Solutions for Developing International Banking Services to Improve the Operational Efficiency of Vietnamese Banks

products, applications and technology transfer with foreign financial institutions; promote the commercial presence of Vietnamese commercial banks in regional and global financial markets.

- The State Bank implements effective and proactive monetary policy: manages exchange rates and interest rates in sync with the development of the money market in accordance with international practices and Vietnam's practical conditions, closely linking exchange rate management and interest rate management.

- Renewing foreign exchange management policies: narrowing the scope of foreign currency use in Vietnam and gradually reducing dollarization; perfecting the legal framework on foreign exchange to create favorable conditions for the development of the foreign exchange market.

5.2. Solutions for developing international banking services to improve the operational efficiency of Vietnamese commercial banks

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5.2.1. Expanding foreign currency capital mobilization services of banks

According to the research results, the variable TSNNT has a positive correlation with HQKT and HQKTT, this result proves that banks should increase capital mobilized in foreign currency to improve HQKT. To improve the ability to mobilize capital in foreign currency, in addition to a reasonable interest rate policy, Vietnamese commercial banks need to consider expanding their scale of operations through networks and branches that are appropriately distributed according to geographical areas nationwide as well as countries in the region. With the development of overseas investment activities of Vietnamese enterprises as well as overseas Vietnamese living around the world, Vietnamese commercial banks can consider expanding branches in countries such as: Laos, Cambodia, Myanmar, the US, Australia... when there are suitable conditions.

Remittances are also an area that many commercial banks are interested in. Since 2003, the State Bank has allowed joint stock commercial banks to establish affiliated remittance companies, with legal status, independent accounting with their own capital such as DongAbank's remittance company, Sacombank's remittance company... Conditions for establishing representative offices abroad to promote remittance channels are also easier. With the widespread network of remittance companies, the source of remittances into the country is increasing and accounting for a large turnover in the current account balance, mainly from

The US, Canada and some markets with a large number of exported workers such as Korea, Taiwan, Malaysia... Since 2000, the implementation of Decision No. 170/1999/QD-TTg and Circular No. 02/2000/TT-NHNN7 has eliminated the requirement for remittance recipients to pay irregular income tax, helping to increase the amount of remittances sharply. Beneficiaries can sell foreign currency to credit institutions, transfer money to personal foreign currency deposit accounts or save foreign currency. Therefore, commercial banks need to have appropriate policies to attract remittances to banks, encourage overseas Vietnamese to send money to relatives in Vietnam as well as call on overseas Vietnamese to invest in business in Vietnam with preferential investment policies for overseas Vietnamese on taxes, land rents, etc., prioritizing areas such as information technology, agricultural processing, etc.

From the research results, increasing equity is necessary because the research shows that the variable of equity is positively correlated with operating performance, focusing on increasing the ratio of equity to total assets to ensure the capital safety ratio, in the short term to increase liquidity, asset quality and ensure stable development of banks and gradually increase market share, contributing to improving operating performance, increasing competitiveness and increasing business profits. Equity accounts for a small proportion of the total capital of banks but plays a key role in the business activities of banks. It determines the scale, stature of banks, competitiveness, tolerance and risk resistance in the operations of banks. The larger the equity, the more opportunities banks have to expand their scope of operations, diversify products, enhance the position of banks, create trust for customers, thereby attracting more deposits in both domestic and foreign currencies. Therefore, increasing equity is also a solution to expand foreign currency capital mobilization activities of banks.

According to the research results, the QMTS variable has a positive correlation with HQHD. According to the law of economic efficiency due to scale, the larger the bank, the more advantageous it is in saving costs, thereby increasing profits and increasing business efficiency. The larger the bank, the more favorable the conditions for expanding domestic and international banking services, expanding the operating market both domestically and abroad.

water, creating many different products, many branch systems to attract customers. However, banks need to be careful, when expanding the scale, they need to consider the quantity and quality of resources commensurate with the banks, avoiding the situation where the expansion of scale encounters more risks beyond the control of the bank's management board. So, expanding the scale is also a solution to develop the bank's foreign currency capital mobilization activities.

5.2.2. Foreign currency credit restrictions

According to the research results, the variable CVNT has an inverse relationship with HQKT for Group 1 banks, which are banks with large foreign currency lending turnover. This research result is completely correct according to the current foreign currency lending policy of the State Bank. In the period 2008-2011, the State Bank has continuously made changes to the subjects eligible for loans and regulations for credit institutions on foreign currency lending, typically Decision 09/2008/QD-NHNN, Circular 25/2009/TT-NHNN, Decision No. 74/2010/QD-NHNN, Decision No. 750/2011/QD-NHNN .... These moves show that the State Bank's policy is to strengthen control and limit foreign currency credit to create stability in the foreign currency market. Restricting and eventually eliminating foreign currency credit can be done according to a defined roadmap consisting of two stages: first restricting foreign currency lending, then completely eliminating foreign currency credit and switching to foreign currency trading relations.

In credit policy, the State Bank should limit foreign currency credit. If foreign currency credit is allowed to develop, it will cause foreign currency lending and repayment relationships to overwhelm foreign currency trading relationships. Foreign currency loans will only be granted to import-export enterprises with foreign currency sources to ensure debt repayment when due. Accordingly, export enterprises will be allowed to borrow foreign currency to pay for imported raw materials or discount export documents. Moreover, if foreign currency credit is allowed to develop, it may increase the dollarization of the economy. This is consistent with the management policies of the State Bank, most recently Circular 43/2014/TT-NHNN on foreign currency lending regulations.

5.2.3. Improve the quality and diversify international banking services

With the mobilized foreign currency capital, to maximize profits, commercial banks must use this capital to diversify other international banking services. In the context of deep international economic integration, the domestic market is increasingly closely linked to the international market, so the possibility of exchange rate risks and large cash flow movements affects the business activities of enterprises in the field of import and export activities as well as foreign currency trading activities of banks. Therefore, the need to develop foreign currency derivatives is necessary and suitable for the development situation according to international trends. The development of foreign currency derivative services plays an important role for banks, on the one hand, banks can diversify their income from trading these services through fees, on the other hand, they can hedge against exchange rate risks for their own banks. In addition, foreign currency derivative trading makes the financial market richer, helping the foreign currency market develop. Therefore, each bank needs to develop a strategy to deploy derivative foreign currency services such as Forward, Swap, Option, Future, not only at the headquarters but also at bank branches to carry out these transactions with customers.

The trend of expanding trade and economic exchanges between countries in the world also leads to an increase in the demand for international payments. International payment services bring banks a rich source of revenue, and at the same time, international payment services also create opportunities for banks to direct customers to other bank products and services such as: opening payment accounts, card services, consulting services, etc. Therefore, banks need to focus on developing and perfecting international payment products and services such as: money transfer methods, collection methods, payment methods by L/C, etc. to ensure fast and accurate payments, creating maximum convenience for customers.

To perform international payment services, each bank needs to establish agency relationships with financial institutions and banks in different countries, especially in countries that have bilateral trade agreements. The reason why banks always want to establish and develop correspondent banking services is because this is a very useful activity for payment services.

international payment. The role of this activity is first of all reflected in helping payments between two banks in different countries to be easy, fast and effective. Agent banking activities ensure smooth circulation of business activities between customers and their partners in different territories around the world. In addition, two banks can exchange and use each other's products and services such as foreign currency trading, capital trading, payment, guarantee, collection... with the purpose of mutual benefit. Performing agent banking services contributes to standardizing banking services according to international practices, thereby enhancing the position of that bank domestically and internationally.

Since our Party and State implemented the policy of opening up and integrating with the outside world, the number of foreign tourists and businessmen coming to Vietnam as well as Vietnamese people going abroad (traveling, working, studying...) has been increasing. In the process of trade exchange, the need to use cards to pay for expenses is inevitable. In order for international card services to develop further, banks need to increase the utility of international cards, specifically: combine card payment utilities with other types of services through card products linked between banks and services such as tourism, medical examination and treatment, shopping...; apply special incentives for international cardholders such as exchange rates, fees, limits..., expand the network of card acceptance units to attract a large number of customer transactions.

International banking services of banks such as: international payment, factoring, guarantee, foreign currency trading have a close relationship with customers who have international business activities, therefore when banks provide complete, closed international banking services and one-stop transactions for customers, they will provide more international banking services to customers, the bank's income will also increase and at the same time, the management and supervision of international banking services will be easier. Banks need to implement electronic banking services for international banking services to facilitate customers in transactions.

5.2.4. Perfecting and innovating banking technology and human resource quality

International banking business often faces greater risks than domestic banking business such as exchange rate risk, legal risk, operational risk. In addition, international banking business also requires a modern infrastructure system with technology.

advanced technology. The results of the analysis of the Malmquist total factor productivity index in chapter 4 show that technological progress is the main factor increasing total factor productivity. Therefore, to continue to increase productivity, Vietnamese commercial banks need to continue to modernize technology. In banking business, technology has a decisive influence on product development, product quality and product distribution methods as well as the ability to manage banking business activities. Therefore, to develop international banking services, commercial banks need to make certain investments to modernize technology. In particular, the derivatives trading department must be equipped with the most modern facilities to facilitate transactions, and machinery and equipment must be connected to the world's banking system and the global information system. According to the research results in Table 4.9, there are still many Vietnamese commercial banks whose efficiency decreases with scale, meaning that if they expand their scale, their operational efficiency will decrease. Therefore, Vietnamese commercial banks should invest in in-depth development, providing new international banking services based on the foundation of advanced banking technology, which can improve the productivity of input factors, using a synchronous technology system according to a common standard to be able to integrate and exploit mutual services, and fully exploit the technology infrastructure. Each bank needs to establish a network connection system with famous financial media companies in the world such as Reuters, Bloomberg ... to meet the information needs of customers and the bank.

In the field of international banking services, the requirements for human resources are very strict, because working in this business field requires bank staff to have solid professional qualifications, international business experience not only limited to the services provided by banks but also other related fields, for example, international payment staff must have a good grasp of foreign trade operations such as transportation, insurance, customs, etc., have foreign language proficiency, effectively apply banking technology, understand domestic laws and international practices in business. In particular, staff trading in currency derivatives must be able to flexibly apply exchange rate risk prevention tools for the bank's own foreign currency investment portfolio. In addition, bank staff must also be able to develop (or sell) derivative products to businesses.

businesses with international trade activities. Therefore, the team of business staff directly doing international banking services need to have in-depth expertise in the field they are in charge of, foreign language proficiency, work experience, and professional ethics. In addition, the bank's leadership team needs to have the following factors: management level, work experience, vision, and interest in the field of international banking services.

5.3. Some recommendations to the State Bank and the Government

5.3.1. Development of foreign exchange derivatives market

Derivative foreign currency instruments were created to hedge against exchange rate risks. Exchange rates fluctuate in a large and random range, reflecting the supply and demand relationship of foreign currencies in the market, which is a prerequisite for the use of risk prevention tools. In the foreign exchange market, in addition to reflecting the supply and demand relationship of foreign currencies, the market also contains speculative factors and price differences in foreign currencies. These are also important factors in making exchange rates in the foreign exchange market fluctuate unpredictably. Because of the unpredictability of changes in exchange rates in the market, businesses as well as commercial banks always want to hedge against possible losses to their foreign currency cash flows.

Currently, the derivatives market for currency instruments has not developed strongly in Vietnam, foreign currency derivative transactions in Vietnam only exist in a simple form, with small transaction turnover. Therefore, the State Bank needs to study and issue currency derivatives in line with the international integration trend, suitable for Vietnam's environmental conditions in each period. However, foreign currency trading also generates many risks, so the State Bank needs to strengthen remote risk monitoring through the reporting information system of commercial banks and on-site inspections to promptly detect and prevent currency trading risks, ensuring the safety of the Vietnamese commercial banking system.

5.3.2. On exchange rate management

In the trend of globalization, Vietnam needs to choose a managed floating exchange rate policy to adapt and create momentum for the development of our economy in the integration process because the floating exchange rate regime has the advantage that the exchange rate is always linked to the

This supply-demand and exchange rate relationship is suitable for the globalization of the international financial market, besides, the State can still manage the level of exchange rate fluctuations. The State Bank should build a flexible exchange rate management mechanism, the exchange rate policy should be built in the direction of floating to accurately reflect market fluctuations, but the State Bank will have timely interventions at the right time through buying and selling foreign currencies when the exchange rate fluctuates excessively combined with controlling capital flows. In addition, the exchange rate should be built in the direction of being linked to a basket of currencies of Vietnam's important trade and investment partners, eliminating the mechanism of pegging the exchange rate to the US dollar, but should determine the exchange rate on the basis of pegging the exchange rate to a basket of currencies with the structure of currencies according to the trade proportion of countries having trade relations with Vietnam.

The State Bank needs to further strengthen its role in the interbank foreign exchange market. The interbank foreign exchange market is organized, supervised and operated by the State Bank to form an organized foreign exchange market between credit institutions that are market members. The State Bank participates in the market as the final buyer and seller, and intervenes when necessary for the purpose of national monetary policy.

5.4. Some limitations of the topic and future research directions

The values of the input and output variables of the DEA model in the study only take absolute data without being adjusted for the inflation rate over the years. The ratios are calculated based on the balance at the end of each year without taking the average data during the year, so they do not fully reflect the fluctuations of the data during the year. The model only stops at non-parametric testing, not combined with parametric analysis methods to analyze the performance of banks. The DEA model does not mention the level of significance or reliability. The DEA efficiency score is obtained from comparison with banks in the analyzed sample, so when banks achieve an efficiency score of 1, it is not necessarily the optimal score in reality.

The study only collects data based on financial reports or audited annual reports in the period 2008-2014 of commercial banks. The data collected by year in the 7-year research period is not long enough to closely represent the dependence.

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