Solutions to promote consumer lending activities at Lien Viet Post Joint Stock Commercial Bank - Dong Do Branch

Vietnamese labor export companies so that these companies can introduce subjects who sign study abroad contracts and labor export contracts to borrow capital from banks.

3.2.2.4. Implementation resources

Human resources:

Research and product development activities require a lot of intelligence from the staff. Therefore, it is necessary to pay attention to selecting candidates with sufficient capacity, experience and qualities suitable for the nature of the job. In addition, training also needs to be regularly focused on to be able to meet the requirements of the job. However, the human resource factor must be placed in a healthy working environment with culture and encourage staff to be responsible for their work, constantly innovate and improve for themselves and for the development of the bank.

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Information source:

Information sources are an extremely important and decisive factor in the development of consumer lending products. Information sources include: information about products, markets, competitors, laws, etc.

3.2.2.5. Expected results

Diversify consumer lending products to meet the increasing needs of customers in the coming years. Implement indirect lending activities, expand relationships with supporting units in auto and home loans. Strengthen the relationship between three parties: construction companies, banks and customers. In addition, Dong Do branch has outlined a plan to expand consumer lending activities in all forms with advanced methods and methods, expanding to the field of real estate speculative lending.

3.2.3. Focus on customer care

3.2.3.1. Basis for solution formation

As analyzed in Chapter II, the quality of customer care at Dong Do Branch is only at a fair level (meaning it only meets requirements). If the quality of this activity is not improved, the department will lose a large number of customers when the competitive environment in the lending sector becomes increasingly fierce. Therefore,

Focusing on customer care is an urgent requirement for consumer lending activities at Dong Do Branch.

3.2.3.2. Objective

Take good care of customers, try to best meet customers' needs to retain existing customers, especially the Bank's large customers, thereby increasing consumer loan sales.

3.2.3.3. Implementation content

To improve the quality of customer care, Dong Do Branch needs to have some specific improvements as follows:

The first is the guidance on procedures for consumer loans. Currently, customers are only guided on loan procedures when they come to Dong Do Branch. The bank needs to send a team of customer relations staff to customers or call to advise customers on loan procedures. To do that, Dong Do Branch needs to increase the quantity and quality of credit officers.

Second, in investigating the information on the customer's personal information, background, and purpose of using the loan, the credit officers at Dong Do Branch are currently letting customers fill out the application themselves. In the application, there are many confusing issues that cause customers a lot of trouble when answering. Letting customers fill out the application themselves will often make customers frustrated when borrowing money from the bank. To improve the effectiveness of this work, Dong Do Branch needs a team of credit officers to guide, ask questions to customers, and then fill out the application for customers. This is a very effective method that many banks in the world have applied, it will help customers feel more comfortable and simpler when coming to borrow money from the bank.

Third is about customer appraisal, collateral appraisal and credit decision making. Currently, Dong Do Branch performs this work in a very short period of time (04 to 05 days), which will improve the efficiency of the bank's consumer lending activities. However, such a short appraisal will make the appraisal results prone to errors and inaccurate credit decisions. Therefore, to promote that advantage, the appraisal work needs to maintain such appraisal speed.

but need to increase both quantity and quality of appraisal staff. This is an advantage of Dong Do Branch in the current competitive situation.

3.2.3.4. Expected results

Dong Do Branch plans to increase the proportion of consumer loans in total credit balance to 12% to 15%. Continue to attract capital sources in the economy and increase the consumer loan balance to over 100 billion VND.

Improve the quality of appraisal and debt collection. With the goal of reducing the rate of overdue consumer loans to below 1%.

3.2.3.5. Implementation resources:

Human resources: Customer care is mainly carried out through direct human activities. Therefore, the human factor and the quality of the staff are of great significance to customer care. To perfect customer care, it is necessary to build a team of customer care staff who are truly professional, have a comprehensive understanding of all services, and are capable of satisfying all types of customers. That team of professional staff can advise customers or inform customers of necessary information in a timely manner.

Customer database system:

Customer database is an important component of the internal information system, which is the basis for improving the quality of customer care activities. Building a complete customer database system will make it easier to find large customers and potential customers.

3.3. Recommendations

3.3.1. Recommendations to the Government

There are many factors that affect the consumer lending activities of banks, there are favorable factors that promote this activity and there are factors that hinder it. In order for this activity to develop strongly in the future, the government needs to influence the factors that can promote consumer lending and limit the factors that hinder it.

To curb this activity, in order for consumer lending to grow stronger in the future, I have the following recommendations for the government and relevant ministries and agencies:

Firstly, implementing policies to maintain a stable economic development, low inflation, and economic growth rate needs to be improved. Indeed, in recent times, the Vietnamese economic situation has been unstable. Inflation increased while the GDP growth rate in the first quarter of 2011 was at its lowest level in the last 7 quarters. These are negative impacts affecting customers' purchasing psychology and reducing the number of customers borrowing money for consumption purposes at banks. Along with that, production and business activities also become less effective (due to the tight monetary policies of the State Bank) and these are also negative impacts on consumer lending activities of banks. Therefore, in the immediate future, the government needs to introduce policies to control inflation, stabilize the domestic price market, thereby stimulating domestic consumption.

Second, the Government and relevant ministries and agencies need to have policies to stabilize the real estate market, which has been very hot recently. Currently, the real estate market in our country is divided into 3 parts: high-end houses and apartments, mid-range houses and apartments, and finally affordable houses. The demand in the market for medium-priced houses accounts for over 40%; high-end houses account for over 20% and the rest is affordable houses. Thus, the trend is still the most popular is medium-priced houses. Therefore, real estate investors focus on exploiting the mid-priced house segment. Currently, the urbanization trend is very fast and the migration rate from the provinces to big cities such as Hanoi and Ho Chi Minh City is very high. Every year, several hundred thousand people move there, so the demand for housing is very urgent and it will last for another 10-20 years.

The main problem now is how to reduce the price to make it affordable for buyers, but that is a difficult problem because in the current inflation situation, the price of materials and labor both increase, and along with that, the land tax is also very high. Therefore, investors are also very worried because the price must increase.

To revive this market, the government must have a different policy on land tax because if it continues as it is now, investors will be very tired and apartment prices will increase day by day. It is not the investors who are causing this, but it must be clearly stated that it is the tax policy that makes prices high. These are inadequacies and cause great difficulties for investors.

Therefore, the current land tax policy is very necessary to create conditions for construction businesses and people to buy and sell houses more easily.

3.3.2. Recommendations to the State Bank

At present, with market interest rates fluctuating sharply, normal consumer loan interest rates are higher than business loan interest rates, which limits customers' access to loans. Therefore, the State Bank of Vietnam (SBV) needs to have solutions to impact current consumer loan interest rates, creating favorable conditions for customers to access bank loans more easily. In addition, the SBV needs to supplement and complete regulations and guidelines to create conditions for banks to be able to implement consumer loans more flexibly and effectively. The regulations will create the necessary foundation to help consumer lending activities develop in line with current trends.

Implementing the agreed interest rate for loans for capital needs to serve life, lending through the issuance and use of credit cards according to the regulations of the State Bank (SBV) on the basis of market capital supply and demand, the creditworthiness of borrowers in Circular 01, banks have opened the door to push capital to individual customers. In the context of the market having certain difficulties and the interest rate implemented according to the agreement mechanism is higher than the ceiling for business loans, many individual customers still do not dare to access bank capital for consumption purposes or to buy real estate in installments with real needs. However, if the ceiling is applied to consumer loan interest rates, the risk will increase when capital sources are dispersed. With consumer credit, the provision must be higher, if the interest rate ceiling is maintained, the bank will close. This is one of the hottest issues today, the SBV needs to consider and make more reasonable decisions on interest rates in consumer loans. In the coming time, the State Bank needs to issue a system of specific guiding documents on types of consumer lending products and services. In addition, the State Bank also needs to have regulations to punish unfair competition between banks, thereby supporting and encouraging consumer lending, creating a clear and complete legal corridor to protect the rights of banks to expand and develop this activity.

3.3.3. Recommendations for Lien Viet Post Joint Stock Commercial Bank - Branch

Dong Do

Since its establishment, it can be seen that Dong Do Branch has mainly focused on wholesale activities, so credit relations with individuals have not been expanded. At present, individual customers are the top target of many commercial banks. Therefore, in the future, Dong Do Branch needs to develop retail activities more actively.

Along with that, Dong Do Branch needs to develop marketing activities, customer care, maintain capital sources in an innovative direction. Thereby creating trust for customers as well as increasingly diversifying types of capital mobilization. Focus on increasing the proportion of short-term loans, expanding consumer loans at the office.

Regarding staff training, Dong Do Branch needs to increase the organization of training courses to improve the capacity of staff, at the same time continue to improve the reward and punishment system, combined with further improving the working efficiency and sense of responsibility of bank staff. In addition, the bank also needs to add more staff to meet the labor demand for expanding more transaction offices and new branches nationwide.

CONCLUDE

About 20 years ago, consumer lending was still a fairly new concept in the operations of credit institutions in Vietnam, but only in the past few years, consumer lending has become the target of many banks, especially joint stock commercial banks. Along with the strong development of the economy, people's lives have been significantly improved, the need for spending to serve life is increasing, which is a favorable condition for banking activities in general, and the consumer lending sector in particular, to develop. If in developed countries, the proportion of consumer lending often accounts for about 40% to 50% of total outstanding loans, this ratio of Vietnamese banks currently accounts for only about 5% of total outstanding credit. Thereby, it shows that with the current strong economic growth rate and a population of over 90 million people, the consumer lending market is opening up an extremely large and potential market. In the coming time, the consumer lending market will be increasingly developed and competitive, so preparing a good business strategy is the best solution to help banks effectively carry out this activity.

During my time working at Lien Viet Post Joint Stock Commercial Bank - Dong Do Branch, I realized that although Dong Do Branch has only been doing this activity for 5 years, the bank has achieved certain results. The bank is increasingly interested in and paying more attention to consumer lending and has had business strategies in the coming time. However, being able to compete in a competitive environment, the economic situation, interest rates, and inflation are very unstable as it is now is very difficult, it requires the efforts of all leaders and staff at the office. With my own knowledge and through practical research on consumer lending activities, I have completed this internship with the hope that I can somehow apply it to the practical consumer lending activities of the bank, contributing a small part of my knowledge to further improve the effectiveness of this work at Lien Viet Post Joint Stock Commercial Bank - Dong Do Branch in the coming time.

Due to limited knowledge and research time, the analysis that I have provided certainly has many shortcomings. Therefore, I look forward to comments and suggestions from teachers, officers, bank employees, and those interested in retail banking and consumer lending activities to help me improve my knowledge.

I would like to sincerely thank the teachers in the Faculty of Economics - Graduate School - Hanoi University of Science and Technology for their dedicated guidance and help throughout the research process so that I could complete this thesis. I sincerely thank you!

Solutions to promote consumer lending activities at Lien Viet Post Joint Stock Commercial Bank - Dong Do Branch - 12

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