Nguyen Thi Hong Yen

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BANKING ACADEMY

NGUYEN THI HONG YEN

DEVELOPMENT OF BANKING SERVICES

AT JOINT STOCK COMMERCIAL BANK FOR

INVESTMENT AND DEVELOPMENT OF VIETNAM

SPECIALITY: FINANCE AND BANKING

CODE: 62340201

ABSTRACT OF PH.D. DISSERTATION IN ECONOMICS

HA NOI - 2015

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THE STUDY HAS FULFILLED AT

BANKING ACADEMY

Scientific supervisors:

1. Assoc. Prof. TRUONG QUOC CUONG, Dr.

2. NGUYEN DUC THANG, Dr.

Opponent 1:...... ………………………………………………………

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Opponent 2: .…………………………………………………………

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Opponent 3: .…………………………………………………………

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The dissertation will be reported to Dissertation Reviewing Board at Academy level at Banking Academy

on the………..day of……………….2015 at

The dissertation can be found at:

- Library of Banking Academy

- Vietnam National Library

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RESEARCH PAPERS PUBLISHED AND RELATED TO

THE DISSERTATION

1. Nguyen Thi Hong Yen (2010), “A global financial crisis - Some response measures of Vietnam Bank”, Journal of Science and Technology, No. 2, Vol. 65, Aug. 2010, P. 26 - 32.

2. Nguyen Thi Hong Yen (2011), “Applying the SWOT model to develop competitive strategies of Vietnam Bank for Agriculture and Rural Development in the process of economic integration", Journal of Economics and Business Administration in the process of economic integration, No. 1, 2011, P. 39 - 41

3. Nguyen Thi Hong Yen (2011), “Development of bank services in Ha Giang Branch, Bank for Investment and Development of Vietnam”, Journal of Science and Technology, No. 3, Vol. 79, 2011, P. 59 - 66.

4. Nguyen Thi Hong Yen (2012), “Improving the competitive capacity of Ninh Binh Branch - Global Petroleum Bank of Vietnam”, Journal of Science and Technology, No. 3, 2012, P. 77 - 85.

5. Nguyen Thi Hong Yen (2013), “Development of business operations of credit cards of Bank for Investment and Development of Vietnam in 2012 and the vision up to 2015”, Journal of Science and Technology, No. 12/1, Vol. 112, 2013, P. 185 - 196.

6. Nguyen Thi Hong Yen (2014), “Diversification forms of capital mobilization and capital use at Ha Giang Branch, Vietnam Joint Stock Commercial Bank for Industry and Trade”, Journal of Science and Technology, No. 11, Vol. 125, 2014, P. 31 - 38.

7. Nguyen Thi Hong Yen (2015), “Credit Risk Management at Joint Stock Commercial Bank for Investment and Development of Vietnam, Basel II Route Map", Journal of Accounting Audit. No. 1+2/2015, P.35 - 37.

8. Nguyen Thi Hong Yen (2015), “Assessing the situation of toll collection of services at BIDV”, Journal of Economic Forecasting, Special Theme Vol., 2/2015, P. 40 - 42.

9. Nguyen Thi Hong Yen (2015), “Improving mechanisms of mobilization and capital lending at BIDV", Economic and forecasts, No. 5, 3/2015, P. 21 - 23.

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FOREWORDS

1. The necessity of the research

International integration trend has created opportunities and challenges for Vietnam commercial bank system. Joint Stock Commercial Bank for Investment and Development of Vietnam (hereinafter referred to as BIDV) is a financial institution and primarily provides capital and financial services for socio-economic development. In recent years, BIDV has achieved certain results in business operations, met the diverse needs on banking services for businesses and people. However, BIDV's services are still to have existing limitations such as less diversity, small-scale, low-quality and high-risk features.

Therefore, the development of services is an indispensable choice of Vietnam commercial banks in general and BIDV in particular. The issue posed is how to develop and improve the quality of banking services for inhomogeneous it with the spreading of resources. With such reasons, research and development of banking services at BIDV is a research issue available meaningful urgent with BIDV. This is not only to bring positive results for BIDV in particular, but also for the system of credit and finance and customers using banking services in general. Therefore, the author selected the research topic “Development of banking services at Joint Stock Commercial Bank for Investment and Development of Vietnam” to study.

2. Overview of studies related to the research dissertation

2.1. The research works in Vietnam
The author has collected and studied the reach works related to the dissertation. They include as follow:

1) The author Ngo Thi Lien Huong’s research paper of "Diversification of services at Vietnam Commercial Banks" [19] (2010 - National Economics University, Hanoi) has been studied arguments for diversifying services of commercial banks. These were new contributions of the dissertation in terms of theory of application of Ansoff Matrix in the study of the possibilities for diversifying services at commercial banks. There were three methods of performance of service diversification at Vietnam Commercial Banks, including development of existing services into new markets, development of new services in existing markets and development new services in new markets. There was a proposal about a new system of criteria to assess the level of implementation of service diversification at Vietnam Commercial Banks (VCBs)

(2) The author Bui Van Thach’s doctoral dissertation has its name of "The role of the State in the development of financial markets in Vietnam" (2010) [32]. The author has analyzed the factual situation and assessed the role of the State in forming and developing currency markets. He also proposed solutions of synchronize formation of the legal framework, further enhancement of the regulatory role, market guidance of the state bank, diversification of the types of banking services, more fully application of international standards on safety of banking services in order to enhance the role of the State in developing currency markets.

(3) The author Dao Le Kieu Oanh with the research paper of "Development of banking services for wholesales and retails at Bank for Investment and Development of Vietnam" (2012 - Banking University of Ho Chi Minh City) [28] analyzed influencing factors and the elements necessary for diversification of banking services. From then, it showed that top important factors leading to the diversification of banking services of VCBs are legal environment; capital scale; technology, human resources; risk management and executive administration. It provides solutions necessary for the process of diversification of banking services of VCDs in terms of international economic integration, of which, the most focused solutions are stable measure for legal environment, enhance of financial capacity and modernization of banking technology, innovation of methods of risk management and executive management of VCBs.

(4) With the research paper "Development of non-credit services at VCBs” (2013 - University of Ho Chi Minh City Bank) [36], the author Pham Anh Thuy studied the development of non-credit services on two aspects of scale and quality. On that basis, the dissertation has proposed solutions of development non-credit services of VCBs. Preliminary studies were performed by qualitative method through experts’ consultation used for adjusting and adding quality scale of non-credit service and its impact to customer satisfaction. Official research was performed by formal method of quantitative research through direct interview questionnaires.

(5) The author Ha Van Duong studied in a dissertation of "State Management on diversification of credit activities of Joint Stock Commercial Banks in Ho Chi Minh City until 2020" (2013 - Central Institute for Economic Management) [9]. In this dissertation, it added and fulfilled more rationale and scientific foundation for diversification of credit operations and the state management on diversification of credit activities. Ansoff matrix was applied in choosing orientation and choosing forms of diversification of credit activities. Selection of criteria for evaluating the results of the State management of and determine the factors that affect the results of the State management on diversification of credit activities. There were proposals of solution groups to fulfill the legal framework in relation to each form of credit level in accordance with Law on Credit Institutions in 2010.

(6) The author Khanh Toan studied the doctoral dissertation on “Development of retail banking services at Joint Stock Commercial Vietnam for Industrial and Trade'' (2014 - Ho Chi Minh National Academy of Politics and Public Administration) [39]. He has studied a focus on services of the traditional and modern retail banking, in which, objects provided services are people and small and medium enterprises (SMEs). It was to clearly define the contents of development of retail banking services and develop criteria for evaluating to measure the degree of success of the development of retail banking services.

2.2. The foreign research works

(1) In the the doctoral dissertation of “Studies on the Hungarian credit market, market trend, macroeconomic and financial stability consequences” (2009 - Budapest University of Technology and Economics) [45] of the author Andras Bethlendi, who focused on researching lending market of households and SMEs, including loans, lease financing, market research, mortgage lending and mortgage lending activities in foreign currencies.

(2) In the the doctoral dissertation of “Promoting banking services and products” (2011), Romanian cademy national institute of economic research “Costin C. Kiritescu” [55] of the author Valeria Arina Balaceanu, who analyzed the elements of banking services, the development of banking services and banking markets, the situation of provision of banking services in Romania Romanian, the impacts of globalization to banking services, goals and role of promotion of banking services, etc. The author analyzed all banking services, proposed formation of a marketing strategy and outlined the views of diversification of banking services.

3. Aims of the study

- In terms of reasoning, it is to systemize and further clarify issues related to the development of commercial banking services, in which it is to focus on contents, assessment criteria and factors influencing development of commercial banking services.

- In terms of practice, the dissertation drew comments, evaluations on the development of services at BIDV on the basis of a factual situational analysis and proposals of solution system and recommendations for developing services at BIDV.

4. Subjects and scope of the research

4.1. Subjects of the research: Study subjects of the research are services and the development of commercial banking services.

4.2. The scope of the research:

- Contents: research on "Services and development of banking services" has a very wide scope, because commercial banking services are varied and plentiful. The service development represents a change in quality and quantity of services evaluated through the contents and the system of indicators. Therefore, within the scope of the research of the dissertation topic, the author focused on the following services: the services of capital mobilization, the credit services, the guarantee services, the payment services, the foreign exchange business services and the credit card services.

- In terms of spatial and time aspects, foresaid contents of research dissertation are at BIDV and at the period 2010 - 2014 and orientation to 2020.

5. Research Methods

To obtain contents and aims of the research, the dissertation used the methods of dialectical materialism and historical materialism. The research methods are namely the statistical method; the survey method; the method of information collection; the analysis method, the synthesis of information. Details of methods on investigation, survey, collection, analysis and synthesis of information in Appendices of 1, 2, 3, 4, 5, 6, 7 and 8.

6. The dissertation structure

In addition to an introduction, conclusion and list of references, appendices, the contents of the dissertation consists of three chapters:

Chapter 1: The basic reasoning issues on the development of banking services of commercial banks

Chapter 2: Factual situation of development of services at Joint Stock Commercial Bank for Investment and Development of Vietnam

Chapter 3: Solutions for development of services at Joint Stock Commercial Bank for Investment and Development of Vietnam

Chapter 1

THE BASIC REASONING ISSUES ON THE DEVELOPMENT OF BANKING SERVICES OF COMMERCIAL BANKS

1.1. Overview of commercial banking services

1.1.1. The concept

"Services" can be understood as "The service activities in order to meet the needs of production business and activities of daily life." Banking service, (i) according to the tradition (in the past), is "services performed for many years, based on old technology, familiarity with customers, the final phase in the life cycle of a service product" [24, P. 125]; (ii) according to World Trade Organization (WTO), banking service is "a financial service, any service of financial nature and provided by a supplier of financial services. Financial services include all insurance services and services related to insurance, all banking services and other financial services (excluding insurance) " [24, tr 142].

1.1.2. Types of banking services

The types of banking services include services of deposit taking/capital mobilization; credit services; payment services; foreign currency business services; other banking services.

1.2. Development of banking services

1.2.1. Opinion on development of banking services

In sum, from the foresaid concepts on the development of services, the authors showed that development of banking services is creation of change in terms of quantity and quality aspects of services. Accordingly, in terms of quantity, it expresses an increase in the scale of services. In terms of quality, it increases utilities provide in accordance with capability of banks with the orientation development of the bank as well as the economy.

1.2.2. Criteria of evaluation of development of banking services

1.2.2.1. Quantitative criteria

Quantitative criteria of assessment of the development of banking services are in size of quantity of service products. The criteria include: (1) quantity and types; (2) The size and revenues; (3) The subjects, number of customers; (4) market share; (5) The system of branches and distribution channels; (6) Income.

1.2.2.2. Qualitative criteria

Development in depth means that increases the list of service products combined with enhance of quality of service; development of a diversity of services; usability of the services; the safety of services. When between banks are no longer discern on the diversity of forms of services, the quality of services is a vital element of all banks.

1.2.3. Factors affecting development of banking services

Factors belonging to banks are economic environment, political and legal environment, competition in the banking and financial sector, environment of technological engineering.