MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY - Nguyễn Mỹ Phước FACTORS AFFECTING CONSUMERS’ RE-PURCHASE INTENTION TOWARDS RETAIL BANKING SERVICES IN VIETNAM MASTER THESIS Ho Chi Minh City, 2011 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY - Nguyễn Mỹ Phước FACTORS AFFECTING CONSUMERS’ RE-PURCHASE INTENTION TOWARDS RETAIL BANKING SERVICES IN VIETNAM Major: Business Administration Code: 60.34.05 MASTER THESIS Supervisor: Nguyễn Thị Mai Trang Ho Chi Minh City, 2011 ACKNOWLEDGEMENT First of all, I would like to express my deep appreciation to my supervisor Dr Nguyen Thi Mai Trang, a respectable, responsible and resourceful scholar, who had read and re-read my work repeatedly, thanks her for all the patience, valuable guidance, and perspectives throughout the research Without her exceptional support, I could not have completed my thesis I wish to express my appreciation Dr Tran Ha Minh Quan, my head teacher, for his encourages Thanks and love in abundance to my parents, who provided much support in everything I would like also thank all my best friends who had assisted and supported me, especially in valuable research database, data collection process ABSTRACT With the intense competition and increasing globalization in the financial markets, bank management must develop customer-oriented strategies in order to compete successfully in the competitive retail-banking environment The longer a bank can retain a customer, the greater revenue and cost savings from that customer However, customers are also more prone to changing their banking behaviour when they can purchase nearly identical financial products provided by the retail banks In order to stay competitive, bank managers need to understand the factors that influence and determine bank consumers’ re-purchase intention Purpose: This study identifies and analyses the factors that influence bank customers’ re-purchase intention in the Vietnamese retail banking industry Methodology: Sampling technique is used to select the respondents from some banks in Ho Chi Minh City Multiple regression analysis was used to identify relationship between independent variables (convenience, service quality, competitiveness of price, reputation and tangibles) and the dependent variable (bank customers’ repurchase intention) Findings: The findings reveal that Convenience, Service quality, Competitiveness of price, and Reputation have an impact on bank customers’ re-purchase intention Practical implications: In general, the results of this research allow service marketers to develop and implement services marketing strategies to increase bank customers’ re-purchase intention rates, and in turn, increase bank profits Keywords: Convenience, Service quality, Competitiveness of price, Reputation and Tangibles, Bank customers’ re-purchase intention, Retail banking services, Vietnam GLOSSARY Automated teller machine (ATM) A special device that allows customer to make debit transactions for electronic payment and delivers cash Phone Banking Banking services that allow a customer to interact with a financial institution from a remote location by using a telephone (Telephone banking or Telebanking) Internet banking Systems that enable bank customers to access accounts and general information on bank products and services through a personal computer (PC) or other intelligent devices Table of Contents List of Figures i List of Tables ii CHAPTER 1: INTRODUCTION 1.1 Research background 1.2 Problem statement 1.3 Research objective 1.4 Scope and Research methodology 1.5 The structure of the research CHAPTER 2: LITERATURE REVIEW 2.1 Bank customers’ re-purchase intention 2.2 Convenience 2.3 Service quality 2.4 Competitiveness of price 2.5 Reputation 11 2.6 Tangibles 12 Research model 12 CHAPTER 3: RESEARCH METHODOLOGY 14 3.1 Design and sample 14 3.1.1 Qualitative survey 14 3.1.1.1 Qualitative survey procedure 14 3.1.1.2 Results of the focus group 15 3.1.2 Quantitative survey 15 3.2 Sample size 16 3.3 Measurement 17 3.4 Data processing and analysis method 18 3.5 Summary 20 CHAPTER 4: RESULTS AND DISCUSSION 21 4.1 Description of sample 21 4.2 Assessment of scale 22 4.2.1 Reliability testing 22 4.2.2 Exploratory Factor Analysis (EFA) 25 4.3 Research hypothesis testing 27 4.4 Summary 29 CHAPTER 5: CONCLUSIONS AND RECOMMENDATION 30 5.1 Conclusion 30 5.2 Research implications 30 5.2.1 Theoretical implications 30 5.2.2 Managerial implications 31 5.3 Limitations and further research recommendation 33 References 35 APPENDICES 38 Appendix 1: Survey Questionnaire (in Vietnamese) 38 Appendix 2: Survey Questionnaire (in English) 40 Appendix 3: Reliability of Convenience 42 Appendix 4: Reliability of Service Quality 43 Appendix 5: Reliability of Competitiveness of Price 44 Appendix 6: Reliability of Reputation 45 Appendix 7: Reliability of Tangibles (before deleting TAN3 item) 46 Appendix 8: Reliability of Tangibles (after deleting TAN3 item) 47 Appendix 9: Reliability of Consumers’ Re-purchase Intention 48 Appendix 10: Pearson correlation coefficient 49 List of Figures Figure 1.1: Vietnam’s banking market is in an early stage of development Figure 2.1: Research model 13 i List of Tables Table 3.1: Guidelines for focus group interview .15 Table 3.2: Findings from the focus group interview 15 Table 3.3: Description of factors 157 Table 4.1: Sample description statistic 22 Table 4.2: Reliability statistic and items – total statistic of components .264 Table 4.3: Rotated Component Matrix 26 Table 4.4: Model Summary 267 Table 4.5: Coefficients of independent variables 278 Table 4.6: Summary of hypotheses testing results 288 ii CHAPTER 1: INTRODUCTION 1.1 Research background In recent years, the growth of Vietnam financial services sector has been gone up significantly On lending side, “the four large state-owned commercial banks — Vietnam Bank for Agriculture and Rural Development (Agribank), Bank for Investment and Development of Vietnam (BIDV), Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Bank for Industry and Trade (Vietinbank) — continue to dominate Vietnam’s banking system, accounting for 51% of systemwide loans at end-September 2009 (2008: 52%; 2007: 54%) They very actively distributed two-thirds of all loans at subsidised interest rates and thereby defended their market shares The two largest privately owned banks — Asia Commercial Bank (ACB) and Sacombank — recorded exceptionally brisk loans growth in first nine months 2009 (un-annualised): 78% and 62%, respectively.” (Fitch Ratings, 2010) Under World Trade Organization rules, Vietnam has to open the economy, including financial services, to global competition International banks have looked forward to enter into Vietnam’s young and potential market Consequently, not only competition has become higher in this sector, but also consumer has more options for their financial services needs However, “Vietnam is largely undeveloped territory for banking services Out of a total population of 84 million people, just million have a personal bank account, and only 2% have ever taken out a bank loan Even in the biggest cities, consumers’ use of bank services is still rare Only about half of Hanoi’s residents and than a third of those living in Ho Chi Minh City have bank accounts City dwellers are eager to embrace modern financial products The number of credit card holders has jumped 300% since 2004, to some million, and demand for loans to finance the Spiros P.G , Vlassis S and Antreas D A (2003), “Antecedents to perceived service quality: an exploratory study in the banking industry”, International Journal of Bank Marketing, pp 168-190 Stafford, M.R (1996), “Demographic discriminators of service quality in the banking industry”, Journal of Services Marketing, Vol.10, No 4, pp 6-22 Varki, S & Colgate, M (2001), “The role of price perception in an integrated model behavioral intention”, Journal of Service Research, Vol 3, No 3, pp 232-241 Vendelo, M T (1998), “Narrating corporate reputation”, International studies of management and organization, Vol 28, No 3, pp 120-137 Weigelt, K., & Camerer, C (1988), “Reputation and corporate strategy: A review of recent theory and application”, Strategic Management Journal, Vol 9, No 5, pp 443-454 Zeithaml, V., Berry, L & Parasuraman, A (1996), “The Behavioural consequences of Service Quality”, Journal of Marketing, Vol 60, pp 31-46 37 APPENDICES Appendix 1: Survey Questionnaire (in Vietnamese) Xin chào! Chúng tiến hành nghiên cứu yếu tố ảnh hưởng đến xu hướng sử dụng dịch vụ ngân hàng anh/chị Rất mong anh/chị dành chút thời gian để trả lời bảng câu hỏi Những đánh giá Quý anh/chị có giá trị cho nghiên cứu Mọi thông tin thu thập phục vụ cho mục đích nghiên cứu Chân thành cám ơn anh/chị tham gia trả lời bảng câu hỏi Phần 1: Vui lòng cho biết mức độ đồng ý anh/chị cho phát biểu cách khoanh tròn vào MỘT số, với quy ước sau: = không đồng ý = không đồng ý = trung lập = đồng ý = đồng ý Vui lòng cho biết ngân hàng anh/chị hay giao dịch thường xuyên _ (được gọi X) Ngân hàng X có vị trí giao dịch thuận tiện 5 5 Ngân hàng X có nhiều chi nhánh để giao dịch Ngân hàng X thực hiên dịch vụ thời điểm hứa 5 Nhân viên ngân hàng X phục vụ nhanh chóng, hạn Tôi cảm thấy an toàn giao dịch với ngân hàng X 10 Nhân viên ngân hàng X lịch sự, nhã nhặn 11 Nhân viên ngân hàng X hiểu kỹ sản phẩm dịch vụ ngân hàng 5 13 Nhân viên ngân hàng X thể quan tâm đến 14 Lãi suất ngân hàng X cạnh tranh 15 Phí dịch vụ ngân hàng X cạnh tranh Mạng lưới máy rút tiền tự động (ATM) ngân hàng X thuận tiện cho việc giao dịch Tôi giao dịch với ngân hàng X dễ dàng thông qua Internet điện thoại Thời gian giao dịch ngân hàng X thuận tiện (ví dụ: hành chánh, thứ 7) Khi gặp vấn đề, ngân hàng X thể quan tâm chân thành trình giải Nhân viên ngân hàng X hiểu nhu cầu biết dịch vụ đáp ứng 12 nhu cầu 38 16 Ngân hàng X hoạt động ổn định 17 Uy tín ngân hàng X tốt 18 Ngân hàng X có quy mô lớn 19 Ngân hàng X có thiết bị đại 20 Cơ sở vật chất ngân hàng X thu hút 21 Nhân viên ngân hàng X ăn mặc đẹp lịch 22 Tôi nói tốt ngân hàng X với người khác 23 Tôi đề nghị người khác chọn ngân hàng X nhờ góp ý 5 25 Tôi chọn ngân hàng X có nhu cầu sử dụng dịch vụ ngân hàng 26 Trong vài năm tới, sử dụng dịch vụ ngân hàng X nhiều Tôi khuyến khích bạn bè người thân sử dụng dịch vụ ngân hàng 24 X PHẦN 2: Anh/chị vui lòng cho biết thông tin sau: Giới tính Nam Nữ Độ tuổi Từ 18 – 25 tuổi Từ 26 - 30 tuổi Từ 31 – 40 tuổi Từ 41 – 50 tuổi Trên 50 tuổi Thu nhập bình quân hàng tháng triệu đồng 10 triệu đến 20 triệu đồng từ triệu đến 10 triệu đồng từ 20 triệu đồng trở lên Học vấn đại học đại học đại học Xin chân thành cảm ơn anh/chị 39 Appendix 2: Survey Questionnaire (in English) Hello! We are investigating a study on factors affecting consumers’ re-purchase intention towards Vietnamese retail banking industry It is highly appreciated for your support to complete this questionnaire Your evaluation is a valuable contribution for our study All provided information shall be kept confidentially Thank you! Part 1: Please CIRCLE how strongly you agree or disagree with each of following statements on the scale of to 1 = strongly disagree = disagree = neutral = agree = strongly agree The bank which you conduct the majority of your banking transactions is ………………… (Referred as X) Location of the bank’s Automatic Teller Machines (ATM) network is convenient I can make transaction easily with the bank via the Internet and phone banking services offered 5 Opening hours of the bank is long enough 5 Number of the bank’s branches is big The bank provides its services at the time it promises to so When I have problems, the bank is sympathetic and reassuring I receive prompt service from the bank’s employees I feel safe in my transaction with the bank 10 The bank’s employees are polite 11 The Bank’s employees know the bank’s product and service very well The bank’s employees know what my needs are and how the bank’s 13 The bank’s employees give me personal attention 14 Interest rate of the bank is competitive 15 Services fees of the bank is competitive 16 The bank operation is stable 17 Reputation of the bank is good 18 Size of the bank is large 19 The bank has up to date equipments 20 The bank’s physical facilities are visually appealing Location of the bank’s branches is convenient 12 products can satisfy them 40 21 The bank’s employees are well dressed and appear neat 22 I will say positive things about the bank to other people 23 I will recommend the bank to some one who seeks my advice 24 I will encourage my friends and relatives to use services with the bank 25 I will consider the bank as my first choice to use services 26 I will use more services with the bank in the next few years Part 2: Please tick the most appropriate box: Gender Male Female Age group 18-25 26-30 31-40 41-50 50 and older Monthly income Under VND5 million over VND10 million to VND 20 million VND5 – 10 million over VND20 million and higher Highest level of Education Lower Bachelor degree Bachelor degree Postgraduate degree Thank you very much 41 Appendix 3: Reliability of Convenience Reliability Statistics Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items 832 830 Inter-Item Correlation Matrix COV1 COV2 COV3 COV4 COV5 COV1 1.000 561 530 376 492 COV2 561 1.000 553 442 562 COV3 530 553 1.000 554 447 COV4 376 442 554 1.000 463 COV5 492 562 447 463 1.000 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected ItemTotal Correlation Squared Multiple Cronbach's Alpha Correlation if Item Deleted COV1 13.37 10.669 622 411 800 COV2 13.79 8.883 677 477 785 COV3 13.62 9.946 667 469 786 COV4 13.84 10.505 571 369 812 COV5 13.49 10.441 623 404 798 42 Appendix 4: Reliability of Service Quality Reliability Statistics Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items 922 921 Inter-Item Correlation Matrix SQ1 SQ2 SQ3 SQ4 SQ5 SQ6 SQ7 SQ8 SQ1 1.000 723 500 616 514 461 504 489 SQ2 723 1.000 688 754 660 669 716 713 SQ3 500 688 1.000 654 505 511 527 550 SQ4 616 754 654 1.000 468 542 590 582 SQ5 514 660 505 468 1.000 602 551 652 SQ6 461 669 511 542 602 1.000 652 625 SQ7 504 716 527 590 551 652 1.000 662 SQ8 489 713 550 582 652 625 662 1.000 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected ItemTotal Correlation Squared Multiple Cronbach's Alpha Correlation if Item Deleted SQ1 25.26 26.540 663 546 917 SQ2 25.37 24.468 891 808 898 SQ3 25.20 26.775 688 525 915 SQ4 24.98 26.871 745 627 911 SQ5 25.15 26.977 696 542 914 SQ6 25.35 26.005 717 552 913 SQ7 25.51 25.313 745 594 911 SQ8 25.57 25.856 758 614 909 43 Appendix 5: Reliability of Competitiveness of Price Reliability Statistics Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items 828 827 Inter-Item Correlation Matrix PRI1 PR2 PRI1 1.000 706 PR2 706 1.000 Item-Total Statistics Scale Mean if Item Scale Variance if Corrected Item-Total Squared Multiple Cronbach's Alpha if Deleted Item Deleted Correlation Correlation Item Deleted PRI1 3.22 908 706 499 a PR2 3.26 831 706 499 a 44 Appendix 6: Reliability of Reputation Reliability Statistics Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items 783 769 Inter-Item Correlation Matrix REP1 REP2 REP3 REP1 1.000 604 486 REP2 604 1.000 547 REP3 486 547 1.000 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected ItemTotal Correlation Squared Multiple Cronbach's Alpha Correlation if Item Deleted REP1 7.65 2.218 613 399 698 REP2 7.72 1.880 658 448 629 REP3 7.97 1.619 579 337 747 45 Appendix 7: Reliability of Tangibles (before deleting TAN3 item) Reliability Statistics Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items 679 689 Inter-Item Correlation Matrix TAN1 TAN2 TAN3 TAN1 1.000 784 228 TAN2 784 1.000 229 TAN3 228 229 1.000 Item-Total Statistics Scale Mean if Item Scale Variance if Corrected Item-Total Deleted Item Deleted Correlation Squared Multiple Cronbach's Alpha Correlation if Item Deleted TAN1 6.48 1.637 659 618 371 TAN2 6.59 1.741 669 618 369 TAN3 6.39 2.709 242 058 878 46 Appendix 8: Reliability of Tangibles (after deleting TAN3 item) Reliability Statistics N of Cronbach's Alpha Cronbach's Alpha Based on Standardized Items Items 879 878 Inter-Item Correlation Matrix TAN1 TAN2 TAN1 1.000 784 TAN2 784 1.000 Item-Total Statistics Scale Mean if Item Scale Variance Corrected Item-Total Deleted if Item Deleted Correlation Squared Multiple Cronbach's Alpha Correlation if Item Deleted TAN1 3.14 716 784 615 a TAN2 3.25 803 784 615 a 47 Appendix 9: Reliability of Consumers’ Re-purchase Intention Reliability Statistics Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items 935 934 Inter-Item Correlation Matrix CRI1 CRI2 CRI3 CRI4 CRI5 CRI1 1.000 746 726 667 682 CRI2 746 1.000 860 773 734 CRI3 726 860 1.000 769 705 CRI4 667 773 769 1.000 757 CRI5 682 734 705 757 1.000 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected ItemTotal Correlation Squared Multiple Cronbach's Alpha Correlation if Item Deleted CRI1 13.67 10.300 776 613 928 CRI2 13.87 9.658 875 794 910 CRI3 13.88 9.594 856 775 913 CRI4 13.95 9.355 828 698 918 CRI5 13.79 9.486 797 648 925 48 Appendix 10: Pearson correlation coefficient KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square 3.312E3 Df 300 Sig .000 Communalities Initial 884 Extraction COV1 1.000 660 COV2 1.000 683 COV3 1.000 665 COV4 1.000 684 COV5 1.000 696 SQ1 1.000 608 SQ2 1.000 863 SQ3 1.000 587 SQ4 1.000 733 SQ5 1.000 689 SQ6 1.000 669 SQ7 1.000 687 SQ8 1.000 749 PRI1 1.000 844 PR2 1.000 836 REP1 1.000 697 REP2 1.000 754 REP3 1.000 686 TAN1 1.000 880 TAN2 1.000 884 CRI1 1.000 761 CRI2 1.000 865 CRI3 1.000 804 CRI4 1.000 813 CRI5 1.000 755 49 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 884 Approx Chi-Square 3.312E3 Df 300 Extraction Method: Principal Component Analysis Total Variance Explained Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings Initial Eigenvalues Compone nt Total % of Cumulative Variance % Total % of Cumulative Variance % Total % of Cumulative Variance % 9.761 39.044 39.044 9.761 39.044 39.044 5.184 20.735 20.735 3.827 15.308 54.352 3.827 15.308 54.352 4.274 17.096 37.831 1.598 6.393 60.745 1.598 6.393 60.745 2.989 11.957 49.788 1.197 4.789 65.534 1.197 4.789 65.534 2.460 9.839 59.627 1.147 4.590 70.124 1.147 4.590 70.124 1.850 7.399 67.026 1.021 4.085 74.208 1.021 4.085 74.208 1.796 7.182 74.208 824 3.294 77.503 654 2.616 80.119 584 2.334 82.453 10 571 2.285 84.738 11 484 1.937 86.675 12 410 1.642 88.317 13 382 1.527 89.844 14 356 1.422 91.266 15 310 1.239 92.505 16 307 1.230 93.735 17 262 1.050 94.784 18 241 963 95.747 19 202 809 96.556 20 197 787 97.343 21 184 735 98.078 22 163 651 98.728 50 23 122 486 99.215 24 102 407 99.622 25 095 378 100.000 Extraction Method: Principal Component Analysis 51 ... lowering of entry barriers and blurring product lines of banks and nonbanks since the financial sector reforms, banks are functioning increasingly under competitive pressures emanating from within... capability of firms Moreover, according to a study of Anderson et al (1976), one of the highestranking determinant factors of selecting a bank in the USA is the reputation of the bank In a study... customers’ re-purchase intention In the banking industry, Gerrard & Cunningham (2004) suggest that price plays a more influential role in influencing customers’ re-purchase intention behaviour Therefore,