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Investment Situation in Non-Credit Services at Saigon Commercial Joint Stock Bank in the Period of 2015-2019

3.5 Investment situation in non-credit services at Saigon Commercial Joint Stock Bank in the period 2015-2019

Table 3.13: Investment situation in non-credit services at Saigon Commercial Joint Stock Bank in the period 2015-2019

Unit: billion VND, %



Criteria

2015

2016

2017

2018

2019


Expense


Income

Cost/revenue ratio

import (%)


Expense


Income

Cost/revenue ratio

import (%)


Expense


Income

Cost/revenue ratio

import (%)


Expense


Income

Cost/revenue ratio

import (%)


Expense


Income

Cost/income ratio (%)

Payment service

domestic

2.78

7.30

38.14

3.25

44.20

7.34

4.06

52.10

7.80

5.18

44.83

11.54

6.37

44.80

14.21

Payment service

international

2.57

16.09

15.99

4.25

91.78

4.63

6.78

156.59

4.33

9.81

215.66

4.55

11.50

193.29

5.95

Card services

13.76

23.93

57.52

31.52

59.42

53.05

65.88

125.52

52.48

202.35

334.81

60.44

213.65

382.86

55.80

Insurance services

16.64

168.70

9.86

2.76

29.37

9.40

4.24

98.37

4.31

5.18

238.86

2.17

11.30

383.91

2.94

Consulting service

0.16

1.57

9.86

0.35

4.26

8.18

1.19

22.63

5.27

2.01

42.01

4.80

0.40

197.24

0.20

E-banking services

0.10

5.42

1.85

6.24

11,14

56.03

10.39

18.57

55.95

20.96

45.00

46.57

34.68

58.66

59.12

Other PTD services

17.81

53.68

33.18

16.97

142.91

11.87

6.14

96.71

6.35

10.96

212.95

5.15

11.80

189.29

6.23

Total

53.83

276.70

19.45

65.33

383.08

17.05

98.69

570.49

17.30

256.44

1,134.12

22.61

289.70

1,450.06

19.98

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Investment Situation in Non-Credit Services at Saigon Commercial Joint Stock Bank in the Period of 2015-2019


Source: SCB Annual Report 2015-2019 & author's calculations


118

Table 3.14: Comparison of the ratio of investment costs and income from non-credit services at Saigon Commercial Joint Stock Bank in the period 2015-2019

Unit: %



Criteria

Compare income/expense ratios

2016/

2015

2017/

2016

2018/

2017

2019/

2018

Domestic payment services

-30.8

0.46

3.74

2.67

International payment service

-11.35

-0.31

0.22

1.4

Card services

-4.47

-0.57

7.96

-4.64

Insurance services

-0.46

-5.09

-2.14

0.77

Consulting service

-1.68

-2.91

-0.47

-4,6

E-banking services

54.18

-0.08

-9.38

12.55

Other PTD services

-21.31

-5.52

-1,2

1.08

Source: SCB Annual Report 2015-2019 & author's calculations

The above data table summarizes the income and expenses of each type of non-credit service at SCB Bank in the period 2015-2019. Accordingly, SCB's total investment costs in non-credit services increased gradually over the years. In 2015, investment costs were 53.8 billion VND, by 2019, this number was 294.8 billion VND, 5.5 times higher. This proves that SCB has had a clear change in its development orientation, focusing on investment and developing non-credit services, gradually transforming into a retail, multi-functional and modern bank.

Total income from non-credit services at SCB has grown strongly over the years. In 2015, the total income from non-credit services was 276.7 billion VND, by 2019, this source of revenue reached 1,598.5 billion VND, 5.8 times higher than in 2015. On the other hand, the ratio between Costs and income from non-credit services range from 17% -22%. Thus, although the ratio between costs and income is not high, the source of profit from non-credit services for banks is very large. In general, total income from non-credit services each year is usually over 5 times the total investment costs, except for 2018, when income was 4.4 times higher than costs. This is explained by SCB's strong investment in non-credit services in 2018. In 2017, the wave of the 4.0 industrial revolution spread widely in the banking and finance industry system. Commercial banks stepped up their efforts

Applying technology in operations, bringing the most optimal experience to customers using the service. SCB is no exception to that general trend. Starting from September 2017, SCB deployed upgrading the core banking system (Core Banking) and electronic banking (Digital Banking). This project is considered the lifeblood for strong development in the future. By September 2018, SCB had completed the upgrade and went live successfully. This is an important milestone, marking a new development step for SCB in applying international standard technology at the Bank. The investment and application of modern technology platforms in operations caused the total cost of non-credit services in 2018 to increase compared to 2017 to 156.8 billion VND, accounting for 22.52% of income from non-credit services. credit.

The data compiled in tables 3.8 and 3.9 give us an overview, partly understanding the characteristics and benefits of each type of service brought to SCB.

Domestic payment services are one of the most traditional and basic non-credit services at banks. At SCB, this service brings an average income of about 45-50 billion VND/year. Compared to the income generated by other services, this is a rather modest number. In the period from 2013 to 2016, SCB's domestic payment revenue was very modest, growing steadily at a slow pace. Furthermore, according to statistics, in 2017, the number of middle-aged and elderly customers aged 40 and over accounted for 54% and the number of customers under 40 years old accounted for 46%. Both of these customer segments have high growth rates compared to the previous year, for the group of customers under 40 years old it is 39% and the group of middle-aged and elderly customers is 17%. The growth rate of the group of customers under 40 years old shows that SCB keeps up with the ever-changing needs of young customers and attracts them to the Bank's modern products. This is a good sign, proving that SCB has taken the right direction, expanding its customer base and increasing opportunities to cross-sell SCB's products and services.

In parallel with domestic payment services is international payment services. International payment services have very modest investment costs, but the income is very high. From 2016 to 2019, the ratio of investment costs to revenue

input no more than 6%. Typically, most recently, in 2018 and 2019, the income from this service was VND 215.6 billion and VND 193.3 billion, respectively. In terms of economic efficiency, international payment services bring large profits and are truly a smart and effective investment channel. Developing international payment services is not only because of the large revenue the service brings, but also a way to affirm the SCB brand. The more customers trust and choose SCB, the more it proves that SCB's services are good, bringing benefits and satisfaction to customers. Therefore, in the future, SCB needs to continue to focus on developing international payment services.

On January 20, 2016, the World Economic Forum opened with the theme "Mastering the Fourth Industrial Revolution". Since then, the term "Industry 4.0" has been widely used around the world to describe the 4.0 Industrial Revolution. Commercial banks promote investment in applying technology to operations, bringing the most optimal experience to customers using services. The services that directly benefit from this technology investment are card services and electronic banking services. Developing electronic banking services is an inevitable development trend in the context of the 4.0 Industrial Revolution that is taking place strongly today. Developing electronic banking services is always invested by SCB, applying digital technology, new technology, high technology, information, telecommunications, and technical infrastructure into products, to improve service quality. customer service, improving SCB's efficiency, reputation, and sustainable development. It can be seen that from 2016 to 2019, investment costs for card services and electronic banking services are usually from 50% to 60%/year. Thanks to the right investment, e-banking services bring stable income and grow gradually each year, promising to be a sustainable and effective source of service revenue for SCB.

In 2016, 2017 and 2019, card services and e-banking services had the same investment proportion, but card services had very impressive income, growing strongly in 2018 and 2019. 2019 , SCB was awarded " Best credit card offers in Vietnam 2019 " by Global Business Outlook . In the first 6 months of 2019, there were 61,788 additional payment cards

International credit cards and SCB branded international credit cards are used by customers. These positive results were achieved thanks to the strategy of promoting the credit card segment, with the launch of a series of new products, expanding distribution channels, and reaching customers. At the same time, incentive programs, customer care... also receive large investments in the direction of increasing technology application, improving services, and expanding partner networks. Card services are always one of the services SCB focuses on investing in, not only for high efficiency but also as a way to promote SCB's image and brand, actively contributing to reducing payment rates. cash.

In particular, as analyzed above, financial consulting services are services with a very low cost/income ratio but are highly effective. In 2016 compared to 2015, investment costs increased by 0.19 billion VND, equivalent to an increase of 118.75%; Income increased by 2.69 billion VND, equivalent to an increase of 171.34%. At that time, this result was considered a successful first step for financial consulting services. The investment proportion has gradually decreased over the years and especially in 2019, the cost of consulting services was only 0.4 billion VND and the income generated was 197 billion VND. In 2019 compared to 2018, costs from financial consulting services decreased, income grew strongly. Income increased by 155.2 billion, equivalent to 369.51%, while the ratio of costs to income decreased by 4.6%. Therefore, financial consulting services are currently considered one of the important non-credit services that need to maintain their strength at SCB.

In general, non-credit services bring impressive non-interest income to SCB. SCB has had certain successes in reducing dependence on credit and actively developing non-credit services. The above data is the basis for SCB to orient its long-term investment and development strategy in the future.

3.6. General assessment of the current status of credit service development of Saigon Commercial Joint Stock Bank

3.6.1. Results achieved

3.6.1.1. Regarding the quality of human resources operating in the field of non-credit services

Human resources are considered the most important issue in the 4.0 Industrial Revolution, human resource development becomes the foundation for sustainable development and

increase competitive advantage. Therefore, over the past time, SCB has always focused on training and regularly improving professional knowledge for employees on content related to new products and services following digital technology trends. In general, the quality of human resources operating in the field of non-credit services at SCB has achieved some positive results as follows:

- The number of personnel working in the field of credit services increases every year

Table 3.15 Situation of personnel operating in the field of credit services of SCB from 2015-2019

Unit of measure: person



Year


Criteria


2015


2016


2017


2018


2019

Growth rate (%)

2016/

2015

2017/

2016

2018/

2017

2019/

2018


Number of personnel


4,595


5,556


6,428


7,258


7,763


20.91


15.69


12.91


6.96

Number of personnel operating in the field of consumer services


1,608


2,444


3,342


4.137


5,045


51.99


36.74


23.79


21.95

Proportion of personnel operating in the field of consumer services (%)


35


44


52


57


65


9


8


5


8

Source: SCB Human Resources Management Department & author's calculations The number of employees at SCB increased over the years in the period 2015-2019. The average number of employees increased by 792 people/year. Meanwhile, the number of employees operating in the field of non-credit services grows every year with an average level of 859 people/year. The average growth rate of personnel operating in the non-credit service sector is higher than the average growth rate of total personnel/year. This is explained by the fact that since the end of 2015, SCB began to drastically transform its business model, throughout the system. SCB focuses on training staff/consultants to promote the sale of non-credit products and services. With the goal of gradually reducing dependence on credit services, SCB deployed recruitment and training of a direct sales team at the counter. In particular, SCB prioritizes and encourages the conversion of existing personnel positions, from positions such as teller and sales staff to staff/financial consultant positions. The above mechanism helps save recruitment costs

and training by existing personnel who have a thorough understanding of SCB's products and services. On the other hand, SCB takes advantage of the existing staff who are familiar with and understand customers at the unit, making it easier to understand customers' psychology and needs to advise on products. Because of internal transfers, the average growth rate of personnel operating in the non-credit service sector may be higher than the average growth rate of total personnel/year.

The proportion of personnel operating in the field of non-credit services increases every year, helping SCB to serve non-credit services to customers more thoughtfully and carefully. On the other hand, with abundant human resources, banks have the opportunity to increase sales as well as income from the bank's non-credit services.

- The educational level of personnel operating in the field of PVPTD is increasingly improving

Table 3.16 Education level of personnel operating in the field of PVPTD of SCB in the period 2015-2019‌

Unit of measure: person



Year


Criteria


2015


2016


2017


2018


2019

Proportional growth rate (%)

2016/

2015

2017/

2016

2018/

2017

2019/

2018

Doctor

-

1

2

3

5

0.04

0.02

0.01

0.04

Master

64

115

167

215

297

0.7

0.3

0.2

0.69

University

1,069

1,689

2,440

3,062

3,895

1.6

1.1

3.8

3.2

Under college

445

639

827

857

848

-2.34

-1.42

-4.01

-3.93

Total

1,608

2,444

3,342

4.137

5,045

-

-

-

-

Source: SCB Human Resources Management Department & author's calculations

The quality of human resources in the field of non-credit services has been stable and consistent at all training levels, especially education levels have been gradually improved over the years. From 2015 to 2019, the number of officials with master's and university degrees increased sharply, and the growth and mobility structure was reasonable in accordance with the trend of human resource development during the 4.0 industrial revolution. Officials with doctoral degrees have increased slightly, and officials with less than university degrees have been shrinking since 2015 to 445.

people, equivalent to 24.67% and by 2019 to 17.9%, the average 5-year decrease rate is 0.68%.

The educational level of personnel has gradually improved over the years. This means that the quality of human resources is improved. From there, it is more convenient to interact with new technology and new services to guide people and serve customers.

Table 3.17 Work efficiency situation of SCB's personnel operating in the field of PVPTD in the period 2015-2019‌

Unit of measure: person


Year


Criteria


2015


2016


2017


2018


2019

1. Number of workers completed excellently

assigned tasks

178

300

417

528

660

Proportion (%)

11.05

12.26

12.48

12.77

13.09

2. Number of employees who successfully complete assigned tasks

973

1,483

2,050

2,548

3.121

Proportion (%)

60.48

60.69

61.33

61.58

61.86

3. Labor completes tasks

assigned

333

510

673

871

1,068

Proportion (%)

20.69

20.87

20.14

21.05

21.16

4. Number of employees who do not complete assigned tasks

185

176

159

148

122

Proportion (%)

7.78

6.18

6.05

4,6

3.89

Total (people)

1,608

2,444

3,342

4.137

5,045

Source: SCB Human Resources Management Department & author's calculations

The summary table of results above shows the work efficiency of personnel operating in the field of non-credit services. In employee positions in the non-credit service sector, although the pressure to complete targets is very high, the proportion of employees assessed at the job completion level or higher is very large, accounting for 92.22%. in 2015 and accounted for 96.11% in 2019. In particular, the proportion of excellent workers accounted for over 10%/year and tended to increase gradually over the years. The number of workers who do not complete the target is gradually shrinking, accounting for 7.78% in 2015, decreasing over the years, by 2019 this number is 3.89%.

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