LV Thạc sỹ_Enhance and develop VPSuper card business at VPBank

ACKNOWLEDGEMENT

First and foremost, I would like to express my gratitude to all those who gave
me the possibility to complete this report. I want to thank the teachers from Faculty
of foreign languages – Department of Business English in National Economics
University for giving me permission to commence this report in the first instance
and to do the necessary research work.
I am deeply indebted to my supervisors Ms. … who gave materials,
supported, stimulated suggestions and encouragement, helped me in all stages
of this research and writing of this report.
Secondly, I would like to send my appreciation to staff of VPBank branch in
Nam Dinh province for their support during my internship there. Without their
facilitation, assistance and suggestions I would have not finished my internship
report successfully.
Also, my classmates from class Business English A course 50 supported me a
great deal, and I want to thank them for all their support, cooperation and valuable
suggestions.
I would like to express my sincere appreciation to other fellow students
of the English Department for references.
Finally, I can not fully express my gratitude to all the people whose direct
and indirect support helped me complete my assignment in time.

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TABLE OF CONTENTS
ACKNOWLEDGEMENT.......................................................................................i
EXECUTIVE SUMMARY....................................................................................vi
INTRODUCTION...................................................................................................1
CHAPTER 1: INTRODUCTION OF VIETNAM PROSPERITY BANK..........4
1.1. Overview of Vietnam Prosperous Bank..........................................................4

1.1.1 Formation and developing progress...........................................................4
1.1.2 Organizational structure.............................................................................6
1.1.3 Business status from 2008-2011................................................................8
1.1.4 Introduction of VPBank Card Center.......................................................10
1.2 Status of card service development at VPBank branch in Nam Dinh
province............................................................................................................... 12
1.2.1 Card services business status...................................................................12
1.2.2 Technology and human resource in card service development at VPBank
branch in Nam Dinh province...........................................................................13
1.2.3 Marketing application in card service development at VPBank branch in
Nam Dinh province...........................................................................................15
1.2.4 Coordination and inspection in card service development at VPBank
branch in Nam Dinh province...........................................................................16
1.3 Introduction of VPSuper Card........................................................................17
CHAPTER 2: OVERVIEW OF CARD SERVICE
BUSINESS
DEVELOPMENT IN COMMERCIAL BANK...................................................19
2.1. Concept, nature, role of card service business in commercial bank...............19
2.1.1. Concept of card.......................................................................................19
2.1.2 Concept of card service business.............................................................20
2.1.3 Role of card service business in commercial bank................................21
2.2. Basic content and system of evaluating criteria for card service business
development in commercial bank.........................................................................22
2.2.1 Basic content of card service business development in commercial bank22
2.2.1.1 Issuance.................................................................................................22
2.2.2 System of evaluating criteria for card service business development in
commercial bank...............................................................................................25

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2.3. Factors affecting the card service business development in commercial
bank..................................................................................................................... 27
2.3.1 Habit of using card in the economy.........................................................27
2.3.2 The guidelines and policies of the State management agency for card
business............................................................................................................. 28
2.3.3 Technology development.........................................................................28
2.3.4 The quality of client evaluation................................................................29
2.3.5 Marketing activities.................................................................................29
2.4.6 Human resource.......................................................................................29
2.4.................. Experiences of some commercial banks in card service business
development........................................................................................................30
CHAPTER 3: RESULTS AND LIMITATIONS IN VPSUPER CARD
SERVICE DEVELOPMENT AT VPBANK BRANCH IN NAM DINH
PROVINCE............................................................................................................ 32
3.1 Results of VPSuper card service business......................................................32
3.2 Limitations in VPSuper card service development at VPBank branch in Nam
Dinh province.......................................................................................................34
3.2.1 Limited using-card subjects.....................................................................34
3.2.2 Small card payment environment.............................................................34
3.2.3 Using cash habit in community................................................................34
3.2.4 Risks arising form card issuance and payment.........................................35
CHAPTER 4: SOME SOLUTIONS TO ENHANCE AND DEVELOP
VPSUPER CARD BUSINESS AT VPBANK BRANCH IN NAM DINH
PROVINCE............................................................................................................ 36
4.1 Business orientation at VPBank branch in Nam Dinh province.....................36
4.1.1 Card service competition between commercial banks in Nam Dinh
province............................................................................................................36
4.1.2 Orientation of card service business development in the future of VPBank
branch in Nam Dinh province...........................................................................39

4.2 Solutions to enhance and develop VPSuper card business at VPBank branch
in Nam Dinh province..........................................................................................39
4.2.1 Enhance card service Marketing..............................................................39
4.2.2 Develop distribution channel...................................................................42
4.2.3 Unite with other banks.............................................................................43

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4.2.4 Develop card service products.................................................................43
4.2.5 Improve human resource quality..............................................................44
4.2.6 Modernize technological facilities...........................................................45
4.2.7 Enhance management and risk prevention...............................................45
4.2.8 Develop relationship with economic and financial organization..............46
4.3 Recommendation to enhance and develop VPSuper card business at VPBank
branch in Nam Dinh province..............................................................................46
4.3.1 Recommendation to State policies...........................................................46
4.3.2 Recommendation to State Bank and related ministries............................47
CONCLUSION......................................................................................................48
APPENDIX............................................................................................................49
REFERENCES......................................................................................................50

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LIST OF ABBREVIATIONS

VPB: Vietnam Prosperity Bank
Agribank: Vietnam Bank for Agriculture and Rural Development
Vietinbank: Vietnam Joint Stock Commercial bank for Industry and Trade

VCB: Vietcombank – Joint Stock Commercial Bank for Foreign Trade of Vietnam
BIDV: Bank for Investment and Development of Vietnam
VIB: Vietnam International Bank
Techcombank: Vietnam Technological Commercial Joint-Stock Bank
ANZ: Australia and New Zealand Banking Group Limited
POS: Point of Sale
ATM: Automatic Teller Machine
CAU: card-accepting unit

LIST OF CHARTS

Chart 1: VPBank’s organizational Structure..............................................................7
Chart 2: Total assets of VPBank from 2007 to 2011..................................................8
Chart 3: Net income before tax of VPBank from 2007 to 2011.................................9
Chart 4: VPBank Card Center’s organizational structure.........................................11
Chart 5: Debit card number of VPBank branch in Nam Dinh province...................13
from 2008 to 2011...................................................................................................13
Chart 6: Customer evaluation about awareness of VPSuper card............................32
in February 2012.....................................................................................................32
LIST OF TABLES

Table 1: VPSuper card Growth in VPBank branch in Nam Dinh province..............33

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EXECUTIVE SUMMARY
In the process of commodity exchange, monetary with intermediary role has
facilitated continual transaction, promoted the development of production and
commodity circulation. Social production process continuously takes place and

constantly expands with many diverse complex relationships. Along with the
characteristics and requirements of different industries, it requires a good payment
organization process for solving these relationships without affecting the production
process when production develops in high-level. Therefore, it needs to have a
suitable payment method to the open world economy. And payment card was born
to satisfy the development of goods production and circulation.
Nowadays the bank card market in Vietnam continues to strongly grow.
Along with the continuous development of science and technology, the needs of
customers are also increasing. Understanding this trend, to attract customers, the
domestic banks increasingly pay more attention to improve services, particularly
service facilities associated with the card. Now, the card is not merely a method to
withdraw cash, it becomes multi-purpose facility which enables users to access
many transaction services of the bank. The Vietnam Prosperity Bank (VPBank) in
recent years also actively develops various types of card services, including
VPSuper card.
During the time studying in VPBank branch in Nam Dinh province, I have
made the report focusing on analyzing the real situations of VPSuper card business
development and recommending improving this kind of business in the bank.
The report is divided into four chapters. The first chapter introduces VPBank
and the card development in general. The second chapter builds an overall theory of
card and card business development. Continually, the third chapter explains the
analysis of VPSuper card development in VPBank branch in Nam Dinh province.
And lastly, chapter four consists of some recommendations suggested to help
VPBank Nam Dinh in particular and the all VPBank system in general to enhance
its competiveness in developing card services.

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INTRODUCTION

Introduction of the research topic and rationales
Vietnam is now on the road to industrialization and modernization, the
achievements in the renovation of the country has become the foundation for the
next development step of Vietnam in the future, to gradually prove its standing in
regional and international markets. This change has attracted many investors as well
as international visitors coming to Vietnam, and it offers a good opportunity for
Vietnam to trade and expand relationships with other countries all over the world.
Contributing to the country's efforts, the banking sector also extended credit
relations with customers, strengthened linkages with other regional and
international banks, developed modern products and services to meet the diverse
needs of customers. Since participating and integrating in the global economy, the
number of foreign visitors to Vietnam is now on the rise, so that the demand for
non-cash payment becomes more and more imperative. Perceiving these demands,
the banks have quickly researched and invested in card product development - a
modern and popular payment method in the world.
Particularly to Vietnam Prosperity Bank (VPBank), card service
development has become the strategic objectives of the bank in the recent years.
With the initial success such as launching the most modern products, creating the
largest card alliances with the largest card accepting place nationwide and linking
successfully with many other banks, the card payment method of VPBank has step
by step confirmed its stable position on the market.
However, due to various effects within the banking system, the efforts of
banks in improving the operation of card issuance and payment as well as fierce
competition among banks to gain card market share, card issuance and payment
activities of VPBank are now facing to many difficulties. Decentralization of card
payment services towards different groups of customer is a difficult problem
requiring the answer set for VPBank. After the theoretical research at VPBank
branch in Nam Dinh province, training course in professional skills about card,
along with the fact-finding process for card market in Nam Dinh province, I would

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like to make a report on “Some solutions to enhance and develop VPSuper card
business at VPBank branch in Nam Dinh province”.
Research questions
The report will be analyzed to answer these questions as follows:
1. What is the real status of VPSuper card service at VPBank branch in
Nam Dinh province?
2. What are the limitations of VPSuper card development at VPBank
branch in Nam Dinh province?
3. How will VPSuper card business be developed at VPBank branch in
Nam Dinh province?
Methodology
The study is primarily based on the knowledge gained from figures and data
of VP Bank branch in Nam Dinh province. With these data, I applied some methods
of studying report in my research such as figures collection, comparison, and data
evaluation combining with secondary data from Internet and reference books.
Moreover, the output analysis applied for the VPBank card trading. This
analysis tells VPBank card payment’s status. Also, pie chart and table chart analysis
are used to further clarify this topic.
Scope of the study
Banking and Finance sector includes various fields with broad knowledge, so
in the limitation of about 30 pages graduation report, I cannot cover all issues
related to this. In the scope of research, I just focus on analyzing the real status of
VPBank Nam Dinh branch’s VPSuper card, therefore propsoing some solutions to
improve the bank’s competitiveness in Nam Dinh market.

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CHAPTER 1: INTRODUCTION OF VIETNAM PROSPERITY BANK
1.1 Overview of Vietnam Prosperous Bank
1.1.1 Formation and developing progress
Vietnam Prosperity Bank (VPBank) was established under License No.
0042/NH-GP, issued by the State Bank on 12 August 1993, and License No.
1535/QD-UB granted by Hanoi People’s Committee on 4 September 1993. The
Bank came into operation since September 10, 1993.
The main operating functions of VPB include some following activities:
- Raising short, medium, and long term funds in the forms of VNDdenominated term and non-term deposits from organizations and individuals
- Receiving trust funds for investment and management from domestic
organizations
- Borrowing capital form the State Bank and other financial institutions
- Lending short, medium and long-term loans to organizations and
individuals
- Discounting notes, bonds and other commercial paper
- Co-investing, forming joint ventures, or acquiring shares in accordance with
current regulations
- Providing payment services for customers
- Trading foreign exchange, gold and international payment markets, raising
capital from various foreign sources, providing other banking services related to
foreign entities where permitted by the State Bank
- Brokering and consulting in stack market investment, providing securities
custody and underwriting and cooperating financial advisory services
- Providing services in the fields of investment
The chartered capital when VPBank was established was 20 billion VND.
Then, because of developing demand, VPBank has increased chartered capital many
times. In August 2006, chartered capital was raised to 500 billion VND, and until
July 2007, it reached around 1,500 billion VND.
In the establishment and development process, VPBank has undergone a lot

of noticeable milestones:
- From 1994 to 2004: this was the period when VPBank actively expanded its
network and developed news products, in order to acquire market share and increase
customers. Many of VPBank branches and transaction offices were started up
during this period.

4


- 2005: VPBank designed a new logo and brand-recognition system with two
main colors being green and bright red. Changing logo to the new one was a
strategic transformation, starting an important development process that geared
VPBank to enter a new phase with many professional and modernized
improvements.
- 2006: It was an exciting year with VPBank – a turning point with many
remarkable events. In February, the headquarter was relocated to the building at No.
8 Le Thai To strt. Hoan Kiem Dist. Sprawling spaces at the most esthetic place in
the capital offered VPBank the best conditions to do business in the most effective
way, and to solidify trust from the customers and partners. In March, VPBank
formally chose its strategic shareholder which was a foreign financial institution –
the Singaporean OCBC Bank. And in April, VPBank bought the core banking
system software (Core Banking T24 of Temenos from Switzerland). This was an
important step moving forward in the banking infrastructure modernizing process.
Also during this year, 18 branches and transaction offices were opened.
- 2007: VPBank launched VPBank Platinum MasterCard, the first chip card
in Vietnam.
- 2008: With the approval of the State Bank of Vietnam, VPBank increased
its charter capital to 2,117 billion VND, with OCBC’s share position rising to 15%.
- 2009: VPBank signed a cooperation agreement with Prudential Vietnam
under which the Bank became Prudential Vietnam’s official agent to distribute Bank

Assurance products. VPBank, in cooperation with OAAG (Singapore), unveiled a
golf program for holders of VPBank MasterCard Platinum.
- 2010: VPBank was granted State Bank of Vietnam approval to change its
name from Vietnam Joint Stock Commercial Bank for Private Enterprises to
Vietnam Prosperity Joint Stock Commercial Bank. VPBank introduced a new logo
and brand identity. With these changes, the Bank has stepped into a new phase of
development with approaches better suited to current economic conditions. VPBank
was granted State Bank of Vietnam approval to change its name from Vietnam Joint
Stock Commercial Bank for Private Enterprises to Vietnam Prosperity Joint Stock
Commercial Bank. VPBank introduced a new logo and brand identity. With these
changes, the Bank has stepped into a new phase of development with approaches
better suited to current economic conditions.

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In the development process, VPBank has always paid attention to the scale
expansion, enhanced operating network in the big cities. At the end of 1993, State
Bank approved VPBank to open one branch in Ho Chi Minh City. In November
1994, VPBank was permittied to set up Hai Phong Branch, and in July 1995, Da
Nang branch was followed. In addition, from 2005, VPBank has continually opened
a lot of branches and transaction offices in many cities and provinces.
At 31st December 2011, VPBank had:
- Nearly 200 branches and transaction offices in Vietnam
- 550 agents of VPBank fast money transfer Center - Western Union
- More than 3,000 employees
In 2006 and 2007, VP Bank Vietnam started to implement networkexpansion strategy in some central type 2 provinces and cities. After conducting a
market survey, Nam Dinh City was chosen to build level I branch, and VP Bank
Nam Dinh branch was established in May 24, 2007.
1.1.2 Organizational structure

The chart 1 below shows the VPBank’s organizational structure:

6


Shareholder’s
Shareholder’s meeting
meeting

Board
Board of
of Directors
Directors

Supervisor
Supervisor Board
Board

Loan
Loan management
management

Investment
Investment board
board

Credit
Credit councils
councils

Remuneration
Remuneration Board
Board

BOD’s
BOD’s office
office

Risk
Risk management
management board
board

Internal
Internal Audit
Audit

Board
Board of
of Management
Management

Personnel
Personnel
and
and training
training

Retail
Retail

banking
banking

*Retail
*Retail products
products
and
and services
services
Department
Department
*Wealth
*Wealth
Management
Management
*Western
*Western Union
Union
Center
Center

Corporate
Corporate
banking
banking

Managerial
Managerial
monitoring
monitoring

Supporting
Supporting
divisions
divisions

Informatics
Informatics
Center
Center

Treasury
Treasury

Corporate
Corporate
products
products and
and
services
services
Department
Department

*Risk
*Finance
*Foreign
*Risk Management
Management
*Finance &

& Account
Account *Operational
*Operational
*Foreign
Department
** Payment
services
Exchange
Department
Payment Center
Center
services
Exchange
** Legal
** Card
** Service
** Money
Legal Department
Department
Card Center
Center
Service
Money market
market
** Credit
** Planning
Management
** Derivative
Credit Admin
Admin

Planning
Management
Derivative
** Credit
Department
** Network
Products
Credit Revaluation
Revaluation
Department
Network &
&
Products
** Marketing
** Admin
Security
** Bonds
Marketing
Admin office
office
Security
Bonds market
market
information
system
**organizational
Marketing
Management
Chart
1: VPBank’s

Structure
information
system
Marketing
Management
units
** Cash
** System
&
units
Cash and
and Vault
Vault
System
& report in 2011)
(Source:
VPBank’s
annual
Management
Storage
Management
Storage
** Branch
Branch network
network &
& Management
Management
services
** Application
services Quality

Quality
Application
Management
Development
Management
Development
shown in Chart 1 above, VPBank's
organizational structure includes:
** Contact
Contact Center
Center

As it is
- Shareholder’s Meeting: has the highest authority of the bank.
- Board of Directors:Branches/Transaction
Includes shareholders
who contributed the biggest
offices
Branches/Transaction
offices
amount of capital shareholder, elected by the Shareholder’s Meeting to administer
the Bank, on behalf of banks to make decisions related to the sake and benefit of the
bank.

7


- Supervisor Board: is chosen by the Shareholders' meeting to perform
tasks of inspecting financial activities, monitoring the observance of the account
and systems operation and internal audit.

- Board of management: controls executive departments with different
functions.
- The branches/ transaction offices: are located in various regions across
the country so that people can have direct access to banking services.
- The Departments of Head Office: perform various functions, specific
tasks to help the system work smoothly.
1.1.3 Business status from 2008-2011
VPBank in recent years has recorded stable and sustainable growth, even in
the bleak scenarios of the global financial crisis. This achievement can be attributed
to the appropriate strategies of top management and the solidarity and collective
effort of staff.

Chart 2: Total assets of VPBank from 2007 to 2011
(Source: VPBank’s annual report in 2011)
The chart 2 performs VP Bank's total assets growth rate from 2007 to 2011.
Just in 5 years, the total assets of VPBank increased by 62, 518 billion VND, equal
to 344.7%. In two years, 2007 and 2008, the total assets were in equal levels,
fluctuating from 18,137 to 18,648 billion VND. Coming to 2009, VPBank's total
assets reached 27,543 billion VND, up 48% compared to the same period last year.
And from 2009, growth in total assets of VPBank was continuously in high level.
The year of 2010 and 2011 marked the transition of the VPBank. Total assets in

8


2010 compared to 2009 increased more than two times; total assets in 2011
compared to 2010 increased by 35%. This is a good sign for the VPBank in the
crisis of world economy.

Chart 3: Net income before tax of VPBank from 2007 to 2011

(Source: VPBank’s annual report in 2011)
Next, chart 3 continually shows VP Bank's profit before tax over 5 years. In
2008, VPBank’s profit was negatively affected because basic credit activities have
been its key operation while credit expansion was very limited; consumer and realestate credits were tightened up. In addition, VPBank had to defend itself against
many difficulties in cash flow in light of the deposit interest rate being higher than
ever before, spanning throughout the majority parts of the year. However, upon the
year’s end, VPBank’s operational condition was stabilized. VPBank had weathered
through a stormy year quite safely. However, income of the bank was only 44%
compared to the project plan at the beginning of the year.
In the first half of 2009, the policy stimulating to prevent economic recession
helped credit conditions return in growth. As a result, net income before tax of
VPBank is also on the rise again. In 2009, VP Bank's income before tax almost
doubled compared to 2008, continued in 2010, that number became 663.1, an
increase of 73%, and in 2011 the rate of increase continued to be 60%.
1.1.4 Introduction of VPBank Card Center
VPBank Card Center was operated in late 2006, headquartered was placed at
No. 362 Hue Strt., Hai Ba Trung Dist., Hanoi. Initially, the center included only 6

9


people. Since its establishment until December 2007, VPBank Card Center had
increased the number of employees to 62 people.
Operating orientation of the Card Center is to put card business in center of
development strategy of banking retail services, a part of service which not only
VPBank but also other banks are aiming to. VPBank is striving to open payment
network widely, connect with other systems, and gain a number of cards issued
about more than two million cards, network of 800 to 1,000 ATMs and 2,500 POS
in 2012.

DIRECTOR
DIRECTOR

Operating
Operating
Department
Department

Sales
Sales and
and
Marketing
Marketing
Department
Department

Credit
Credit card
card service
service
Department
Department

Accounting
Accounting
Department
Department

Product
Product

Development
Development
Department
Department

Customer
Customer
Service
Service

Sales
Sales

Credit
Credit
Controlling
Controlling

CAU
CAU
accounting
accounting

Credit
Credit

Data
Data process
process

CAU
CAU service
service

Payment
Payment
permission
permission

Cardholder
Cardholder
accounting
accounting

Link
Link service
service

Card
Card issuance
issuance

Cardholder
Cardholder
marketing
marketing

Card
Card security
security

Inter-change
Inter-change

Card
Card product
product

Account
Account
Statement
Statement

Marketing
Marketing
cooperation
cooperation

Debt
Debt collection
collection

Account
Account
balance
balance

International
International
Card

Card
Organization
Organization

Supplying
Supplying
service
service

Advertisemen
Advertisemen
tt &
& Promotion
Promotion

ATM
ATM service
service

Card
Card
equipment
equipment
storage
storage
General
General Affair
Affair

Training

Training
Card
Card
management
management
10
System
System
Application
Application


Chart 4: VPBank Card Center’s organizational structure
(Source: VPBank’s Card Center)
As Chart 4 above, the head of VPBank card center’s organizational structure
is the director, who has responsibility for leading and coordinating five departments
specialized in the card operation. It is said to be an effective organizational
structure, which not only covers all the card operations, but also ensures the
operation of each separate divisions in the entire system of VPBank Card Center.
1.2 Status of card service development at VPBank branch in Nam Dinh
province
1.2.1 Card services business status
1.2.1.1 Overview of VPBank card business status:
Card payment activity in Vietnam began in the early '90s, with the first
participation of Vietcombank. Next was the market penetration of ANZ, Eximbank
in 1996 - 1997, and other banks later. Two years after the card payment activities
appeared in Vietnam, the sales reached $ 200 million/year, the speed of card
payment increased on average by 300%/year. In the following year, the card market
was influenced by the economic crisis in the region, so that a number of cards
issued significantly reduced but banks still actively extended payment network.

In 2004, under the auspices of Vietcombank, VPBank signed a contract to
participate as a sub member of the MasterCard organization with 10 other banks
such as Techcombank, Military Bank, VIB Bank, etc. A number of banks joining in
the alliance now increased to 27. However, VPBank’s card center just went into
operation separately in late 2006. Because of good preparation, so when launched to
the market, card products of VPBank had strongly impressed consumers. With the
current high growth rate, VPBank’s card products have gradually asserted its
position. Along with the interest of every member in VPBank to the card activity
development, the bank has gradually improved organizational structure of the card
center, successfully launched debit card products which offer convenience and
advantages to customers. Moreover, it is also accepted in hundreds of ATM and
payment accepting places of VPBank or Vietcombank and other banks in the

11


alliance. And in the near future, VPBank will merge with the card payment systems
of all banks presenting in Vietnam.
VPBank was the first commercial bank applying chip technology on
payment cards. This is an advantage as well as challenges posed to VPBank when
the bank can attract more customers coming to this advanced card technology, but it
also requires banks to invest heavily in building infrastructure to meet the need in
using and paying card.
Compared with other commercial banks, VPBank's card products are quite
diverse and abundant, in accordance with each customer group. In addition to the
normal card product - Autolink, the bank also introduced VPBank MasterCard
Platinum designed for successful entrepreneurs, VPBank MasterCard MC2 for
young people, and card products for online payment - VPBank MasterCard E-card.
Also, VPBank invests in bringing added value to the cardholder through links with
partners providing reputable service.

1.2.1.2 Card business status of VPBank branch in Nam Dinh province
Currently in the Nam Dinh card market, the customers still prefer debit card.
There is no demand of payment via credit card, so transactions via card are almost
raised from debit card. This is the card operation not only of state-owned banks but
also of VPBank branch in Nam Dinh province.

Chart 5: Debit card number of VPBank branch in Nam Dinh province
from 2008 to 2011
(Source: VPBank’s Card Center)
The chart 5 above shows the growth of debit card in VPBank branch in Nam
Dinh province from 2008 to 2011. In the last 4 years, the debit card number has

12


raised from 909 to 1,919 card, it means that the number increased by 111%. This is
a good sign for a young branch as VPBank branch in Nam Dinh province.
1.2.2 Technology and human resource in card service development at
VPBank branch in Nam Dinh province
Born later than the same type of card products, VPSuper is brought to the
customer with VPBank’s big effort. The goal of VPBank is not only to develop the
number of issued card, but also maintain stable growth rate by continually
improving the quality of the card. To achieve this, VPBank has paid special
attention to strategy building to develop factors affecting the quality of card
services.
1.2.2.1 Technology
Card is one of modern payment methods in the developing science
technology period. To help card services achieve best results, it needs the support
from a system of modern equipment and suitable management system to assist as
well as excellent information storage and high security in a card. Therefore, taking

awareness of lately-born card services compared with the corresponding cards on
the market, VPBank has focused on technology investment, considered card
technology as a nib strategy.
In fact, many banks in Vietnam have difficulty in developing chip card in
accordance with international standards, because they have to not only take time
and cost to replace all used magnetic cards, but also exchange all ATMs and POS
machines to read the chip card. On the other hand, chip card issuance costs will be
larger than the other cards; however, VPBank understand that client security must
always be placed on top; the bank has invested a lot in high technology cards.
1.2.2.2 Human resource quality
Development of human resources is an important issue of all banks, because
people use, control and manage all other resources. If human resources do not
perform necessary quality, the use and development of other resources will not gain
effect as expected. Human resources that are not qualified and have no
understanding of the product will not be able to use the equipment and card service
management software, advise, answer questions and deal with arising situations.

13


Understand the important role of human resources; VPBank’s Card Center
has continuously held short-term training courses for all staff in the system to
improve staff’s knowledge of the card such as features, characteristics, or billing
process. This is the basis that each employee of VPBank in any position also has
knowledge of the bank's card products, and can recommend and advise customers
anytime, anywhere. In every training course, VPBank’s staff are also viewed the
situation, discuss and propose best solutions.
In addition, VPBank also collaborates with prestigious universities,
institutes, or training units in Vietnam and overseas to develop training programs in
short - medium - long term following development goals of staff. Moreover,

VPBank has hired foreign consultants to build overall training plans for the bank,
structure developing strategy for human resources to meet the needs of development
now and in the future. The training programs were set up throughout the
development needs of VPBank in each period, and they are appropriate to career
promotion target of each employee, marked the professional developing step in
recruiting and training at VPBank.
Until now, along with caring policy staff’s life, combined with policies to
attract talent, VPBank owns a strong staff of more than 3,000 people. These
employees are highly qualified, enthusiastic, eager and passionate to learn.
Continually investing in human resources development is one of important
strategies in the development plan of VPBank. The strong and stable development
of VPBank in recent years is the most compelling evidence for what VPBank has
done to improve its human resources. This is also one of important factors VPBank
to maximum serve network expansion activities and customers better and better.
1.2.3 Marketing application in card service development at VPBank
branch in Nam Dinh province
In fact, to develop card service business, VPBank has used four marketing
tools including product, pricing, distribution and promotion.
1.2.3.1. Product
A chose product is the one which satisfies best customer needs with the high
quality. The quality of card services is reflected not only in convenience, flexibility
in payment, high security for users but also in the added utilities, and even in the
form (size, color, shape) of the card.

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Currently, in card technology, VPBank outperformed the other banks when
applying chip card technology, but the chip price is relatively expensive compared
to magnetic card, so the cost of VPBank card issuance is higher than some. Also in

Vietnam, it is hard to counterfeit a bank card, so that cardholders still do not take
care much of card security and awareness of advantage of a chip card compared to
other cards in the market. This is a reason affecting VPBank’s card issuance.
1.2.3.2. Price
Fees to use of products and services of VPBank and the cards of other banks
do not have much difference. The fee for service usage including card issuance fee
and maintenance fee is about 50,000 VND/ card, this price is also considered quite
competitive compared to some other banks.
In fact, when accepting to use card services, customers often appreciate the
convenience of cards and pay little attention to the cost of maintaining the card
(called the annual fee). Conversely, if the card quality is relatively low, lower costs
also have some certain effects.
1.2.3.3. Distribution
Card is printed in the manufacturing workshop of the Card Center. To use the
card, customers can go directly to the Card Center, branches and transaction offices
to register or contact with Card Center for large quantity. With a wide distribution
network (more than 200 branches and transaction offices), customers can easily
approach card services of VPBank.
1.2.3.4. Promotion
The promotion of VPBank’s card is conducted very well. Beside to the usual
forms of advertisement such as banner, VPBank connected with transportation units
to advertise on the buses, also advertised in supermarkets such as Big C Thang
Long, Metro Thang Long, and on television. Thus, the image and message of
VPBank are quickly known.
A number of issued cards are one of the grading criteria for branches and
transaction offices of VPBank. Each of VPBank employees beside to professional
duties, are assigned targets for card issuance, so that VPBank staff always strives to
do marketing this product to customers anytime, anywhere.
1.2.4 Coordination and inspection in card service development at VPBank
branch in Nam Dinh province

1.2.4.1 The cooperation within VPBank to develop card service business
The implementation of activities to bring card services to customers as well
as business management are decentralized, in which Card Center focally issue,

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assigned tasks to each transaction office and branch; so it requires coordination
between divisions and departments of VPBank.
The introduction, marketing of card services and search for customers can be
taken by Card Center or branches and transaction offices; but the principle is not to
jostle with each other for customers. In many cases of requiring support, Card
Center and branches as well as transaction offices can communicate, facilitate and
assist each other to complete tasks.
Until now, the incidents in card service business are always limited to the
lowest level; the problems that customers encounter are resolved quickly, without
affecting to customer’s works.
1.2.4.2. The coordinated implementation to develop card activities of
VPBank with other banks
Currently, VPBank is in the alliance with other banks to increase the number
of places that customers can make transactions. With problems arising when
customers use another bank's ATM, VPBank directly contact to this bank to solve
and minimize the possible risk to consumers.
1.2.4.3. The inspection and evaluation
VPBank's Card Center always has a department to inspect and evaluate
activities related to payment card services. In addition to regularly supervise and
urge branches and transaction offices, review the report about card services to
propose measures, the Card Center also has hotline numbers as well as e-mail for
customers to contact and reflect the problems arising when using the card services
or the employee's service in branches and transaction offices.

Card Center also do some tests for the branch’s staff after short-term training
courses, hold irregular inspections to assess the management of card issuance and
payment or the knowledge about products in branches and transaction offices to
make adjustments accordingly.
1.3 Introduction of VPSuper Card
On February 28th 2011, VPBank launched VPSuper - a cutting-edge product
package which includes current account, debit card, Internet Banking and SMS
Banking services.
VPSuper is a service account for customers who have funds flowing through
the payment account and it offers the interest up to 6%. In addition, customers can
use the VPSuper account through various convenient and simple forms of
transactions such as via messages or Internet. Besides the high interest rates,

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VPSuper account of VPBank will help customers manage accounts efficiently and
conveniently.
When registering for VPSuper account, customer will receive special
promotions of:
- A 4GB USB, plus a luxurious ballpoint pen
- A D-Com 3G USB shall be given to customers who maintain a balance of
VND 100 million in a month or VND 33 million in three consecutive months.
In addition, using VPSuper account, customers will get a lot of benefits:
- Maximum interest rate up to 6% per annum
- No minimum balance required
- No application fee, card issuance fee and registration fee for Internet
Banking and SMS Banking services
- No fee charged on any transactions on VP Super account
- Highest transaction limits:

+ Cash withdrawal at ATMs: VND 20 million/time and VND 100
million/day
+ Account transfer via ATMs: no limit
+ Account transfer via i2b: VND 200 million/day
- Easily withdrawing cash or making payments at over 11,000 ATMs and
40,000 POS of all banks in Smartlink, Banknet and VNBC network nationwide.
- Undertaking transactions conveniently via Internet Banking i2b: online
savings, intra-bank fund transfer, inter-bank fund transfer, 24/7 card-based fund
transfer, top-up services, bill payments, etc.
- Extensive transaction network with 200 branch nationwide.
- Account maintenance fee: VND 50,000 per month (free for cardholders
with average minimum balance of VND 10 million/month).
VPSuper card is identified as an outstanding debit card product of VPBank
towards the group of customers who frequently have demand to do transactions
locally.

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CHAPTER 2: OVERVIEW OF CARD SERVICE BUSINESS
DEVELOPMENT IN COMMERCIAL BANK

2.1 Concept, nature, role of card service business in commercial bank
2.1.1. Concept of card
2.1.1.1 Concept of card
Bank card is one of non-cash payment methods, which was born from the
purchase method of retail goods and associated with the development of
information technology applications in the banking sector. Bank card is payment
instrument issued by issuing banks to the customers to use payment for goods and
services, or withdraw cash within their cash deposit balance or granted credit

limitation. Bank card is also used to perform the service through the automatic
trading system, known as self-service ATM systems (Dr. Nguyen Minh Kieu, 2008)
2.1.1.2 Classification of card
There are a lot of classifications of card now. But in general, cards are
divided into different groups based on their own functions. Following the
classification of Dr. Nguyen Minh Kieu, there are three ways to classify cards:
 Based on manufacturing technology
- Embossed card: it is a card with necessary information embossed in the
surface of the card. Nowadays, this type of card is rarely used because of the
primitive technology and counterfeiting potential.
- Magnetic card: it is a card that the cardholder's information is not only
embossed on the front of the card, but also encoded in the magnetic stripe on the
back of the card. The information must be accurate and fit together. Magnetic cards
are now dominating the total number of cards in use on the market.
- Smart card: This is the latest generation of cards, with high security and
safety features. It is based on computing processing technology: the card is attached
with an electronic chip which has a structure like a perfect computer. Typically, a
chip is used to replace the magnetic stripe on the card.
 Based on paying property
- Credit card: It is the non-cash payment method, providing the users with the
ability to buy thing first and pay later. At the time the customers pay for goods or
services, the bank will stand in the customers to pay for goods and service providers
and then to salvage this amount of money from the customer after a certain time,
following the agreement between the bank and the cardholder.

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- Debit card: Like the credit card, the debit card is the non-cash payment
method. It allows customers to access their account balance via the online

connection to pay for goods or services at card-accepting units, or carry on
transactions related to account at ATM systems. Cardholder's expenditure depends
mostly on the account balance. The bank pays a role in providing services to
cardholders and charge service fees.
 Based on the scope of card usage
- Local card: it is issued by banks or credit institutions to replace cash to pay
for goods and services and use to withdraw cash within country. Usually, it is the
domestic debit card of the commercial bank, that is issued to use at ATM systems
and card-accepting unit network of issuing banks, agent banks and banks associated
with the issuing bank in that country.
- International card: The international cards are cards bearing the brand of
international organizations, which the banks and credit institutions play a role as
issuing agents. International card can be used locally and overseas, at any cardaccepting units or ATM carrying symbols that accept these cards. To issue
international card, card-issuing banks must register and be accepted as a member of
the international card organization, also strictly observe the rules of the card
issuance and payment. These rules are ordained by the international card
organization.
2.1.2 Concept of card service business
Dr. Nguyen Minh Kieu said that business is an activity of a person or an
organization to gain the benefit through a set of activities like Management,
Marketing, Finance, Accounting and Manufacture.
She also emphasized that card service business is an activity of card-issuing
organization in the marketing activities to introduce services to the card user with
the aim of benefit increase.
Therefore, card service business development is management and marketing
activities of the card-issuing organizations (Banks) to enhance a number of cards
and to increase benefit.

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2.1.3 Role of card service business in commercial bank
2.1.3.1 To the cardholder
First of all, card services offer the customer safety. Card is an electronic
currency used to replace cash. The cards used in payment can limit risks from the
use of cash such as the risk of being stolen. Moreover, cards are produced with the
base on encrypting technology and the most modern technology, electronic circuit
application; therefore it is hard to access the account without cardholder’s signature.
When purchasing goods and services, the cardholder must sign the bills and the
seller will make the comparison with the specimen signature, so the encoded
information will create the wall against the risk of crooks.
Secondly, using card services, customer can feel the fastness and
convenience. When selecting bank card, the cardholder will not have to keep the
large amounts of cash. Cardholders can actively manage their expense and
purchase, also easily use bank card to make a payment in any service supplier
accepting the card. With debit cards, customers can withdraw money or purchasing
goods and services by doing transaction with the bank through ATMs instead of
going directly to the bank. And with credit cards, the convenience is that the
cardholder can use the money that bank advanced. This allows customer to extend
the financial transaction beyond the income limitation.
Lastly, card services bring out flexibility and economy. To own a bank card,
cardholder just has to pay a smaller fee than the utility that the card offers. In
addition, transactions such as balance check, withdrawal or transfer are all free.
Besides, the banks always give the current fee and interest clearly and transparently.
Thus, the cardholder can personally control fees and interest of their transactions
and that always brings satisfaction to both customers and banks.
2.1.3.2 To the bank
When participating in issuing card, the bank can benefit a lot:
First, with the card issuing activities, the bank can easily diversify its
services, attract new customers and retain old customers. Also, with joining the

international card organization, the bank will build business relationships with other
banks and financial institutions in the world, increase foreign currency revenues and
improve operational efficiency.
Second, through the card issuance, revenue from intermediary activities as
well as fees from charging interest, card issuance reissuance, etc. will increase

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