Factors Affecting the Development of Banking Services for High-end Customers of Commercial Banks

1.3.3. Factors affecting the development of banking services for high-end customers of commercial banks

1.3.3.1. Objective factors

a. Economic development

Economic growth and development contribute to increasing personal income, including a rapid increase in the asset value of the wealthy in society. This is the target customer that the banking service for public customers pursues, thus contributing to increasing the customer base for banks providing this service. In fact, in recent years, Asian countries, especially China, have had strong economic development and therefore, the number of wealthy people has increased at a very high rate (compared to 2013, the number of wealthy people in China increased by 17.5% while the assets of the wealthy increased by 19.3% (Capgemini & RBC Wealth Management, 2015). As a result, China is emerging as one of the leading countries in Asia in providing banking services for public customers.

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b. Development of banking industry

The development of the banking industry is also a factor promoting the development of banking services in general and banking services for public customers in particular. When the banking system has conditions for safe, stable and healthy development, it will create trust in customers and increase the number of customers using banking services. On the contrary, if the banking system encounters difficulties, the expansion of banking services of banks may be limited to focus on the goal of restructuring the system to be more stable. In addition, the level of international integration of the banking industry will have a significant impact on the development of banking services for public customers abroad or attract more investors and potential customers with high income from abroad to use banking services of domestic commercial banks.

c. Social environment

The social environment includes many factors such as social situation, habits, psychology, education level, national identity, lifestyle... or factors such as place of residence, place of work... This is an important basis for determining the needs, purposes and strategies for developing public services for customers.

In terms of age, if the rich people in society have an average age of over 50 years old, they will have the mentality of preserving assets and passing them on to the next generation. Therefore, banks often focus on banking services related to retirement plans, inheritance, etc. On the contrary, if the rich people in society have a low average age,

The higher their risk tolerance level, the higher their risk tolerance level will be. Normally, the banking service provides this group with consulting services, portfolio management, etc. to earn more profit for customers and the bank itself.

If we consider income level, then surely the place with many high-income people will have the ability to develop diverse healthcare services for customers.

In terms of work location (geographical factor), people working in different countries will use the customer service of many different banks or many types of offshore services of a bank because their mobility is higher than that of others.

In addition to the above factors, the emergence of the next generation has an important impact on the development of public service for customers. When customers use public service for customers, customer managers are not only concerned about themselves but also their families, especially the next generation. Currently, many commercial banks have introduced services that bring many benefits to this generation such as choosing schools, providing scholarships, etc. More importantly and deeply, it is to fulfill the desire to transfer wealth of the rich to the next generation. Therefore, banks pay great attention to this issue to create trust in customers and create a group of potential customers in the future for the bank.

d. State policies and laws

It can be said that if banking capacity is a necessary condition, then the law is a sufficient condition for the development of banking services. The law here is understood as the system of legal policies of the State on banking activities and other issues related to banking services. In the context of the banking system increasingly developing based on modern technology and increasingly diverse customer needs, if the legal policy system is not complete, comprehensive and synchronous, it will be a factor limiting the development of banking services in general and banking services for customers in particular, and sometimes, just one specific legal policy can also have a great impact on this service.

One of the typical examples of the impact of the legal system on private banking services for customers is Switzerland. This country has issued the Banking Secrecy Law, all information related to taxpayer account balances, profits, income from interest on deposits and sales revenues... are not shared. This policy has attracted many wealthy people in the world to open accounts and use private banking services in Switzerland and banks in this country have become the leading providers of private banking services in the world. However, these advantages

Switzerland's reputation has been eroded since the US government introduced international standards for automatic information sharing under the US Foreign Account Tax Compliance Act (FATCA), which requires non-US banks to disclose details of US citizens' foreign accounts, including in European countries, including Switzerland.

In addition to the above reasons, the legal policy system also protects banks from risks in the process of operating and providing banking services to public customers. The rapid development of banking services for public customers with complex nature can lead to risks for banks or customers if the law does not create a corridor to control possible fraudulent behavior or does not strictly regulate the risk management system of banks. Therefore, the law must be linked to reality, on the one hand creating conditions for the development of new products and services to meet the needs of public customers, on the other hand ensuring safety for both public customers and commercial banks.

1.3.3.2. Subjective factors

a. Banking service delivery channels

The most popular and dominant channel for providing banking services today is the network of branches and transaction offices of banks. Seiler (2011) argues that the convenience of accessing the bank network is an important manifestation of the accessibility of banking services.

A bank with a wide network, distributed in reasonable locations will contribute to creating favorable conditions for the transaction process as well as reducing the cost of providing services to customers. Even when the global factor is widely mentioned, a bank with many branches worldwide is a significant advantage in operation, especially for banking services for customers, when operating abroad is preferred for reasons such as financial secrecy, flexibility of the legal system, tax policy, market reliability, etc. To be able to reach out to foreign markets, the providing bank must have a branch system operating effectively in many countries around the world. A typical example is the Industrial and Commercial Bank of China (ICBC) - the joint stock bank with the largest market value and profit in the world today, and the first bank licensed by the China Banking Regulatory Commission (CBRC) to operate private banking services (ICBC's private banking service office was established on March 27, 2008). With a wide network, ICBC has now established 36 private banking service centers and about 400 additional service centers in most major cities in China. In addition, ICBC established 04 private service centers

banking overseas (in Hong Kong, Europe, Singapore and Macau, and expanding to countries such as Australia, North America, South America or the Middle East. Currently, ICBC is the leading bank in providing banking services for corporate customers in China.

Besides, with the strong development of science and technology, banks have introduced many channels to provide electronic banking services, creating easier and more convenient access for customers such as banking services via phone (mobile banking), via SMS banking, via the internet (internet banking)... From there, commercial banks can be ready to meet the needs of customers anytime, anywhere.

In addition to the above factors, the quality of contact between customers and banks is also considered as one of the manifestations in the process of providing services of banks and increasing the accessibility of customers. Arbatt and Russell (1999) argued that easy and convenient access to customer managers is very important. Meanwhile, Parasuraman et al. (1985) argued that ease of contact (e.g. by telephone) is an important factor of accessibility. In addition, Brown and Swart (1989) pointed out that convenience and quick appointment arrangements are signs of a professional service.

Thus, the more convenient and diverse the banking service channels are, the higher the accessibility to banking services, the more customers appreciate the convenience and professionalism of banking services, thereby retaining old customers and at the same time developing new customers for the bank.

b. Bank facilities

Bank facilities, including transaction space, bank equipment. For private banking services, creating a quiet, private space for customers is very important, and it is necessary to create an impression on customers through the layout and arrangement at the transaction location. Parasuraman et al. (1985) argued that tangible means affect service quality and then customer satisfaction (Phillip Kotler, 2003). Horn and Rudoff (2011) through research showed the significant influence of perceptions of the service environment on service quality and satisfaction with private banking services. Spies et al. (1997) found that the idea that pleasant atmosphere and interior bring satisfaction to customers. According to Gronroos (1984), the service industry's supply and consumption processes take place simultaneously, so customer satisfaction is inspired by the surrounding environment (Shostack, 1977). Commercial banks today, in addition to equipping modern facilities, also pay attention to working space to ensure privacy for

customers, creating the most comfortable and relaxing feeling when coming to the bank. The more convenient the bank's facilities are, the more satisfied customers feel with the banking services and thus affect the development of banking services for customers.

c. Scope of services provided

Seiler (2011) through qualitative research has given the reason that a service provided independently and separately is a unique factor in providing banking services for corporate customers. In fact, banks also pay great attention to the distinctive features of the service. For example, BNP Paribas Wealth Management provides a comprehensive service package for customers, including financial management (equities, bonds, investment funds, alternative instruments, structured products, real estate, etc.), investment solutions (portfolio management), asset solutions (inheritance assets) and financial solutions (loans, guarantees, other financing). Particularly for business customers, the bank also offers a director training program for female entrepreneurs at Stanford Business School. This is a significant difference compared to many other banks due to the unique characteristics of BNP Paribas Wealth Management's customer segment. Or another distinctive feature of Citi Private Bank compared to other banks is the service aimed at people's artistic needs. With in-depth knowledge of art and 18 years of experience in fields related to museums, exhibitions, etc., Citi Private Bank pioneered the concept of considering art as a collateral asset at the bank, using art as an asset to provide a non-transferable source of liquidity, so the bank finances collectors in the market to trade art products such as paintings, sculptures, photography, etc. Citi Private Bank has an entire art advisory center (Art Advisors) that carefully evaluates to provide services and this is done annually.

In addition, the diversity in linking with units to provide convenient services for customers also brings positive feelings to customers and makes customers more satisfied. For countries with high economic development and human resources, banking services for corporate customers are mainly investment banking services, in which portfolio management is one of the popular services in European and North American countries. On the contrary, due to the mentality of preserving assets and being more cautious, customers in the Asian region still prefer traditional banking services and some banking services that combine tradition and investment to increase value. One of the basic characteristics today is that commercial banks not only provide financial banking services but also conduct in-depth research and offer non-financial banking services, especially services related to the personal lives of customers and their families. Currently, the

Banks in Korea, Switzerland, and the US all have many types of banking services for customers and, more importantly, maintain close and long-term relationships with customers, creating customer trust.

In addition, taking advantage of modern technology, banks have also created new innovative and convenient products such as internet banking, mobile banking, international payment services or global investment links... From there, commercial banks can be ready to meet customer needs anytime, anywhere.

Therefore, the perception of the scope of services provided has a positive and significant influence on service quality and customer satisfaction with public service delivery (Horn and Rudoff, 2011).

d. Quality of investment advice

Investment advice is one of the core services of public financial institutions for their customers and is an important output factor of the services provided (Seiler, 2011). Horn and Rudolf (2011) also argue that the quality of investment advice reflects the output quality of the services provided.

The quality of investment advice is reflected in the way the bank makes recommendations that are appropriate to each customer based on the customer's information and expectations, while analyzing and taking into account the customer's risk factors and risk tolerance. Krume (2013) argues that customer perceptions of investment advice quality are related to customer satisfaction for two reasons. First, because investment advice addresses key issues in the customer's asset positioning strategy in the specific and individual conditions of each customer, it has a direct impact on customer satisfaction. Second, the quality of investment advice reflects the bank's capabilities and therefore provides identifiable indicators of service value.

Therefore, the higher the quality of investment consulting, the more qualitatively the banking services for customers will develop.

e. Safety and security of the service

It can be affirmed that the safety and security of banking services for customers is extremely important. Many customers are interested in the safety of banking services for customers because these services have the ability to achieve diversification of investment by geographical area (Stenfen, 2012). Safety is reflected in the safety of funds, safety in the application of modern technology, safety in the security of customer information. As the financial market as well as information technology increasingly develop,

Security in banking operations is becoming increasingly important and a matter of survival. With security technologies and security measures such as digital signatures, transmission encryption, etc., the safety of products has been and is being enhanced. The higher the security in transactions, the more the bank gains the trust of customers, retains old customers and develops new customers.

e. Client asset portfolio results

Wealthy customers are those who hold a relatively large amount of assets, so they are always interested in the profitability of that asset. Seiler (2011) found that the asset portfolio results are an important factor affecting the satisfaction of wealthy customers. In addition, Capgemini and Merrill Lynch (2009) conducted a survey of high-income earners (HNWI) and concluded that portfolio results strongly affect customer purchasing behavior. Similarly, Horn and Rudolf (2011) also pointed out that asset portfolio results are an important output factor of service quality for wealthy customers and thus affect the satisfaction of wealthy customers.

Therefore, if the bank manages its customers' asset portfolio well, meets their expectations and brings profits to them, it will first motivate them to maintain their relationship with the bank, and then contribute significantly to the bank's revenue and profits. However, how to manage to achieve good results is also a difficult problem that banks must solve.

g. Quality of human resources

In all business activities, the human factor plays a decisive role in the development of the enterprise. For customer service, this is even more evident.

One of the characteristics of the service for customers is the principle of private service, which means that each customer will be served individually, first of all, each customer will have a customer manager (also known as customer relationship manager) - the person responsible for contacting and consulting on financial plans, especially investment plans based on understanding the needs and risk appetite of the customer. In addition, the customer manager also plays the role of a consultant in the lives of customers and their families, serving wholeheartedly from the smallest things and being able to meet the requirements of the customer at any time during the 24 hours of a day.

Many studies have shown that customer satisfaction and loyalty in the service sector are greatly influenced by human factors (Mittal and Lassar, 1996), Solomon et al. (1985). For public service, customer managers play an extremely important role in the service delivery process because they are almost the only connection channel between customers and the bank. Therefore, the service capacity, professional ability and communication skills of customer managers (Carl, 2008) have a significant impact on public customer satisfaction.

To be able to do the above tasks well, customer managers must be qualified experts, rich in knowledge, knowledgeable about the market, well-trained to be ready to provide information and advice according to customer requests, and have a lot of experience to deal with all possible situations because their customers are not simple people. In addition, customer managers must have the skills to build trust in customers and must be a "good psychologist" who knows when to "brake" impulsive customers from making high-risk decisions. To achieve this, customer managers must create trust with customers and be fully shared with necessary information to be able to support customers in the investment decision-making process.

Recognizing the importance of customer managers, banks always focus on training knowledge and skills for customer managers. BNP Paribas Wealth Management has a global team of experts who understand customers in each territory. With more than 6,300 experts, including more than 3,200 customer relationship managers and 130 experts for ultra-high-net-worth customers, the bank can identify and provide the best solutions to serve customers. In addition, the Investment Management and Portfolio Management departments support customers with products such as hedge funds, equities, real estate and asset services, etc. Through this, the bank helps customers diversify their assets into investment areas such as art, luxury goods and other assets.

Meanwhile, ICBC's customer relations team of over 4,000 people are experienced in the fields of personal customers, corporate customers, international finance, asset management and investment banking. The members of the staff groups are all experienced managers, leading asset consultants, specialized product specialists and investment consultants. The managers are all experienced in the banking sector. Asset consultants must have CFA, ACCA, CFP/AFP certificates. Special product specialists and investment consultants are recruited.

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