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SOLUTIONS FOR DEVELOPING NON-CREDIT SERVICES AT VIETNAMESE COMMERCIAL BANKS
Posted date 21/10/2016
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Posted date 21/10/2016
2.099 view
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Faced with competitive pressure from the integration process and especially after the 2008-2010 global economic and financial crisis, Vietnamese commercial banks are facing huge challenges and opportunities.
Faced with competitive pressure from the integration process and especially after the 2008-2010 global economic and financial crisis, Vietnamese commercial banks are facing huge challenges and opportunities . Innovation in investment direction of commercial banks to suit specific economic situations is a necessary and important step . And developing non - credit services is a smart choice . In particular, in the project on restructuring the system of credit institutions in the period of 2011-2015 approved by the Prime Minister under Decision No. 254/QD-TTg, dated March 1, 2012, it is clearly stated that "Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services" shows that we have recognized the role of non-credit services in bringing a more stable and secure source of income for commercial banks. At the same time, the development of non-credit services plays a very important role, deciding the existence of a bank in the process of international economic integration.
However, up to now, the non-credit service sector at banks is still monotonous in form, low quality, small service scale, and limited competitiveness; meanwhile, marketing activities are not really effective, so the rate of individual customers participating in non-credit activities at banks is still limited; the development of a clear strategy for the development of non-credit services has not been focused on, but is often integrated into the general development strategy of the bank; The level of technology and high-quality human resources to develop high-tech non-credit services such as derivatives trading, electronic banking, trust... have not been fully exploited to bring about efficiency commensurate with capacity and advantages; besides, the habit of using cash of Vietnamese people is also a major obstacle in the development of card networks in particular and non-credit services in general of banks. As a result, although revenue from non-credit activities of banks in recent years has improved, it is still modest.
So what is the solution to develop truly effective non-credit services for Vietnamese commercial banks, especially non-state-owned commercial banks?
1. Some features of the development of non-credit services of commercial banks
DVPTD can arise simultaneously with the activities of DVTD (capital mobilization and capital provision) of commercial banks to meet the deposit and loan needs of customers as desired. In addition, some DVPTD operate independently from credit activities such as: Collecting money for product consumption for customers; Paying for input factors of the production process; Transferring salary through accounts; Transferring tax payments to customers...
To identify which banking service is DVPTD, you can rely on the following factors:
First: When a customer makes a transaction with a customer, the bank does not have to use its capital (or if it does, it does not use much of its capital) to make the transaction.
Second: When customers transact with the bank, they have to pay a fee when the bank provides services to customers. The bank's income at this time is made in the form of fees, not in the form of interest collection and interest payment (interest rate) like credit services.
Thus, Non-credit services are services provided by banks to customers to meet their financial and monetary needs, directly or indirectly bringing the bank an income from specified fees collected from customers, excluding credit services.
The viewpoint on developing public services is based on two aspects: development in breadth and development in depth, which means that development is increasing the scale, quantity and quality of existing services, while developing new services.
· Develop non-credit services in breadth
Developing public services in breadth means increasing the scale and number of existing public services and opening new public services, which is closely linked to diversifying the types of public services.
New commercial services development can be understood as commercial services that are first included in the list of commercial bank business services. According to this understanding, new commercial services are divided into two types:
First: Completely new DVPTD: These are new DVPTD for banks and the market.
Second: New types of commercial services (copying services) are commercial services that are new to banks, not new to the market. By developing this new type of commercial service, banks can take advantage of the advantages of the later comers and avoid the mistakes of the predecessors. Therefore, developing this new type of commercial service is considered the focus of the current trend of developing new commercial services of commercial banks.
· Develop non-credit services in depth
Developing DVPTD in depth means perfecting existing DVPTD, it is associated with improving the quality of DVPTD, which is the accuracy, responsiveness, convenience... that DVPTD can bring to customers.
Developing DVPTD in depth does not mean creating new DVPTDs but only creating new versions of existing DVPTDs with new features and functions that are superior to the old DVPTDs. Therefore, developing DVPTD in depth today often focuses on the following directions:
First : Improve the quality of public services by modernizing technology, enhancing equipment and means of serving customers, and innovating staff transaction styles.
Second : Make the use of DVPTD easier, more attractive and bring customers new values and benefits by perfecting the process, simplifying business procedures and features of DVPTD, enhancing customer guidance on the process of using DVPTD, timely information on innovations of DVPTD. Especially innovations that bring convenience and benefits to users.
Third : Change the distribution method by opening transactions outside of business hours, increasing transactions through modern bank distribution systems.
2. Current status of DVPTD development at Vietnamese commercial banks
a) On income from non-credit services
Non-credit services have been deployed quite abundantly, focusing on the following 12 main forms: Cash and non-cash payment services in the form of collection and letter of credit (L/C); Foreign currency purchase and sale; Trust; Card; Cash management; Consulting and information provision; Supervising bank; Guarantee; Electronic banking; Accounting; Derivatives trading; Securities investment brokerage...
Currently, revenue from consumer credit services accounts for an average of 20% to 35% of total bank income. In particular, revenue from consumer credit services is mainly from fees (accounting for about 60% of total revenue from non-credit activities) in addition to revenue from business and investment services (such as foreign exchange trading, gold and derivative financial services). With the aim of increasing the proportion of revenue from consumer credit services/total revenue to 45-55%, commercial banks need to make a lot more efforts.
A typical example is Vietcombank. As of the end of the first quarter of 2016, Vietcombank was the third largest bank in the Vietnamese banking market (in terms of total assets), only behind BIDV and Vietinbank. This is also a commercial bank with PTD services that were deployed early and achieved good results.
However, up to now, the non-credit service sector at banks is still monotonous in form, low quality, small service scale, and limited competitiveness; meanwhile, marketing activities are not really effective, so the rate of individual customers participating in non-credit activities at banks is still limited; the development of a clear strategy for the development of non-credit services has not been focused on, but is often integrated into the general development strategy of the bank; The level of technology and high-quality human resources to develop high-tech non-credit services such as derivatives trading, electronic banking, trust... have not been fully exploited to bring about efficiency commensurate with capacity and advantages; besides, the habit of using cash of Vietnamese people is also a major obstacle in the development of card networks in particular and non-credit services in general of banks. As a result, although revenue from non-credit activities of banks in recent years has improved, it is still modest.
So what is the solution to develop truly effective non-credit services for Vietnamese commercial banks, especially non-state-owned commercial banks?
1. Some features of the development of non-credit services of commercial banks
DVPTD can arise simultaneously with the activities of DVTD (capital mobilization and capital provision) of commercial banks to meet the deposit and loan needs of customers as desired. In addition, some DVPTD operate independently from credit activities such as: Collecting money for product consumption for customers; Paying for input factors of the production process; Transferring salary through accounts; Transferring tax payments to customers...
To identify which banking service is DVPTD, you can rely on the following factors:
First: When a customer makes a transaction with a customer, the bank does not have to use its capital (or if it does, it does not use much of its capital) to make the transaction.
Second: When customers transact with the bank, they have to pay a fee when the bank provides services to customers. The bank's income at this time is made in the form of fees, not in the form of interest collection and interest payment (interest rate) like credit services.
Thus, Non-credit services are services provided by banks to customers to meet their financial and monetary needs, directly or indirectly bringing the bank an income from specified fees collected from customers, excluding credit services.
The viewpoint on developing public services is based on two aspects: development in breadth and development in depth, which means that development is increasing the scale, quantity and quality of existing services, while developing new services.
· Develop non-credit services in breadth
Developing public services in breadth means increasing the scale and number of existing public services and opening new public services, which is closely linked to diversifying the types of public services.
New commercial services development can be understood as commercial services that are first included in the list of commercial bank business services. According to this understanding, new commercial services are divided into two types:
First: Completely new DVPTD: These are new DVPTD for banks and the market.
Second: New types of commercial services (copying services) are commercial services that are new to banks, not new to the market. By developing this new type of commercial service, banks can take advantage of the advantages of the later comers and avoid the mistakes of the predecessors. Therefore, developing this new type of commercial service is considered the focus of the current trend of developing new commercial services of commercial banks.
· Develop non-credit services in depth
Developing DVPTD in depth means perfecting existing DVPTD, it is associated with improving the quality of DVPTD, which is the accuracy, responsiveness, convenience... that DVPTD can bring to customers.
Developing DVPTD in depth does not mean creating new DVPTDs but only creating new versions of existing DVPTDs with new features and functions that are superior to the old DVPTDs. Therefore, developing DVPTD in depth today often focuses on the following directions:
First : Improve the quality of public services by modernizing technology, enhancing equipment and means of serving customers, and innovating staff transaction styles.
Second : Make the use of DVPTD easier, more attractive and bring customers new values and benefits by perfecting the process, simplifying business procedures and features of DVPTD, enhancing customer guidance on the process of using DVPTD, timely information on innovations of DVPTD. Especially innovations that bring convenience and benefits to users.
Third : Change the distribution method by opening transactions outside of business hours, increasing transactions through modern bank distribution systems.
2. Current status of DVPTD development at Vietnamese commercial banks
a) On income from non-credit services
Non-credit services have been deployed quite abundantly, focusing on the following 12 main forms: Cash and non-cash payment services in the form of collection and letter of credit (L/C); Foreign currency purchase and sale; Trust; Card; Cash management; Consulting and information provision; Supervising bank; Guarantee; Electronic banking; Accounting; Derivatives trading; Securities investment brokerage...
Currently, revenue from consumer credit services accounts for an average of 20% to 35% of total bank income. In particular, revenue from consumer credit services is mainly from fees (accounting for about 60% of total revenue from non-credit activities) in addition to revenue from business and investment services (such as foreign exchange trading, gold and derivative financial services). With the aim of increasing the proportion of revenue from consumer credit services/total revenue to 45-55%, commercial banks need to make a lot more efforts.
A typical example is Vietcombank. As of the end of the first quarter of 2016, Vietcombank was the third largest bank in the Vietnamese banking market (in terms of total assets), only behind BIDV and Vietinbank. This is also a commercial bank with PTD services that were deployed early and achieved good results.
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Chart 1: Income structure of Joint Stock Commercial Bank for Foreign Trade of Vietnam
period 2013 – T03/2016
Source: http://vietcombank.com.vn/
Investment in the consumer service sector at Vietcombank has always been a priority, the results have been positive, consumer service has been bringing a stable income to banks. However, the income from consumer service is still quite modest compared to the goals and capabilities of the bank.
Table 1: Proportion of income from consumer credit services of Joint Stock Commercial Bank for Foreign Trade of Vietnam in the period 2011-Q1/2016
Table 1: Proportion of income from consumer credit services of Joint Stock Commercial Bank for Foreign Trade of Vietnam in the period 2011-Q1/2016
| According to the fiscal year ending December 31 of each year | 2011 | 2012 | 2013 | 2014 | 2015 | Q1/2016 |
| DVPTD income on business income (%) | 26.47 | 27.45 | 30.47 | 31.96 | 27.11 | 24.10 |
Source: http://vietcombank.com.vn/
In particular, in terms of the structure of types of public services, the growth rate is gradually leaning towards modern public services, and it can be said that in recent years, derivative financial instrument transactions have achieved the highest growth rate in the group of modern public services. Public services such as payment services, investment banking services, foreign exchange trading services are also services with a relatively large proportion of income in the total public service income of banks.
b) On the growth rate of the number of modern distribution channels
Along with expanding the branch network and traditional distribution channels , the bank has promoted the development of modern distribution channels such as : ATM network and card acceptance points ( POS ) .
ATM is considered a self - service banking channel , a modern distribution channel . More than 10 years ago , a milestone was considered the starting point of the Vietnamese bank card market . At that time , the entire market had only 2 types of domestic cards used on ATMs: Connect 24 of Vietcombank and F@ st Access of Techcombank with a total number of issued cards reaching 234,000 cards (including domestic cards and international cards). By 2015, the number of issued cards had increased 368 times and always maintained a very high annual growth rate, some years over 300%. ATMs provide services 24 hours a day, 365 days a year and are installed at convenient locations for customers to conduct transactions. ATM is not only for cash withdrawal transactions, with advances in information technology and the popularity of the internet, ATM can effectively provide other banking services such as information query, money transfer, bill payment and other electronic transactions and this is also an effective advertising channel in banking activities.
In particular, in terms of the structure of types of public services, the growth rate is gradually leaning towards modern public services, and it can be said that in recent years, derivative financial instrument transactions have achieved the highest growth rate in the group of modern public services. Public services such as payment services, investment banking services, foreign exchange trading services are also services with a relatively large proportion of income in the total public service income of banks.
b) On the growth rate of the number of modern distribution channels
Along with expanding the branch network and traditional distribution channels , the bank has promoted the development of modern distribution channels such as : ATM network and card acceptance points ( POS ) .
ATM is considered a self - service banking channel , a modern distribution channel . More than 10 years ago , a milestone was considered the starting point of the Vietnamese bank card market . At that time , the entire market had only 2 types of domestic cards used on ATMs: Connect 24 of Vietcombank and F@ st Access of Techcombank with a total number of issued cards reaching 234,000 cards (including domestic cards and international cards). By 2015, the number of issued cards had increased 368 times and always maintained a very high annual growth rate, some years over 300%. ATMs provide services 24 hours a day, 365 days a year and are installed at convenient locations for customers to conduct transactions. ATM is not only for cash withdrawal transactions, with advances in information technology and the popularity of the internet, ATM can effectively provide other banking services such as information query, money transfer, bill payment and other electronic transactions and this is also an effective advertising channel in banking activities.
.png)
Chart 2: Number of cards issued by commercial banks by financial source
period 2010 - 2015
Source: www.vnba.org.vn
Source: www.vnba.org.vn
Along with the development of card services, payment infrastructure must be built and connected. After 2011, banks shifted their focus from ATM to developing POS payment systems, so the ATM automatic transaction channel tended to grow slightly.
.png)
Chart 3: Number of ATMs and POS machines of the Vietnamese commercial banking system
period 2010 - 2015
Source: www.vnba.org.vn
period 2010 - 2015
Source: www.vnba.org.vn
According to the announcement from the Vietnam Banking Association as of December 31, 2015, the entire market had 16,573 ATMs and 217,470 POS machines, growth rates of 23% and 181% respectively compared to 2011. This is the "launching pad" and the basis for banks to put more trust in the development of different types of bank cards.
Thus , the ATM and POS payment system has grown steadily over the years . Especially the payment acceptance points ( POS ) .
In addition to developing modern distribution channels as present , banks have also expanded other transaction channels by establishing relationships with domestic and foreign banks and financial institutions .
c) Investment rate in non-credit services of commercial banks
If before 2012, the investment rate of non-credit services of commercial banks only accounted for an average of less than 15% of total income, still relatively modest, then since 2013, the investment cost for non-credit services has been focused on and improved. Typically, ACB bank, since 2014, the investment rate for non-credit services has always reached an average of over 25% of total income.
According to reliable survey and interview documents, the reasonable investment ratio for non-credit activities to maximize profits from non-credit activities, the majority of interview responses agree that the investment ratio for non-credit activities accounts for 30 % - 40 % of the total income of the bank is reasonable. According to the author's assessment, the investment ratio for non-credit services accounts for about 30-40% of the bank's income in the current period and in the near future, which can be considered a reasonable investment ratio to develop non-credit services commensurate with the opportunities and goals of the bank (to achieve income from non-credit services accounting for 45-55% of the total income of the bank). Because to build a foundation and develop non-credit services, the initial investment cost is quite large. Therefore, banks need to focus on investing more to improve the quality and efficiency of non-credit services at the bank.
d) About customer satisfaction
Currently, it can be said that customers are relatively satisfied with the financial services provided by the Bank. The quality of financial services is rated at a fairly high average score of 3.7/5. Financial services show concern and understanding of customers' needs, bringing customers comfort and convenience. 100% of surveyed customers gave a score of 3 or higher (on a scale of 5). Financial services provided are considered to be relatively safe, however, customers are not really satisfied with the fact that financial services are implemented with errors.
Regarding the current customer policy of the Bank, customers are also quite satisfied, and are assessed by customers as diverse and beneficial, suitable to customers' wishes and highly competitive. For example, currently, for priority customers of the Bank, customers will receive many outstanding incentives in terms of both economic benefits and service convenience. The Bank also applies a maximum fee policy for transactions related to money transfers. These policies make customers very satisfied and highly appreciated.
3. Some limitations and causes in the development of non-credit services of Vietnamese commercial banks today
First : The quality of public services is still limited , and the service convenience is not high .
The current banking services are still complicated , lacking in convenience and features , and the stability of technology in modern banking services is not high . Like card services , electronic banking services are not completely stable , there are still transaction errors or machines temporarily running out of money . The quantity and quality of ATMs and POS machines do not meet customer requirements , and their arrangement also causes inconvenience to customers . Therefore , service quality is being paid more and more attention nowadays .
Second : The number of non -credit services actually provided to customers is limited .
The number of PTD services built and deployed in banks is quite diverse, but in banks, these services have not been deployed evenly and effectively. PTD services are mainly exploited as Payment Services, Derivative Finance Services, Foreign Exchange Trading Services, Services, etc., while other PTD services have poor operating revenue. In particular, Insurance Services, Securities Services, Asset Protection Services, have recently been improved but not significantly, almost leaving the market open. This is a huge waste.
Third, the distribution channel is not really effective.
In reality, traditional distribution channels such as branch offices have limited potential for further exploitation and high costs.
As for modern distribution channels, the main ones mentioned here are ATMs and POS machines. In addition, there is a distribution channel that banks are using and developing, which is the distribution channel based on information and communication technology platforms such as telephone and internet. The development of this distribution channel is quite fast and effective, bringing many benefits to customers. However, the target audience of this channel is mainly young customers with good information technology application skills. On the other hand, the errors, risks and safety level of this distribution channel are still limited, thus causing apprehension for users.
There are four basic reasons leading to the above situation. Specifically:
Firstly, because the level of human resources does not meet the needs.
In fact, the current human resources of banks are generally quite young, dynamic, enthusiastic, attentive and dedicated. The level of human resources performing PTD services of banks is trained annually, significantly improving their professional qualifications, but their foreign language proficiency and understanding of the law and international practices are still limited, so they still do not meet the requirements well, there are still regrettable errors and mistakes that occur during transactions with customers, affecting the quality of PTD services provided to customers.
Second, due to the marketing policy still having many shortcomings, it has not been effective.
Currently, the major problem of advertising and marketing of banks is that the content and form of advertising are still monotonous, the updating and effectiveness of information to customers are limited. Customers do not know or understand all the content and benefits of bank products and services, so there are products that customers are almost not deployed and or have very modest sales.
Third, because the service development strategy is still spontaneous.
The development orientation and development strategy of consumer credit services are spontaneous . The activities of consumer credit services of banks have developed but are spontaneous . A comprehensive, consistent , long -term development strategy has not been established based on information obtained from organizing, surveying, and researching market needs. The advantages and disadvantages of the bank in the future have not been assessed to come up with appropriate development policies. The contents of the consumer credit service development strategy are often integrated into the general development strategy of the bank, so they are not complete and comprehensive.
There are also other reasons such as the level of socio-economic development, people's consumer psychology and habits, and shortcomings in the legal environment.
4. Solutions and recommendations
Based on the research status, the author would like to propose four basic solutions to help develop non-credit services commensurate with the potential of Vietnamese commercial banks in the coming period as follows:
First, improve the quality of human resources.
In particular, special attention should be paid to developing human resources with high technical qualifications. Because modern non-credit services use high technology, it requires service providers to have a level of understanding and mastery of technology. Along with that, it is necessary to build a policy to attract talent and retain good human resources, committed and dedicated to the development of the bank. Improving foreign language proficiency and understanding of international laws and practices is still limited. Banks need to have quality and focused training, and the recruitment process also needs to pay more attention to these criteria in the quality of candidates. This is a necessary and urgent task today. Because employees are the ones who bring success to the bank, but also bring risks to the bank.
Second, improve the quality of non-credit services provided by the Bank . By paying more attention to the quality of direct transactions with customers. Increase professionalism and improve the working style and transaction culture of employees. The Bank also needs to quickly build a database of its customers. Increase tangible means to create trust with customers. Minimize errors in the implementation process.
Third, develop banking technology.
Banks need to develop a long-term technology development strategy, along with developing existing resources. Changing banking technology is quite expensive, so without a proper technology development strategy, it can create great waste. Technology strategy needs to delve into aspects such as: technology level, techniques, innovation capabilities, research and development of products and services, application, exploitation of information technology, digital, electronics and telecommunications in business activities (transactions, payments, management and operations, etc.) of the bank.
Developing banking technology must ensure the safety of technology operations as a top priority, because all data information is stored online, an IT incident can cause data loss, or cause the bank's operations to stop, affecting customers, and damaging the bank's reputation. In addition, it is necessary to develop procedures and regulations on the authority of each functional department and individual in the operation and use of the bank's information technology system to increase the level of safety and security in the database system. Regularly plan to check and maintain the system to ensure stability.
Fourth, limit risks in developing non-credit services.
Risk management and prevention are essential and important when implementing non-credit services. This activity greatly affects the reputation and operational capacity of the bank and directly impacts the customer's decision to use the service. Solutions to limit risks include: Clearly defining the responsibilities of employees in supervising the development and maintenance of the bank's security policies; Conducting full direct checks to prevent unauthorized access in the computer environment; Relationships with third parties must also be closely monitored...
In addition, the author would like to make some recommendations to the State Bank.
¾ Complete the legal framework on payment , encourage enterprises to expand the cashless payment system among residents . Effectively implement the Master Plan for the development of non - cash payment in the period 2006 - 2010 and orientations towards 2020 according to Decision No. 291 / 2006 / QD - TTg with the goal of reducing the amount of cash in total means of payment in Vietnam to below 15 % by 2020 .
¾ Strongly implement the Laws issued by the State Bank , especially the Law on State Bank and the new Law on Credit Institutions ( 2010 .
¾ The State Bank of Vietnam needs to promptly direct the completion of the unified national financial system switching center nationwide , allowing the connection of a common ATM network for commercial banks nationwide , thereby unifying the card service fee collection level among banks , thereby creating conditions for stronger development of card services in Vietnam . and also contribute to accelerating the reduction of cash in circulation .
¾ The State Bank needs to expand the scope of payment and payment time of the interbank electronic payment system . The State Bank needs to take the lead , together with commercial banks , to effectively implement the project of modernizing the banking system and the second phase of the interbank payment system .
Thus, along with the development of the economy, in the context of increasingly fierce competition, the need to develop public services to meet the needs of customers is considered inevitable for commercial banks in the economy. Based on the right orientations in developing public services to provide to customers, commercial banks are making efforts to attract customers, increase the proportion of service revenue, and at the same time contribute to promoting the socialization of non-cash payments. The author hopes that the solutions and recommendations provided will help commercial banks to partly overcome their shortcomings and limitations, successfully implementing the goal of developing public services for the coming period.
REFERENCE DOCUMENTS
1. Nguyen Thi Phuong Lan and Phan Thi Linh, 2013. To develop non-credit services at commercial banks . Journal of economics and forecasting, No. 17, pp. 21-23.
2. State Bank of Vietnam , Law on State Bank and Law on Credit Institutions , 2010. Hanoi : Legal Publishing House .
3. Dao Le Kieu Oanh and Pham Anh Thuy, 2012. The role of developing non-credit services at Vietnamese commercial banks . Development and Integration Journal, No. 6, pp. 41-45.
4. Nguyen Thi Qui, 2008. Modern Banking Services Textbook. Foreign Trade University, Hanoi
5. Prime Minister , 2006. Decision No. 261 / 2006 / QD - TTg dated December 29 , 2006 on approving the project on non - cash payment for the period 2007 - 2010 and orientation to 20120. Hanoi
Web site
6. www.acb.com.vn
7. www . t h e b a n k e r . c o m
8. www.vnba.org.vn
9. www.vietcombank.com.vn/
10. www .v ne co nom y .v n
Thus , the ATM and POS payment system has grown steadily over the years . Especially the payment acceptance points ( POS ) .
In addition to developing modern distribution channels as present , banks have also expanded other transaction channels by establishing relationships with domestic and foreign banks and financial institutions .
c) Investment rate in non-credit services of commercial banks
If before 2012, the investment rate of non-credit services of commercial banks only accounted for an average of less than 15% of total income, still relatively modest, then since 2013, the investment cost for non-credit services has been focused on and improved. Typically, ACB bank, since 2014, the investment rate for non-credit services has always reached an average of over 25% of total income.
According to reliable survey and interview documents, the reasonable investment ratio for non-credit activities to maximize profits from non-credit activities, the majority of interview responses agree that the investment ratio for non-credit activities accounts for 30 % - 40 % of the total income of the bank is reasonable. According to the author's assessment, the investment ratio for non-credit services accounts for about 30-40% of the bank's income in the current period and in the near future, which can be considered a reasonable investment ratio to develop non-credit services commensurate with the opportunities and goals of the bank (to achieve income from non-credit services accounting for 45-55% of the total income of the bank). Because to build a foundation and develop non-credit services, the initial investment cost is quite large. Therefore, banks need to focus on investing more to improve the quality and efficiency of non-credit services at the bank.
d) About customer satisfaction
Currently, it can be said that customers are relatively satisfied with the financial services provided by the Bank. The quality of financial services is rated at a fairly high average score of 3.7/5. Financial services show concern and understanding of customers' needs, bringing customers comfort and convenience. 100% of surveyed customers gave a score of 3 or higher (on a scale of 5). Financial services provided are considered to be relatively safe, however, customers are not really satisfied with the fact that financial services are implemented with errors.
Regarding the current customer policy of the Bank, customers are also quite satisfied, and are assessed by customers as diverse and beneficial, suitable to customers' wishes and highly competitive. For example, currently, for priority customers of the Bank, customers will receive many outstanding incentives in terms of both economic benefits and service convenience. The Bank also applies a maximum fee policy for transactions related to money transfers. These policies make customers very satisfied and highly appreciated.
3. Some limitations and causes in the development of non-credit services of Vietnamese commercial banks today
First : The quality of public services is still limited , and the service convenience is not high .
The current banking services are still complicated , lacking in convenience and features , and the stability of technology in modern banking services is not high . Like card services , electronic banking services are not completely stable , there are still transaction errors or machines temporarily running out of money . The quantity and quality of ATMs and POS machines do not meet customer requirements , and their arrangement also causes inconvenience to customers . Therefore , service quality is being paid more and more attention nowadays .
Second : The number of non -credit services actually provided to customers is limited .
The number of PTD services built and deployed in banks is quite diverse, but in banks, these services have not been deployed evenly and effectively. PTD services are mainly exploited as Payment Services, Derivative Finance Services, Foreign Exchange Trading Services, Services, etc., while other PTD services have poor operating revenue. In particular, Insurance Services, Securities Services, Asset Protection Services, have recently been improved but not significantly, almost leaving the market open. This is a huge waste.
Third, the distribution channel is not really effective.
In reality, traditional distribution channels such as branch offices have limited potential for further exploitation and high costs.
As for modern distribution channels, the main ones mentioned here are ATMs and POS machines. In addition, there is a distribution channel that banks are using and developing, which is the distribution channel based on information and communication technology platforms such as telephone and internet. The development of this distribution channel is quite fast and effective, bringing many benefits to customers. However, the target audience of this channel is mainly young customers with good information technology application skills. On the other hand, the errors, risks and safety level of this distribution channel are still limited, thus causing apprehension for users.
There are four basic reasons leading to the above situation. Specifically:
Firstly, because the level of human resources does not meet the needs.
In fact, the current human resources of banks are generally quite young, dynamic, enthusiastic, attentive and dedicated. The level of human resources performing PTD services of banks is trained annually, significantly improving their professional qualifications, but their foreign language proficiency and understanding of the law and international practices are still limited, so they still do not meet the requirements well, there are still regrettable errors and mistakes that occur during transactions with customers, affecting the quality of PTD services provided to customers.
Second, due to the marketing policy still having many shortcomings, it has not been effective.
Currently, the major problem of advertising and marketing of banks is that the content and form of advertising are still monotonous, the updating and effectiveness of information to customers are limited. Customers do not know or understand all the content and benefits of bank products and services, so there are products that customers are almost not deployed and or have very modest sales.
Third, because the service development strategy is still spontaneous.
The development orientation and development strategy of consumer credit services are spontaneous . The activities of consumer credit services of banks have developed but are spontaneous . A comprehensive, consistent , long -term development strategy has not been established based on information obtained from organizing, surveying, and researching market needs. The advantages and disadvantages of the bank in the future have not been assessed to come up with appropriate development policies. The contents of the consumer credit service development strategy are often integrated into the general development strategy of the bank, so they are not complete and comprehensive.
There are also other reasons such as the level of socio-economic development, people's consumer psychology and habits, and shortcomings in the legal environment.
4. Solutions and recommendations
Based on the research status, the author would like to propose four basic solutions to help develop non-credit services commensurate with the potential of Vietnamese commercial banks in the coming period as follows:
First, improve the quality of human resources.
In particular, special attention should be paid to developing human resources with high technical qualifications. Because modern non-credit services use high technology, it requires service providers to have a level of understanding and mastery of technology. Along with that, it is necessary to build a policy to attract talent and retain good human resources, committed and dedicated to the development of the bank. Improving foreign language proficiency and understanding of international laws and practices is still limited. Banks need to have quality and focused training, and the recruitment process also needs to pay more attention to these criteria in the quality of candidates. This is a necessary and urgent task today. Because employees are the ones who bring success to the bank, but also bring risks to the bank.
Second, improve the quality of non-credit services provided by the Bank . By paying more attention to the quality of direct transactions with customers. Increase professionalism and improve the working style and transaction culture of employees. The Bank also needs to quickly build a database of its customers. Increase tangible means to create trust with customers. Minimize errors in the implementation process.
Third, develop banking technology.
Banks need to develop a long-term technology development strategy, along with developing existing resources. Changing banking technology is quite expensive, so without a proper technology development strategy, it can create great waste. Technology strategy needs to delve into aspects such as: technology level, techniques, innovation capabilities, research and development of products and services, application, exploitation of information technology, digital, electronics and telecommunications in business activities (transactions, payments, management and operations, etc.) of the bank.
Developing banking technology must ensure the safety of technology operations as a top priority, because all data information is stored online, an IT incident can cause data loss, or cause the bank's operations to stop, affecting customers, and damaging the bank's reputation. In addition, it is necessary to develop procedures and regulations on the authority of each functional department and individual in the operation and use of the bank's information technology system to increase the level of safety and security in the database system. Regularly plan to check and maintain the system to ensure stability.
Fourth, limit risks in developing non-credit services.
Risk management and prevention are essential and important when implementing non-credit services. This activity greatly affects the reputation and operational capacity of the bank and directly impacts the customer's decision to use the service. Solutions to limit risks include: Clearly defining the responsibilities of employees in supervising the development and maintenance of the bank's security policies; Conducting full direct checks to prevent unauthorized access in the computer environment; Relationships with third parties must also be closely monitored...
In addition, the author would like to make some recommendations to the State Bank.
¾ Complete the legal framework on payment , encourage enterprises to expand the cashless payment system among residents . Effectively implement the Master Plan for the development of non - cash payment in the period 2006 - 2010 and orientations towards 2020 according to Decision No. 291 / 2006 / QD - TTg with the goal of reducing the amount of cash in total means of payment in Vietnam to below 15 % by 2020 .
¾ Strongly implement the Laws issued by the State Bank , especially the Law on State Bank and the new Law on Credit Institutions ( 2010 .
¾ The State Bank of Vietnam needs to promptly direct the completion of the unified national financial system switching center nationwide , allowing the connection of a common ATM network for commercial banks nationwide , thereby unifying the card service fee collection level among banks , thereby creating conditions for stronger development of card services in Vietnam . and also contribute to accelerating the reduction of cash in circulation .
¾ The State Bank needs to expand the scope of payment and payment time of the interbank electronic payment system . The State Bank needs to take the lead , together with commercial banks , to effectively implement the project of modernizing the banking system and the second phase of the interbank payment system .
Thus, along with the development of the economy, in the context of increasingly fierce competition, the need to develop public services to meet the needs of customers is considered inevitable for commercial banks in the economy. Based on the right orientations in developing public services to provide to customers, commercial banks are making efforts to attract customers, increase the proportion of service revenue, and at the same time contribute to promoting the socialization of non-cash payments. The author hopes that the solutions and recommendations provided will help commercial banks to partly overcome their shortcomings and limitations, successfully implementing the goal of developing public services for the coming period.
REFERENCE DOCUMENTS
1. Nguyen Thi Phuong Lan and Phan Thi Linh, 2013. To develop non-credit services at commercial banks . Journal of economics and forecasting, No. 17, pp. 21-23.
2. State Bank of Vietnam , Law on State Bank and Law on Credit Institutions , 2010. Hanoi : Legal Publishing House .
3. Dao Le Kieu Oanh and Pham Anh Thuy, 2012. The role of developing non-credit services at Vietnamese commercial banks . Development and Integration Journal, No. 6, pp. 41-45.
4. Nguyen Thi Qui, 2008. Modern Banking Services Textbook. Foreign Trade University, Hanoi
5. Prime Minister , 2006. Decision No. 261 / 2006 / QD - TTg dated December 29 , 2006 on approving the project on non - cash payment for the period 2007 - 2010 and orientation to 20120. Hanoi
Web site
6. www.acb.com.vn
7. www . t h e b a n k e r . c o m
8. www.vnba.org.vn
9. www.vietcombank.com.vn/
10. www .v ne co nom y .v n
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