Development of a Competitive and Sustainable Bank in Vietnam

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Development of a Competitive and Sustainable Bank in Vietnam

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Development of a Competitive and Sustainable Bank in Vietnam

  1. 1. DEVELOPMENT OF A COMPETITIVE& SUSTAINABLE BANK IN VIETNAM Group of Finance Research Tran Cong Tuong (tctuong@gmail.com) Jul. - 2011
  2. 2. AGENDABanking Strategic AnalysisVIB - Competitive PositionGeneral Strategic Recommendations – General strategies – Retail banking – Corporate banking – Brand management – HR management © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 2
  3. 3. Banking Strategic Analysis
  4. 4. Important Factors Affecting Bank Selection(ordered by importance level) Prestigious bank Simple formalities/ procedure Fast business transaction •The first four factors are most important Attractive interest rate Professional staffs Reasonable interest charges •Most banks try to build & achieve the four Be advisable to use factors (prestigious bank, simple procedure, Clear instruction and information fast transaction…) Enthusiasm/politeness of staffs’ manner Branch is easy to find out •How can a bank differentiate? Famous bank Good customer service Convenient for transaction and transaction’s management A lot of ATMs Wide branch network Convenient (transaction & branch) Good customer service A lot of ATM machines Be advisable to use Competitive service charges International standard quality Applied high technology Multiple banking services •Conduct a marketing research to check Banking products are easy to be understood these! 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. 4
  5. 5. Bank Differentiation StrategyHow can a bank differentiate? SECONDARY CRITICAL DIFFERENTIATION DIFFERENTIATION Have internet banking Good customer service Have many ATMs Wide branch network The leader of Famous bank banking services Differentiation Level Many promotion Branch is easy to find International programs out Simple procedure standard quality Product are easy to be Multiple banking Professional staffs Be advisable to use understood services Attractive interest rate Have call center/ Reasonable hotline Interest charges Enthusiasm/politeness Competitive service Fast business of staffs’ manner With foreign bank charges transaction share/cooperation Prestigious bank Applied high Convenient for technology Clear instruction & transaction’s information management IRRELEVANT Importance Level PREREQUISITE •Conduct marketing research to test these factors. © CFVG - MBA 18 - Group of Finance Research. All rights reserved.
  6. 6. Corporate Bank - Bank Profit Bank Income Corporate Customers Key driver is interest Key driver is SMEs SMEs Large Corps Interest Income Other Operating (High profit margin, (Low profit margin, (80%) Income (20%) 80% loan) 20% loan) •Focus credit risk management •Focus market risk management •Different strategy for each segment © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 6
  7. 7. Retail Bank - Needs-based Segmentation SIMPLE – PROFESSIONAL Main requirements EFFICIENT PRODUCTS & SERVICES A professional and friendly staff Clients requirements are more oriented on Simple procedures, Clear info Multiple, easy and competitive banking services CLUSTER 4 High tech: ATM, Internet banking, Fast transactions They appreciate a leading bank in products & services 12% CLUSTER 1 42% CLUSTER 3 •Each segmentation 21% has its own strategy REPUTATION – FIRST CLASS The focus is on •Focus segment 1 A prestigious and famous bank in line with international standard quality •ACB, Techcombank are strong at seg. 1 &3 CLUSTER 2 25% •Vietcombank, Agribank, BANK NETWORK - CUSTOMER SERVICE Vietinbank are strong at seg. 2 & 3 Source: FTA Research & Consultant © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 7
  8. 8. Banking & Technology Innovative Risk Management Complex Credit Calculations Global Operations Pervasive Branch Network Mass Transaction & Items Processing © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 8
  9. 9. VIB – Competitive Position
  10. 10. Charter Capital (2010) Charter Capital 12,000.00 10,560 11,000.00 10,000.00 9,377 9,179 9,000.00VND Bil. 8,000.00 7,300 6,932 7,000.00 6,000.00 5,000 5,000.00 4,500 4,000 4,000.00 3,000.00 2,000.00 1,000.00 0.00 Eximbank ACB Sacombank MB T echcombank Marit ime Bank DongA Bank VIB Excluding: Agribank, BIDV, Vietinbank, Vietcombank © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 10
  11. 11. Total Asset (2010) Total Asset 220,000.00 206,844 170,000.00 150,291 140,101 137,848 VND Bil. 118,000 115,336 120,000.00 93,827 70,000.00 60,235 20,000.00 ACB T echcombank Sacombank Eximbank MB Martime Bank VIB Southern Bank -30,000.00 © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 11
  12. 12. Profit After Tax (2010) Profit After Tax 2,800 2632 2,400 2073 2,000 1810 1799 1712 VND Bil. 1,600 1157 1,200 791 659 800 400 0 ACB T echcombank Eximbank Sacombank MB Maritime Bank VIB DongA Bank © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 12
  13. 13. VIB - Financial Highlights (2006-2010) 2006 2007 2008 2009 2010 Total Assets 16.527 39.305 34.719 56.635 93.827Total Deposits 9.813 19.225 23.958 34.210 59.564 Total Loans 9.137 16.774 19.775 27.353 41.731Owner Equity 1.190 2.183 2.293 2.945 6.593 Charter 1.000 2.000 2.000 2.400 4.000 CapitalProfit before 200 426 230 610 1.051 Tax © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 13
  14. 14. Brand Awareness – Corporate Customers (SME) Source: FTA Research & Consultant (2010) © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 14
  15. 15. Brand Awareness – Private Customers Source: FTA Research & Consultant (2010) © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 15
  16. 16. General Strategic Recommendations
  17. 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 © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 17
  18. 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 © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 18
  19. 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 © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 19
  20. 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… © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 20
  21. 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 © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 21
  22. 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 © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 22
  23. 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 © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 23
  24. 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 organizations 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. © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 24
  25. 25. References Documents from – VIB Bank, Techcombank, Maritime Bank… – State Bank of Vietnam – Nielsen Vietnam – FTA Research & Consultant © CFVG - MBA 18 - Group of Finance Research. All rights reserved. 25

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