i TRƯỜNG ĐẠI HỌC MỞ TP. HCM UNIVERSITEÙ LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL MBAVB4 HO MINH TUAN DETERMINANTS OF CUSTOMER SATISFACTION OF INTERNET BANKING IN VIETNAM MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION (PART-TIME) Tutor’s Name: Dr. NGUYEN VAN PHUC Student’s Name: HO MINH TUAN Ho Chi Minh City (2011) ii COMMITMENT I hereby committed that the thesis content was prepared and written by myself with information obtained from reliable sources for the partial fulfillment of the requirement for the degree of Master in Business Administration program. HoChiMinh City, December, 2011 HO MINH TUAN iii ACKNOWLEDGEMENT First of all, I would like to express my deepest gratitude to Dr. NGUYEN VAN PHUC who gave me a lot of valuable comments and guidance during this thesis. Secondly, I would like to express my sincere acknowledgement to Belgian professors from Solvay Brussels School of Economics and Management who taught me not only valuable knowledge and experiences on business administration but also analytical, creative thinking and professional working methods. Thirdly, I would like to appreciate all Vietnamese professors from Ho Chi Minh City Open University who transfer me knowledge, experiences and spirit which guided me during this program. Fourthly, I would like to thank Mr. Serge Bywalski, Ms. Hien and Ms. Ha – program coordinators - for their support on schedule planning, academic procedure and extra- courses tutoring. Next, I would like to thank my team members and classmates who studied together during two years, contributed innovative ideas, shared experiences and developed close friendship. Finally, I would like to express love to my parents and younger sister who have encouraged and motivated me during the program. v ABSTRACT Internet banking is a new channel of banking services which have a lot of benefits against other traditional channels. It allows customers to perform a wide range of banking services electronically via banks’ websites. It helps customers to enjoy their financial services not only anywhere, anytime but also faster and more efficient. Internet banking becomes a key and strategic component of every bank nowadays but its customers remain very modest. Both customer development and customer retention are much focused. Customer development takes considerably more time and cost because other potential Vietnamese customers have low level of income, less knowledge to use Internet and long time habit of cash transaction. Therefore, customer retention strategy is more preferable by improving level of customer satisfaction. This research is to find key determinants of customer satisfaction of Internet banking in Vietnam and to propose strategic recommendations for banks to increase customer satisfaction level and then to succeed in their customer retention. About findings of the study, the three most important determinants of customer satisfaction of Internet banking are convenience, image, security and website content (security and website content have the same important level). In turn, key determinants of convenience are enabling customers to make their transaction at anytime and anywhere. Key determinants of security are certification from a famous international institution and available 24/24 hot-line for any queries. Key determinants of website content are accessible at anytime, each transaction performs fast and having confirmation notice. Key determinants of customer support are fast, free hot-line available for any queries, collection of regular feedback from customers and consulting the reason and solution for future experiences. Key determinants of promotion are higher saving interest rate and discounts for eating, shopping, tourism at some specific partnership stores. Key determinants of image are modern and dynamic. Keywords: Vietnam, Internet banking, customer satisfaction, determinants. vi TABLE OF CONTENT COMMITMENT ii ACKNOWLEDGEMENT iii TUTOR’S COMMENT iv ABSTRACT v TABLE OF CONTENT vi ABBREVIATION ix LIST OF FIGURES x LIST OF TABLES xi CHAPTER 1: INTRODUCTION TO THE STUDY 1 1.1 Rationale of the study 1 1.2 Problem statement 2 1.3 Research objectives and questions 2 1.4 Significance and scope of the study 2 1.5 Research methodology 2 1.6 Structure of the study 3 CHAPTER 2: LITERATURE REVIEW 4 2.1 Customer satisfaction 4 2.2 Service quality and Website quality 6 2.3 Research model 8 2.4 Internet banking 10 2.4.1 History of Internet banking 10 2.4.2 Definition of Internet banking 11 2.4.3 Security method 11 vii 2.4.4 The architecture of Internet banking 12 2.4.5 The advantages and disadvantages of Internet banking 14 2.4.6 The current situation of Internet banking in the World 15 2.4.7 The development of Internet banking in Vietnam 17 CHAPTER 3: RESEARCH METHODOLOGY 20 3.1 Type of research 20 3.2 Research design 21 3.3 Target population 24 3.4 Sample size 24 3.5 Questionnaire design 24 3.6 Data collection 25 CHAPTER 4: DATA ANALYSIS AND FINDINGS 26 4.1 Profile information of respondents 26 4.2 Usage volume of current and potential products 28 4.3 Determinants of customer satisfaction 29 4.4 Determinants of each customer satisfaction factor 32 4.4.1 Determinants of convenience 32 4.4.2 Determinants of security 33 4.4.3 Determinants of website content 35 4.4.4 Determinants of customer support 36 4.4.5 Determinants of promotion 38 4.4.6 Determinants of image 39 CHAPTER 5: CONCLUSION AND RECOMMENDATION 41 5.1 Conclusion 41 5.2 Recommendation for banks to improve their customer satisfaction 42 viii  Image building 42  Product development 42 5.3 Limitation of the study and future suggestion 43 REFERENCES 44 APPENDICES 46 ix ABBREVIATION ASEAN Association of Southeast Asian Nations VNNIC Vietnam Internet Network Information Center ACSI American Customer Satisfaction Index CORE Centralized Online Real-time Exchange ATM Automatic Teller Machine SMS Short Message Service PIN Personal Identification Number TAN Transaction Identification Number SSL Secure Socket Layer VND Viet Nam Dong SEC Social Economic Class x LIST OF FIGURES Figure 1.6: The structure of the study 3 Figure 2.1.1: American Customer Satisfaction Index 5 Figure 2.1.2: Diagram of customer satisfaction factors 5 Figure 2.3: Variables development 8 Figure 2.4.4: The architecture of Internet banking 12 Figure 2.4.7.1: Internet users in Vietnam 2004 - 2010 16 Figure 2.4.7.2: Online business development 2007 - 2010 17 Figure 3.2.1: Research design 2 Figure 4.1.1: Gender distribution 25 Figure 4.1.2: Age group distribution 25 Figure 4.1.3: Distribution of educational level 26 Figure 4.1.4: Distribution of Internet banking usage frequency 26 Figure 4.2.1: Usage volume of current products 27 Figure 4.2.2: Usage volume of potential products 28 Figure 4.3: Customer satisfaction determinants 29 Figure 4.4.1: Determinants of convenience 31 Figure 4.4.2: Determinants of security 32 Figure 4.4.3: Determinants of website content 33 Figure 4.4.4: Determinants of customer support 34 Figure 4.4.5: Determinants of promotion 35 Figure 4.4.6: Determinants of image 36 xi LIST OF TABLES Table 2.2.1: Service quality dimensions 7 Table 2.2.2: Website quality dimensions 8 Table 3.1: Comparison between traditional and Internet survey method 20 Table 3.2.1: Variables coding 22 Table 4.3.1: T-test for customer satisfaction determinants 29 Table 4.3.2: T-test for Likert scale 29 Table 4.4.1: T-test for determinants of convenience 31 Table 4.4.2: T-test for determinants of security 32 Table 4.4.3: T-test for determinants of website content 33 Table 4.4.4: T-test for determinants of customer support 34 Table 4.4.5: T-test for determinants of promotion 35 Table 4.4.6: T-test for determinants of image 36 [...]... improve customer satisfaction level by finding the most important satisfaction factors of Internet banking in Vietnam 1.3 Research objectives and questions a) Research objectives i To identify key determinants of customer satisfaction of Internet banking in Vietnam ii To propose recommendations for banks to improve their customer satisfaction b) Research questions i What are key determinants of customer satisfaction. .. variable of image plays an important part in satisfaction factors of Internet banking customers The concept of image was mentioned by Philip Kolter (2001) and in many other researches as well 2.4 Internet banking 2.4.1 History of Internet banking The previous version of today’s online banking services was the distance banking services over electronic media from the early 1980s Online banking services... registered Internet banking users can now perform common banking transactions such as writing checks, paying bills, transferring funds, printing statements, and inquiring account balances Internet banking has evolved into a “one stop service and information unit” that promises great benefits to both banks and consumers 11 2.4.2 Definition of Internet banking Internet banking is the use of the Internet as... disclosure publications in their offices by law In summary, most banks consider Internet banking services as the crucial factor for longterm success in the world of electronic commerce Penetration of Internet banking is increasing in most countries and the market for Internet banking is forecast to grow sharply thanks to the evolving communication technology In spite of huge benefits, Internet banking generates... determinants of customer satisfaction of Internet banking in Vietnam? 1.4 Significance and scope of the study Besides attracting new customers for Internet banking, banks are trying to keep their current customers by improving their level of satisfaction This study is to find the most important satisfaction factors of Internet banking customers and to propose strategic recommendation for banks However, the... promotion power in the Vietnamese Internet banking context Sub-variables are developed based on information collected from newspapers, magazines, journals and articles Descriptive statistics are used to describe the profile information of respondents, the usage volume of current and potential products, determinants of customer satisfaction and determinants of each satisfaction factor In addition, T-test... mortar’ origin Standinaviska Easkilda Banken was Sweden’s first Internet bank, having gone on- line in December 1996 It has 1,000 corporate clients for its Trading Station – an Internet based trading mechanism for forex dealing, stock-index futures and Swedish treasury bills and government bonds Banks in Japan are increasingly focusing on e -banking transactions with customers Internet banking is an important... advantage of huge and young population (87 million people in which over 60% of them under the age of 30) and high Internet penetration comparing to other ASEAN countries (26.8 millions of Internet users representing for 31% of the population in 2010), Vietnam is very potential to all kinds of Internet- based business and activities such as e-shopping, e -banking, ecommunication, e-entertainment, e-education,... as Personal Digital Assistants, Internet Telephone and Wireless Communication channels are used in the United State banking sector Over two thirds of United Kingdom consumers conducting the majority of their banking activities on the internet in 2006, compared to one in five in 2005, according to Lloyds TSB In addition, 57% of the people surveyed said that they banked via the internet more often recently... questions which are categorized into three sections (see Appendix 1) The first section (question 1 - 5) gathers profile information of respondents such as gender, age, education, Internet banking usage frequency The second section (question 6 – 8) collects the importance level of six key satisfaction factors of 25 Internet banking such as convenience, security, website content, customer support, promotion . level of customer satisfaction. This research is to find key determinants of customer satisfaction of Internet banking in Vietnam and to propose strategic recommendations for banks to increase customer. model 8 2.4 Internet banking 10 2.4.1 History of Internet banking 10 2.4.2 Definition of Internet banking 11 2.4.3 Security method 11 vii 2.4.4 The architecture of Internet banking 12 2.4.5. customer satisfaction level and then to succeed in their customer retention. About findings of the study, the three most important determinants of customer satisfaction of Internet banking are convenience,