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The Role of Payment Services for Banks


can be a gift, a present or after providing goods or services to a partner

foreign.

1.5.2. NHBL's payment service distribution channels

Payment at the counter:

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This is the basic and traditional distribution channel of all commercial banks. Customers come to the bank and make their payment orders at the transaction counter. Through the branch network, it is where customers come and make transactions with the bank, and at the same time it is a channel to attract new customers, expand the bank's market share, and create opportunities for cross-selling products. A wide branch network attracts customers, creates conditions for closer access to customers and plays an important role in maintaining customer relationships.

Payment over the counter

The Role of Payment Services for Banks

Technology develops, bank payments expand to many new payment methods, convenient and reduce costs for both customers and banks. That is the birth of electronic communication channels: transactions via ATM, POS, internet banking, mobile banking....

The bank develops a payment card network, connecting transactions with a system of commercial banks nationwide, along with a series of card acceptance points, customers can proactively make their own payments or cash withdrawals.

Through the internet, specifically the bank's website, with just a computer or phone connected to the internet and registered for the bank's services, customers can make any money transfer orders 24/7 without having to go through the bank. This is important when the number of computers connected to the internet is increasing and the number of customers registering for electronic banking services is also growing rapidly.

1.5.3. The role of payment services for banks

For banks:

Payment services bring significant revenue to banks. At the same time,


Meeting customers' payment needs, reaching customers, banks have the opportunity to provide other accompanying services such as credit, payment cards or foreign currency trading, insurance (cross-selling products).

Thanks to payment to customers, banks can collect payment deposits from customers as part of mobilized capital, adding short-term capital to the bank.

Thanks to payment, banks can monitor and control the financial situation and loan usage of customers. Thereby, helping the credit department monitor and collect debts promptly.

For customers:

Help customers pay conveniently, safely and save related costs

to pay in cash

Customers can keep money in their account as a safe place to keep it while still being able to make a profit from this source of money (non-term interest rate of 2%/year)

Thanks to payment, customers can learn about and access other services provided by the bank.

1.6. Criteria for evaluating the development of NHBL services

Developing retail banking services means that banks increase their access to individual customers and small and medium enterprises, thereby enhancing their presence, increasing market share and diversifying their product and service types, contributing to increasing the competitiveness of banks.

To evaluate the development of retail banking services, we use some evaluation criteria as follows:

Diversification of retail banking products and services

Nowadays, banks participate in the financial market, where customers are provided with banking products, mortgage loans, insurance services, and securities trading at the same provider, so most banks have product packages and customer programs to attract new customers as well as maintain long-term relationships with customers. A common feature of


Programs or product packages are that customers will enjoy certain incentives when using all products in the same group of financial products. When using the product package provided by the bank, customers will be reluctant to change banks because if customers stop using the bank's services, it means that customers have to leave a series of products and services they are using. The inconvenience encountered when customers want to leave the bank seems to be higher, so it will reduce the tendency of customers to change.

On the other hand, when using a service package, customers usually only have to pay a common fee for the entire package, saving service costs. Therefore, customers will maintain a long-term relationship with the bank. In the current development trend, banks often design service packages to attract and maintain long-term relationships with customers.

Product features

One criterion for evaluating banking products and services that perhaps every customer mentions is the utility of the product. Not every bank with a full range of products and services can be considered a modern bank. The problem is that depending on the operational characteristics of each bank; depending on the business strategy; depending on each customer segment, target customers, and prospective customers, the corresponding services are developed.

Product utility is the added value of services that banks provide to customers such as: convenience in use, easy and simple usage, multi-functional products. Product utility also reflects the level of technology application of each bank. Therefore, product utility is an important criterion for customers to evaluate the level of modernity of the product and choose to use the product.

Quality of retail banking products and services

Service quality is important and vital in assessing the development of retail banking services. Because if service quality is not guaranteed or improved, the diversity and development of services will be limited.


The service will be meaningless if it is not accepted by customers. The quality of service is not only assessed through the quality of service of bank employees, but also assessed through the safety, accuracy of transactions, simple and convenient procedures... On the other hand, the competition in services between banks is increasingly raised and each bank tries to maintain the market share of each type of service. To achieve that goal, in addition to diversifying services, marketing operations, reputation and brand of the bank, the scale and network of the bank also depend on the quality of service of each bank.

Banking market share

Any product or service is not considered good or a product provider is considered developed if it is not accepted and used by a large number of customers. Retail banking products and services are no exception to this general rule. Any bank with a wide and modern market share will create trust for users of banking services. This is an important criterion when evaluating the development of retail banking services.

Scale, operating revenue, income of NHBL services

The development of a bank's retail banking service must be demonstrated first by specific operational figures in a few years and the income generated by that activity in the total income of that bank. A retail banking service cannot be considered developed if its scale and operating turnover are not commensurate with its potential, do not meet the set plan, and do not have clear growth. These are not only figures that reflect timely direction, flexibility, sensitivity to the market, and efforts of the entire bank, but also a driving force and goal for the bank to better complete its business strategy in general and retail banking services in particular.

1.7. Experience in developing retail services in some countries around the world

In the current fierce competition, taking advantage of the extensive experience in the field of developing banking services of foreign financial institutions


In addition to creating no small pressure on domestic banks, this pressure is necessary and also a driving force forcing Vietnamese banks to rise up in the domestic market. Therefore, each bank must learn and draw its own lessons.

1.7.1. Experience in developing NHBL services through technology application

modern india

State Bank of India (SBI), one of India’s largest state-owned financial institutions, is so large that it has one-sixth as many branches as the entire United States. A decade ago, SBI was the poster child for big state-owned banks in poor countries. At a time when banks around the world were installing giant computer servers, SBI balanced its books by hand. It took nearly a month to process payments, and reams of paper were sent from branch to branch.

To maximize its banking profits and better serve its customers, SBI uses mobile phones, ATMs, and the Internet to lower the costs of its retail banking division. Compared to banks in the US and Europe, SBI is benefiting from being a late adopter of technology, having started spending money just as computers became cheaper and better integrated into information systems such as the Internet and mobile phones. To reach remote villages, SBI employs agents with mobile phones that come with card readers. Customers swipe their savings cards on the phone and then hand the agent the amount they want to deposit. When they want to withdraw money, the agent hands the money back to the customer. The real branch is the mobile, and the mobile is taking SBI to

100,000 villages have no banks.

SBI Bank is proving to the world its efficiency and effectiveness.

technology and creativity in the field of NHBL

1.7.2. Experience in developing NHBL services through restructuring the system organization

system of French bank BNP Paribas

BNP Paribas is France's largest retail bank. First quarter profit


BNP Paribas' net profit rose 15 percent in 2011, beating forecasts by 2.62 billion euros. The bank said strong growth in retail and investment banking had boosted investor confidence, and pushed its shares up nearly 3 percent. While some banks have been forced to lower their targets this year amid tighter capital and liquidity regulations, BNP Paribas has persevered and is on track to achieve strong growth. BNP Paribas is leading the French market with its extensive experience in the retail banking market and its focus on acquiring younger banks.

To maximize the efficiency of retail banking services and meet the needs

To better serve its customers, PNB Paribas has restructured its organization to include three core groups.

Group 1: Product distribution and development

Based on customer relationships including customer behavior and needs research, market monitoring as well as competitors, this group focuses on sales and product development strategy. Sales will help the group determine how products and services are sold, from which the group can set goals and measures to implement.

One of the group’s top priorities is to regularly adapt its product and service offerings to the bank’s various distribution channels, expand its retail banking offering in France and promote cross-selling opportunities to the bank’s other corporate and investment divisions. Focus on the link between sales and marketing

Group 2: Performing operations and customer care

This group has two main tasks: organizing and performing daily tasks (the 'back office' part of the bank). The goal of the group is to process transactions in a specialized way to achieve the best quality. This special platform is designed for each individual product, not dependent on geography.

Group 3: Analysis and research of development strategy

BNP wants its customers to access banking not only through branches.

branches but also with other transaction points, as well as the supply of products of


They are not limited to national scope.

The main task of group 3 is to come up with ways to implement projects in accordance with the bank's strategy. In the implementation process, the group has two ways: First, they will provide services through the branch network, then they will design and implement other distribution channels. Conversely, they will restructure all product distribution channels.

In addition, BNP Paribas has undertaken a very large investment program to modernize its branch network. The growth of its sales network combined with a younger workforce creates its strengths. With its commitment to service quality, the PNB Paribas brand will increasingly be worthy of being “France’s leading retail bank”.

1.7.3. Experience in risk management and consumer credit development of Thai banks

The 1997-1998 financial crisis caused the Thai banking system to falter. Thailand had to close 58 bank branches and financial companies, the bad debt ratio reached 15%, many commercial banks went bankrupt or merged, forcing Thai banks to reconsider their operations, especially the credit sector in retail banking operations. Thailand is trying to spread the risk by regulating lending such as the loan limit for a customer not exceeding 25% of equity, off-balance sheet debts limited to less than 50% of total capital, banks are not allowed to invest more than 20% of total capital in stocks, debt certificates of a company, the prescribed liquidity reserve ratio is 7% of which 2% is deposited at the Central Bank, maximum not exceeding 2.5% in cash, the rest is in the form of securities, in addition, banks must make 100% provisions for assets classified as doubtful and force closed banks to increase charter capital to 15% of total capital to be able to continue operating. With the determination in recent banking reforms, Thailand has recovered from the crisis. Specifically:

At Bangkok Bank, the functions of each department are clearly separated and assigned.


and comply with the steps in the process of handling personal loans. Previously, the two departments receiving and processing documents and the department appraising personal loans were combined into one, now the bank has separated them into two independent departments. In which, the appraisal department must have a credit appraisal report and a risk rating report. Similarly, Siam Commercial Bank also built a model to organize and deploy credit services according to the principle of clearly defining the responsibilities of 3 departments: Customer Marketing, appraisal department and loan decision department. This is a fundamental change of banks to ensure objectivity, sales marketing (customer relations staff) and credit decision department are independent of each other.

At Kasikorn Bank: Applying an automated lending decision-making process. Receiving credit requests from customers through direct channels such as branches, customer relations staff, or indirectly through mail, the Internet or Contact Center. The data will then be processed centrally by the bank through a specialized program. The bank will then have a department contact the credit requester to confirm the information, collect additional necessary information (credit requests received through indirect channels) or check the information through the Government's credit management agency. From there, the bank processes the input information through the credit scoring system and makes automatic decisions. The analyst confirms the credit limit according to the results of the scoring program. Kasikorn Bank has applied credit rating as an automated decision-making tool for consumer loans and unsecured loans. After implementing the automated lending decision-making process, Kasikorn Bank's overdue personal loans have decreased from nearly 40% to less than 10%.

1.7.4. Lessons learned can be applied to the Investment and Development Joint Stock Commercial Bank.

Vietnam development

Through the experiences and achievements that banks around the world have achieved, we can summarize and draw lessons that can be applied to

BIDV Investment and Development Bank as follows:

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