LV Thạc sỹ_Strategic diagnosis of priority banking service in maritime bank

Maritime Bank ‘s Priority Banking Strategy from 2012-2014

CONTENTS

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Maritime Bank ‘s Priority Banking Strategy from 2012-2014

ACKNOWLEDGEMENTS

This dissertation is the outcome of my study at the French – Vietnamese Center for
Management Training. Many people have been of great help in completing this dissertation.
I would like to thank all of them, both in person and in these acknowledgements.
Unfortunately, it is not possible to mention all on this page.
I wish to express my sincere thanks and special gratitude to Dr. …, my adviser in studying
theory, who kindly supervised and gave me encouragements at all stages of my research.
My special thanks are devoted to my colleagues at Maritime Bank who have been so helpful.
And I would like to say thank so much to Retail Bank’s CEO- Mr. … - who helped me in
work and this thesis as well.
I am indebted to my family for encouraging me to pursue my education as far as possible.
This entire book is dedicated to them. I also owe my gratitude to all my friends for love and
support.
I could not have finished this dissertation without all supports.

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Maritime Bank ‘s Priority Banking Strategy from 2012-2014

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Maritime Bank ‘s Priority Banking Strategy from 2012-2014

INTRODUCTION
Retail Banking is the kind of profitable and stable business in the world. Retail banking aims
to be the one-stop shop for as many financial services as possible on behalf of retail clients.
Traditional business in a typical retail bank are Deposit, Lending, Card, Payment,…and The
bank makes much profit on services and lending. But when the economy is changing and
developing day by day, customers care more on how they will be treated in bank.
Nowadays, customer comes to bank not for begging a service or money but to experience the
best service which bank could provide them. Among many types of customer, High net worth
(HNW) or affluent segment (AF) is one of the sexiest segments, ill-defined and also difficult
to manage. And, increasingly, AF itself becomes an important contributor to profit of retail
banking.
But how to develop the right service model to HNWs segment or how to develop priority
banking is a challenge to any retail bank and a big question with many different answers.
1.

Problem statement

Vietnam’s banking market has been developing quickly in recent years with many new banks
join the market including joint stock banks, foreign banks so the competition between them is
getting hotter and hotter. All banks have to focus not only in product development to meet
customer demand, price competition, selling performance but also improve service quality to
gain big market share.
‘Priority Banking’ is not a new concept in banking activities but still new in Vietnam. With the
first launching of this service in HSBC from 2010, there looks like a shot to big space without
reaction. This is because Vietnamese has still not been familiar with that kind of services and
all banks do not know why they have to build up “another banking service” to their current

customer, and why they have to invest more on those which may increase their cost.
Therefore Priority Banking didn’t have much market to grow more. But from the year of
2011, with the development of economy and banking services, foreign bank starts bringing
new model from priority to wealth management to Vietnam which makes local bank realize
the segment that they should focus on.
Defining the HNWs is itself challenge for any local bank. Almost definition is based on the
asset customer holding which includes deposit and investment, borrowing only. The general
assumption is that Mass affluent is people who care more deposit and lending traditionally
rather than financial management or investment consulting service. Then HNWs or AF is the
mid-station segment from traditional banking and investment banking.

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Maritime Bank ‘s Priority Banking Strategy from 2012-2014

Maritime bank (MSB) is young man in the retail banking segment. It has just developed retail
for 2 years even it is 20 years old bank. As emerging in the market, MSB’s BOM, BOD has
thought about creating the unique or differences of product and service to compete with some
big giants in the market.
Author joined MSB as Product Head and Project Manager of Priority banking project. Before
joining MSB, I worked in Maritime Bank on Priority Banking Proposition and Strategy
Manager. From my working experience and deep attention on Affluent segment, it is the right
time for the all big local banks to prepare for priority banking service, and MSB is not out of
these if MSB wants to develop retail banking in higher level.
MSB’s Priority Banking is going to implementation phase and the first effect could mention
here is deposit growth and customer satisfaction improvement.
2.

Objectives of the study

With this research, I would like to understand deeply the HNWs and priority banking model
which will include following aims:
-

To analyze how bank can manage or mis-manage HNWs segment in order to maximize
the contribution from them.

-

To identify the necessary strategy to develop Priority Banking in MSB.

-

To provide recommendations and solutions for MSB to set up Priority Banking Service.

3.

Methodology of the study

Data sources:
Secondary data and primary data will be used together to study the research topic. Data
collection method:
-

For secondary data: gathering information from published sources such as various
sources like newspapers, websites, journals, reports, researched books…; banking
industry data published by information from Maritime bank’s annual reports; reports
from monthly Retail Banking Division.

-

For primary data: The main tools for the collection of data included mystery shopping,
interview directly VIP customer and review from expats.
+

5

Interview Relationship Manager from local banks and foreign banks to understand
which services or products those banks are offering to VIP customers. From that, we


Maritime Bank ‘s Priority Banking Strategy from 2012-2014

will have the actual view from market and give best suggestion to BOM to build up
the strategy.
+

Interview VIP customer to understand deeply customer demand and from that can
build the best product & service packages.

+

Interview expats to get recommendation from the best practice in the other market
outside Vietnam.

Mystery shopping Survey
Author and team did a survey of relationship manager in 10 banks (6 local commercial banks
and 4 foreign banks) in Jan 2012 in both Hanoi and Ho Chi Minh.
The survey was done by playing VIP customer role to talk with sales in other banks following

the prime set up cases.
Interview Information
Author did a survey loan customer satisfaction with current retail products and how they
expect from Priority banking. The survey is with 93 existing customers in April 2012 with
several questions in both multiple choices and giving feedback type (Annex 01). The survey
took no more than 15 minutes for each customer and was supported by Customer Association
in Maritime Bank’s branches.
4.

Limitation of the study

In this research, because of the fact that it is just finished the setting phase and in early stage
of implementation, author only focused on analyzing how to develop Priority Banking model,
not the practice after building up.
In the chapter 2, the study takes the reader the overview of priority segment and how it is
developed in Vietnam. We also point out why this business is important to retail banking. And
How/What MSB should focus on when they decide to start with this business is mentioned in
the chapter 3.
5.

Scope of research

This is the research for Maritime Bank to grow priority banking service from 2012 -2014.
6. Research Structure
The outline of the research is in short as follows:
Table of Contents

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Maritime Bank ‘s Priority Banking Strategy from 2012-2014

-

Chapter 1: Literature review

-

Chapter 2: Overview of Maritime Bank and Priority Banking service in Vietnam

-

Chapter 3: Strategic Diagnosis of Priority banking services at MSB

-

Chapter 4: Strategic Planning

-

Recommendation & Conclusion

-

Annex 1: Customer survey

Annex 2: Mystery Shopping Case set up

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Maritime Bank ‘s Priority Banking Strategy from 2012-2014

CHAPTER 1: LITERATURE REVIEW
1.1.

A definition of strategy
The word “strategy” is derived from the Greek word “stratçgos”; stratus (meaning army) and
“ago” (meaning leading/moving).
There are many definitions of strategy and all have their own reasonable meaning. The most
popular definition which is considered precisely is as follows: “strategy is a direction and scope of
an organization over the long term which achieve advantage in the changing environment through
it configuration of resource and competence with the aim of fulfilling stakeholder’s expectations”
(Source: Exploring Corporate Strategy – Eighth edition)
From above definition , some key elements could be understood as follows:
-

The scope of an organization’s activities is to answer the question about should the
organization concentrate on one area of activity, or should it have many activities.

-

Advantage for the organization over competition in the market and could be achieved in
different ways and may also mean different things.

-

Strategic fit with the business environment. Organizations need to point out their
positioning in their environment, in terms of the extent to which products or services
meet clearly specific market needs. This maybe like trying to find a particular niche in a

market, or finding to buy up businesses that have already found successful market
positions.

-

The organization’s resources and competences: Following “the resource-based view” of
strategy, it is to exploit the strategic capability of an organization, in terms of its resources
and competences, to provide competitive advantages and new business opportunities.

-

The values and expectations of powerful stake holders inside or outside the organization.
These stakeholders – individuals, groups or even other organizations – can effect to some
decisions as whether an organization is expansionist or more concerned with
consolidation, or where the boundaries are drawn for the organization’s activities.

1.2.

Level of strategy
There are some levels of strategies an organization and each levels has different scopes an business
directions:
-

8

Corporate level of strategy: Is the top level, concerning with the overall scope of a
corporate and how value will be added to the different parts (business units) of that
company. This could include issues of geographical coverage, diversity of

Maritime Bank ‘s Priority Banking Strategy from 2012-2014

products/services or business units, and how resources are to be allocated between the
different parts of the company. In another form of this is about ‘mission’ that reflects such
expectations from the Top management for growth of company. Being clear about
corporate-level strategy is important: determining the range of business to include is the
basis of other strategic decisions.

1.3.

-

Business level of strategy: is a competitive strategy and it is all about how the different
businesses included in the corporate strategy should compete in their specific segments. It
maybe concern issues such as pricing strategy, innovation or differentiation, for instance by
better quality or a distinctive distribution channel. Therefore, even though corporate-level
strategy involves decisions about the organization as a whole or not, strategic decisions
relate to particular strategic business units (SBUs) within the overall organization. In small
and simple organizations with only one business, the corporate strategy and the businesslevel strategy are almost same. Otherwise it is useful to differentiate the corporate-level
strategy with business level strategy, because the corporate strategy will provide the
framework for whether and under what conditions other business opportunities might be
added or rejected.

-

Operational strategy: is the important part of an organization to see how the other
departments inside an organization to deliver effectively the corporate strategy and
business-level depend to a large decisions that are taken, or activities that happen, at the
operational level.
Strategic management

Strategic management is including the strategic position of an organization, making strategic
choices for the future and managing strategy in action.
Strategic Positioning
Understanding the strategic position is identifying the impact on strategy of the external
environment, an organization’s strategic capability (resources and competences) and the
expectations and influence of stake- holders. When developing strategies, analysis of the
organization’s environment as it is at the moment and how it could develop in the future, is
important. Once a company has identified its target, it starts with your current situation to make a
strategic plan to achieve those goals. Changes in the external environment often present new
opportunities and new ways to achieve goals. An environmental scan action is done to determine
the opportunities available. The company also must know the capabilities and limitations of it to
choose the opportunities that it can pursue with a higher probability of success. Therefore, analysis
of the situation related to the analysis of the environment inside and outside. This analysis must be
done at a local level as well as outside to identify all opportunities and threats of the external
environment as well as the strengths and weaknesses of the organization. A situation analysis can
produce a large amount of information, much of which is not specifically related to strategy
formulation. To make the information more manageable, sometimes it is useful to classify the

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Maritime Bank ‘s Priority Banking Strategy from 2012-2014

factors as the company's internal strengths and weaknesses, and external environmental factors
such as opportunities and threats threatened. Such analysis is often referred to as SWOT analysis.
There are a number of questions which will be raised to define future strategies of organization
related to:
-

The macro and micro environment: the way for an organization to exist and compete in the
context of a complex world political, economic, social, technological, environmental and
legal. Environmental changes are more complex for some organizations than others. How
this affects the organization may include an understanding of the historical and
environmental impact, as well as expected or potential changes in the environment variable.
Many of the changes will increase the opportunities and others will not pose threats to the
organization - or both. External environment has two aspects: the macro environment affect
all companies and micro environment affect businesses in a particular industry. Analysis of
macroeconomic environment including political, economic, social, technological and other
factors and is sometimes referred to as a PEST analysis. An important aspect of the analysis
of the micro environment is the industry in which the company operates or is considering
operating. Michael Porter has devised a five forces framework that is useful for industrial
analysis. Porter's five forces are including barriers to entry, customers, suppliers, substitutes,
and rivalry among competing firms There are a number of factors to assess the external
situation analysis:


The market (customers)



Competition



Technology



Economy



Legal Environment

Analysis of the competitive environment is also performed, many times based on the
framework suggested by Michael Porter. For specific market planning, researchers have
proposed a series of action steps or guidelines prescribed by the market makers.
Analysis of the external environment tends to focus on the customers. Management must
have open visionary in building customer strategy, and should do so by thinking about the
changing market environment, how can impact the customer, for whether customers are
setting the company wants to serve.

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Maritime Bank ‘s Priority Banking Strategy from 2012-2014
-

The strategic capability of the organization – made up of resources and competences. Is the way of
thinking about the Strength and Weakness of company like competitive advantage or
disadvantage). The objective to define those elements is to see the internal influences and the
consequence for strategic choices for future of organization. Major influences of stakeholder
expectations will be consider as a part on an organization’s purposes. It is all about an
organization’s vision, mission and values. The mission describes the purpose of organization - the
purpose for which it has set up and why the organization exists. Some reporting duties include the
organization's business .The company's mission is its reason to be. The task is often expressed in
the form of mission statements, which gives a sense of purpose for employees and projects a
corporate image to customers. In the formulation of strategy, mission statement set the mood of
where the company should go. Others explain the products or services they produce or what clients

they serve. Organization mission statement says what it does? Why does the organization exist?
The vision is to see how company wants to be in future and the unique proposition that
organization wants to apply. It is also the story about how cultural and historical influences can
also influence strategy. Cultural influences can be organizational, sectored or national. Historical
influences can create lock-in on particular strategic trajectories. The leader needs to indentify the
difference in culture and from that can give the right direction. Internal analysis should consider:


Company culture



Company image



Organizational Structure



Performance



Brand awareness



Market share



Financial resources

Strategic Choice
Strategic choices involve the options for a strategy in terms of both the directions in which
strategy might focus on and the methods by which strategy might change to action.

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There are strategic choices in terms of how the organization becomes more competitive in market
and get business. Normally, it will concern to pricing and differentiation strategies, and decisions
about how to compete with competitors to dominate the market share. These include
diversification decisions about the portfolio of products and services which company provide to
market and it also concerned with the relationship among the several parts of the business and
how the company adds value to these various parts. In details, it would be:
-

The choices as to how an organization positions itself in relation to competitors. Michael
Porter proposed three different ‘generic’ strategies by which an organization could
achieve competitive advantage: ‘overall cost leadership’, ‘differentiation’ and ‘focuses. It
is very important that organization have to find the way to answer how an organization
differentiate themselves from the other rivals in specifics things like pricing, quality of
service, diversify products,… depending on strategic positioning above. It is can be seen
same in the chart below. Those competitive advantages should be more flexible or stable
compare with competitors also need to be answered by top management.

(Source: Exploring Corporate Strategy – Eighth Edition. p229)

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-

The choices of products and markets for an organization are about what an organization to
decide to focus on specific segment or products or services or extend to all scopes. The
Ansoff product/market growth matrix1 in the chart below provides a simple way of
generating four basic alternative directions for strategic development:
o

An organization normally starts in box A, with its current products and markets:
According to the matrix, the organization basically
has a choice between
penetrating still further within its existing sphere (staying in box A);

o

And the organization also have a choice to move rightwards by developing new
products for its current markets (box B); or to move downwards by bringing
its existing products into new markets (box C); or taking the most radical step
of full diversification, with altogether new markets and new products (box D).

o

The Ansoff matrix explicitly considers growth options. Growth is rarely a good
result in itself. Corporate managers are accused of empire building at the expense
of shareholders. The fifth option for organization is consolidation which involves
protecting existing products and existing markets and therefore belongs to box A.

(Source: Exploring Corporate Strategy – Eighth Edition. p261)

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-

o

Organization can choose the technology push or market pull. Relying heavily on
existing users can make companies too conservative, and vulnerable to disruptive
technologies that uncover needs unforeseen by existing markets. Technology push
and market pull are best seen as extreme views, therefore, helping to focus
attention on a fundamental choice: relatively how much to rely on science and
technology as sources of innovation, rather than what people are actually doing in
the market. In practice, most organizations find a compromise between the two
views, with the balance varying between industries and often over time. The key
issue for managers is to be aware of the dilemma and to review their
organization’s balance between the two extremes consciously rather than relying
on habit or prejudice.

o

Product innovation relates to the final product (or service) to be sold, especially
with regard to its features; process innovation relates to the way in which this
product is produced and distributed, especially with regard to improvements in
cost or reliability. Some companies focus more on product innovation, others
more in process innovation.

The choices about how strategies are to be implemented and tracked. For any strategic

choice an organization made, it should be pursued by all related departments, and go
along with company’s development, M&A strategy of company. Organizations have to
make choices about the methods by which they pursue their strategies. Many
organizations prefer building new businesses with their own resources. Other
organizations might develop by mergers/acquisitions and/or strategic alliances with other
organizations. The way an organization to track on their action will also related to how
they evaluate their strategic choices:
o

Suitability is concerned with whether a strategy addresses the key issues relating
to the strategic position of the organization.

o

Acceptability is concerned with the expected performance outcomes (like the
revenue or risk) of a strategy and the extent to which these meet the expectations
of stakeholders.

o

Feasibility is concerned with whether a strategy could work in practice; therefore,
whether it has the capabilities to deliver a strategy.

Strategic in Action
Organizing strategy in action is concerned with ensuring that chosen strategies are actually put
into action. It describes the way an organization to review all the internal processes to implement
the strategic choices and manage it. It is distinction between intended and emergent explanations
of strategy development by reviewing the different organizational processes that can explain how
strategies come about. It is also the relationship between a strategy and how an organization

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functions such as how people work with each other within formal structures but also more
informal relationships and key resource areas of an organization. The action plan should be
designed after the main goals and objectives have been set to achieve tasks in an easy way and
can be measured. With an Action Plan, itself the goal can be achieved. Without an action plan, and
measures it requires, it will be impossible to implement the plan and measure success. Once the
longer-term elements of a strategic plan have been developed, it is time to ensure a specific work
plan to begin implementation. This strategy can be expressed in high-level concepts and priorities.
To do so effectively, it needs to be translated into more detailed policies can be understood at the
functional level of the organization. The expression of functional policy strategy also serves to
highlight any practical problems that cannot be seen at a higher level. In addition to developing
the policy function, the implementation phase involves determining the necessary resources and
put in place the necessary organizational changes. Strategic planning acknowledges that the
strategy must reflect the current conditions in the organization and its environment. So it is rare to
try to develop detailed annual targets except for the first and second year or may be covered by
the strategic plan. However, the annual action plan is needed. Annual program goals should be
based on the time and can be measured. Objectives and work plan for the Board and the
organization as a whole is as important as the ones related programs. Most of the projects
identified annual goals and work plans as required by donors, while only a strategic plan may
require the Board to think about the desired components, its skills, and participation, or the
organizational structure and administrative system. Board of Directors must approve the action
plan, while employees (with consulting help, if desired) can do much of the development of the
plan. This is an area of expertise of the staff, since the implementation of programs and strategies
based on the policy by the Board of Management is a staff function. Completed a strategic plan
summarizes the results and decisions of the strategic planning process. There is no set format, but
be sure to include the output of each major step. Box at the end of this document provides a
possibility. Develop procedures to monitor, and modify strategies based on changes in the external
environment or organization. Be sure progress toward goals and objectives and the strategic use

of routine monitoring, with the revised strategy and annual objectives developed annually, based
on the progress made, the return problems encountered, and the changing environment.
Procedures to take advantage of sudden changes such as more sympathetic to elected officials,
appointed, improvements in the economy, changes in the local donor priorities, or changes in
target population.
Strategic in action have some key issues as follow to be reviewed:
-

15

How strategies develop in organizations is the first step need to be reviewed. The
organization management must define the outcome of the vision, leadership or ‘command’
of individuals, formal planning systems or the deliberate imposition of strategy from
outside an organization to support implementation process. Strategy will be out of more
routine and day-by-day activities in organizations and through cultural processes and
political processes.


-

The organization will also have to see how to arrange internal organizing for successful
strategy implementation. There are three separate strands of organizing: organizational
structures, organizational processes and the management of relationships. It is very
importance for successful organizing of making these various elements work together in
order to create mutually reinforcing configurations that are well matched to an
organization’s strategies.

-

The relationship between an organization’s overall strategy and the strategies in four key

resource areas: people, information, finance and technology is critical for company to
pursue their action plan. It is about to answer whether the separate resource areas of an
organization are capable of enabling strategies to be executed successfully and whether
the strategies of an organization are being shaped to capitalize on the expertise in a
particular resource area.

-

How strategic change might be managed could be done in several ways. First, by
acknowledging that the challenge of managing change is not the same in all organizations;
that the change context matters. Second, by looking at different approaches to manage
change, including the roles that managers and others play and the styles of managing
change they adopt. Next, by considering a range of levers that might be employed to
help manage change in organizations, including changes to organizational routines, the
management of political and symbolic processes and other specific tactics for managing
change. Finally the chapter considers how these various levers might be employed in
different change contexts.

-

There are three issues in the practice of strategy which includes: who to include in
strategy-making activities (not just top management but middle managers, consultants and
planners as well); the kinds of activities that strategists do from selling strategic issues
to communicating chosen strategies; and the kinds of methodologies that strategists use,
including away-days, projects, hypothesis testing and business plans.

So strategy is all about integrating organizational activities and utilizing and allocating the scarce
resources within the organizational environment so as to meet the present objectives. While
planning a strategy it is essential to consider that decisions are not taken in a vacuum and that any
act taken by a firm is likely to be met by a reaction from those affected, competitors, customers,

employees or suppliers.
Strategic planning is a tool for organizing the present on the basis of the desired future. That is, a
strategic plan is a road map to lead an organization from where it is now to where it wants to be in
five or ten years. It is necessary to have a strategic plan for company or division. To develop a
comprehensive plan for company or division will include long-range and strategic elements.

16


1.4.

Benefits and difficulties in strategic planning
All companies recognize that it can no longer merely react to problems as they appear. If it is
to continue as a leader in improving the profession, it must begin predict changes in the future
rather than merely react to change. Each company or division must consider the long-term
future.
•

Clearly define the purpose of the organization and to establish realistic goals and
objectives consistent with that mission in a defined time frame within the
organization’s capacity for implementation.

•

Communicate those goals and objectives to the organization’s constituents.

•

Develop a sense of ownership of the plan.

•

Ensure the most effective use is made of the organization’s resources by focusing the
resources on the key priorities.

•

Provide a base from which progress can be measured and establish a mechanism for
informed change when needed.

•

Bring together of everyone’s best and most reasoned efforts have important value in
building a consensus about where an organization is going.

•

Provides clearer focus of organization, producing more efficiency and effectiveness

•

Bridges staff and board of directors (in the case of corporations)

•

Builds strong teams in the board and the staff (in the case of corporations)

•

Provides the glue that keeps the board together (in the case of corporations)

•

Produces great satisfaction among planners around a common vision

•

Increases productivity from increased efficiency and effectiveness

•

Solves major problems

There are a number of pitfalls associated with strategic planning. First, the plan cannot
become successful as expected because of changes in the environment in which the plan is
obligation to act. In addition, the strategic plan is worthless in an organization of a major
crisis. The crisis is a current problem cannot be solved by a strategic plan. And, if the planning
process itself is weak, the resulting plan can be weak and inadequate organization.

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Maritime Bank‘s Priority Banking Strategy from 2012-2014

CHAPTER 2: OVERVIEW OF BANKING SERVICE IN VIETNAM
AND MARITIME BANK
2.1.

Overview of Vietnamese banking industry

2012 is the difficult year for banking industry due to the crisis prolonged from end of 2011 till
now. The economy is facing with many challenges like many SMEs going to bankruptcy, Real
Estate Market frozen, Bad debt increased, and pressure to re-structure banking system, .etc.
Growth rate of bad debt YOY

(Source: - Minh Đức (August 2012))
Non-performing loans (NPLs) of the banking system by the end of March, 2012 is more than
202,000 billion, accounting for 8.6% of total outstanding credit, according to the State Bank
announced this afternoon. According to the investigation results of the Inspection, supervision
of banks, with nearly 1.01 million borrowers selected sample of 57 Vietnamese credit
institutions accounted for 90.1% of total outstanding loans of credit institutions, the NPL
31/03/2012 of 202,000 billion VND will be accounting for 8.6% of total loans. In some array is
said to be sensitive, the State Bank official "closing" a problematic past. Specifically, loans real
estate investment business by the end of May, 2012 is about 197,000 billion. Bad debts in this
segment accounted for approximately 10.3% of total bank loans. The value of collateral for
real estate loans of loans up to 180% of the outstanding loans.
In particular, the number of corporate closed is 4105, increase of 35.4%. Number of
entrepreneur shut down business is 22,219, increase of 1.3%. In June alone, the number of
bankrupt business and deactivated is 4110, in which, the number of bankrupt companies is 610.

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Maritime Bank‘s Priority Banking Strategy from 2012-2014

The State Bank of Vietnam (SBV) has recently announced data on operations of credit
institutions till the end of June 2012 whereby as of June 30, 2012, according to which the total
assets of Vietnam’s credit institutions posted a rise of 37.266 trillion dong, equaling to a growth
of 0.76 percent from the end of April 2012. Meanwhile, the equity of credit institutions
increased by additional 2.731 trillion dong and chartered capital increased by over 12

trillion dong.
Regarding chartered capital of credit institutions, as of June 30, 2012, the chartered capital of
state-owned commercial banks increased by additional 8.745 trillion dong, or 8.5 percent from
the end of April 2012.Similarly, chartered capital of joint stock commercial banks surged 2.787
trillion dong
The capital adequacy ratio (CAR),of finance and financial leasing companies decreased from
11.71 percent at the end of April 2012 to 8.65 percent as of the end of June, 2012 reflect the
unstable in capital management and credit risk of banks.
However, following some economists, from Q4 2012 Vietnamese economy will be back on
track to recover. It is thanks to the fiscal policy from government on pricing management and
interest adjustment.
Vietnam's economy has overcome the most difficult times and began to tend to thrive. Quarter
GDP I/2012 4%, II/2012 quarter reached 4.66%. Overall, GDP growth rate of the first six
months of 2012 is estimated at 4.38%, while inflation is only about 3% (the lowest in three
years).
Growth rate began a downward trend since 7/2011 and continue to fall in the first six months
of this year. In particular, in June CPI is up 2.52% from last year and up 6.9% over the same
period. Organizations assess the credibility Standard & Poor's has raised the credibility of
Vietnam from negative to stable, saying the government was taking measures to tighten
financial success.
Like India and China, Vietnam forced to drastically lower interest rates and to accept slow
growth to control inflation and stimulate the domestic economy. Vietnamese interest rate has
dropped significantly, interest rates for loans to the rural agricultural sector, exports, industrial
popular support at 12% to 13% a year, for other business loans in 14% to 17.5% ... Basically
stable exchange rate, foreign currency liquidity is improved because of abundant supply of
foreign currency from higher exports, the international balance of payments surplus is quite
large, foreign reserves improved.
Index of businesses started with bright signals to dissolve business began to decline about 10%
in May, inventories tend to decrease, from 34.9 percent in March to times 32.1% and 29.4% in
the month 4 and 5. In the first six months of 2012, Vietnam's export turnover has reached $

53.1 billion, up 22.2% compared to the same period last year. "The results achieved in the first
six months of the year will support for the prospect of last 6 months which will have growth,

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Maritime Bank‘s Priority Banking Strategy from 2012-2014

better transformation", the Vietnamese newspaper quoted Prime Minister Nguyen Tan Dung in
the first meeting took place in July at the Hanoi.
The economist also said that there is reason to believe that Vietnam's economic recovery. Do
not fall prey to "deadlock" in 2011, to support the economy, Vietnam's Prime Minister Nguyen
Tan Dung has a wide range of economic policy decisions by experts as an innovative
assessment. Accordingly, despite the economy 'cry' intense, Prime Minister Nguyen Tan Dung
policy to increase aggregate demand in the plan and not break plans, market support, not only
at the business by supporting measures interest rates in 2009.
Although the lowest economic growth over the past three years, but Vietnam will continue
prioritize to curbing inflation, stabilizing macro economy. Prime Minister Nguyen Tan Dung
put the priority on curbing inflation, stabilizing the macro economy not only for 2012 but also
for the next year. It is also the foundation for sustained growth and sustainable development. At
the same time, it is needed to maintain growth at a reasonable level, to promote satisfactory
growth but not to cause macroeconomic instability and the high inflation does not come back
in the next year.
Banking is industry reflecting clearly the recovery of economy. Credit increases again after
months with negative growth ratio. Number of new branches and staffs are one of factors to see
how banking system return on road.
2.2.

Priority Banking Service in Vietnam Market

Piority banking (VIP Banking) was implemented by foreign banks in Vietnam since 2009. The
race to get market share in high-income segment becomes aggressively when the commercial
domestic banks also began to participate in the “potential playing field".
So who is VIP customer? Gets a foreign bank operating in Vietnam as an example, to register
as a VIP customer, the total asset value of maintaining is a 1 billion USD or currency
equivalent value in deposit accounts, or in investments. "Standard" VIP customers in the
domestic banks are now little more than a bit. For example: deposit of USD 2 billion or more;
deposit payment card account 6-month average of 500 million or more; or shareholders owning
2 billion par value of shares or more; addition, income customers from 60 - 70 million VND /
month or more is considered VIP clients, ...
We could see the current domestic and foreign commercial banks when ranked VIP clients are
mainly based on the income criteria or average balance of deposits as a basis for evaluation.
The banks are also very flexible with the customer ranking criteria from time to time, in line
with the bank's business strategy to attract, and encourage long-term adherence to the bank,
become guests VIP customers to be served with the high standards.
Recent statistics show that in the world, the high-end market segment accounts for about 1.2 2% of the customers in the bank. In Vietnam, the estimated number of standard VIP customers

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Maritime Bank‘s Priority Banking Strategy from 2012-2014

account for about 10% of the total number of individual customers across the banking system.
Therefore, VIP customers are not just customers purely so that they really became partners
bring significant bank revenue.
Status of implementation VIP customer care
A series of commercial banks deploy services exclusively for VIP customers under different
names. Foreign banks to launch services "Priority Banking" for customers in Vietnam with
luxury services chain and global benefits. Other commercial banks serve VIP customers under
the name "VIP banking" or "Private banking". But all have a common characteristic: To ensure

privacy, providing optimal utility and transaction security. Most banks are focused on
exploiting VIP credit card products such as Visa Gold, Premier Master, Cremium Visa
Platinum, ...
Besides credit cards, some banks are also many products for VIP customers such as: mortgage,
investment, insurance, asset management, with a commitment will address immediate financial
needs and take place, special offers on service fees and interest rates, preferential policies for
overdraft services and credit card ... foreign banks, with the advantage of extensive global
network made commitments: VIP clients, they benefit and credit card use online banking
services around the globe, the bank can support customers worldwide.
In addition, banks are promising VIP customers enjoying the optimum customer care services
such as: special offers when using the service, shopping in the system of the bank's major
partners, gifts, bonus points corresponding to the number of transactions, ...
With a dedicated card for VIP clients, customers immediately receive a formal welcome and
immediate priority transactions in a separate room, with wireless internet facilities, books,
magazines, coffee, and tea serving. In case the customer does not reach the bank to perform
transactions, customers simply pick up the phone, call the dedicated line for VIP customers,
bank will have its own staff to hear, receive the request, made and report back. All are quick,
accurate and absolute security, the level of "VIP customers".
Currently, the domestic banks’ new strategic focus is on providing a total solution for VIP
customers such as: giving a separate reception space with amenities; giving the preferential
interest rate when VIP customers wishing to borrow or savings, increasing overdraft limit, the
ATM withdrawal limit, reduction of international payment services, money transfer; priorities
sell foreign currency at preferential rates, receive meaningful gift in birthdays, New Year, ...
In addition, VIP customers always have a team of professional private service with style,
attentive service, one-stop service to take place, newsletter real estate market analysis,
securities daily ... With VIP banking, customers also shared consultants and resolve financial
needs. That is, the experienced staff will advise investment securities, gold, foreign exchange
or financial services for business customers. In addition, if the VIP customer complaints, RM
will be in charge of dealing with rapid time.

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Maritime Bank‘s Priority Banking Strategy from 2012-2014

To build a separate space, provide products of great utility for VIP customers would not have
been a problem too difficult. By the fact that at present, the high-end products for VIP
customers is basically retail banking products for mass, plus some other value. But to have a
professional staff to serve, knowledgeable financial markets, meet the requirements of VIP
customers is not easy. Cost and long training time, but also requires the employee experience,
skills cause trust with customers.
One of the new trends "VIP banking" in the world today is the type of service called "lifestyle
management", ie bank dedicated completely to the special VIP customer management, or
consultant with a lot of responsibility as the organization of events related to housing, leisure,
entertainment, or to the more specific obligations arising as customer support ticket booking,
reservation hotels when traveling; currency exchange rate information and advice about health,
law.
Therefore, at this time, the VIP customer service Vietnam's commercial banks have not "touch"
to all the needs of VIP. A profit from operations for VIP collection service is not commensurate
with the costs when products or services are relatively simple operators (mainly cards and
related financial transactions directly to the bank). The reason is that the services can be
profitable, high commissions as capital management, investment consulting, partnership,
inheritance management, commercial banks are not interested in exploiting properly.
Adequate service level
To exploit effective VIP segments, now many banks have concentrated investment of resources
to launch the product flexibility, consistent with the needs of this high-end customer segments.
Various products and services in areas such as insurance, investments, credit cards contribute to
enrich the product portfolio to meet the diverse needs of VIP customer in increasing assets. The
bank also promote strategic cooperation with suppliers of products and services outside the
banking sector to customer service package only VIP card issued by the bank. The goal is for

VIP customers can use bank cards as a modern tool of payment and enjoy the preferential
policy discount from the unit in addition to cooperation with the banking industry. In addition,
some commercial banks building data management systems and customer analysis, system
gifts, gift message ... with the desire to maintain the, socialize relationship between banks and
customers.
Some commercial banks have built for themselves a strategic interest, VIP customer support in
all circumstances. A number of other banks to consider the possibility of outsourcing services
gifts for VIP clients. But even according to the method are also sharing the same basic process:
- Set the profile gifts for VIP clients: With the support of the CRM tool (software systems
Customer Relationship Management) is a storage place full of information about the mass
customers as well as customers VIP. When conducting a campaign gifts, customer care staff
can base on which to choose gifts, gift given form to match each customer with psychology.

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Maritime Bank‘s Priority Banking Strategy from 2012-2014

Unlike ordinary souvenirs, gifts for customers, partners of VIP requires an imagination and can
be personalized, relevance and implications of the emotional gift with the cover experience
resonates, rich meaning from gifts. That is how the record marks, is the invisible cord that links
banks and VIP customer relationships are a reliable partner, mutual understanding.
- Before giving gifts: base situation to plan for density gifts, gift funds for services is expected.
Contact VIP customers to confirm some basic information and understand the need for
customer gifts.
- Conducting gifts: customer care staff must be instructed and trained more direct customer
care skills including behavior, gestures, words, greetings and communication. Employees
should be trained the skills to adapt to each customer VIP on the way, the method of handling
diverse situations which may occur in the process of gift giving. The ultimate goal is customer
experience, and feels the individual care, making customers happy and satisfied with the

services they receive.
- After the gift-giving: After giving gifts to customers, from 2 - 4 days, the customer care
department will contact (phone / email) to thank customers and match to find out some
additional information such as customer satisfaction on gifts, stylish gifts, as well as services
that banks are offering products, learn more about customer preferences for the next gift-giving
and gift forms would want.
In addition, a number of other banks also conduct daily financial newsletter sent to the office of
VIP customers as a value added service his VIP customer care.
Competition and exploit the high-end customer market share among commercial banks have
started to become exciting. A domestic commercial bank said it will open 30 outlets VIP; still
represent a foreign bank operating in Vietnam announced that the bank is preparing to launch a
compelling product for VIP customers ... This promises a new race of commercial banks in the
deployment of services and products dedicated VIP customer segment in Vietnam today.Since
early 2009, respectively, HSBC, Standard Chartered and ANZ launched retail banking services.
And recently Citibank has Citi Gold product package.
Advantages of foreign banks are that they would have individual clients, mainly the VIPs
income and awareness is high. For example, using the services of Citi Gold clients, require a
minimum balance of $ 50,000 or more.
Under pressure to compete with foreign banks, domestic banks also launched financial
products for high-end customers and have strong plans in late 2009, early 2010.
VP Bank is one of the first to offer high-end product line, which is VPBank MasterCard
Platinum credit card - the first card in Vietnam to adopt EMV chip standard security
technology for credit limit up to 500 million USD.

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Maritime Bank‘s Priority Banking Strategy from 2012-2014

Other banks also have the Visa-line products for customers with good solvency and large

spending needs. The credit card banks also assigned credit limits to target different customers.
However to have policies specifically for high-end customers is not really obvious. While, in
the foreign bank, the customer care is very focused. For example, customers have a $ 1 million
balance will have special care; even banks have necessarily focused affiliates serving 20 - 30
VIP clients.
Techcombank is now piloting financial products for high-end customer segments (private
transaction for customer preference). Although not widely introduced, but the bank has piloted
in a number of branches.
A series of internal bank expressed targeting VIPs. Lien Viet bank began to study the earliest
possible time to market the product package dedicated to high-end customers. VIB also
identify the target audience of the Bank will be subject to income customers from the middle
class and above. From customer segments, VIB will study and make specific product package,
in accordance with the characteristics of each customer. According to industry experts, the
bank will want to enter customer segments upstream and Vietnamese banks also have core
products. But the current reality, the banks still does not have clear benefits to customers of this
segment as foreign banks.
Most banks in Vietnam have not come up with a package specific to each target customer is
middle or upper most banks only build the package common to the majority of part of the
population, in order to serve the maximum number of customers. For the audience, they want
to target or have preferential treatment in the policies of those product they will offer more
favorable conditions for the clients. For example, in a mortgage loan products, customers have
a higher income (the income can prove through documentation), the conditions of the loan
extension, bigger loan amount, time longer life of the loan, preferential interest rates
provided ...
However, the difficulty setting up these products is not less. Senior leadership of one of the
five major banks in Vietnam say that the income in Vietnam is generally very low compared to
the world. The number of rich people is increasing but not many and a major obstacle is that
income in Vietnam is not really transparency.
"It may in fact, wealthy audience in Vietnam quite large, but the group is ready to prove his
wealth is not much. This is pretty big barrier for banks when conducting customer access

development of this product line, "the share.
Creating a separate policy for this segment of customers and bank staff training VIP service in
a professional manner and all, standard infrastructure, as well as no small difficulty making
internal banks will have to take some time to overcome before reaching this segment in a
professional manner.

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Maritime Bank‘s Priority Banking Strategy from 2012-2014

Even new egg in Viet Nam, but according to the experts in the industry towards high-end
customer segments with standard banking services will be the main trend of the bank. By
superior customer segments in Asia - the region is considered the world's fastest growing, is
still increasing. Therefore, Vietnam is no exception within this development, especially when
the majority of the financial needs of customers in this segment have not been met. Mr. Shirish
Apte, CEO of Citibank in the Asia-Pacific share the Citigold product launch that, this is the
first two CitiBank look far more about the country of Vietnam. CitiBank’s CEO also made the
comment, by 2015, Vietnam will be a large market in the segment of high-end customers.
(sources:)
2.3.

Overview of Maritime Bank
Vietnam Maritime Commercial Joint Stock Bank – Maritime Bank is a commercial joint stock
bank incorporated and registered in the Socialist Republic of Vietnam.
The Bank was established on 8 June 1991 under Operation License No. 0001/NH-GP by the
State Bank of Vietnam for operating duration of 25 years in Hai Phong and used to be SMEs
oriented bank. The operating duration was increased to 99 years in accordance with Decision
No. 719/QD-NHNN dated on 7 July 2003 of the Governor of the State Bank of Vietnam.
The Bank’s principle activities are to provide banking services including receiving short,

medium and long-term deposits from organizations and individuals; making short, medium and
long-term loans and advances to organizations and individuals based on the nature and
capability of the bank’s sources of capital; foreign exchange transactions, international trade
financial services, discounting of commercial papers, bonds and other valuable papers, and
providing other banking services allowed by the State Bank of Vietnam. From 2010, Maritime
Bank has been transformed with the consultation from Mc. Kinsey. After 3 years, Maritime
Bank changed long term strategy to retail banking.
The initial chartered capital of the Bank was VNDm 40,000 under Operation Licence No.
0001/NH-GP and increased periodically. The actual chartered capital as at 31 December 2011
is VNDm 8,000,000 (as at 31 December 2010: VNDm 5,000,000). Today, Maritime Bank has
more than 230 TSOs in nationwide, 300 ATMs, and more than 6,000 staffs. Maritime Bank is
one of the twelve biggest commercial banks in Vietnam which are considered stably growing
and profitability. Its’ Charter Capital reached 8000bio and total Asset is 110,000bio.
Maritime Bank Organization Chart:

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