development of a competitive and sustainable bank in vietnam

DEVELOPMENT OF A COMPETITIVE & SUSTAINABLE BANK IN VIETNAM

Group of Finance ResearchTran Cong Tuong ([email protected])

Jul. - 2011

2© CFVG - MBA 18 - Group of Finance Research. All rights reserved.

AGENDA

Banking Strategic AnalysisVIB - Competitive PositionGeneral Strategic Recommendations

– General strategies– Retail banking– Corporate banking– Brand management– HR management

Banking Strategic Analysis

4

Important Factors Affecting Bank Selection(ordered by importance level)

Prestigious bank Simple formalities/ procedure Fast business transaction Attractive interest rate Professional staffs Reasonable interest charges Be advisable to use Clear instruction and information Enthusiasm/politeness of staffs’ manner Branch is easy to find out Famous bank Convenient for transaction and transaction’s management Wide branch network Good customer service A lot of ATM machines Competitive service charges International standard quality Applied high technology Multiple banking services Banking products are easy to be understood Leading bank in products, services and high technology With foreign bank share/cooperation Many promotion/ advertising programs Have call center/ hotline Have internet banking service

© CFVG - MBA 18 - Group of Finance Research. All rights reserved.

• The first four factors are most important

• Most banks try to build & achieve the four factors (prestigious bank, simple procedure, fast transaction…)

• How can a bank differentiate? Good customer service

A lot of ATMs

Convenient (transaction & branch)

Be advisable to use

• Conduct a marketing research to check these!

Bank Differentiation Strategy How can a bank differentiate?


Product are easy to be understood

The leader of banking services

Have many ATMsHave internet bank-

ing

Many promotion programs

Have call center/ hotline

Convenient for transaction’s management

Clear instruction & information

Professional staffs

Enthusiasm/po-liteness

of staffs’ manner

Simple procedure

Fast business transactionCompetitive service

charges

Reasonable Interest charges

Attractive interest rate

Applied high technology

With foreign bank share/cooperation

International standard quality

Be advisable to use

Famous bank

Prestigious bank

Branch is easy to find out

Wide branch network

Multiple banking services

Good customer service

Dif

fere

nti

atio

n L

evel

Importance Level

SECONDARYDIFFERENTIATION

SECONDARYDIFFERENTIATION

CRITICALDIFFERENTIATION

CRITICALDIFFERENTIATION

IRRELEVANTIRRELEVANT PREREQUISITEPREREQUISITE

• Conduct marketing research to test these factors.

6

Corporate Bank - Bank Profit


Corporate Customers

Key driver is SMEs

SMEs(High profit margin,

80% loan)

SMEs(High profit margin,

80% loan)

Large Corps(Low profit margin,

20% loan)

Large Corps(Low profit margin,

20% loan)

• Focus credit risk management• Different strategy for each segment

Bank Income

Key driver is interest

Interest Income(80%)

Interest Income(80%)

Other OperatingIncome (20%)

Other OperatingIncome (20%)

• Focus market risk management

7

Retail Bank - Needs-based Segmentation


CLUSTER 412%

CLUSTER 321%

CLUSTER 225%

CLUSTER 142%

REPUTATION – FIRST CLASSThe focus is onA prestigious and famous bank in line withinternational standard quality

EFFICIENT PRODUCTS & SERVICES

BANK NETWORK - CUSTOMER SERVICE

Clients requirements are more oriented onMultiple, easy and competitive banking servicesHigh tech: ATM, Internet banking, Fast transactionsThey appreciate a leading bank in products & services

SIMPLE – PROFESSIONALMain requirementsA professional and friendly staffSimple procedures, Clear info

Source: FTA Research & Consultant

• Each segmentation has its own strategy

• Focus segment 1

• ACB, Techcombank are strong at seg. 1 & 3

• Vietcombank, Agribank, Vietinbank are strong at seg. 2 & 3

Banking & Technology

© CFVG - MBA 18 - Group of Finance Research. All rights reserved. 8

Pervasive BranchNetwork

Global Operations

Complex Credit Calculations

Innovative RiskManagement

Banking &

Tech

nology

Mass Transaction& Items Processing

VIB – Competitive Position

10

Charter Capital (2010)


Charter Capital

4,0004,500

5,000

6,9327,300

9,1799,377

10,560

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

8,000.00

9,000.00

10,000.00

11,000.00

12,000.00

Eximbank ACB Sacombank MB Techcombank Maritime Bank DongA Bank VIB

VN

D B

il.

Excluding: Agribank, BIDV, Vietinbank, Vietcombank

11

Total Asset (2010)


Total Asset

150,291140,101 137,848

118,000 115,336

93,827

60,235

206,844

-30,000.00

20,000.00

70,000.00

120,000.00

170,000.00

220,000.00

ACB Techcombank Sacombank Eximbank MB Martime Bank VIB Southern Bank

VN

D B

il.

12

Profit After Tax (2010)


Profit After Tax

659791

1157

17121799

2073

2632

1810

0

400

800

1,200

1,600

2,000

2,400

2,800

ACB Techcombank Eximbank Sacombank MB Maritime Bank VIB DongA Bank

VN

D B

il.

13

VIB - Financial Highlights (2006-2010)


2006 2007 2008 2009 2010

Total Assets 16.527 39.305 34.719 56.635 93.827

Total Deposits 9.813 19.225 23.958 34.210 59.564

Total Loans 9.137 16.774 19.775 27.353 41.731

Owner Equity 1.190 2.183 2.293 2.945 6.593

Charter Capital 1.000 2.000 2.000 2.400 4.000

Profit before Tax 200 426 230 610 1.051

14

Brand Awareness – Corporate Customers (SME)

© CFVG - MBA 18 - Group of Finance Research. All rights reserved.Source: FTA Research & Consultant (2010)

15

Brand Awareness – Private Customers

© CFVG - MBA 18 - Group of Finance Research. All rights reserved.Source: FTA Research & Consultant (2010)

General Strategic Recommendations

17

General Strategies

Indentifying, developing and effective monitoring high potential market segments where customers are willing to pay for your products/services (e.g. corporate banking: SME, retail banking: segment 1)

Safe banking– Securing capital and liquidity positions (especially capital

contribution & investment in securities and toxic assets)

– Building professional, international-standards risk management system

Effective cost management– Tremendously using management accounting


18

General Strategies (cont.)

Effective cost management (cont.)– Renovating business processes which are simple and appropriate

(e.g. simplify credit services process, reduce credit approval time)

– Employing right people

Strong competitive position– Designing innovative and simple products

– Improving customer service

– Better use of technology

– M&A with foreign and prestigious partners


19

Retail Banking

Service quality– Building new business model which increase convenience for

customers and reduce transaction time

– Standardizing service quality (formalities & procedures, staff training)

Network development– Convenient, easily-found out ATMs & branches

Building sales force team– Attract new customer (increase trial rate)

Product development– Developing different products for different needs-based segments


20

Retail Banking (cont.)

Market development– Focus on non-urban and rural segments which are high potential

– Cost effective expansion

– Growing through alliances: retailers, life insurances, hospitality…


21

Corporate Banking

Market– SMEs are key corporate customers

– Building prestige image through relationship with big corporate customers

Service quality– Evaluating regularly and improving significantly (e.g. faster

process, enthusiastic and professional staff )

– Applying different assessment tools (e.g. customer satisfaction)

Deposits– Developing variety of interest-based products


22

Corporate Banking (cont.)

Credits– Concentrating on SME credit products

Trade finance– Providing consistent, good and full-range trade products

– Proactively supporting trade clients

– Priority services for big trade customers


23

Brand Management

Increasing focus on brand awareness -> build strong awareness, increase trial rate for bank

Focus on building bank image of Prestige and Customer service– Increase customers’ trust (earn famous certificates & awards)

– Use PR communication

– Be advised by many people / experts to use bank services

– Improve customer service (staff, procedure…)

Prestige, long-established, simple procedure and fast transaction are prerequisite criteria of all banks

Customer service and convenient (transaction & branch) are differentiated criteria


24

HR Management

Recruitment– Employing “right” (most suitable) people

– Rewarding them fairly and transparently

Employee engagement program– “An engaged employee is one who is fully involved in, and

enthusiastic about their work, and thus will act in a way that furthers their organization's interests.” Engaged employees generate a return on assets higher then less-engaged employees

– How to make employees engaged? Fun place to work, there is a future in bank, sense of belonging to bank, career development, communication is open & honest, working for a successful bank.


25

References

Documents from– VIB Bank, Techcombank, Maritime Bank…

– State Bank of Vietnam

– Nielsen Vietnam

– FTA Research & Consultant


development of a competitive and sustainable bank in vietnam

Economy & Finance