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Overview of Digital Banking Services for Individual Customers at Commercial Banks

CHAPTER I: BASIC THEORIES ON THE QUALITY OF DIGITAL BANKING SERVICES FOR INDIVIDUAL CUSTOMERS

1.1. Overview of digital banking services for individual customers at commercial banks

1.1.1. Overview of digital banking services


1.1.1.1. Concept of digital banking services

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Currently, e-commerce channel applications are quite popular and widely used by customers, especially in the economy where the banking sector is increasingly interested and focused as it is today. The application of e-commerce applications to banking products and services has created a new step in expanding distribution channels as well as expanding the scope of business development of banks. From there, the concepts of digital banking services were born and are increasingly popular on electronic information sites. First of all, we must find out what e-commerce is, because from the concept of e-commerce, scientists have proposed the concept of electronic banking services and from there, the concept of digital banking.

Overview of Digital Banking Services for Individual Customers at Commercial Banks

E-commerce is a concept commonly used to refer to the process of buying and selling a product (tangible) or service (intangible) through an electronic network, the most popular medium of e-commerce is the Internet. Through the network environment, people can establish payment transactions, buy and sell any product from goods to services, including banking services.

Through the above concept, we can also see that the current banking system has also developed, fully exploiting and applying the success of e-commerce to open up new directions for product and service development, thereby contributing significantly to increasing the competitiveness of commercial banks in the domestic and international financial markets. That is the reason why digital banking services are constantly developing in banking systems around the world in general and in Vietnam in particular today.

Digital banking service (Digibank) can be understood as a type of banking service product that customers do not need to go to the transaction office to meet the tellers but can perform money transfer transactions, bill payments, etc. anywhere through the use of smart electronic devices such as information technology, electronics, digital, magnetic, wireless transmission, optical, electromagnetic or similar technologies. If understood in a more objective and broader sense, Digibank is the combination of modern information technology with traditional banking services such as payment, transfer, savings, etc. In short, the combination of advanced information technology with banking communication services is a form of "e-commerce applied in banking business activities" .

The State Bank of Vietnam has also provided the following definitions of digital banking services: “ Modern and multi-utility banking services and products that are distributed to wholesale and retail customers quickly (online, continuously 24 hours a day and 7 days a week, regardless of space and time) through distribution channels (Internet and other terminal access devices such as computers, ATMs, POS, desktop phones, mobile phones, etc.) are called digital banking services”.

“ It can be seen that the concepts of electronic transactions are also extended to transactions on electronic means, not just limited to the scope of information on the internet or social networks, etc. Therefore, electronic transactions in banking services are transactions by electronic means, in other words, digital banking services are banking services that customers transact through electronic means. Thus, it can be said that the achievements in science and technology have had a relatively large impact on the development of electronic banking services as well as the development of banking services in the current economy. ”

“ In short, digital banking can be understood in the simplest and most intuitive way as follows: digital banking is the perfect combination of traditional banking activities with the development of advanced science and technology.

This is the inevitable result when the banking sector is receiving great attention from the State for development, combined with the rapid development of technology and the explosive development of the 4.0 industrial revolution .

1.1.1.2. Characteristics of digital banking services


At commercial banks today, electronic banking services are increasingly known and popularly used by customers, not only because they are easy to use but also because they are very convenient and superior. The outstanding features of digital banking services can be listed as follows:

“ Digital banking services are provided through electronic means and are performed in an automatic and closed process” : The implementation process of an electronic transaction is a closed process. Initially, the customer will need to register to use the service, then the customer will place an order through the steps and at the end, they will receive a successful notification screen when the transaction has been completed from the bank fee and the notification will be sent to the electronic device that the customer is using. Activities from receiving to responding are all set to be performed automatically through the bank's server system, which are smart and modern devices.

“Digital banking services have fast transaction processing speed”: Digital banking services used on smart electronic devices also allow users to perform traditional banking transactions in the fastest way with the shortest processing time. In the current era of digital technology development, people's time is limited, so fast and convenient products are always the top priority for customers. The birth of digital banking services has met the wishes of customers when they just need to sit at home, in a cafe, in the office, just click the mouse to be able to perform transactions quickly and the recipient can receive the transaction within a few minutes of processing. Time is gold, this saying is even more true in today's developed society. Currently, information technology is increasingly developing, combined with the emergence of modern machinery and equipment, so the time for a transaction to be processed can be calculated in seconds. Today, banks have set the goal of

The development of digital banking services is a top priority, so the costs invested in upgrading the core system are always focused and focused. From there, the digital banking services of commercial banks are always in a stable operating state, providing the fastest processing time, bringing satisfaction and trust of customers during use. Therefore, it can be affirmed that digital banking services are the strategic products of each bank.

“ Digital banking services are not limited by space or time”: When customers make transactions on digital banking services, they do not need to provide complicated documents or go directly to the transaction counter to sign documents related to the transaction, write a money transfer form, wait in line, they just need to make the transaction right away on the computer, phone, make a phone call at home, at the office or anywhere the customer wants. Customers can save a lot of time traveling, waiting in line for transactions, thereby seizing more opportunities. With modern means, digital banking services can bring customers convenient service experiences that are no different from when customers transact sitting at the counter. When the transaction is completed, customers can go into the application to check the transaction without having to go to the counter to check again. Everything is processed quickly and neatly, helping customers not miss investment opportunities. For individual customers who have their own businesses, buying and selling goods becomes easier and more convenient, making the opportunity to get rich more within reach.

“Digital banking services have the lowest transaction costs”: This is even more evident when we look at the fee schedules of banks. Transactions made on digital banking applications are cheaper than over-the-counter transactions. The main reason why the cost of transactions on digital banks is cheaper is because banks do not have to pay for rental space, rent transaction offices in prime locations, do not have labor costs, office supplies costs, or counting costs. Because there are no additional fees, transactions on electronic banking are reduced to the maximum cost and it is the customers using the service who benefit from this.

“Digital banking services are global”: The emergence of digital banking services has helped the Vietnamese economy increase its ability to integrate with the world economy. With the rapid development of the internet, customers can not only shop domestically but also on global e-commerce sites. The more modern and convenient digital banking services are, the more the economy integrates, helping to bring economic development potential to the country.

From the characteristics of digital banking services, we can see the importance of developing digital banking services in promoting economic development. These are also the aspects that banks should focus on to develop and improve the quality of banking services, contributing to promoting the national economy.

1.1.1.3. The role of digital banking services


The emergence of digital banking services can be considered an important turning point in the provision of banking products and services to the economy. This is also a service that brings high efficiency and high profits to related parties.

For banks:


Firstly, digital banking services have helped banks reduce costs such as renting locations for transaction offices, labor costs, facility costs, stationery costs, etc. Secondly, the emergence of digital banking services has increased customers' demand for online shopping, leading to a decrease in the need for cash spending. Customers who need to deposit savings do not need to go to the counter but can operate directly on digibank, thereby increasing the amount of money customers deposit at the bank rapidly, which is the resource for banks to invest to make a profit and increase capital for the bank. Third, customers using digital channels also helps reduce errors and losses for tellers when they have to perform too many transactions for customers, while reducing the number of customers transacting at the counter, bringing satisfaction to customers when they do not have to wait too long each time they want to make a transaction, helping to retain customers for a long time with the bank, and also helping to increase the ability to circulate cash flow in the economy, helping the economy to grow more and more.

For customers:


When customers make transactions on digital banking channels, they will save time and the cost of making transactions will be cheaper, such as transaction costs on digital banking channels are cheaper than at the counter, and there are no additional travel costs, etc. The customer's transaction volume will not be limited per day, customers can make many transactions at the same time, the transaction status is also displayed, creating convenience during the customer transaction process. When there are errors, customers can also detect them early and immediately notify the bank so that the bank can take measures to support customers promptly to minimize risks for customers.

For the economy:


Transactions on digital banking channels also help the circulation of money to take place quickly, helping to promote economic development . When shopping online, with just one click, customers have successfully purchased, stimulating customers to shop and spend, especially during the complicated Covid epidemic, the economy is also significantly affected. Digibank service allows customers to reduce the amount of cash transactions, thereby helping sellers quickly receive payment, regardless of geographical distance, so they can rest assured to deliver goods as quickly as possible, and recover capital early to invest in continued production or trading. Thus, online payment services help promote capital turnover, or in other words, increase the circulation of money and goods.

Digital banking services help modernize the payment system. Digital banking services make transactions simple and fast, transaction costs are significantly reduced and security is more guaranteed, and have made payments much more convenient.

Digital banking services contribute to promoting the development of commerce, especially e-commerce. Thanks to modern payment methods through Digibank, businesses have more choices in commercial transactions. Online payment services are the foundation of e-commerce systems, so diversifying digital banking services will perfect e-commerce."

1.1.1.4. Subjects of digital banking services


“ Division by products and services of digital banking: Subjects of digital banking services include: Customers borrowing from banks, customers depositing money in banks, customers performing domestic and international money transfer services, customers performing domestic and international money transfer services, customers paying phone bills, etc.

Classification by customer characteristics: Digital banking service subjects include: Individual customers, corporate customers (including small & medium enterprises and large enterprises), financial institutions and other financial organizations.

Regardless of the perspective, currently, at commercial banks, digital banking service tools have covered all customers on most of the bank's products and developed new services in addition to traditional services .

1.1.2. Concept and characteristics of individual customers of commercial banks


1.1.2.1. Concept of individual customers of commercial banks and customer satisfaction


“ A commercial bank's individual customer is a person or a group of people who have, are, or will buy and use the bank's products and services to serve their personal purposes. ”

1.1.2.2. Characteristics of individual customers of commercial banks


- “ Individual customers of commercial banks are often large in scale and constantly increasing.

- In terms of age, gender, income, and educational level, individual customers at commercial banks are often very diverse, which has created diversity and richness in customer requirements for the quality of digital banking services.

- Individual customers of commercial banks will use banking products and services for personal purposes that are constantly changing .

1.1.3. Digital banking services for individual customers


1.1.3.1. Concept of digital banking services for individual customers


“ Digital banking service is a service that customers can log in remotely to query information, or use for payment and transfer purposes based on bank accounts that have been issued and registered for use with the bank. The quality of digital banking services is an overall assessment of customers' comments and it is also a measure of the success of the bank's products and services, whether those products are known and widely used by customers. Currently, many studies have mentioned the outstanding attributes of digital banking service quality. Kayabaşı et al. (2013) stated that the quality of digital banking services includes 4 aspects: feedback, ease of use, product catalog and security. According to Tran Duc Thang (2015), the quality of digital banking services represents the customers' overall assessment of digital banking services through 3 aspects: online customer service quality, online information system quality and banking product and service quality. Hammoud et al. (2018) identified four dimensions that influence e-banking service quality: efficiency and ease of use, trust, responsiveness and community, and security and privacy.

Satisfaction is a customer's evaluation of whether a product or service has met their needs and expectations. According to Hansemark and Albinsson (2004), satisfaction is a customer's overall attitude toward a service provider, or emotional response.

1.1.3.2. Characteristics of digital banking services for individual customers


“ Digital banking services for individual customers have all the characteristics of digital banking services. In addition, because the target customers are individuals, digital banking services for individual customers also have their own characteristics.

Firstly, the customer base is individuals and households, which accounts for a large number. This is a potential market segment due to the increasing number of customers and the increasing demand of customers thanks to the modernization of life and the increasing living standards of people. Therefore, the big challenge for products

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