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Loan Process Using Savings Book as Collateral at Vietinbank and Acb

Table 2.14: Loan process using savings book as collateral at Vietinbank and ACB

ACB

Vietinbank

Procedure

Time

Procedure

Time

Find out customer needs

5 minutes

Find out customer needs

10 minutes

Credit support officer prepares documents

10 minutes

Customer Service staff prepare documents

20 minutes

Warehouse support staff

save on system

Treasury department enters savings books

save

20 minutes

Account creation support staff

5 minutes

Operational staff create account

20 minutes

Disbursement teller

10 minutes

Disbursement teller

20 minutes

Total time

30 minutes

Total time

90 minutes

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(Source: Author's comparison)

Comparing the savings book mortgage loan at Vietinbank and ACB, it can be seen that the savings book mortgage loan product at Vietinbank has a process quite similar to that at ACB, but the total time spent for this product at ACB is only 30 minutes, while at Vietinbank the time is up to 90 minutes. At ACB, the credit support staff is the person in charge of lending this loan, from the first step of understanding the needs, to preparing the loan application, creating an account for the customer, all these steps only go through a control point of the loan control controller, who has understood the contents of the application from the beginning with the credit support staff, only when the customer receives the money must move to the transaction officer and end the process.

At Vietinbank, the customer relations officer is the one who has to contact to learn and prepare documents for customers, through a control point which is the head/deputy head of retail department/transaction office, the documents along with the customer's signature are sent to the treasury department for storage, then the documents are transferred to the operations officer to create an account on the system and through the controller of this department for control. The process ends at the Accounting department when the teller disburses and the customer receives the money.

Thus, at Vietinbank, the loan product secured by a savings book is implemented with a process and control similar to the loan products secured by other means.

other assets, so the time is extended. Because the product of pledging a savings book is a special product, the customer's source of repayment is the deposit in the bank, the bank lends to customers to limit the customer's loss when the deposit has not yet matured but there is an urgent need to use it. At the same time, the bank can also retain customers to stay with the bank. However, if customers have to wait too long to receive this money, the savings of the money lost due to early withdrawal will no longer be meaningful, and displeasing these customers will also lead to the loss of potential deposits of customers in the future and negatively affect the reputation of Vietinbank.

2.2.2.5. About the habit factor

The survey results show that the average score of the habit factor is 3.71, so customers express their agreement that customers use Vietinbank's products and services because of the influence of habits. In particular, customers continue to come to Vietinbank because they have chosen to come to this bank since the beginning of banking transactions with the average score of the variable being 3.85, they are familiar with using Vietinbank's services, it is also quite close to the customer's workplace and they also easily access Vietinbank because of its extensive network system with the average score of the variables fluctuating around 3.74. Customers often have the habit of going to transactions at branches or transaction offices near where they live, near the agency where they work due to the convenience of travel. Evaluate the habit factor through Vietinbank's network work because with a wide transaction network, banking products and services will be brought closer to customers. Arranging the bank near the customer's workplace or residence will create a habit for customers to come to the bank for transactions.

The bank's management is very interested in the transaction network. Currently, Vietinbank is still holding the position of the commercial bank with the second largest network in Vietnam with more than a thousand units nationwide, second only to Agribank.

Figure 2.10: Network diagram over the years

(Source: Vietinbank Annual Report 2010-2014)

It can be seen that the number of branches has not fluctuated for many years, but Vietinbank has continuously increased the number of transaction offices over the years. Opening transaction offices does not cost much, but can provide almost all the products and services as a branch. With this feature, Vietinbank wants to bring banking services closer to customers, bringing convenience to customers.

In addition to expanding its network, Vietinbank has also continuously invested in upgrading its system of spacious and modern branch headquarters and transaction offices. In the 90s of the last century, the headquarters of the Vietnam Joint Stock Commercial Bank for Industry and Trade at 16-18 Phan Dinh Phung in Hanoi was just an old, dilapidated 5-storey building. However, the face of VietinBank has changed in recent years. This is clearly shown through the increasing number of large-scale, modern transaction offices. Right in Hanoi, in addition to the 17-storey headquarters building at 108 Tran Hung Dao, there are a series of other large-scale projects of VietinBank such as the VietinBank Branch building in Ba Dinh district (12 floors), in Thanh Xuan district (12 floors) and in Dong Da district (16 floors)... In Ho Chi Minh City. In Ho Chi Minh City, Vietinbank also continuously inaugurated new branch offices such as Branch 12, Branch 5, ... and recently Branch 1 was built on an area of ​​1,200 m2, including 23 floors. Transaction offices at the branches are also provided by the head office.

Funds to upgrade, renovate or build new facilities in accordance with the brand identity throughout the system.

However, some branches and transaction offices across the country are still rented locations with small areas, designs that do not meet brand identity standards, and old shelves that have not been invested in renovation. In 2014, the Bank's Board of Directors has a policy of providing funds for branches to buy land or houses in convenient locations to relocate branches and transaction offices in rented locations, and to construct or renovate according to Vietinbank brand identity standards. In order to implement the policy, many branches have promoted the search for convenient locations to buy and renovate or build new ones. This work will take a long time because it is necessary to find locations that meet the requirements of having a convenient location for business activities, premises suitable for design, and reasonable negotiated prices compared to market prices.

Vietinbank's goal is that transaction offices must ensure that they serve the needs of customers almost like a branch. However, the staff structure of transaction offices is quite thin and does not meet the needs of customers. At the transaction department, each office is usually only arranged with one transaction officer, one cashier and one controller. After completing all the documents at the Transaction Officer's counter, customers will transfer to deposit money at the Cashier's counter. Therefore, at peak times, many customers come to make transactions at the same time, only one Transaction Officer serves many different needs of many customers, pressure from customers and performing many different types of transactions leads to employees making mistakes, correcting errors in this transaction can lead to delays in performing subsequent transactions. Meanwhile, the Cashier is only responsible for collecting and paying money for customers and this is only done after completing the procedures from the Transaction Officer.

Along with the expansion of its network of operations, Vietinbank has also expanded its ATM system to make it more convenient for customers who open cards at the bank to withdraw money and make other transactions. To improve the quality of ATM services, the

ATMs are regularly replenished with funds, even on holidays and Tet holidays, to ensure smooth ATM operations. Vietinbank's management is very determined in ensuring smooth ATM operations through rectification documents and specific penalties for branches that have ATMs downtime for more than 24 hours. In addition, maintenance, repair, and troubleshooting are also carried out regularly and continuously. At ATMs, Vietinbank also arranges 24/7 hotline numbers and suggestion boxes to promptly receive customer feedback on ATM service quality.

However, many branches have not paid attention to the management of ATMs, leading to many ATM locations becoming business locations for people. The arrangement of tables, chairs, and stalls in front of ATMs by people hinders customers' transactions, destroying the professional image of the bank. Although there have been many articles reflecting this situation, branches have not actively handled it and people's business activities still take place, affecting the image of the bank.

2.3. General assessment of the current status of individual customer loyalty at Vietinbank

2.3.1. Tangible service quality

 Advantages

Vietinbank's diverse deposit, loan, card and utility products and services attract the attention of a large number of customers.

Vietinbank also continuously offers incentives and promotions to attract and show gratitude to customers.

Large card business market share, fast growth, POS system expanded nationwide.

Electronic banking transactions are highly secure and safe, providing convenient online payment services.

Beautiful, professional staff uniforms. Convenient opening hours.

 Limitations

Focusing product promotion and sales on sales representatives and customer relations officers has not been effective.

Not investing in promoting products, services, and promotional programs on media.

ATM systems often experience problems during weekends or holidays.

The POS system is not working properly.

E-banking services are not yet linked with many service providers to support online payments.

Staff uniforms are not consistent between old and new employees.

Closing transactions on Saturdays is disadvantageous for customers who are civil servants and employees whose working hours coincide with the bank's hours.

 Cause:

Because the Tellers and Customer Service Officers only focus on marketing to a certain number of customers and take on many tasks.

Not paying close attention, not deeply caring, not evaluating the effectiveness of promoting products and brands to customers through major media channels.

There is no department that closely monitors ATM fund balance to replenish funds in time.

There is no guidance for employees of card accepting units to use POS machines and regularly take care of units with large sales.

Not yet focused on marketing and developing links with service providers to develop online payment activities via Internet Banking.

2.3.2. Invisible service quality

 Advantages

Recruiting staff from prestigious universities, objective and transparent recruitment mechanism.

Staff qualifications range from bachelor's degree and above, the number of master's degrees increases over the years, Vietinbank also opens professional knowledge training courses for employees.

The Board of Directors focuses on Corporate Culture, building a Corporate Culture that is suitable for the competitive reality in the industry.

The Customer Support Center (Contact Center) operates 24/7, providing customers with information about products, services, and promotions. At the same time, supporting customers in handling customer complaints.

 Limitations

The number of new employees is large but cannot compensate for the number of employees leaving.

Employees throughout the system make mistakes when executing transactions, resulting in a high number of transaction cancellations and adjustments.

Through the "Mystery Shopper" program, many employees in transaction positions and in contact with customers violated transaction standards.

Contact Center staff have not been able to access the systems to find information and have not been trained in the professional knowledge and skills to respond to customer complaints.

There is no focal point to monitor and compile reports on violations by staff to report to the leadership to develop solutions to prevent violations.

 Cause

Due to high work pressure, often have to work overtime.

Newly recruited employees do not yet understand the job, old employees have high work pressure, so many operational errors arise.

Employees have not yet grasped and taken seriously the implementation of established transaction standards.

Operators do not have access to the system and have not been updated or supplemented with new knowledge.

The management has not taken seriously the work of evaluating and drawing lessons from operational errors that occur frequently.

2.3.3. Conversion costs

 Advantages

Implement a loyalty points and ranking program for customers, specifying care policies for each customer class.

 Limitations

Not yet implemented to communicate the loyalty program to customers who are transacting.

Many branches and transaction offices have not arranged VIP rooms or counters to serve customers and do not issue VIP cards to identify customers.

 Cause

The management has not taken customer loyalty seriously.

Many branches and transaction offices are not yet qualified to arrange VIP transaction rooms or counters due to space limitations.

VIP cards have not been issued to customers yet.

2.3.4. Decision on choosing a transaction bank

 Advantages

Advantages over other banks in terms of extensive network, brand reputation, and competitive fees.

 Limitations

Not focused on brand promotion activities like ACB, Vietcombank or BIDV.

The procedure for processing documents is slow, wasting a lot of customers' time.

 Cause

The importance of branding in influencing customer choice of transactions is not fully appreciated.

The process of handling documents goes through many stages and involves many complicated departments.

2.3.5. Habits

 Advantages

Large network of branches and transaction offices, located throughout the country.

Products and services served at transaction offices are equivalent to branches.

Many branches and transaction offices have been invested in building and renovating to be spacious.

The ATM network has also been expanded, convenient for card customers at Vietinbank. Funding activities are carried out regularly, ensuring continuous operation of ATMs.

 Limitations

Many transaction rooms are small, have substandard design, and old shelves.

Each room only has one teller, one cashier and one controller, so when there are many customers, it is difficult to serve them properly.

Many ATM stations have become places of business for people, causing loss of aesthetics and affecting the image of the bank.

 Cause

Inherited from old branches and transaction offices that have been degraded for many years without investment in repair and renovation.

Vietinbank's labor budget is to reduce banking costs. No concern for ATM management.

Chapter 2 Summary

Based on the survey results, the author evaluated the scale of factors affecting customer loyalty at Vietinbank. At the same time, combined with secondary data, the author continued to analyze the current status of tangible service quality factors, intangible service quality, switching costs, decisions to choose a transaction bank and habits affecting customer loyalty at Vietinbank.

CHAPTER 3: SOME SOLUTIONS TO INCREASE CUSTOMER LOYALTY IN

VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE BY 2018

3.1. Development orientation and goals of Vietinbank to 2018

Vietinbank's business philosophy is "Safe, effective and sustainable", the bank advocates developing business activities and sustainable growth, focusing on customers, continuously improving products and distribution channels, enhancing service quality with the goal of becoming the leading bank in terms of domestic market share and on par with banks in the region, moving towards becoming a modern, multi-functional financial - banking group according to international standards by 2018. Specifically:

 Credit growth is accompanied by good debt quality, maintaining market share for traditional customers and continuing to exploit new customers. Taking advantage of available advantages in terms of brand, scale, human resources, and extensive network to develop individual customers, promoting the development of products and services for retail banking. Strive to have total outstanding loans reach 800 trillion VND by 2018, an increase of more than 50% compared to 2014, individual customer credit accounts for 40% of the total outstanding loans of the entire bank, prioritizing the development of individual credit because of good credit quality, low risk, maximum bad debt accounts for 1.1% of total outstanding loans.

 Capital mobilization activities ensure balance, consistent with credit growth and investment capacity, consistent with the development orientation of the bank. Strengthen capital mobilization activities, especially residential deposits because this is a stable source of deposits. In particular, develop payment deposit products to mobilize young capital sources, minimizing interest costs. By 2018, total mobilized capital reached 850 trillion VND, an increase of more than 40% compared to 2014, residential deposits accounted for 50% of the total mobilized capital of the bank.

 Diversify the income structure, including increasing the proportion of service revenue by improving the quality of card products/services, e-banking services, and other payment activities. Increasing the proportion of non-interest income will facilitate banks to reduce pressure from traditional credit activities, creating a premise for development according to banking models in the region and the world. By 2018, service revenue must account for 20% of the bank's total income.

To achieve this goal, Vietinbank promotes restructuring, perfecting and standardizing the organizational model. Restructuring the bank's organization through the establishment of business blocks, risk management blocks, operations blocks, finance blocks, etc. to focus management functions across all business and administrative areas from headquarters to branches, in accordance with the practices of modern commercial banks in the world.

Vietinbank also focuses on developing human resources, considering this the fundamental foundation that determines the success of the bank. Continue to innovate recruitment - training/development - planning, set out a job title roadmap to ensure attracting high-quality human resources, creating a source for key positions in the future of the bank. Apply the KPI-based salary mechanism to create appropriate financial motivation, encourage employees to focus on contributing to the development of Vietinbank.

Vietinbank develops information technology applications to serve business development and management, focuses on modernizing facilities, ensuring a working environment, and creating a modern and professional banking image.

All of these goals aim to better meet customer needs and increase customer loyalty to Vietinbank.

3.2. Some solutions to increase customer loyalty at Vietinbank

3.2.1. Group of solutions on tangible service quality factors

Vietinbank has a variety of banking products. Every year, the bank invests in developing new products to meet the increasing needs and demands.

of customers and increase competitive advantage compared to other commercial banks. To further improve the quality of tangible services, Vietinbank needs to implement the following solutions:

Firstly, for customer relations officers, they are officers who directly contact customers, introduce, market and sell banking products and services. The Human Resources Policy and Planning Department advises the bank's leadership on building the functions and tasks of customer relations officers, focusing on the main function of marketing and selling products and services.

Build a KPI scorecard for Customer Relations Officers with the weight of product and service sales indicators accounting for 70-80% of the total scorecard. Depending on the product or service, the sales officer focuses on marketing, balancing the weights of the indicators accordingly, such as specializing in lending, specializing in capital mobilization or cards and other products and services. Build the weights of the main products and services sold, which will account for more than 50% of the total scorecard weight. For products and services that are not part of the main function, assign a target of 20-30% of the total scorecard weight to take advantage of developing effective cross-selling activities. The remaining 20-30% belongs to the qualitative activities of the officer, such as preliminary assessment and customer care.

The Human Resources Policy and Planning Department should also advise the Bank's Board of Directors on the development of functions and tasks and the recruitment of personnel with the title of Financial Consultant. These are employees who sit in the transaction halls of branches to support Tellers in consulting and selling products and services. In the scorecard of Financial Consultants, the weight of product and service sales expenses accounts for a maximum of 50%, the remaining 50% will belong to consulting indicators and other indicators.

Second, strengthen marketing activities to introduce Vietinbank brand and Vietinbank products and services to customers. Television in Vietnam is a popular means of entertainment, almost every family has a television, so if Vietinbank appears frequently on this medium, the Vietinbank brand will be deeply imprinted in the minds of customers, helping customers remember Vietinbank and choose

Vietinbank when it is necessary to conduct banking transactions. Therefore, Vietinbank should design an advertisement on TV channels with high coverage such as VTV1 or VTV3. Vietinbank often has preferential loan interest rate programs, interest rates are very competitive compared to other banks, advertising on TV will attract a lot of attention from customers, customers will easily compare with the interest rates of other banks, from there come to the decision to choose to transact with Vietinbank.

To save costs, Vietinbank can also advertise on electronic newspapers such as VN Express, Tuoitre online, Thanhnien online... Deposit promotion programs such as lucky draw, or gifts, ..., incentives for using Vietinbank's ATM and international cards such as discounts on purchase value or 0% interest installment payments,

… The form of advertising is to place a banner on an electronic newspaper page, connecting to a link to the program information on Vietinbank's website. According to statistics from the General Statistics Office of Vietnam, currently our country has 31 million Internet users, accounting for 1/3 of the population. Of which, more than 90% use the Internet to read news on online newspapers and magazines. Therefore, advertising on electronic newspapers will help Vietinbank reach customers more easily and the information sent to customers will also be more specific and clear.

For new products and services deployed for the first time, such as deposit products, loans, new card products, loyalty services, etc., Vietinbank should organize seminars to introduce them to customers. Guests attending the seminar are key officials who work related to the deployed products and services, strategic customers in the product and service sector, and customers who may have a need to use the introduced products and services. After the introductory seminar, Vietinbank can post information about the new product or service to customers on a number of newspapers or online newspapers, including instructions for customers to view specific information on the Vietinbank website. Every year, Vietinbank researches and launches new products and services to better meet the needs of customers. Organizing seminars is both an opportunity to introduce products and services.

Help promote Vietinbank brand image in the eyes of customers as a business active in researching and developing products, best serving customer needs.

In addition, for all promotions or introductions of new products and services, Vietinbank should inform customers via SMS, customers can refer to detailed information on the bank's website when needed. To serve SMS advertising, customer data should be collected with phone number information being mandatory.

Third , to ensure that ATMs operate smoothly in accordance with the regulations of the State Bank, the Cash and Treasury Management Department advised the Board of Directors of Vietinbank to issue an official dispatch with specific regulations:

 Require branches to assign in writing computer staff or staff in the card department to regularly monitor the minimum fund balance through the remote ATM monitoring system. If the fund balance at the machine is close to 100 million VND, proactively replenish the fund to ensure the ATM operates normally.

 Require the branch to assign in writing staff in the fund-raising team, arrange at least two fund-raising teams to take turns performing fund-raising work, including holidays and Tet.

 The penalty for branches that have ATM downtime of more than 4 hours due to failure to replenish funds in a timely manner is to lower the branch's performance by one level compared to the branch's performance in the quarterly evaluation period and consider lowering the annual performance if the branch repeats the offense.

Fourth, POS machines are often installed in stores and shopping centers, where customers often need to pay by card. To ensure that store employees understand how to use POS machines, the Card Center designs a POS machine user manual and sends it to card accepting units. Contents

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