Orientation and Goals to Improve the Quality of Branch Business Loan Services

- Although information technology has been improved, there are still many incidents and system errors during operation, especially the LOS credit approval system still has many complex information fields, leading to delays in processing customer records.

- Inspection and control work has been implemented but not thoroughly and has not fulfilled its functions and tasks, sometimes subjectively and formally.

- The branch has not yet developed a medium and long-term business plan to orient the growth of outstanding CVKD loans.

2.4.3. Causes

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* External causes

- First, let's look at the reasons from the customer side. Business customers need to borrow capital with high limits but they do not meet the loan conditions.

+ Unfeasible business plans, projects and plans: Customers who need to borrow capital from banks must have feasible plans and projects built on a scientific basis, with complete information and accurate analysis and evaluation.

+ Financial potential and self-capital to participate in the plan and project do not meet the bank's conditions. This is a difficulty for most businesses, households and individuals doing business because most of them have small and medium-sized businesses.

+ No or incomplete mortgaged assets, assets with incomplete legal status.

+ The implementation of the accounting and statistical regime of enterprises has not been serious, many enterprises deal with banks by reporting false data. In addition, because there are no regulations on mandatory auditing for small and medium-sized enterprises, the reports of these enterprises are often not in accordance with the current regime, causing great difficulties for officers doing appraisal work.

In addition, some difficulties are caused by objective factors from the economic and legal environment such as:

- Currently, our country's economy has many fluctuations, many policies and management mechanisms of the Government are still gradually being perfected. Besides, the world market also has many fluctuations, strongly affecting economic activities in general as well as credit activities of banks in particular.

- The system of legal documents related to lending activities, although improved, is still not really scientific and synchronous, not suitable for the competitive environment of the market mechanism. Lending procedures and conditions are often too cumbersome and complicated, causing banks to reject many loans.

- Legal issues are still slow to be implemented, have many shortcomings and overlaps, causing difficulties for credit officers in lending and handling secured assets.

* Internal causes.

- Although the credit staff is prioritized for lending, they are lacking in quantity and lacking in professional experience, which is one of the difficulties in expanding business lending. Currently, credit staff at the branch are mainly young, fresh out of school, so their experience in handling work and appraisal is very limited.

- Due to focusing on providing capital for traditional and reputable customers, the Branch has not focused on expanding loans to new customers.

- The business loan procedures for customers at the branch are not really convenient for customers to borrow capital.

- The quality of customer service is not timely compared to customer requirements. Due to the characteristics of borrowers in the area, they always want to be resolved quickly while the conditions do not fully meet the requirements of the bank.

- Collecting information for loan appraisal is very difficult and time-consuming. Although there is a credit information center of the State Bank of Vietnam (CIC), it only provides information on credit relations at credit institutions. Other information such as reputation in commercial relations, issues related to unit violations of the law, etc., is still not regularly and continuously provided by any agency.

Meanwhile, to appraise a plan or project, credit officers often have to collect information from many sources such as information on economic sectors, industry activities, market prices, customers, etc. Currently, the branch has not been able to collect the above information, but when conducting appraisals, the branch mainly relies on customers' financial reports, checking actual business plans and business performance, leading to decisions that may not be accurate.

- The branch does not have an effective bank marketing policy that is specific to the branch. Currently, the branch only relies on the marketing policy implemented by the parent bank, so it is very passive in approaching and attracting customers.

CHAPTER III

ORIENTATION OF GOALS AND SOLUTION SYSTEM TO IMPROVE THE QUALITY OF BUSINESS LOAN SERVICES AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE, QUANG TRI BRANCH

3.1. Orientation and goals to improve the quality of business loan services of the branch

Vietinbank's orientation for the period 2015-2020 is to become a modern, multi-functional banking and financial group according to international standards, focusing on improving the quality and efficiency of services, improving transaction procedures, especially retail banking services, and comprehensively approaching modern banking activities to best meet the needs of the economy.

In 2015, Vietinbank Quang Tri actively attracted all capital sources; focusing on stable deposits from organizations and individuals; continuing to do a good job of customer care and marketing, especially for customers with large deposits to achieve the goal of increasing mobilized capital by 40% compared to the previous year. The branch will also proactively grasp domestic and international market information, closely following the direction of the State Bank and the industry to increase credit growth in the right direction. Vietinbank Quang Tri promoted business loans, focusing on a number of trade, service, manufacturing and agricultural sectors.

In addition to mobilizing, improving credit quality and developing, diversifying banking products and services, Vietinbank Quang Tri has set a goal to better serve customers through consolidating, improving and developing the network and opening many new transaction points in the province. Vietinbank Quang Tri also continues to research and apply many convenient and quality services such as salary payment, payment of electricity, water and postpaid phone bills, purchase of prepaid phone cards, purchase of train tickets, purchase of goods, term deposits, ATM account inquiries via SMS Banking service... to increase versatility and flexibility for customers.

Vietinbank card brand. In which the specific goals for business loans at the branch are as follows:

1. Continue to strongly increase business loans based on capital mobilized from the market and select customers with effective investment projects/plans to use Vietinbank Quang Tri's services. In 2015, strive to increase business loans by 30% compared to 2014.

2. Strengthen loan risk management to improve credit quality, actively and thoroughly handle bad debt and overdue debt.

3. Business loan interest rate policy: maintain the floor interest rate policy, adjust interest rates for some reputable customers in credit relations and using the branch's products and services, and follow the operating mechanism of the State Bank at each time.

3.2. Solution system to improve the quality of business loan services

Currently, Vietinbank Quang Tri is the bank with the third largest market share in terms of outstanding loans in the area (7.5% of total outstanding loans in Quang Tri province), behind two banks: Agribank (49%) and BIDV Quang Tri (8.1%). Banks such as Sacombank, Vietcombank, BIDV and some other banks are making efforts to expand the market, develop the network of transaction offices and increase outstanding loans.

Through customer opinion surveys, using measurement tools, combined with analyzing the limitations and causes of the current status of loan service quality of Vietinbank Quang Tri branch, a system of solutions is proposed to improve the efficiency of business loan service quality at the branch as follows:

3.2.1. Diversify lending products towards improving the quality of traditional services and developing new services.

In the current fierce competition situation, to develop the business loan market share, branches must focus on developing modern and convenient business loan services for customers to meet the increasing needs of specific customers.

- For traditional business loan products, Vietinbank Quang

Management needs to maintain and improve quality by reducing procedures to help customers have access to branch capital, develop outstanding loans associated with safe and sustainable growth.

- Developing credit in the form of discounting commercial paper. Compared to the form of advance lending, this is a highly secure business for banks, and at the same time, customers' capital needs are satisfied in a timely manner. This product will have conditions to develop if the Commercial Paper Law is promulgated and truly comes into life. Banks also need to research and quickly introduce factoring services to the market because this service has been licensed and brings many benefits to customers as well as banks.

- Lending with collateral by insurance contracts is also a fairly safe service because the bank's loan is paid by the insurance companies themselves if the customer cannot repay the debt, but so far banks have not done so. With its existing advantages, the Branch only needs to research and design the insurance contract appraisal process to be able to perform the service.

- Further develop project financing and financial leasing towards important industry projects to contribute to economic restructuring.

- Develop appropriate product and service development strategies for each period, research the advantages and disadvantages of each service, and help customers use banking services most effectively.

3.2.2. Diversify loan structure

About the term

Diversity in terms of business loan balance structure will ensure sustainable growth for the Branch and limit risks in business lending activities. The bank's lending subjects are very diverse in terms of scale and industry, including all entities participating in the production and business process of the economy, so it is necessary to provide many forms of credit with corresponding terms to ensure meeting the requirements of customers as well as being reasonable in the bank's lending structure.

Diversify loan customers

Diversifying investment fields is a very necessary activity for banks, because through this activity, banks will disperse risks and improve credit efficiency. With the strength of being a large commercial bank in the area, Vietnam Joint Stock Commercial Bank for Industry and Trade, Quang Tri branch has many advantages in lending for business. However, it is still necessary to continue adjusting the lending and investment structure to suit the structure of economic sectors, especially the private sector. Therefore, expanding credit relations for this economic sector is extremely necessary.

3.2.3. Flexible use of interest rate tools

Interest rate is a very important factor to attract customers. In the current competitive conditions, determining a reasonable interest rate for each customer group helps banks increase their competitiveness, retain old customers and approach and attract new customers.

According to regulations, the interest rate is applied according to the Vietinbank system, however, the branch authority can decide to adjust the interest rate down from 0.5%/year to 1.5%/year. Therefore, the branch using this right should have an interest rate policy suitable for the customer.

Traditional, reputable customers who have performed well in credit contracts will enjoy a preferential interest rate according to Vietinbank's preferential program. That will contribute to strengthening long-term relationships with businesses, encouraging businesses to strengthen their relationships with the Branch, and actively do business effectively, paying principal and interest on time to the bank.

For new customers, customers who have credit relationships with other banks need to be attracted and motivated, branches in addition to applying preferential interest rate programs of the Branch system can reduce interest rates, creating an interest rate gap attractive enough for customers.

3.2.4. Modernization of facilities and equipment

Service quality depends on the environment and surrounding landscape, including: design and layout of the service counter to serve customers in the most convenient way. This has a significant impact on attracting customers to the bank. Therefore, the design includes the layout in the bank, equipment, furniture, space, color, ... all of these factors must create a friendly atmosphere and help eliminate the "barrier" between customers and bank staff.

A coffee table with a vase of flowers and a few magazines introducing the bank's activities, and a few small services while waiting are also an effective way to attract customers that not every place can do.

Banks should place more shelves for leaflets about credit products at the counter to increase information delivery to customers.

Banks can arrange racks for helmets and raincoats for customers to ensure aesthetics and convenience for customers when coming to do transactions on rainy days because the space from the parking area to the transaction lobby is completely uncovered.

The surface of the headquarters also needs to be repainted and renewed after many years of operation to create an impression of the bank's solidity as well as its ability to innovate and develop.

Besides, a modern bank, with full facilities and convenient transaction locations, may not have customers if there is no safe parking space. Currently, the roof of the bank employee parking area is damaged and needs to be repaired.

Invest in installing more ATMs in areas where businesses have made salary payments through bank accounts to increase customer convenience and improve operational efficiency.

Develop a strategy for developing banking technology to serve business operations, capital management, risk management, and inter-bank payment systems.

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