development of a competitive and sustainable bank in vietnam
DESCRIPTION
Development of a Competitive and Sustainable Bank in VietnamTRANSCRIPT
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?
© CFVG - MBA 18 - Group of Finance Research. All rights reserved.
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
© CFVG - MBA 18 - Group of Finance Research. All rights reserved.
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
© CFVG - MBA 18 - Group of Finance Research. All rights reserved.
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)
© CFVG - MBA 18 - Group of Finance Research. All rights reserved.
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)
© CFVG - MBA 18 - Group of Finance Research. All rights reserved.
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)
© CFVG - MBA 18 - Group of Finance Research. All rights reserved.
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)
© CFVG - MBA 18 - Group of Finance Research. All rights reserved.
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
© CFVG - MBA 18 - Group of Finance Research. All rights reserved.
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.
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.
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.
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.
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.
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.
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.
© CFVG - MBA 18 - Group of Finance Research. All rights reserved.
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.