conclude that service quality and satisfaction are two distinct concepts (Bitner, 1990; Boulding et al., 1993) (quoted from Lassar et al., 2000).

Often service businesses and authors in popular publications tend to use the terms "customer satisfaction" and "service quality" interchangeably , but for researchers, these two concepts can be completely distinguished and measured (Zeithaml & Bitner, 2000, cited in Nguyen Dinh Tho & ctg., 2003).

Customer satisfaction is a general concept that expresses their satisfaction when consuming a service. Meanwhile, service quality only focuses on specific elements of the service (Zeithaml & Bitner, 2000, cited by Nguyen Dinh Tho et al., 2003).

Service quality is an objective, evaluative and cognitive concept, while satisfaction is a combination of subjective factors, based on feelings and emotions (Shemwell & ctg., 1998, cited in Thongsamak, 2001).


Customer satisfaction is a general concept that refers to customer satisfaction when consuming a service, while service quality is concerned with specific elements of the service (Zeithaml & Bitner, 2000).

Oliver (1993) argues that service quality influences customer satisfaction. That is, service quality - which is determined by many different factors

- is a determining factor of satisfaction (Parasuraman, 1985, 1988).

Other studies have also shown that service quality is the cause of satisfaction (eg: Cronin & Taylor, 1992). The reason is that quality is related to service delivery, while satisfaction can only be assessed after using the service. If quality is improved but not based on customer needs, customers will never be satisfied with that service. Therefore, when using the service, if customers feel the service is of high quality, they will be satisfied with that service. On the contrary, if customers feel the service is of low quality, dissatisfaction will appear.

1.2. Practical basis


1.2.1. Current status of deposit service quality at Vietnamese commercial banks

In the era of information explosion, every business or economic organization must strive to increase its competitive strength and integrate with the regional and world economy. Not out of that trend, Vietnamese commercial banks constantly improve their operational efficiency, especially focusing on improving the quality of deposit services to increase their capital and ensure the most convenience for customers.

In recent times, commercial banks have been very active in improving the quality of deposit services. The application of banking technology, marketing tools, staff training... in deposit mobilization is becoming stronger and more urgent. The almost synchronous and similar implementation between banks has created more choices for customers in terms of products, convenient services, and satisfied needs... Especially in the current inflationary economic situation, maintaining customers


Existing and attracting potential customers is a challenge for commercial banks and also a problem for those working in deposit mobilization.

Currently, commercial banks have mobilized a large amount of deposits and provided a large amount of capital for the economy, estimated to account for about 5-8% of GDP annually, nearly 13% of social investment capital . The banking system has undergone a comprehensive reform . Many legal documents have been issued synchronously. Monetary policy has been renewed and operated according to market principles and in accordance with international practices. Interest rate and exchange rate policies have been flexibly applied according to market mechanisms.

However, commercial banks still have some limitations: domestic deposit services are still monotonous, service quality is not high, not oriented to customer needs. Marketing activities for deposit mobilization are not focused, advertising activities are not organized and implemented on a large scale. Information systems are still backward compared to other countries in the region and the world.

1.2.2.Research works related to the quality of deposit services at banks

With the increasing demand for bank deposits as it is today, banks need to conduct research to find measures to improve service quality to better meet the demand, and therefore more and more scholars are conducting research on this issue.

For example, according to the research topic of Dr. Ha Nam Khanh Giao on "Measuring the quality of savings deposit services at Agribank", he used the SERQUAL scale adjusted to 4 indicators of Osman et al (2005), and another indicator on Price proposed by Joshua & Moli (2005):

- Service environment: related to the appearance of service providers and the interior and exterior design of the bank's facilities.

- Interaction quality: includes the attitudes and behaviors of service providers and their style of interaction with customers.

- Empathy: is defined as the personal attention to customers, the bank staff's awareness in helping customers and quickly resolving customer problems.


- Reliability: related to the reliability of the service and the accuracy of the stored information.

- Price: related to deposit interest rates as well as additional fees related to deposit activities that the bank applies to customers.

His research and colleagues applied the theory of SERVQUAL model to measure the quality of personal savings deposit services at banks.

NNo&PTNT. The model helps managers of NHNNo&PTNT understand more about customers, understand their expectations about the quality of banking services. Thereby, NHNNo&PTNT can visualize where the bank is and what needs to be done to approach customers' expectations about services.

(Source: Banking magazine No. 20, October 2010 )


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