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Personal Customer Service of Vietnam Commercial Bank


It is possible for bank managers to attempt to attract new customers by developing strategies to overcome the switching barriers of competing banks to increase market share.

7. Structure of the thesis

The thesis structure includes 5 chapters as follows:

Chapter 1 Research Overview

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The content of this chapter summarizes the research situation of the thesis as well as introduces the research sample, research method, and also presents the research gap of the thesis and summarizes the results achieved by the thesis.

Chapter 2 Theoretical basis.

Personal Customer Service of Vietnam Commercial Bank

This chapter analyzes previous research on switching behavior and examines the factors influencing switching behavior in the banking sector.

Chapter 3 Research methods.

The content of this chapter includes how to select variables, build models and research hypotheses, and statistical methods to test research hypotheses.

Chapter 4 Research results.

This chapter presents quantitative research results to identify factors influencing individual customer conversion behavior.

Chapter 5 Recommendations and solutions .

The content of this chapter summarizes the thesis in terms of limitations, implications for building solutions for banks and future research directions.

Conclude

In the introduction of the thesis, the urgency of the topic, research objectives, research questions, research methods were presented. In addition, the thesis also summarized domestic and foreign studies related to the topic. On that basis, the author also pointed out the gaps in the research and gave the expected results as well as the structure of the thesis.


CHAPTER 1 OVERVIEW OF THE RESEARCH PROBLEM


This chapter introduces the personal customer service of Vietnamese commercial banks and also introduces an overview of research on the switching behavior of personal customers.

1.1 Personal customer service of Vietnamese commercial banks

Personal customer service of commercial banks is all services and products provided to individuals and households through the branch network. It can also be understood that personal customer service of commercial banks is the service that provides banking utilities to consumers. The target of personal customer service is therefore extremely large, including individuals and households, the means are associated with high technology and allow service at any place, at any time and for multiple purposes, customers can access directly through electronic telecommunications and information technology.


A customer using personal customer service can use many modern banking services at the same time, including credit card loans, multiple overdrafts, salary payments through accounts, ATM withdrawals, automatic monthly savings account deductions, electricity, water, and other living services through bank accounts, without having to go directly to the bank, but transacting through personal means such as the internet, mobile phones, etc. These service utilities are used globally. Therefore, personal customer service has the following characteristics:

Firstly, the target of personal customer service is large. The target of personal customer services of commercial banks are individuals and households. This is a potential market segment due to the large number of customers and the increasing demand of customers thanks to the modernization of life and the increasing living standards of people. Besides, it brings the opportunity to diversify non-banking products and services and especially personal customer services are more socialized than corporate customer services due to the large number of customers.


Second, the scale of personal customer service is not large. Because the target of personal customer service is individuals and households, the value of each service is usually not large. Customers are individuals, so their needs are not repetitive, for example, they only buy a house once, so they only borrow once to buy a house, and cannot regularly borrow money from the bank to finance working capital like businesses. Therefore, to be effective, in addition to increasing the number of customers, banks need to build a highly integrated service system, combining the provision of many products to a customer.

Third, the science and technology in providing personal customer services is modern technology. Customers of this type of service are often not concentrated in a wide geographical area, they want to use banking services but also want to save time and travel costs, they want to use services easily and quickly but require accuracy and safety. Therefore, personal customer services require a modern information technology platform to be able to meet.

1.2 Overview of research on conversion behavior

Customer switching means that customers leave their current service provider and adopt another service provider and switching behavior has become a focus of research in the service sector Garland (2002a). Several researchers have investigated the reasons why customers switch service providers.

Naveed Ur Rehaman Khan (2010) studied the reasons for switching banks in Pakistan with a sample of 500, using factor analysis and regression techniques concluded that there are seven factors influencing the decision to switch banks. Those factors are high price, less reputable bank, poor service quality, distance, effective advertising of other banks, distance has a positive correlation with switching while high switching cost factor has a negative correlation with switching intention. In addition, some recommendations for retail banks are given to bank managers. One is that high price and distance are the most important factors influencing bank switching, so managers must consider these two factors in making business strategies, banks need to open more branches in small roads with reasonable prices. Two is that price and service quality are concerns


The top in business, so banks should come up with a strategy that includes price and quality. Third, banks should encourage their customers to speak well of the banking services they are using to their relatives and friends because this is a way to promote the brand through word of mouth. Fourth, banks should operate in the best way so that customers always think that the values ​​they receive here cannot be found anywhere else. Finally, to attract more customers and retain customers, banks need to develop new services.

Minchal Clemes et al. (2010) studied the bank switching behavior of Chinese bank customers. This study was conducted in Jiaozuo City, Henan Province, China using a convenience sample survey and identified seven important factors affecting the bank switching behavior of Chinese customers. The study used factor analysis and logistic regression techniques to analyze the data. The results of the study showed that price, reputation, service quality, effective advertising, involuntary switching, distance and switching costs affect customers' bank switching behavior and that young, high-income customers are more likely to switch banks. This study was conducted in one province of China, so the demographic factors were not diverse.

Zhang (2009) studied and analyzed the factors affecting the decision to switch retail banks in China. Data were collected using a convenience sample of 421 customers who switched banks. The factors affecting bank switching behavior included price, reputation, service quality, effective advertising of banks, unwillingness to switch, distance, switching costs, and demographic characteristics. Factor analysis and logistic regression were used to analyze the data, identify and rank the factors affecting customers' switching. The results showed that price, reputation, service quality, effective advertising, unwillingness to switch, distance, and switching costs affected the decision to switch banks. The study also found that young and high-income groups were more likely to switch banks.

Lees (2007) studied bank switching in New Zealand using a questionnaire survey with a sample of 732. The results showed that there were three main factors influencing


to the decision to switch banks. These are maximizing utility, unmet expectations and other factors, in which maximizing utility has the highest impact (32%) on the decision to switch, followed by unmet expectations (31%). The study also shows that when customers switch because the bank does not meet their expectations, nearly 70% do not care about the old bank anymore. In the case of customers switching to maximize utility, about 50% do not care about the old bank.

Colgate and Hedge (2001) in their study “An investigation into the switching process in retail banking services” found that customer loss can have a negative impact on a bank’s market share and profitability, with empirical evidence drawn from 694 survey samples collected from bank customers in Australia and New Zealand. Reasons for switching banks were classified into three main areas: service failures, price problems and service rejection. The results showed that the main reasons for switching banks were price problems, service quality failures and poor service knowledge and attitude. Of which, price problems had the strongest impact. Of which, unreasonable costs and fees were the two most important components of price problems. Next, savings interest rates and interest rates paid to banks when borrowing were important factors to consider. Poor service knowledge and attitude factors had the second highest impact on switching decisions. In particular, inflexible staff and rude staff of poor service knowledge and attitude factors have the highest impact. Service quality errors factor ranked third in the reasons for customers to switch banks.

Gerrard, P and Cunningham, J,B (2000) studied the reasons for switching banks in Singapore based on the study of Keaveney (1995). The results showed that there are six important factors in switching banks: inconvenience, service quality errors, price, poor service attitude knowledge, objective factors and impact on competitors. In which, inconvenience, poor service attitude, price are the factors that have the highest impact on switching.

Steward (1998), Factors influencing customers' switching behavior decisions in the banking industry can be numerous and complex, the study has given four reasons for switching behavior in service usage including: switching costs and procedures.


administrative procedures, facilities, information systems and security, and customer service.

Mittal and Laser (1998), studied why customers switch banks with the relationship between satisfaction and loyalty, and the study showed that there is a correlation between customer satisfaction and loyalty with bank switching behavior, when satisfaction increases, customer loyalty increases, leading to less switching.

Levesque McDougall (1996) investigated customer switching behavior and found that price and geographic inconvenience were important factors that stimulate customers to switch their banking services.

Zeithaml et al. (1996), in their study on the behavioral consequences of service quality, the authors proposed a model of the impact of service quality on customer switching behavior. The empirical results tested showed strong evidence that they are influenced by service quality.

Keaveney, (1995 ) in the study “Customer switching behavior in online services: An exploratory study of the role of selected attitudinal, behavioral, and demographic factors”, reported the results of two field studies, conducted among two randomly selected samples of online service users, investigating the extent to which behavioral selection (information that customers use when making online service decisions, their service usage), attitudes (risk tolerance bias) and demographic factors (income and education) are effective in distinguishing between service switchers and non-switchers. Keaveney developed a general model to investigate the factors influencing customers’ switching behavior between service providers. It includes eight groups of causes related to service problems and non-service factors that stimulate customers to switch service providers. The groups of factors include: price, inconvenience, core service inadequacy, customer dissatisfaction, customer reaction, ethics, competition, and involuntary switching behavior. However, the study was based on only 45 service types including restaurants, hotels, airlines, and travel agencies. Therefore, the generalizations of Keaveny (1995) may not be applicable to the operations of commercial banks.


Gierl (1993 ) found that the percentage of brand switching was even greater than the switching rate of dissatisfied customers in a commercial setting. However, dissatisfied customers may choose to stay because there will be no alternative better service provider (Bendapudi and Berry, 1997).

Reichheld, FF and Sasser, E. (1990) in their book Zero Defections: Quality Comes to Services, pointed out that increased service fees and poor management lead to customer loss, and that companies can increase profits by 25% to 85% if they reduce their customer defections by 5%. Therefore, commercial banks have recognized and invested in building customer loyalty as an important competitive factor. Many banks have failed when they only focused on attracting new customers and forgot to retain old and current customers.

Some studies have found a positive relationship between switching barriers and customer loyalty (Julander and Soderlund 2003, Burnham 2003,..) These studies consider switching barriers as factors that make customers think and calculate before deciding to switch to another service provider. These studies also conclude that the higher the switching barrier, the higher the loyalty. In Vietnam, Nguyen Ho Ngoc Han, Pham Huynh Mai Thanh, Pham Ngoc Thuy (2011) also studied the relationship between switching barriers and customer loyalty - hotel service industry, quantitative research results also showed that switching barriers have a positive impact on loyalty.

Previous studies have shown that customer switching behavior in the banking industry is influenced by many factors and has been studied in developed countries. However, very few similar studies have been conducted in Vietnam. Due to the differences in economy, society, politics, and culture, it is very important to investigate the switching behavior of customers. However, as mentioned above, studies have shown that loyalty and switching barriers are closely related, so the thesis also considers additional studies related to customer loyalty.

Typical domestic studies

Nguyen Minh Loan (2018) Factors affecting customer loyalty in retail banking, Five basic components of service quality


These are: One, tangible means: Shown through the brand, image, documents, equipment and machinery to perform the service and the appearance and uniform of the service staff; Two, reliability: Showing the ability to perform the service appropriately and on time the first time; Three, responsiveness: The level of desire and readiness to serve customers promptly; Four, service capacity: Professional knowledge and polite, friendly style of the staff, readiness and especially quick resolution of customer complaints and questions; Five, sympathy: Showing care, concern, and encouragement to each individual customer. Service quality is an important factor affecting customer loyalty. Among the quality components, the bank's ability to perform promised services accurately and in a friendly manner, the bank employees' willingness to help customers and provide timely service, the bank employees' knowledge, courtesy and their ability to communicate to instill confidence in customers are the most important factors influencing customer loyalty.

Le Chi Cong (2014) has studied and built the loyalty of tourists to Vietnam's sea tourism. Based on the theory of consumer behavior, tourist loyalty in the tourism sector. The thesis focuses on clarifying the theoretical basis of tourist loyalty, influencing factors, thereby proposing 03 new research models and testing, specifically: Firstly, it is necessary to approach the quality of sea tourism destinations from the perspective of components (constitutive factors) as well as their different levels of influence on satisfaction and loyalty of tourists at sea tourism destinations. Secondly, factors belonging to the strength of attitudes (knowledge about destinations, interest in sea tourism, psychology of exploring new tourist destinations) have a moderating effect (ie making the relationship between satisfaction and loyalty of tourists to sea tourism destinations increase or decrease differently). Third, factors related to demographic characteristics (age and income) have a moderating effect (i.e., making the relationship between satisfaction and loyalty of tourists to coastal tourism destinations increase or decrease differently). Regarding research methods: The thesis has applied a research method combining qualitative and quantitative (multivariate research model taking into account intermediate and moderating variables), with data processing techniques using AMOS software in tourism research.

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