Chapter 2: THEORETICAL BASIS AND RESEARCH METHODOLOGY
2.1. Theoretical basis
2.1.1. Commercial Bank
2.1.1.1. Concept of Bank
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A bank is a financial institution and financial intermediary that accepts deposits and channels those deposits into lending activities, directly or indirectly through capital markets. A bank is an intermediary connecting customers with capital deficits and customers with capital surpluses. According to the nature and objectives of operation, types of banks include Commercial Banks, Policy Banks, and Cooperative Banks.
2.1.1.2. Concept of Commercial Bank
Commercial Bank is a type of bank that performs all banking activities and other business activities for the purpose of profit. Thus, the concept of Commercial Bank can be understood as follows: Commercial Bank is a type of bank that transacts directly with companies, enterprises, economic organizations and individuals, by receiving deposits, savings, and then using that capital to lend, discount, provide means of payment and provide banking services to the above subjects.
2.1.1.3. Functions of the Bank
* Credit intermediary
Credit intermediation is the most important and basic function of Commercial Banks, it not only shows the nature of Commercial Banks but also shows the main task of Commercial Banks. In this function, the "credit intermediary" function of Commercial Banks plays the role of an intermediary to concentrate and mobilize temporarily idle monetary capital sources in the economy, turning them into credit capital sources for lending (credit granting) to meet the capital needs of business and investment capital for economic sectors and the capital needs of consumption of society.
* Payment intermediary
Payment intermediary is a commercial bank that acts as an intermediary to carry out payment transactions between customers, buyers, sellers, etc. to complete economic and commercial relations between them. Payment intermediary functions include opening transaction deposit accounts for organizations and individuals, managing and providing payment means for customers, organizing and controlling the payment process between customers, etc.
* Providing banking services.
Banking services that Commercial Banks provide to customers are not only purely for commissions and service fees, but banking services also support the main activities of Commercial Banks, first of all credit activities. Therefore, Commercial Banks only provide services related to banking activities, including treasury services and domestic fast money transfers, remittance services and international fast money transfers, trust services, investment consulting services, electronic banking services, etc.
2.1.2. Services and service characteristics
2.1.2.1. Service concept
Service is a popular concept in marketing and business. There are many ways to define service, but according to Valarie A Zeihaml and Mary J Bitner (2000), "service is the behavior, process and way of performing a certain job to create value for customers to satisfy their needs and expectations".
2.1.2.2. Service characteristics
Services are unique products with many characteristics that are different from goods such as intangibility, heterogeneity, inseparability and perishability. These characteristics make services difficult to quantify and cannot be identified by the naked eye.
2.1.3. Savings deposits
2.1.3.1. Concept
According to the Regulation in Article 6 No. 1160/2004/QD-NHNN dated September 13, 2004 of the Governor of the State Bank promulgating the regulations on SAVINGS DEPOSITS .
Savings are personal funds deposited into a savings account, confirmed on a savings card, earning interest according to the regulations of the savings deposit receiving organization and insured according to the provisions of the law on deposit insurance.
A depositor is a person who conducts transactions related to savings deposits. A depositor can be the owner of a savings deposit or a co-owner of a savings deposit, or the guardian or legal representative of the owner of a savings deposit or of a co-owner of a savings deposit.
The owner of the savings deposit is the person whose name is on the savings card.
Joint owners of savings deposits are two or more individuals whose names are on the savings card.
Transactions related to savings deposits are transactions of depositing, withdrawing savings deposits and other transactions related to savings deposits.
A savings account is an account in the name of an individual or several individuals and is used to make a number of payment transactions.
A savings card is a certificate confirming the ownership of the savings deposit owner or co-owner of the savings deposit for the amount deposited at the savings deposit receiving institution.
Deposit term is the period from the date the depositor begins depositing money into the savings deposit receiving organization to the date the savings deposit receiving organization commits to paying off the principal and interest of the savings deposit.
2.1.3.2. Classification
Savings deposits are classified according to the term of deposit, including demand deposits and term deposits. The specific term of deposit is determined by the organization receiving the savings deposit.
- Non-term savings deposits: For this type of deposit, the depositor has the right to withdraw money at any time they want. Customers choose non-term savings deposits for the purpose of ensuring asset safety and convenience in making payment transactions through the bank.
- Term deposits: This is a type of deposit that customers can only withdraw money upon maturity (however, in current conditions, banks still allow customers to withdraw money before maturity and customers will receive interest without a term). For this type of deposit, the depositor has a specific purpose of receiving interest, so customers will choose a bank with higher interest rates and more incentives to deposit money. For that reason, banks often use interest rate tools to attract this source of capital. Competition on interest rates has become one of the fiercest and most common types of competition in the current integration conditions, and whichever bank has higher interest rates, more promotions, and better marketing, that bank will have an advantage in attracting customer deposits.
In Vietnam, savings deposits are applied by commercial banks in a very diverse way such as: 24-hour savings deposits, flexible savings, cumulative savings, bonus savings, savings for the elderly, savings for women...
2.1.3.3. Savings deposit procedures
* Procedures for first time savings deposit
Depositors must directly make deposit transactions at the savings deposit receiving organization and present the following documents:
+ For depositors who are Vietnamese individuals, they must present their identity card.
+ For depositors who are foreign individuals, they must present a passport with a remaining validity period longer than the deposit term (for cases of visa-free entry and exit); present a passport with a visa with a remaining validity period longer than the deposit term (for cases of visa-free entry and exit).
+ For depositors who are guardians or legal representatives, in addition to presenting an identity card or passport, they must present documents proving the status of guardians or legal representatives of minors, people who have lost or have limited civil capacity.
- The depositor registers a sample signature and keeps it at the savings deposit receiving organization. In case the depositor cannot write in any form, the savings deposit receiving organization will instruct the depositor to register a code or special symbol in place of the sample signature.
- The depositor performs other procedures as prescribed by the savings deposit receiving organization.
- The organization receiving savings deposits carries out the procedures for receiving savings deposits, opening savings deposit accounts and issuing savings cards to first-time savers after completing the procedures.
* Procedures for subsequent savings deposits
- Procedures for receiving savings deposits are prescribed by the savings receiving organization in accordance with the characteristics, business conditions, and management model of the savings receiving organization, ensuring convenient, accurate, and safe deposit receiving.
- For deposit transactions into issued savings cards, depositors can do it directly or send it through another person according to the regulations of the savings deposit receiving organization.
2.1.3.4. Regulations on savings cards
* Savings card must have the following main elements:
- Name of the organization receiving the savings deposit, currency type, amount, deposit term, deposit date, payment due date (for term savings deposits); interest rate, interest payment method, interest payment time.
- Full name and address of the owner or co-owner of the savings deposit, identity card or passport number (except in cases where the owner or co-owner of the savings deposit is not yet of age to be issued an identity card or passport).
- Full name, ID card address or passport of the guardian or legal representative (only applicable in cases where the depositor is the guardian or legal representative).
- Card number, seal, signature of the Director of the savings deposit receiving organization or the person authorized by the Director, signature of the teller of the savings deposit receiving organization.
- Regulations on transferring ownership, mortgaging savings cards at the savings deposit receiving organization, and handling of risky cases.
- Other notes and instructions from the organization receiving savings deposits.
2.1.3.5. Place to receive and pay savings deposits
- For each savings card, the savings deposit receiving organization is allowed to receive and pay savings deposits at the transaction location where the card is issued or other transaction locations of the savings deposit receiving organization.
- In case of receiving and paying savings deposits for each savings card at many transaction locations, the savings deposit receiving organization must have conditions regarding facilities, techniques, technology and staff qualifications to ensure convenience, accuracy, confidentiality, asset safety for depositors and operational safety for the savings deposit receiving organization.
2.1.3.6. Interest rate and interest payment method
- The organization receiving savings deposits regulates the savings deposit interest rate in accordance with the market interest rate, ensuring business efficiency and operational safety of the organization receiving savings deposits.
- Savings interest rates are determined on a yearly basis (360 days).
- Interest payment method is determined by the organization receiving savings deposits.
2.1.3.7. Withdrawal of principal and interest from savings deposits
- The organization receiving savings deposits regulates the savings deposit interest rate in accordance with the market interest rate, ensuring business efficiency and operational safety of the organization receiving savings deposits.
- Interest rates on savings deposits are determined on a yearly basis (360 days).
- Interest payment method is determined by the organization receiving savings deposits.
2.1.3.8. Form of savings deposit
- The form of savings deposits classified by deposit term includes demand savings deposits and term savings deposits. The specific deposit term is determined by the organization receiving the savings deposit.
- Savings deposits are classified according to other criteria as prescribed by the organization receiving savings deposits.
2.1.3.9. Procedures for withdrawing principal and interest from savings deposits
- The depositor performs the following procedures:
+ Present savings card.
+ Submit a withdrawal form with a signature that matches the sample signature registered at the savings deposit receiving organization.
+ For depositors who are Vietnamese individuals, they must present their identity card. For depositors who are foreign individuals, they must present their passport with a remaining validity period longer than the deposit term (for cases of visa-free entry and exit); present their passport with a visa with a remaining validity period longer than the deposit term (for cases of visa-free entry and exit).
+ For depositors who are guardians or legal representatives, in addition to carrying out the prescribed procedures, the depositor must also present documents proving the status of guardian or legal representative of a minor, a person without civil act capacity, or a person with limited civil act capacity.
+ Depositors carry out other procedures as prescribed by the savings deposit receiving organization.
- The organization receiving savings deposits shall prescribe procedures for paying savings deposits in accordance with its business characteristics and conditions, ensuring that the payment of savings deposits is in accordance with its business characteristics and conditions, ensuring that the payment of savings deposits is accurate and safe.
- The currency for paying principal and interest (Vietnamese Dong or foreign currency) is the currency in which the depositor deposited.
- For savings deposits in foreign currency, upon request of the depositor, the savings deposit receiving organization may pay principal and interest in Vietnamese Dong at the exchange rate prescribed by the savings deposit receiving organization.
- Payment for odd foreign currencies is made according to the regulations of the savings deposit receiving organization.
- For term savings deposits, in case the payment due date falls on a holiday as prescribed by law, the principal and interest payment of the savings deposit shall be made on the first following working day.
2.1.4. Find out about customer satisfaction level
2.1.4.1. Concept
Customer satisfaction is considered the foundation of marketing's concept of satisfying customer needs and wants (Spreng, MacKenzie, & Olshavsky, 1996). Satisfied customers are an important factor in maintaining long-term business success and appropriate business strategies to attract and retain customers (Zeithaml et al., 1996).
That is, the customer's known experience when using a service and the results after the service is provided. In other words, the level of customer satisfaction depends on the effectiveness or benefits of the service product.
2.1.4.2. Classification of customer satisfaction
Customer satisfaction is of three types and they have different impacts on service providers:
* Positive satisfaction (Dermanding customer satisfaction): this is a positive satisfaction and is reflected through the increasing demands of service providers. For customers with positive satisfaction, they and the provider will have a good relationship, trust each other and feel satisfied when transacting. Moreover, they also hope that the service provider will be able to meet their increasing needs. Therefore, this is a group of customers who easily become loyal customers of the service provider as long as they see many improvements in providing services to them. The positive factor is also shown in the fact that from the constantly increasing demands of customers, the service provider strives to improve the quality of service to become more and more perfect.
* Stable customer satisfaction: for customers with stable satisfaction, they will feel comfortable and satisfied with what is happening and do not want any changes in the way the service is provided. Therefore, these customers are comfortable, have high trust and are willing to continue using the service.
* Passive satisfaction (Resigned customer satisfaction): customers with passive satisfaction have little trust in the service provider and they think it is very difficult to improve the service quality and change their requirements. They feel satisfied not because their needs are completely satisfied but because they think it is impossible to ask for further improvement. Therefore, they will not actively contribute ideas or show indifference to the service provider's improvements.
In addition to classifying customer satisfaction, the level of satisfaction also greatly affects customer behavior. Even if customers have the same positive satisfaction but the level of satisfaction is only at the satisfied level, they may still find another supplier and not continue to use the service. Only customers with the highest level of satisfaction at the very satisfied level will definitely be loyal customers.
Therefore, when studying customer satisfaction, making customers satisfied is very necessary, but helping them feel completely satisfied is much more important. For passively satisfied customers, they can leave at any time while the group of customers who feel completely satisfied will be loyal customers of the bank. This understanding will help to have flexible measures to improve service quality for each different customer group.
2.1.5. Customer satisfaction research model
2.1.5.1. A few words about the SERVQUAL service quality model
The SERVQUAL model (Parasuraman, 1988) is the most popular service quality research model and is widely applied in marketing research. According to Parasuraman, service quality cannot be generally determined but depends on the customer's perception of that service and this perception is considered on many factors. The SERVQUAL model is built on the perspective that perceived service quality is a comparison between expected values, expectations and perceived customer values.
SERVQUAL considers two main aspects of service quality, service outcome and service delivery, which are studied through twenty-two scales.