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Luận văn thạc sỹ tiếng Anh: Cải thiện phân phối ngân hàng bán lẻ tại BIDV.CONTENTSACKNOWLEDGMENTSEXECUTIVE SUMMARYABBREVIATIONLIST OF FIGURES, TABLES AND CHARTSINTRODUCTION1CHAPTER I: THEORETICAL BACKGROUND OF RETAIL BANKING DISTRIBUTION CHANNELS5I.1. Retail banking distribution channel overview5I.1.1. Retail banking and retail banking market5I.1.2. Retail banking channel6I.1.3. Evolution of retail banking channels8I.1.4. Classification of retail banking distribution channel11I.2. Challenges in the distribution of retail financial services13I.2.1. Changes in Customer Behavior13I.2.2. New technologies16I.2.3. Competitive dynamics in retail financial services17I.3. Trends of distribution of retail banking services18I.3.1. Trends of distribution retail banking services via branches18I.3.2. Contact Center21I.3.3. Selfservice – ATM22I.3.4. Mobile banking22I.3.5. Internet banking23I.3.6. Telephone Banking24I.3.7. Other new channels24I.4. Some considerations in Retail banking channel management25I.4.1. Organizational Structure25I.4.2. Technology26I.4.3. Human Resource27I.5. Conclusion28CHAPTER II: CURRENT STATE OF RETAIL BANKING DISTRIBUTION CHANNEL AT BIDV29II.1. Current state of retail banking market and retail banking channel development in Vietnam29II.1.1. Current state of retail banking market in Vietnam29II.1.2. Current state of retail banking channel development in Vietnam32II.2. Overview of BIDV and retail banking channel at BIDV33II.2.1. Overview of BIDV and retail banking at BIDV33II.2.2. Retail banking channel development at BIDV35II.3. Conclusion44 CHAPTER III: SOME SUGGESTIONS AND RECOMMENDATIONS FOR IMPROVING BIDV RETAIL BANKING DISTRIBUTION CHANNELS46III.1. Overall direction: Integration of multichannel through the distribution of the customer’s preference.46III.2. Specific solution and suggestions for improving physical branch channel46III.2.1. Evolution of physical branch46III.2.2. Transformation of Organization Structure toward sales – oriented47III.2.3. Redesign the look and feel as well as the workflow of retail branches48III.2.4. Setting up some new different kind of roles in branch layout50III.3. Specific Solutions and suggestions for improving electronic channel52III.3.1. ATMPOS System52III.3.2. Internet bankingMobile banking53III.3.3. Contact Center55III.3.4. Technology55III.3.5. Human resource57III.4. Conclusion57CONCLUSION59REFERENCESAPPENDIX
Subject: Improving retail banking distribution channels at Bank for Investment and Development of Vietnam INTRODUCTION Rationale Customers, competition and technological advances are rapidly changing the landscape of the provision for financial services globally Customer requirements, current and anticipated preferences need to be centre of the banking/financial services experiences One of that is to allow the customers to have choice of how, when, where they can interact with the banks Customer interactions need to be increasingly accessible, efficient and simple, tailored to individual requirements and trustworthy Recently, these market drivers are rapidly transforming the retail distribution landscape for banking services from a branch-dominated paradigm to one of integration and balance among multiple channels Owing to deregulation, new technology and changing customer behavior, competition in Vietnam banking sector is getting fiercer The intensified competition recently, especially in retail banking has resulted in a number of banks, specifically Joint-stock commercial banks (JSCB) like Asian Commercial Bank (ACB), Techcombank, Sacombank, etc have already launched some stateof the art distribution channel like on phone banking, internet banking, mobile banking, call center, act These new changes in banking channel strategy of JSCB has more and more impact on State-owned commercial banks (SOCB) like BIDV in the battle for customer as well as for growth and future of banks Bank for Investment and Development of Vietnam (BIDV) founded in 1957 is one of the biggest states – owned banks in Vietnam Its main customers are large state owned companies with project finance and long term loan and SMEs for other banking services Therefore, its core businesses are fund mobilization, lending, guarantee, agent banking, etc However, starting from 2005, realizing the increasingly importance of banking services to the stability development of the bank in common as well as retail banking in specific, BIDV is in the change its direction from focusing mainly on wholesale banking to promoting retail banking Recently, BIDV has set up its objective to become one of leading banks in retail banking in Vietnam in 2015 The branch presently dominates BIDV’s distribution approach It has a nationwide network of branches with vast coverage of around 108 branches and more than 200 face-to-face transaction points Almost all these branches are full service ones which offer an entire range of products and services under the BIDV umbrella Other methods of interaction such as ATM network, POS play not very important role in delivering financial services to customers Other remote channels such as Internet banking, Mobile banking, etc are just emerging in BIDV Up to now, the retail banking distribution channels in BIDV are insufficient, not good enough to serve even more and more demanding customers That might be a greater problem in case they would like to become one of leading banks in retail banking in Vietnam in 2015 When studying about the changes in retail banking distribution channel landscape globally and nationwide, as an officer of BIDV with responsibility to study, propose and implement some new channels for the bank, the author would like to choose the topic for the final thesis “Improving retail banking distribution channels at Bank for Investment and Development of Vietnam” The author hopes that the results of this research would bring useful suggestions for BIDV in developing optimal retail banking distribution channels Objectives and research questions The objective of the study is to examine the changes and trends of retail banking distribution channels recently as well as best practices in developing retail banking channels; analyze the current situation of retail banking distribution channel development at BIDV In doing that, the study also identify some problems in BIDV’s retail banking distribution channel development and propose suggestions and recommendations for the successful setting up and implementing an optimal retail banking distribution channel at BIDV Here come the research questions (specific objectives): (i) What are the changes and trends in retail banking distribution channel development recently? What are the best practices in developing these channels? (ii) How is the situation in BIDV? (iii) What BIDV should take into consideration to improve retail banking distribution channels in the coming time in order to reach its desirable objective? Scope and limitation The author limits the scope of study in BIDV retail banking distribution channels from 2006 up to now The thesis deals with retail banking distribution channel management in term of customer’s perspective instead of trying to analyze as well as give out proposals related to commercial management of these channels Research methodology To conduct the analysis in preparation for this final thesis, intensive data collection has been carried out to categorize primary and secondary data for the research: Primary data includes official data and findings, reports published by BIDV related to banking channel management Besides the above source of information, the author conducted some in depth interviews with BOM of BIDV, the head of some departments at BIDV who are in charge of channel management to explore different views and interests in banking channel management Secondary data on the other hand is extracted from the World Wide Web and from the reports published by some international institutes such as McKinsey, IBM, Capgemini, Boston Consulting Group, etc as well as from the domestic journals Structure of the thesis The thesis will aim at pointing out some problems and propose suggestions, recommendations for improving retail banking distribution channels at BIDV in coming time Apart from the Introduction and Conclusion, the content of the thesis consists of three parts as follow: Part 1: Theoretical background of retail banking distribution channels This part goes through the overview of retail banking activities and then discusses retail banking distribution channels The thesis mentions from the evolution of such kinds of distribution channels to its changes, recent trends globally, its practices for best retail banking as well as some considerations the channel managers should pay attention in retail banking distribution channel management This part places the ground for the author to look into BIDV current retail banking distribution channels in the journey to point out its problems Part 2: Current status of retail banking distribution channels at BIDV This part will assess and discuss retail banking distribution channel development at BIDV This starts with the current status of retail banking and retail banking distribution channels in Vietnam to give the reader an overview of the whole playing field in which BIDV is operating and ends with pointing out all problems related to retail banking distribution channel management as well as its limitations for each specific channel (branch, ATM system, Internet banking, Mobile banking, Call Center, etc) Part 3: Some suggestions and recommendations for improving retail banking distribution channels at BIDV Based on assessment from part of this thesis, the author gives out some suggestions as well as recommendations for some critical problems in retail banking distribution channel development and management at BIDV in the coming time in order to reach its desirable objective as the first retail bank in Vietnam in 2015 CONTENTS Subject: Improving retail banking distribution channels at Bank for Investment and Development of Vietnam .1 INTRODUCTION .1 ACKNOWLEDGMENTS EXECUTIVE SUMMARY .8 .11 ABBREVIATION 12 LIST OF FIGURES, TABLES AND CHARTS 13 CHAPTER I .14 THEORETICAL BACKGROUND OF RETAIL BANKING DISTRIBUTION CHANNELS 14 I.1.Retail banking distribution channel overview 14 I.1.1.Retail banking and retail banking market 14 I.1.2.Retail banking channel .15 I.1.3.Evolution of retail banking channels 17 I.1.4.Classification of retail banking distribution channel 20 I.2.Challenges in the distribution of retail financial services 22 I.2.1.Changes in Customer Behavior 22 I.2.2.New technologies .24 I.2.3.Competitive dynamics in retail financial services 26 I.3.Trends of distribution of retail banking services .26 I.3.1.Trends of distribution retail banking services via branches 26 I.3.2.Contact Center 29 I.3.3.Self-service – ATM .30 I.3.4.Mobile banking 30 I.3.5.Internet banking 31 I.3.6.Telephone Banking .32 I.3.7.Other new channels 32 I.4 Some considerations in Retail banking channel management 33 I.4.1.Organizational Structure .33 I.4.2.Technology 34 I.4.3.Human Resource 35 I.5.Conclusion 35 CHAPTER II 37 CURRENT STATE OF RETAIL BANKING .37 DISTRIBUTION CHANNEL AT BIDV 37 II.1.Current state of retail banking market and retail banking channel development in Vietnam 37 II.1.1.Current state of retail banking market in Vietnam .37 II.1.2.Current state of retail banking channel development in Vietnam 40 II.2.Overview of BIDV and retail banking channel at BIDV .41 II.2.1.Overview of BIDV and retail banking at BIDV 41 II.2.2.Retail banking channel development at BIDV 42 II.3.Conclusion 52 CHAPTER III 53 SOME SUGGESTIONS AND RECOMMENDATIONS FOR IMPROVING BIDV RETAIL BANKING DISTRIBUTION CHANNELS .53 III.1.Overall direction: Integration of multi-channel through the distribution of the customer’s preference 53 III.2.Specific solution and suggestions for improving physical branch channel 54 III.2.1.Evolution of physical branch 54 III.2.2.Transformation of Organization Structure toward sales – oriented 54 III.2.3.Redesign the look and feel as well as the workflow of retail branches 56 III.2.4.Setting up some new different kind of roles in branch layout 58 III.3.Specific Solutions and suggestions for improving electronic channel 59 III.3.1.ATM/POS System 59 III.3.2.Internet banking/Mobile banking .61 Customer segmentation 61 Marketing Strategy .61 III.3.3.Contact Center 63 III.3.4.Technology 63 III.3.5.Human resource .64 III.4.Conclusion 65 CONCLUSION 66 REFERENCES 68 APPENDIX 69 ACKNOWLEDGMENTS I would like to express my sincere thanks to MD Dang Manh Pho for his valuable guidance and advice for my research I also would like to thank all ULB members for their valuable arrangement and kind support during my studying period I greatly thank BIDV Retail Products and Marketing Department for their consultations and providing valuable documents for my research Finally, I am heartily indebted to my family for their help, encouragement and support during my study Improving retail banking distribution channels at BIDV EXECUTIVE SUMMARY Jean Paul Votron from Bank Foties in Stephen Timewell Magazine on retail market used to say that "Retail is the problem of distribution" This is especially true for retail banking today as banks are moving nearer and nearer to be alike as retailers Distribution channels are playing more and more important role in retail banking nowadays In retail market, beside the quality of the service as well as reasonable price, a convenient method of distribution which is used to deliver the financial services also has great impact on the customer’s buying decisions Banking customers are today demanding access to their finances through a range of traditional and emerging customer touch points anytime, anywhere They are demanding seamless, multi-channel sales and service experiences These demands are rapidly transforming the retail banking distribution channel landscape all over the world from a branch – dominated paradigm to one of integration and balance among multiple channels The same situation is taking place in Vietnam retail banking recently Starting from 2003 up to now, retail banking distribution channels in Vietnam have gradually developed in the battle among banks to catch as many retail customers as possible These banks, especially some joint – stock commercial banks have launched many state – of – art distribution channels like Internet banking, Phone banking, Mobile banking, Call Center, etc This period also witnessed the financial turmoil and economic downturn all over the world in general as well as in Vietnam economy in particular In this context, all banks are eyeing into retail banking as a stable market for development BIDV is not an exception Starting as corporate banking since 1957, BIDV now is one of the biggest state-owned banks in Vietnam providing a wide spectrum of commercial banking products and services to their retail and corporate banking customers From 2005, the banks started to promote its retail banking and recently stated its objective to become one of leading banks in retail banking in Vietnam in 2015 To realize its dream, the bank has been putting great efforts on reinforcing its distribution channels Although BIDV now is among three banks that have extensive branch as well as ATM network, retail banking distribution channels at BIDV are still not highly appreciated by customers A recent survey on customer satisfaction in 02 typical BIDV branches in Hanoi showed that around 32% of asked customers complained about BIDV service quality in almost of its channels such as not good staff attitude, so many procedures, long waiting queue at branches, errors of ATM system, poor functionalities and less competitive in services supplied in such channels as Internet Nguyen Le Dung –MBM7 Improving retail banking distribution channels at BIDV banking, mobile banking in comparison with other banks, etc These facts encouraged me to find out the real problems lying behind and made me ask myself what can be done to improve retail banking distribution channels at BIDV where now I am working as an officer Starting from studying retail banking distribution channel landscape globally, the thesis has realized some important trends as follow: • There is a increasing recognition that a change in the role of the branch, from being transaction-oriented to advice – oriented, brings with it a change in role of key people in the branch – especially the branch manager and the staff responsible for selling an increasingly broad and more complex portfolio of financial services products The branch of the future is likely to be a lot smaller, more sales and advice oriented, automated and better connected to all other channels • As banks cannot return to the single channel worlds, banks heavily invest in alternative channels to keep up with market development and customer demand Moreover, technological advances can enhance the ability for direct channels to fulfill their potential as a source of banking sales and service with higher convenience at lower costs • Banks are aware of the increasing importance of channel interconnectivity from a customer experience perspective • Whenever rethinking of the distribution channels, the banks should take into consideration such problems as the change of organizational structure, new technology enhancement as well as human resource challenges Returning to BIDV current status of retail banking distribution channels, the thesis has point out some critical problems, as follow: • Retail banking distribution channel at BIDV is limited in number as well as services supplied with customers At the moment, branch is the dominant channel Such direct channels like Internet banking and Mobile banking is emerging and just provide some basic information such as balance, interest rate, location of ATM, etc • Retail banking distribution channel management at HO as well as at branch seems to be not good enough Specifically, each channel is managed by a separately department at HO, lack of overall management • Branch organizational structure shows the lack of retail oriented with the absence of a dedicated team to serve individual customers Now at BIDV branch, there is only one department called Customer Relation Division which serves both individual and corporate customers without segmentation Nguyen Le Dung –MBM7 Improving retail banking distribution channels at BIDV • Branch look and feel seems to be transactional – oriented in which there is no room for private banking customers, no financial advice corner, just place for teller to conduct all kinds of financial transactions • About self-service channels, services provided through this channel (such as ATM, POS) are so poor There is no call center for supporting customers and merchants, just a hot – line which is routed to one card center staff at a time • Lack of integrated channel management platform to manage channels including ATM, POS, mobile banking, internet banking, IVR, etc To deal with such problems, the author suggests BIDV to take into considerations some recommendations to improve its retail banking distribution channels such as: • Setting up multi-channel approach which means the banks need to combine and balance its strength in network of branch with other alternative channels to provide customer a fully integrated customer experience across all channels It also helps to satisfy customers anytime, anywhere according to customer’s preferences • Transforming the branch organization structure towards sales – oriented by redesigning the branch layout, refining some processes as well as adding some more new roles at branch for some new customer segments such as loan advisers, Service Customer Representative, Private banking officers, etc • For self-service channels, it is necessary to improve customer service by newly setting up a call center for customer and merchants support, diversifying services provided via this channel by partnership with some service providers • For Internet banking and Mobile banking, it is high time to set up a clear strategy of development in which at first setting the purpose of catching as many customers as possible as high priority to win the challenge in the battle with other banks because BIDV is a follower in this field • Taking into consideration of implementing some critical technological projects such as CRM, MIS, Autobank, etc as well as designing careful training plans to set up the ground for retail banking development as well as its human resource improvement Nguyen Le Dung –MBM7 Improving retail banking distribution channels at BIDV - - The branch design has to visualize the function of the bank as a centre for financial advice Operational activities not belong in the usual more expensive outfitted customer space Branch department signs must make clear to the customer to whom he or she has to go Brochure presentation and promotional material in the branch will be improved All employees in branch work directly with customers All other activities currently present in branch will be moved upstairs Table in middle should be provided with application forms so SCRs can help customers preparing services they require while waiting ATMs will be in area that is open for all public Not only available for BIDV customers but for all public with ATM cards Private bank account managers and product specialists are present in branch when asked for by PB customers Because of the frequency of the product at least one Loan officer is present in branch at all times If necessary another loan officers comes down Private Banking customers will be serviced in meeting rooms for all non standard products Cash products for Private Banking customers must be serviced at teller, POS or ATM III.2.4 Setting up some new different kind of roles in branch layout Different kind of roles must be present in setting up of new branch layout For each group, a proposal description of main tasks, skills and educational level is given in table below: Table New role description in proposed branch layout Job name Service customer Representative Security Main tasks First contact with the bank for customers that enter the bank Welcome customers if they can be of service Help customers to their required service Help customer to prepare service for basic/simple products Do not help customers with complex products (e.g loans), only guide the customer to the appropriate desk (safe Shows “trust” to customers Nguyen Le Dung –MBM7 Skills Client focused Friendly Open Must give excellent first service to customer Must know where customer must go for what needs Must be able to help customers to use ATM Have knowledge of how to prepare required service (e.g provide form, help fill in) This for basic/simple products only Friendly 58 Improving retail banking distribution channels at BIDV guard) Teller Guarantee the safety customers in bank of Open In back ground, but present Good security skills Operational task: Customer focused Cash Withdrawal Friendly Cash Deposit Efficient in operational tasks Money Transfer (incl Bill Good knowledge of operational Payment) tasks Exchange foreign currency Good ability to explain to Handle and register application customer how to handle forms ATM cards Good knowledge of spoken Issue cards to customers English (depending on branch) Issue user info to customer BSMS and Direct banking (id and password) Private Banker Serve Private Bank (PB) Account customer at all times Take Manager work out of hands customers Know their PB customer very well Create cross sell opportunities for PB customers, etc Product Specialist Loan Officer Customer focused Friendly Open Interested in people private banker customers (where does customer go, what does he do, what is going on in his life, what does he need) Know products on high (overall) level Advise customers on products on detail level Advise Account Manager when visiting PB customer Client focused Friendly Open Exellent detail knowledge of product Must know about product use in mass market and in private bank market Same as Product Specialist but Same as Product Specialists but focused on loans focused on loans III.3 Specific Solutions and suggestions for improving electronic channel III.3.1 ATM/POS System Increasing revenue by value-added services and partnerships e.g top-up of mobile phone accounts from bank accounts or cards (e.g co-operation with VNPT, Viettel, VnPay), bill payment services (e.g co-operation with EVN), Nguyen Le Dung –MBM7 59 Improving retail banking distribution channels at BIDV implementing a merchant discount fee for merchants in conjunction with merchant promotion programs Product development: BIDV Card Centre needs to have a wider range of products to meet consumer requirements AND value-added services There must be clear commitment of time for delivery and service levels from all supporting functions of BIDV, e.g IT, Finance and PR Departments, once there is Board approval for a new product or service Improve customer service for cardholder Set up a call center support for cardholder with dedicated headcount A formal call center should be set-up with projection of number of seats, formal training, call scripts and support hours For a start, the card centre will be manned during office hours and after hours call to be routed to the card authorizer A tiered call centre support arrangements with a junior staff handling and screening general calls and more sensitive functions (like account blocking) to supervisor This will optimize the human resources and more experience staff can handle other operations IT staff should not have access to the card holder account especially blocking of the account This should be handled by card center customer service team For merchant Acquiring There is an urgent need to set up a dedicated merchant acquiring team at Card Centre to co-ordinate and manage merchant acquiring and POS terminal management across all branches ‘Key merchant’ team need to be set up to manage large merchants, including government merchants This team should comprise at least several experienced staff to manage key accounts e.g VNPT, EVN, major supermarket chains For mid-sized merchants and retail chain stores, there should be another team that works with BIDV branches nation-wide to provide adequate support and value-added services For smaller merchants, there should also be a team to proactively manage all branch efforts and to consider outsourcing for small merchants There should be a budget to encourage merchants to use the POS Terminals, not just a one-time merchant acquisition incentive (as is the current practice) This budget should include enough resources to develop merchant discount and promotion programs e.g organizing events to promote BIDV merchants to BIDV cardholders, as well as other incentives for branches to promote usage e.g Nguyen Le Dung –MBM7 60 Improving retail banking distribution channels at BIDV recognition for BIDV branch whose merchant base has the highest transaction value III.3.2 Internet banking/Mobile banking It is high time for setting up a strategy for Internet banking and Mobile banking development in BIDV In the first stage, BIDV should focus upon customer acquisition and subsequently, attracting value from the customer base Figure 13 Proposed strategies for Internet banking and Mobile banking development Customer segmentation Because customers’ knowledge about e-banking services in general and Internet banking services in particular is very limited at present so initially BIDV should segment the market into some segmentations for individual as well as corporate customers BIDV should also migrate the existing corporate and individual customers from Home Banking & Direct Banking onto the proposed Internet banking services Marketing Strategy Product: BIDV needs to differentiate its Internet banking services from its competitors, and add value from the customer’s point of view BIDV also makes people associate with the BIDV brand It is important for people view BIDV differently relative to its competitors BIDV also has to use some sorts of image to attract its target customers through prestige, practical / convenient or lifestyle Nguyen Le Dung –MBM7 61 Improving retail banking distribution channels at BIDV Price: For long term, BIDV should consider to charge customers the fee for usage, especially fee for closure in order to avoid customers finishing using services Initially, BIDV should provide two factor authentications – hardware token to customers However, in medium and long terms, BIDV has to charge customers for this device because it is quite expensive Place: There are several distribution channels to inform and distribute Internet banking services to the customers •ATM: BIDV has existing nationwide network of about 1000 Automated Teller Machines (ATMs) provides it with the ability to inform/distribute its Internet banking services to the ATM users Information about BIDV’s Internet banking services can be disseminated via ATM screen displays and/or brochure placements at the ATMs •Bank branches: BIDV’s branch network is an important distribution channel as it provides for face-to-face interaction with its various customers on a daily basis BIDV can leverage its branch network in its efforts to sell and market its Internet banking services to target customers A well-trained branch customer service personnel is a key factor in BIDV’s ability to promote its Internet banking services effectively •Direct Mail: Alternatively, BIDV may send direct mailers to its existing customers with the appropriately customized forms to market the Internet banking services •Events / Road shows: A popular marketing channel as it typically provides access to a relatively homogenous population at a particular venue •BIDV’s website: With rising internet penetration rates, especially in Hanoi and HCM City, BIDV can take advantage of its existing website as another platform for marketing its Internet banking services BIDV’s website can be enhanced to include a subsection providing information about its Internet banking services features, benefits, and downloadable application forms •Merchants: Merchants, especially those with customer bases similar to BIDV’s target customers, can be exploited as focused distribution channels through the establishment of strategic partnerships / co-branding programs • Besides, BIDV should come to universities and colleges, major state-owned companies, major joint stock companies to present Internet banking services and support for signing up on these places Nguyen Le Dung –MBM7 62 Improving retail banking distribution channels at BIDV Promotion: Promotion is about communicating and selling products and services to target customers Promotion includes advertising, as well as public relations and incentives for customers / strategic partners There are some kinds of method for advertising such as Mass Media, TV advertising… Mass Media includes TV, Print, Radio, and Internet III.3.3 Contact Center BIDV should establish as soon as possible a Contact Center which will become a supplementary channel for other retail banking channels at BIDV and is used to serve more than 2.8 million individual customers at the moment Especially in the case BIDV launches some new distribution channels, like Internet banking and Mobile banking,etc Contact Center will support BIDV a lot in serving customers BIDV Contact Center should be established centralized and support all BIDV customers III.3.4 Technology In the context of developing a more customer-centric business, CRM system is necessary for the transformation of branches from a transaction-oriented to a customer-centric and sales – focused role: Customer relationship management which is a system that provide bank staff with access to a CRM solution which is fully integrated with their day – to – day work environment and makes it easy to translate centralized marketing campaigns into successful customer interactions – will be critical in enabling them to manage the customer experience and drive sales As banks move to an integrated multi-channel architecture from inflexible, siloed legacy systems, banks need to consider to equip a integration channel platform which helps the bank to consolidate information and data from various channels to provide customer with a seamless experience of all channels that customers use The successful launching of Internet banking and Mobile banking channels is fully dependent on information technology Therefore, BIDV have to spend budget for it Currently, BIDV is in progress of international bidding this system In fact, IT infrastructure preparation and solution bidding period take a lot of time and effort of BIDV To implement Internet banking services, BIDV should consider list of things related to technology: Nguyen Le Dung –MBM7 63 Improving retail banking distribution channels at BIDV Internet infrastructure: To launch Internet banking, BIDV shall improve Internet infrastructure including Internet line bandwidth, Internet line backup, necessary devices for Internet access such as proxy, SSL proxy… Security infrastructure: Security factor is important one in implementing Internet banking services This factor includes comprehensive solution from token provided to customers, internal security system: authentication server, public key infrastructure, firewall, certificate authority, SSL certificate… Servers for running Internet banking: To implement Internet banking, BIDV has to invest a lot of servers which are high availability through cluster solution These servers include two web servers, two application servers, two database servers, two authentication servers Internet banking software: This software includes a lot of modules: Front office module for customer, back office module for the bank, module for integration between Internet banking and core banking system… Internet banking system in Disaster Recovery site: For business continuity and reputational risk avoidance, BIDV should double system including all components mentioned above in disaster recovery site In addition, providing Internet banking services on mobile phone is another option for customers to transaction in anywhere Nowadays, mobile technology is developing very fast supporting various services in which GPRS is the most important one With GPRS, customers can brow the web as well as access Internet banking website However, BIDV should design the website that fits to mobile screen and meets slow response when doing transactions In the future to support and diversify retail banking distribution channels, BIDV should invest in some other systems that need to be implemented as soon as possible as follow: Point of Sale, Card Management System, and AutoBank III.3.5 Human resource In the context that banks are considering launching some new channels as well as improving the role of branches in the multi-channel approach, it is important that training needs throughout the organisation are constantly reviewed to assure that people are equipped with necessary skills to their job best For example, with the transformation of branch from transaction – oriented to sales – oriented, we need to retrain our tellers with some new skills of sales, Nguyen Le Dung –MBM7 64 Improving retail banking distribution channels at BIDV cross-selling skills We also need to train or recruit new employees who will take care of financial advice and private banking customers which are new practices in BIDV right now With the launch of new internet banking for example, BIDV need to carry out so many courses to make sure that BIDV’s human resources match with the new requirements of this channel BIDV can not implement Internet banking successfully without contribution of experienced staffs In fact, human resource for e-banking in general and Internet banking in particular needs comprehensive knowledge about e-commerce as well as specific skills about Internet banking To develop Internet banking services, BIDV shall have human resource strategy from hiring senior experts to training current staffs For preparation, BIDV has to consider about organizational structure from Head office to branch network and training plans for employees before launching Internet banking services III.4 Conclusion To deal with critical problems as mentioned in Chapter II, the author suggests BIDV to take into considerations some recommendations to improve its retail banking distribution channels such as: • Setting up multi-channel approach which means the banks need to combine and balance its strength in network of branch with other alternative channels to provide customer a fully integrated customer experience across all channels It also helps to satisfy customers anytime, anywhere according to customer’s preferences • Transforming the branch organization structure towards sales – oriented by redesigning the branch layout, refining some processes as well as adding some more new roles at branch for some new customer segments such as loan advisers, Service Customer Representative, Private banking officers, etc • For self-service channels, it is necessary to improve customer service by newly setting up a call center for customers and merchants support, and diversifying services provided via this channel by partnership with some service providers • For Internet banking and Mobile banking, it is high time to set up a clear strategy of development in which at first setting the purpose of catching as many customers as possible as high priority to win the challenge in the battle with other banks because BIDV is a follower in this field • Taking into consideration of implementing some critical technological projects such as CRM, MIS, Autobank, etc as well as designing careful Nguyen Le Dung –MBM7 65 Improving retail banking distribution channels at BIDV training plans to set up the ground for retail banking development and its human resource improvement CONCLUSION Starting as a corporate bank, with the overall corporate strategy shifting towards greater emphasis on consumer banking, BIDV is striving to reinforce its physical network and utilize other alternatives channels to improve individual customer outreach However that dream does not come easy because of several problems that BIDV retail banking distribution channels are facing Such problems are the limit number of channels serving customers, branches is now focusing mainly on transactions and reluctant of other customer segments like financial advising and private banking; self – service channels are being complained about poor services Nguyen Le Dung –MBM7 66 Improving retail banking distribution channels at BIDV as well as frequent errors; direct channels not provide customers variety of products and in enquiry mode only, etc To deal with these critical problems, the author suggests BIDV to take into considerations some recommendations to improve its retail banking distribution channels such as setting up multi-channel approach to provide customer a fully integrated customer experience across all channels It also help to satisfy customers anytime, anywhere according to customer’s preferences; Transforming the branch organization structure towards sales – oriented by redesigning the branch layout, refining some processes as well as adding some more new roles at branch for some new customer segments such as loan advisers, Service Customer Representative, Private banking officers, etc For self-service channels, it is necessary to improve customer service by newly setting up a call center for customers and merchants support, diversifying services provided via this channel by partnership with some service providers For Internet banking and Mobile banking, it is high time to set up a clear strategy of development in which at first setting the purpose of catching as many customers as possible as high priority to win the challenge in the battle with other banks because BIDV is a follower in this field Last but not least, BIDV should take into consideration of implementing some critical technological projects such as CRM, MIS, Autobank, etc as well as designing careful training plans to set up the ground for retail banking development as well as its human resource improvement Although all my proposals here are so useful but to successful improve retail banking distribution channels at BIDV, BIDV managers should take more steps to transform into Action Plan for each channel in its roadmap toward a multichannel bank The limitations of the thesis is that analysis of the research based on the best practices that the author realizes of the changes and trends of retail banking distribution channels in the world Although almost these models have proved its merits in the reality of developing new channels in the world, it is necessary to verify these models in the context of Vietnam retail banking market Therefore in the future, the author would like to conduct some research on Vietnam retail banking customer behaviors as well as preferences in general and BIDV customers in particular towards retail banking channels These research will set more solid ground for the author to re-visit such above – mentioned proposals for improving retail banking distribution channels at BIDV Nguyen Le Dung –MBM7 67 Improving retail banking distribution channels at BIDV REFERENCES EFMA in partnership with Microsoft, The future role of the “Bank store” and its interconnectivity with other channels, 2007 Deloitte, Evolving Models of Retail banking Distribution Capitalizing on changes in channel usage, 2008 2006 World Retail Banking Report, The rise of remote channels: Building a new client Relationship Model, 2006, p.17 Deloitte, There is a future for the bank branches, 2008 EFMA in partnership with Microsoft, The future of Multi-channel Delivery, 2006 Booz Allen Hamilton, Striving for Growth, Best Practices in Retail Banking Sales and Service Channels, 2007 BIDV Annual Report 2008 Louis Stern, Adel I El-Ansary, Marketing channels Arthur Meidan, Marketing Financial Services Nguyen Le Dung –MBM7 68 Improving retail banking distribution channels at BIDV 10 Juniper Research, Mobile Financial Services: Banking & Payment Markets 2007-2011 11 Temenos, Changes in bank delivery channels in the pursuit of customer centricity and efficiency, 2007, p.4 12 The McKinsey Quaterly, How young consumers could shape Vietnam’s banks, March 2008, p.2 APPENDIX Appendix 1: Branch network of some largest banks in Vietnam in 2009 Nguyen Le Dung –MBM7 69 Improving retail banking distribution channels at BIDV (Source: BIDV branch management Department) Appendix 2: ATM in Vietnam Vietnam Card market from 2006-2009 Year Number of banks 2006 2007 2008 2009 20 30 40 45 Domestic Cards International Cards 4.230.000 450.000 8.751.550 589.784 13.976.472 1.027.469 15.836.629 1.195.567 (Source: Bank Card Association Report) ATM POS 2.715 4.596 7.480 8.810 14.000 19.616 26.930 28.265 ATM market share in 2009 (Source: BIDV Card Center Report) Appendix 3: Comparison of Internet banking of some commercial banks in Vietnam N o Techcomban ANZ k Applicatio Applicatio Application Application Applicatio Registratio n form via n form via form via form via n form via n braches braches braches braches braches Security Static Static Hardware Hardware Static password password Token, OTP token password Criteria BIDV Nguyen Le Dung –MBM7 VCB ACB 70 Improving retail banking distribution channels at BIDV Services Inquiry only Fee Free of charge Nguyen Le Dung –MBM7 and matrix token card Inquiry Transactiona Transactional l Fee for Registration token Free of fee Annual fee charge Fee for token Transaction Annual fee fee Inquiry Free of charge 71 Improving retail banking distribution channels at BIDV Appendix 4: Comparison of Mobile banking of some commercial banks in Vietnam No Criteria BIDV VCB ACB Techcombank Registration Application form via braches Application form via braches Application form via braches Application form via braches Inquiry Inquiry Mobile phone Mobile phone Topup Topup Fund Transfer Bill Payment Fund transfer Payment for shopping online Bill payment Airline ticket payment Fee per messages received Maintenance fee Transaction fee Transaction fee Services Fee Messages received fee Appendix 5: BIDV Organization Structure upon Restructuring (Source: BIDV World Bank Phase Project Management Unit) Nguyen Le Dung –MBM7 72 ... BACKGROUND OF RETAIL BANKING DISTRIBUTION CHANNELS 14 I.1 .Retail banking distribution channel overview 14 I.1.1 .Retail banking and retail banking market 14 I.1.2 .Retail banking. .. Improving retail banking distribution channels at BIDV CHAPTER I THEORETICAL BACKGROUND OF RETAIL BANKING DISTRIBUTION CHANNELS I.1 I.1.1 Retail banking distribution channel overview Retail banking. .. status of retail banking distribution channels at BIDV This part will assess and discuss retail banking distribution channel development at BIDV This starts with the current status of retail banking