customers, markets, etc.) and a modern payment system on par with countries in the region, capable of connecting branches with the Head Office 24/24, and integrating national and international systems. It is necessary to develop information technology policies to promote automation and the use of information technology in all organizational and functional departments of the bank, including: (i) Ensuring the establishment, mandatory compliance and regular updating of standards for equipment, operating systems, database environments, network and communication protocols, including standards for equipment procurement; (ii) Planning for backup and recovery to overcome network and machine failures; (iii) Building an online transaction network based on a centralized database and a communication network with 100% availability to avoid transaction interruptions.
Building a centralized data processing software system
The application of modern software solutions will help the Bank assess its risks and losses with relatively high accuracy in centralized information processing:
- Establish a centralized customer information system of the system
Maybe you are interested!
-
Strengthening Inspection and Control of District's State Budget Management -
Bad Debt Management Vietnam Joint Stock Commercial Bank for Industry and Trade -
Criteria for Evaluating Bad Debt Management of Commercial Banks -
Research on Internal Control System in Relation to Risk Management -
Bad debt management at Lao People's Democratic Republic Commercial Bank 1669778721 - 30
All customer-related information will be gathered. The customer information management system must be an open and centralized information system that will record information about the customer's business activities and, if necessary, can still add information to the system easily.
- Convert from distributed information processing model to centralized information processing model
In a centralized information system, all available customer information will help to improve analysis: from customer analysis, to product analysis and risk management. The condition for a centralized information processing system is to have a wide-area communication system (WAN) with high data transmission speed, allowing transactions to be accessed from local workstations but data updates to be done centrally. The new WAN system will completely change the overall structure of the continuous process, from a system with a clear hierarchical structure to a system with a pure network structure, opening up the possibility of interoperability.
points on the network with other points. Therefore, setting up a WAN is necessary to be able to process data centrally.
- Develop a data storage system to serve credit rating scoring work
To serve credit rating work well, the construction of a bank database needs to meet the following standards:
+ Amount of data to be collected : Banks must collect, maintain and analyze important information related to customer and loan ratings throughout the loan period as well as during the customer's risk management process. In addition to general information data, banks also need to collect qualitative and quantitative data reflecting the business performance as well as the customer's ability to repay: (i) qualitative factors : quality of cash flow, efficiency and reliability of management activities, strategic orientation, industry vision; (ii) quantitative factors such as asset size and revenue, asset efficiency ratios, equity efficiency, profit, cash flow, liquidity and other factors.
+ Data quality : banks need to have appropriate data management policies and programs, ensuring that the database meets the criteria of being timely, accurate, complete, consistent and easily accessible.
4.2.4. Improving the quality of human resources
Human resource development is one of the key tasks in action plans and strategies, aiming to enhance competitiveness to meet the requirements of international integration. In particular, in risk management, the level of staff does not stop at performing well the assigned work, but this is a modern banking management practice, with very new knowledge, requiring staff doing this work to be proactive, explore and research, and at the same time know how to apply it to the operations of their bank. Specifically:
Improve the management capacity of the Board of Directors
The leader in a commercial bank plays an extremely important role, deciding the success or failure of a bank. A good leader must grasp the risks
challenges and potential risks in banking operations, thereby combining the strength of its human resources to overcome challenges, best limit risks, and improve banking business efficiency. To do this, it is necessary to screen and develop a team of management leaders at all levels of the bank. Bank leaders at all levels must have the following basic qualities: TALENT - VIRTUE - HUMANITY - TRUST. Accompanying that are the skills:
- Professional skills
- Analytical and judgment skills
- Interpersonal skills.
Bank management needs to perfect their three skills, creating the ability to proactively develop risk management strategies to minimize risks that may occur to their bank.
In addition, banks also need to implement the planning of management and executive staff. Specifically:
(i) Stipulate specific and public requirements and standards for each position as a basis for training and fostering cadres in the planning as well as those who are striving to improve. At the same time, develop and complete the planning process for managerial and executive positions, creating conditions for the implementation of systematic and effective planning.
(ii) Expand the scope of source creation to be able to select many talented people. From that number, a narrower number will be selected to be sent for training and development according to pre-built programs, suitable for each position. In addition to training and knowledge development at training facilities, practical training must also be provided through challenging assignments, rotation to other positions or to other units, other localities, depending on the specific circumstances and positions. The selection takes into account regional factors, so that each position has many qualified candidates to choose from for the narrow round later.
Improve the quality of human resource recruitment
Recruitment is a direct way to supplement human resources. Therefore, if the quality of recruitment is guaranteed, it will contribute to improving
quickly improve the quality of human resources. In the current conditions, Vietnamese commercial banks are required to have scientific, practical and specific recruitment policies. Specifically:
(i) Develop and complete the recruitment process. In the recruitment process, it is necessary to fully comply with the recruitment standards as prescribed to ensure publicity, transparency, fairness, and to avoid errors, fraud, or interference from familiar relationships or power. This is meaningful in ensuring the quality of human resource recruitment as set out in the objectives.
(ii) Right before recruitment, the bank must determine the sources of recruitment to the bank and what are the characteristics of the sources? Although currently, the number of students majoring in economics graduating each year is quite large, it is necessary to select appropriately to the specific operations of the bank. The main source in the labor market must be students graduating from universities and colleges at home and abroad. From this source, under a strict recruitment regime, it will create opportunities for the bank to select good human resources according to the motto "small number selected from large number" in an objective and fair manner; at the same time, it also creates pride and honor for those recruited.
(iii) In the recruitment plan, special attention should be paid to high-quality labor resources with knowledge of law, market economy, finance and banking, and good foreign language and computer skills; For this labor source, it is necessary to search for and invest in creating resources right from the beginning, which means paying attention to young intellectuals right from when they are still in school. Commercial banks can become sponsors or guests of educational programs, exchanges or scientific seminars at universities, thereby promoting the bank's reputation and brand to students through advertising. This activity contributes to providing information to young intellectuals about banks, operating criteria as well as income, workers' lives, and current welfare policies of the bank. Banks also need to have a material and spiritual reward system for good and excellent students with good moral qualities.
Good by awarding valuable scholarships, praising and encouraging good academic achievements with material rewards, especially preferential treatment and creating opportunities in recruitment to have a worthy job position.
(iv) Pay attention to the team of experts and talented employees who are an important source of intelligence working at foreign banks, financial institutions, enterprises, government and non-government organizations. Have special treatment policies such as paying high salaries according to market mechanisms, creating promotion opportunities, sending them to study abroad... to attract them to work for the bank.
(v) Determine the human resource structure to be recruited in a reasonable manner, meaning there is an appropriate ratio for new recruitment with the target being students who have just graduated from school and the target being experts, people with scientific degrees, practical experience, suitable professional capacity, good qualities and are at the recruitment age according to regulations.
Organize retraining of human resources to meet risk management requirements
High-quality human resources are the basis for determining the competitiveness of banks. Therefore, strengthening the management and retraining of human resources is an important, long-term measure for bad debt management and the development of the entire banking system. Vietnamese commercial banks need to develop, supplement and amend regulations on staff arrangement or dismissal, and appropriate reward and punishment regulations according to new management requirements to improve work quality.
Every year, banks need to develop plans for training and retraining of staff, focusing primarily on key areas such as: risk management, operational and market risk management, accounting and auditing activities, and increasing investment in new services. In addition, it is necessary to build a material and spiritual incentive system for staff, in line with business requirements, competition and profit targets.
Along with training and developing human resources, the policy of attracting and retaining qualified and experienced staff in banking is very important. Every year, banks still recruit a considerable number of staff to supplement their staff.
from the head office to the branches. However, especially in recent years, the entry of foreign banks has increased the demand for qualified and experienced workers in the banking sector. In addition, there is a phenomenon of brain drain in the banking sector, the current remuneration policies and business environment at Vietnamese commercial banks still have many shortcomings, so every year a large number of qualified and experienced staff have moved to work in foreign agencies and banks. This phenomenon has led to a surplus of inefficient workers and a shortage of qualified and experienced workers.
Therefore, from now on, Vietnamese banks need to have policies for training and developing human resources, as well as mechanisms to attract and retain highly qualified and experienced workers in banking operations. Specifically, building an incentive system for employees (salary and reward mechanisms...), creating a favorable business environment as well as future prospects. It is necessary to have a satisfactory remuneration regime commensurate with their capacity and contribution to the work in order to attract and retain capable staff and managers. In addition to ensuring salaries according to the regime and income of employees, it is also necessary to implement according to the business performance of the bank, timely and appropriate rewards and incentives for individuals and units with outstanding achievements in work, and initiatives to help improve the business performance of the bank.
In addition, in order to promptly meet the immediate human resource needs, there needs to be coordination between the State Bank of Vietnam, commercial banks in the system, and experienced experts from banks and financial institutions in the region and around the world. These organizations can coordinate with relevant units to regularly organize training courses and update knowledge to improve the capacity of assessing, measuring, analyzing, and controlling RRTD for staff. According to the advice of experts on RRTD management, no complex analysis method can replace the experience and professional assessment of those in charge of risk management.
Build policies to encourage employees to self-study
Bank staff can completely self-study, improve their knowledge and experience during work, customer contact, or proactively participate in training classes, knowledge improvement at external training centers. To encourage staff to self-study, and at the same time contribute to diversifying training types, banks need to develop policies to encourage staff to self-study with some of the following main contents:
(i) Establishing regulations for self-study by staff is a form of self-training, encouraged and supported by the bank. Self-study is aimed at developing the ability and meeting the needs of staff to improve qualifications and update knowledge, contributing to improving the quality of human resources.
(ii) Develop regulations on criteria for self-study by staff. The bank's management board, personnel department, administrative department, units and training centers organize guidance, monitor, manage, inspect and evaluate the self-study results of staff. From there, there is a basis for resolving financial support, rewards, promotions, salary increases... to encourage staff to self-study, ensuring fairness, transparency and democracy to promote the highest efficiency of the self-study program of bank staff.
Complete human resources system
Scientifically, a reasonable organizational structure is the basis for effective arrangement and use of human resources; helping to maximize the potential of individuals in the cooperative and interactive relationship between different members in an organization. Therefore, in the coming years, Vietnamese commercial banks need to continue to consolidate and improve the organizational structure focusing on the following main contents:
(i) Reasonable arrangement of functional departments at the Head Office, at the same time, it is necessary to clearly define the functions and tasks between the Board of Directors, the Executive Board and the Board of Supervisors. Ensure strict implementation according to the functions and tasks that have been defined, ensuring that there is no encroachment or overlap in order to implement and coordinate smoothly and effectively between these departments.
(ii) Complete the organizational model at branches, depending on the size of each branch, it is necessary to seriously establish appropriate customer departments to increase
Specialization and professionalism according to market segments and customers. At the same time, it is necessary to establish a risk management department to separate business and risk functions independently to increase risk management capacity.
(iii) Enhance the role and effectiveness of the personnel department at both the Head Office and branches. Build a team of competent, impartial, close-knit staff who can approach the staff at the unit. They must be able to organize work scientifically and effectively; grasp the views of the Party, the State, and the banking sector on personnel organization; have basic knowledge of human resource management, and at the same time require knowledge, qualifications and experience in banking operations, regularly updated and provided with new information on the business performance of the unit and the entire system, thereby being able to provide accurate advice in recruiting, arranging, evaluating, using and maintaining human resources effectively.
4.2.5. Strengthening internal inspection and control activities of commercial banks
The internal inspection and control activities of banks are stronger than the State Bank's inspection in terms of time because they are quick and timely as soon as risks arise. Internal inspection must be considered as the "brake" system of the credit vehicle. The faster the vehicle moves, the safer and more effective this system must be. This is to prevent the vehicle from going into risky turns that always exist on the way forward. However, the reality shows that recently, the internal inspection work of Vietnamese commercial banks has almost only existed in form. Therefore, in the coming time, Vietnamese commercial banks need to strengthen internal control activities. Internal inspection activities must be carried out both periodically and suddenly to promptly detect errors and warn of signs of violations, avoiding serious consequences and then handling them later, which will be very costly for the bank. Risk monitoring in credit activities should be divided into: Monitoring of each specific loan and monitoring of the overall credit portfolio. In which:
- Monitor each loan regularly to detect early warning signs for timely action and solutions. The establishment of an internal credit scoring system will also be used to assess the current status of borrowers, which is an important credit monitoring tool. Therefore, the system