Forms of Capital Mobilization of Retail Banks

The bank chooses the time to launch new products, decides to reduce fees, increase interest rates or has a promotion program when making savings at the beginning of the year, free card issuance for students when the new school year starts or customers often spend a lot on cards on holidays, etc. Timing is also reflected in the updating of information about the bank's products and services, attached utilities and especially issues related to the rights and obligations of customers, updating personal information about customers when there are changes.

1.1.2.6. Retail banking services have risks

In fact, banks are facing risks in the business process in general and retail services in particular, which is the possibility of future incidents that make the bank unable to achieve its set goals or cause losses to the bank. The number of transactions of NHBL is very large, so those risks always exist, cannot be eliminated from the business environment, banks can only analyze, find the causes, have preventive solutions, limit the impact of risks on business activities.

Retail banking services in particular are diverse but focus specifically on specific product groups.

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1.1.3. The role of retail banking services

For customers and the economy:

- Through retail banking services, the process of money circulation in the economy is increased, capital resources in the economy are exploited and used more effectively, and money circulation in space and time is increased. The amount of money moves from one place to another, from one customer to another, meeting the needs of socio-economic activities. Contributing to promoting production, business, and consumption, contributing to the process of industrialization and modernization of the country.

- Actively contribute to bringing common benefits to the economy, customers and banks through cost reduction thanks to the convenience and specialization of each type of service: reducing printing, counting, storage and transportation costs.

money, as well as saving manpower to perform, reducing service costs, helping customers have more opportunities to choose products and services.

- Create foreign currency revenue for the country from remittances from abroad.

- For small and medium-sized enterprise customers: create conditions for the production and business process to proceed smoothly and rhythmically, promote rapid capital circulation, contribute to accelerating production speed and goods circulation.

- Contribute to the fight against corruption, commercial fraud, smuggling, and tax evasion. Non-cash payment is a form of payment encouraged by the State in production and business transactions. Cash payment leads to corruption, smuggling, and tax evasion because the cash flow when paying through bank accounts is fully reflected in accounting books and documents, fully reflecting the revenues of enterprises, especially small enterprises. Enterprises are required to fully account for generated revenue and output value added tax, corporate income tax.

business must pay.

- Developing retail banking products and services on advanced, modern technology platforms helps people become familiar with and no longer feel unfamiliar with the concepts of automated banking, unmanned banking, and virtual banking.

For banks:

- Bringing banks a large income from service fees. Developing diverse services with many utilities in the direction of improving payment methods, simplifying procedures, and expanding the network of operations. In addition, banks can develop supporting services such as salary payment services for people with accounts at many different banks, cash transfers to recipients... will attract more and more customers to the bank, thereby increasing the bank's service revenue.

- Take advantage of capital sources in customer payments that are deposited in payment and deposit accounts. Banks do not have to pay interest on these accounts.

or low interest payments reduce the input cost of mobilized capital, creating a large difference between the average lending interest rate and the average deposit interest rate.

- Building a diverse and widespread customer network as a foundation

develop banking services.

1.2. Classification of retail banking services

Currently, there are many ways to classify retail banking services, but the most common and popular is the classification based on the activities of retail banking. Accordingly, retail banking services are divided into 3 large areas:

Capital mobilization services Credit services Payment services

 Capital mobilization services:

Capital mobilization plays an extremely important role in banking activities. It creates capital for banks to carry out income-generating activities for banks such as credit or bank payments.

 Credit services:

This is the main profit-making activity for banks. As we know, one of the first and basic functions of commercial banks is to act as a bridge between customers who do not have a need for capital and those who do need capital but lack capital. Credit activities are the second link, bringing capital to places that are "thirsty for capital".

 Payment services:

In addition to the basic tasks of commercial banks, capital mobilization and credit, commercial banks also have payment activities, contributing to the implementation of the common goal of society: non-cash payment activities.

1.3. Capital mobilization services:

Capital mobilization is one of the main and most important activities of commercial banks. This activity provides capital for banks to carry out other banking activities such as granting credit.

or payment activities and provision of other banking services. Banks can mobilize capital through the following forms:

 Receive deposits from individuals and other credit institutions through the forms of demand deposits, term deposits and other types of deposits.

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

 Borrowing capital from other credit institutions operating in Vietnam and from foreign credit institutions

 Short-term loans from state banks according to the provisions of the State Bank Law

However, within the scope of research on retail banking services, capital mobilization activities here only consider the target of banks to mobilize capital, which are individuals and small and medium enterprises, or in other words, capital mobilization is of a "retail" nature.

1.3.1. Forms of capital mobilization of retail banks

Retail banks focus on mobilizing idle capital from residential areas and a part of idle capital from small and medium enterprises. Forms of mobilization include:

1.3.1.1. Through the issuance of long-term and short-term securities:

Banks mobilize capital through these forms of GTCG issuance mainly mobilize capital for a certain period of time to the bank and will pay the GTCG owner. If the customer does not pay, the bank will keep it and calculate interest for the overdue period. Banks often mobilize capital for specific projects. This method of mobilization has interest rates that are often higher than normal savings interest rates, so retail banks do not regularly issue it, but depend on the investment in projects or restructuring of mobilized capital for issuance. The maximum issuance period is 60 days.

1.3.1.2. Deposit mobilization:

Commercial banks focus on mobilizing deposits from the population and idle money from small and medium enterprises.

 Savings among the population : Previously, there were only term and non-term deposits. Nowadays, due to high technology, capital mobilization among the population is becoming more and more diverse and flexible, such as ladder savings, flexible principal withdrawal savings, savings deposits, social security savings, accumulated savings, electronic savings, insurance savings, etc. This type of mobilization is for customers who have idle money to save for the purpose of making a profit. The number of people who deposit savings is often very large, with different terms and maturity dates, so it is a stable source of mobilized capital. Therefore, this source is very important in the business of NHBL.

 Deposits from businesses (Economic organizations) include payment deposits and term deposits.

Current account or checking account.

Is the amount of money that customers deposit in the bank for payment purposes. Customers have the right to request the bank to deduct from their account to pay the beneficiary who is the supplier of goods or services. Usually customers pay by issuing a check or by payment order. For the bank, this is a deposit for which the bank only has to pay low costs, and at the same time collects payment fees when customers make payments through the bank. If the commercial bank attracts a large number of customers, it will have a large, stable source of capital with low interest rates. The bank can use this capital for short-term or even long-term loans, because customers never pay off the entire deposit at once.

Non-transactional deposit mobilization

The funds in the customer's non-transaction accounts are idle funds. These accounts have the common feature that they earn interest but do not have the right to issue checks for payment needs.

Term deposit mobilization.

This is the idle money of businesses and economic organizations.

Deposited in the bank, customers can only withdraw after a certain period of time depending on the deposit term, the purpose is to earn interest, this source of capital is relatively stable. Banks can use this source of capital for medium-term loans.

1.3.2. Factors affecting capital mobilization activities:

1.3.2.1. Objective factors:

Objective factors are factors that are not under the control of the bank but directly or indirectly affect the bank's operations in general and capital mobilization in particular. Changes in these factors can bring "danger" or "opportunity" to the bank. The bank cannot control or change them, but it is necessary to forecast their fluctuations in order to adjust the bank's operations to suit the changing environment.

Legal corridor:

Like other credit institutions operating in the economy, banks are also strictly managed by the law and the government's functional management agencies. All issues related to the formation and operation of banks are clearly regulated by legal documents. Changes in legal regulations in a period bring new opportunities and challenges to banks. In the process of operation, banks are not only managed by banking law but also affected by many other related laws: civil law, law on credit institutions, enterprise law, ... and legal documents of the state. All activities and adjustments of banks are based on or based on legal regulations.

Socio-economic situation at home and abroad:

The economic and social environment also greatly affects the capital mobilization activities of banks. The growth rate of the economy is high, then people's income increases, leading to them accumulating more. On the contrary, when the economy is in recession, the amount of savings will decrease.

Economic stability is also a deciding factor in depositing money.

of the people. If the economy grows unstably, prices and purchasing power of

When the currency fluctuates and inflation occurs, people tend to prioritize investment channels such as gold, foreign currency or other types of assets. On the contrary, when the economy is stable, people save more, and then the bank's capital increases.

In addition, the state's macro-regulation policies also affect the capital mobilization activities of retail banks. Policies such as tax policy, exchange rate policy, import and export all have two-sided impacts on the process of capital mobilization from the population. For example, if the state has a policy of increasing personal income tax, disposable income will decrease. Conversely, if personal income tax decreases, capital mobilization from the population will increase.

Psychology of depositors' spending habits:

People's spending habits also greatly affect the ability to mobilize capital from this sector. Cash spending habits or non-cash payments, along with people's income levels, will affect the level and form of savings of the population.

1.3.2.2. Subjective factors:

Subjective factors directly affect the capital mobilization results of retail banks. The capital mobilization activities of retail banks are high or low depending on how the bank manages and uses these factors. Subjective factors include:

 Facilities and staff for capital mobilization:

Facilities show the level of modernity, the transaction processing speed of the teller is partly reflected in the transmission speed, the network system and the modernity of the bank's computers. This affects the satisfaction of customers when they come to deposit money at the bank. Satisfied customers tend to continue to come to the bank when they have a need.

The qualifications and working style of capital mobilization officers greatly affect the capital mobilization activities of commercial banks. If capital mobilization officers are enthusiastic, friendly, and knowledgeable about the bank's capital mobilization product system,

Advise customers on suitable products, helping them feel satisfied and comfortable when

Choose a bank to deposit money.

 The diversity and attractiveness of capital mobilization products:

People's needs are diverse. Therefore, which bank has the product and service structure?

Diversified services will attract more capital from the population.

The diversity of product and service structure is reflected in the diversity of terms and forms of capital mobilization. An individual only has a certain amount of idle money and wishes to have a certain profit when depositing money in a bank. This amount of money is only available for a certain period of time. Therefore, if the bank does not have a term suitable for the customer, that amount of money will not be deposited in the bank anymore. Currently, commercial banks have very diverse terms from 01 to 12 months, super flexible savings with principal withdrawal, step savings, flexible savings. In addition to mobilizing by saving method, commercial banks also mobilize in the form of opening personal accounts, issuing bills, bonds. From here, banks have achieved significant results.

 Interest rate policy:

The first and main purpose of depositing money in a bank is to make a profit. Therefore, the first thing they care about is the deposit interest rate. The deposit interest rate is the percentage of the amount of money received compared to the principal that the depositor receives from the bank. Interest rate

The higher the interest rate, the more attractive it is to depositors. However, the interest rate is still associated with the issue.

profit and business performance of the bank. When the mobilization interest rate is high, the bank must increase the lending interest rate if it does not want to reduce its income.

income. And that will affect the competitiveness of the bank.

Thus, the requirement for banks is to offer a high enough interest rate to attract depositors but not too high, so as to still attract borrowers without reducing the bank's profits.

A reasonable interest rate policy must ensure factors such as: risk level and profit from investments, state regulations on lending interest rates, inflation rate, exchange rate fluctuations, maturity of bonds.

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