Habits of Using Banking Services Through Distribution Channels

Develop the business network in both quantity and quality, with special attention and priority given to improving the quality of retail distribution channel operations. Limit the development of the branch network and promote the development of the transaction office network serving banking business activities and pilot purely retail transaction offices.

Modern distribution channel (ATM): continue to strongly develop modern distribution channels based on modern and suitable technology and towards becoming the main distribution channel for some services (overdraft, consumer credit, payment...).

According to the results of a customer demand research report by Booz Allen (a company specializing in retail banking market research), although non-traditional service channels are also developing very strongly, the majority of customers still prefer to conduct their transactions at the counters of bank branches.

Retirement/investment/life product groups

28 11 11 7

Insurance products

16 10 2

Branch

Mobile Sales force

Real estate related products

22 10 10 4

Credit Products

11 16 21 15

Telephone

Online ATM

Other sources

CA/SA accounts

15 7 12 12

0% 20% 40% 60% 80% 100%

Figure 1.3. Habits of using banking services through distribution channels

(Source: BIDV Financial Report)

Table 1.2. The most important values for customers in conducting transactions with distribution channels

Distribution channel

Most important values to customers (in descending order)

Branch

Privacy

Product knowledge

Ability to resolve customer queries Central location

Short waiting time

Staff with customer recognition skills

Online

Has security measurement system

Has quick and easy access

Ability to find necessary information on the website

All services are on the same website. Friendly and clear interface.

There is additional information

Call center

Option to speak directly to an officer Quick and easy security check

Problems can be solved right in the Call center Multiple problems can be solved in one call Short waiting time

Shifting gears and shifting gears less

Mobile sales force

Get to meet the right consultant The right to ask for solutions

Expert advice on how to automatically update systems

Product Knowledge Flexible Time

Maybe you are interested!

(Source: BIDV Financial Report)

Innovating the "thinking" in network development, the goal of "efficiency" must be put first, resolutely implementing not to open more networks in difficult areas and regions lacking potential - strengths or in branches operating ineffectively and with poor network management.

Strictly comply with the process and criteria in network development, ensure strict compliance with state regulations on commercial bank networks.

The operating model of the KDNHBL network includes branches, transaction offices, and ATMs. Limit and eventually eliminate the savings fund model in the regions, replacing it with a 2-level transaction office model. The branch model develops according to the mixed branch model, establishing an independent/specialized branch customer service department. The 2-level transaction office model focuses on development and the goal and orientation of operations is retail business ("pure" retail transaction offices and mixed transaction offices).

Focus on developing a network of retail transaction offices mainly in key areas in the North, the South and large cities with potential for retail business such as Hanoi and Ho Chi Minh City; Limit opening new networks in the remaining areas to focus on improving operational efficiency on the existing network.

Sixth, strengthen marketing and customer care activities. Most of the service objects of DVNH are individuals, promoting and marketing services play an extremely important role, beneficial to banks and customers. Strengthen the transmission of information to the public to help customers have updated information about the capacity and reputation of the bank, basic understanding of retail banking services, understanding how to use and benefits of services.

Seventh, focus on developing information technology because IT is closely related to the quality of banking services. Vietinbank considers the CoreBanking Replacement Project as the number one key project in the information technology development strategy, one of the breakthroughs that Vietinbank has chosen to ensure the good implementation of strategic goals until 2020. Or the information security strategy is implemented with synchronous solutions: equipment, technology, people, processes; Standardizing infrastructure, controlling zoning... preventing and repelling traditional risks. Even the security policy for end users is effectively supported by the system.

technology systems. BIDV should learn from experience in focused investment, prioritizing highly sensitive systems, combining strong authentication solutions with updated knowledge, supplementing control processes, helping to deploy many electronic banking services.

Services based on IT platforms have become an inevitable trend, such as Mobile Banking, Internet Banking, Phone Banking..., and at the same time, they also require high security and sufficient human resources with knowledge of technology to avoid risks. It is necessary to turn information security into a competitive advantage. It is necessary to identify security as a factor in service quality, when customers are satisfied, it will stimulate more use of the service, creating a voluntary propaganda channel for the bank.

IT is an important premise for storing and processing centralized databases, allowing online transactions to be performed. IT supports the implementation of advanced banking products and services such as automatic money transfer, capital mobilization and residential lending in many different forms. Thanks to the ability to exchange information instantly, IT contributes to improving the efficiency of banking management, creating conditions for implementing a centralized processing model for decentralized transactions such as money transfers, card transactions, significantly reducing transaction costs. IT has the effect of enhancing management capabilities in banks, the centralized management system will allow data to be exploited consistently, quickly and accurately.

CONCLUSION OF CHAPTER 1

In chapter 1, the author delves into understanding what is service and development of commercial banking services, the content of developing commercial banking services, criteria for evaluating the development of commercial banking services. Measuring factors affecting the quality of commercial banking services. In addition, the thesis also presents some experiences of domestic and international banks that have successfully developed commercial banking services and from there draws lessons for BIDV. And that is the theoretical basis for the thesis to apply to analyze the current situation of commercial banking service development at BIDV in chapter 2.

according to state plan

Chapter 2

CURRENT STATUS OF SERVICE DEVELOPMENT AT JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM

2.1. Overview of Vietnam Joint Stock Commercial Bank for Investment and Development

2.1.1. Formation and development process

Joint Stock Commercial Bank for Investment and Development of Vietnam, formerly known as Vietnam Construction Bank. Current full name in English: Joint Stock Commercial Bank for Investment and Development of Vietnam.

Transaction name: BIDV.

BIDV Head Office: BIDV Tower, 35 Hang Voi, Hoan Kiem District, Hanoi City, Vietnam.

Vietnam Joint Stock Commercial Bank for Investment and Development is a multi-functional, multi-field business bank in finance, currency, credit, banking and non-banking services in accordance with the provisions of law, including: Banking services (providing a full package of traditional and modern banking services); Insurance services (insurance, reinsurance of all types of non-life insurance); Securities (securities brokerage; securities depository; investment consulting for businesses and individuals, underwriting; investment portfolio management); Financial investment (investment in securities; bonds, stocks...); capital contribution to establish enterprises to invest in projects.

During 56 years of establishment and development, BIDV has made significant contributions to the construction and protection of the Fatherland and the development of the country's economy through each historical period.

Vietnam Construction Bank under the Ministry of Finance (the predecessor of BIDV) was established on April 26, 1957 under Decree No. 177 - QD/TTg of the Prime Minister. This is a bank established very early (only 5 years after the State Bank of Vietnam) with the main task of paying for the volume of basic construction completed within a narrow scope.

On June 24, 1981, the Government Council changed the name of the Vietnam Construction Bank to the Vietnam Investment and Construction Bank according to Decree No. 259-CP, and transferred BIDV from being under the Ministry of Finance to being under the State Bank of Vietnam.

On November 14, 1990, the Bank for Investment and Construction of Vietnam was renamed the Bank for Investment and Development of Vietnam according to Decision No. 401/CT of the Chairman of the Council of Ministers. Then, to implement the policy of restructuring state-owned enterprises according to Decision No. 90/TTg dated March 7, 1994 of the Prime Minister, the Bank was converted to operate under the model of a State Corporation with an operating period of 99 years from September 21, 1996 according to Decision No. 287/QD - NH5 of the Governor of the State Bank of Vietnam.

On March 8, 2012, BIDV successfully held its first General Meeting of Shareholders and officially operated as a Joint Stock Commercial Bank from May 1, 2012, marking a historic turning point right on the occasion of the 55th anniversary of its Traditional Day.

Along with the transformation of operations into a Joint Stock Commercial Bank model, BIDV has developed and implemented the BIDV Restructuring Plan for the period 2012 - 2013 and orientation to 2015 in line with the Government's goals and requirements for restructuring credit institutions. At the same time, BIDV has also issued a Resolution on BIDV's Development Strategy to 2020, which are considered important stepping stone indicators for the implementation of BIDV's development strategy to 2020.

2.1.2. Organizational model

To date, BIDV is one of the four largest state-owned commercial banks in Vietnam. BIDV is one of the three commercial banks with the largest network in Vietnam. As of December 31, 2014, BIDV has five (06) subsidiaries, such as: BIDV Financial Leasing Company Limited; BAMC Debt Management and Asset Exploitation Company; BIDV International Company Limited in Hong Kong; BIC Insurance Corporation; BIDV Securities Company and Lao-Vietnam Insurance Joint Venture Company as shown in Figure 2.1.

Diagram 2.1. Organizational model of the Joint Stock Commercial Bank for Investment and Development of Vietnam system

Source: BIDV Annual Report 2014

2.1.3. Business performance

2.1.3.1. Strong financial potential

Table 2.1. Key financial indicators

Unit: billion VND, %

INDICATORS

YEAR 2010	YEAR 2011	YEAR 2012	YEAR 2013	YEAR 2014
Total TS	366,267	405,755	484,785	548,386	650,340
VCSH	24,220	24,390	26,194	32,040	32,271
Charter capital	14,600	12,947	23,011	28,112	28,112
Profit Margin/Equity (ROE)	17.95	13.20	12.90	13.80	15.27
Profit Margin/Total Assets (ROA)	1.13	0.83	0.74	0.78	0.83
Capital Adequacy Ratio (CAR)	9.32	11.07	9.65	10.23	> 9.00

Source: Audited consolidated financial statements (VAS) 2010 - 2014

The average growth rate of total assets in the period 2010-1014 reached 15.4%. The average growth rate of equity reached 8.3%. Commercial banks must gradually convert the equity item in the Debt section to the Asset section of the balance sheet. Charter capital growth allows banks to increase the amount of assets. This means they will be able to push credit growth higher and have the opportunity to expand investment.

As of December 31, 2014, BIDV's total assets reached VND650,340 billion (~ USD31 billion) with a growth rate of 18.6%, the highest in the past 3 years. Pre-tax profit reached VND6,297 billion, a growth of 19%, ROA 0.83% and ROE 15.27%.

Building BIDV brand

Recognizing the importance of brand development for the development of banking services, including retail credit activities. BIDV brand is the choice of many economic organizations, businesses and individuals, known and recognized by the domestic and international community as one of the largest banking brands in Vietnam.

BIDV

#3 Capital

regulations

#3 Total assets

#2 Credit balance

BIDV brand position in Vietnam banking industry

#2 Mobilize

# 1 Project Sponsorship

#3 Network

Figure 2.1. BIDV's position in the banking industry

Source: BIDV Vietnam