Phát triển tín dụng tiêu dùng của các công ty tài chính trực thuộc các ngân hàng thương mại ở việt nam tt téng anh

MINISTRY OF EDUCATION AND TRAINING
THUONGMAI UNIVERSITY
-------------------------

CONSMER CREDIT DEVELOPMENT OF FINANCE
COMPANIES UNDER COMMERCIAL BANK IN
VIETNAM

Major: Commercial business
Code: 934.01.21

SUMMARY OF ECONOMIC DOTORAL THESIS

Ha Noi, 2020


The thesis was completed at Thuongmai University

Supervisors:
1. Supervisor 1: Prof.Doctor. Đinh Van Son
2. Supervisor 2: Deputy Prof.Doctor Le Thi Kim Nhung

Critical reviewer 1 : -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Critical reviewer 2 : ------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------Critical reviewer 3 : ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The thesis will be defended in front of the University-level Thesis Evaluation Council
at the Thuongmai University
At……….hour………date………month……….year……………

The thesis can be found at: National Library
Thuongmai University Libarary

LIST OF PUBLICATIONS PUBLISHED RELATED TO THE THESIS
1. To Thanh Huong 2020, Experience in developing consumer credit of some finance companies in the
world, Asia Pacific Economic Review, February 2020, pages 107-109.
2. To Thanh Huong, 2020, Current situation of consumer credit development of finance companies
under commercial banks in Vietnam, Journal of Economics and Forecasting, No. 08 March 2020,
pages 37-39.
3. Nguyen Thi Phuong Lien, To Thanh Huong, 2020, Development of consumer credit products of
finance companies under commercial banks in Vietnam, Proceedings of national science conferences,
Personal finance - Theory and practice in a new context, Science and Technology Publishing House.
4. Nguyen Thi Phuong Lien, To Thanh Huong, 2020, Development of consumer credit distribution
channels of finance companies under commercial banks in Vietnam, Proceedings of national science
conferences, Commercial Journal of Commercial Science, August 2020.


1
HEADING
1. THE URGENCY OF THE SUBJECT
Consumer credit for decades has been provided by two main actors in the financial market to
customers, including finance companies and commercial banks. Although both entities are providing credit, the
customer segment has a clear difference, in which commercial banks focus on providing credit for standard
customers who meet loan conditions of the bank, while the financial institutions mainly approach segments of
customers that are difficult to access loans from commercial banks, also known as subprime customers. Thanks
to the clear customer classification between finance companies and commercial banks, it has led to differences
in business activities of the two lenders and benefits for customers. In addition to the benefits of credit for
customers, lenders and the economy, excessive credit growth, lack of strategy and uncontrolled safety in the
legal framework can cause crises. Economic crisis on a national and global scale. The clear evidence is that the
global economic crisis of 2008-2009 originated from North America originated from rampant under-standard
credit development. This is also a lesson for emerging markets with a lot of room for developing credit and at
risk of hot credit growth, requiring strict control and safe and sustainable credit growth solutions.

Retail banking activities in Vietnam have been formed and developed strongly along with the
development of the commercial banking system. Standard consumer credits for individual customers have
been widely deployed by commercial banks, becoming a profitable activity for commercial banks in the
context of difficult credit growth from enterprises. With the structure of the golden population (69% of the
population is of working age), the average income and living standards are increasing, the consumption
behaviors of the people change in a positive direction, the credit market in Vietnam is growing. It has grown
rapidly in the past 10 years and is expected to continue to grow in the future, with an average growth rate of
about 20% per year until 2025. In fact, Vietnamese commercial banks are having many advantages when
participating in the consumer credit market segment and seeking new development opportunities to enhance
the competitiveness and position of the market.
Along with the policy of the Government and the State Bank on strengthening consumer credit
activities of domestic financel companies and restricting the license to open new finance companies in
Vietnam, many commercial banks are looking taking ownership of a finance companies to deploy credit
operations for subordinate customers is a fertile land to maximize the advantages of capital, network,
management experience etc and contribute to achieving strategic targets of commercial banks in the period of
2020-2025. Therefore, the period 2017-2019 witnessed a series of mergers between commercial banks and
finance companies, 02 finance companies under commercial banks including MCredit and HD Saison officially
came into operation. In 2017 and 2018, some commercial banks completed the procedures for acquiring
financel companies in 2018-2019, such as Southeast Asia Commercial Joint Stock Bank and Tien Phong
Commercial Joint Stock Bank. At the same time, many other commercial banks are also preparing to submit to
the State Bank on the acquisition of finance companies, showing the increasing competition pressure in the
consumer credit market.
In the first phase of credit activity implementation, a number of advantages help finance companies
under commercial banks compete with independent finance companies stemming from the support of the
parent commercial banks. However, the finance companies also face challenging challenges from: (i)
Pressure to transform the digital platform business model to the 4.0 trend; (ii) Competition is increasingly
fierce in the field of the financel companies with the accession of Fintech companies, especially the form of
loan through APP has flourished because many competitors from China and Indonesia have moved to
Vietnam after the collapse. disruption of the peer lending market; iii) The legal framework is increasingly
completed in the direction of strictly controlling the operations of the finance companies and restricting

unsecured cash loans according to the schedule; and (iv) Regulations on restricting credit growth of the State
Bank for many years.
Owned by leading domestic commercial banks in Vietnam, the finance companies are expected to
actively contribute to the policy of restricting black credit, contributing to lending transactions to people. the
integration of legal transactions, responsible lending activities with customers and the community, preserving
and strengthening the brand reputation of the commercial banks. The finance companies need to determine
which business model is appropriate, which solutions are needed to exist and develop properly, balancing
profit and safety goals, prestige in relation with the general strategy of the parent commercial banks, well
implementing the policy of restricting black credit, protecting the brand reputation of the parent commercial


2
banks and its finance companies through the responsible lending activities. Stemming from the above reality,
the author chooses "Development of consumer credit of finance companies under commercial banks in
Vietnam" as his thesis topic.
2. OBJECTIVES AND RESEARCH MISSION
* Objectives of the study
The objective of the thesis is to establish a theoretical framework to analyze and evaluate the current
situation of consumer credit development of the finance companies, thereby proposing scientific-based
solutions and practicality for developing consumer credit of the finance companies in Vietnam.
* Research mission
- In theory: the thesis clarifies the theory of consumer credit and consumer credit development in the
context of international economic integration and increases competition pressure. The thesis also focuses on
analyzing international experience on consumer credit from which to apply the practical conditions of the
financel companies in Vietnam.
- In practice: On the basis of analyzing and assessing the current situation of consumer credit
development of the financel companies in Vietnam in the period of 2014-2019, defining the limitation, the
cause of the limitations and shortcomings in consumer credit development, the research shows the opportunities
and challenges, thereby proposing orientations and solutions for developing consumer credit of the financel
companies til 2025 in accordance with the reality of international economic integration of Vietnam.

3. SUBJECTS AND SCOPE OF THE STUDY
* Research subjects
The object of the thesis research is the development of consumer credit of the finance companies in
Vietnam.
* Research scope
- Regarding the research content: The thesis studies the theoretical basis of consumer credit and
consumer credit development of the financel companies in Vietnam, assesses the current situation of the
financel companies in Vietnam, some solutions for developing the financel companies in Vietnam. Regarding
the content of the development, the thesis focuses on researching ways to develop consumer credit in quantity
(including: products, distribution channels, markets, sales promotion, interest rates), developing consumer
credit quality (including risk management model, credit policy and process), other issues studied under the
approach are factors affecting the finance companies's consumer credit development.
- Regarding the research space: the dissertation examines a typical case study of four out of six finance
companies belonging to commercial banks in Vietnam, including FE Credit, HD Saison, Mcredit and SHB
Finance.
- Regarding the study time: practical information and data on consumer credit development is
collected in the 2014-2019 period, the proposed solutions and recommendations apply for the period from
2020 to 2025.
4. RESEARCH QUESTIONS
(1) Characteristics and role of consumer credit of the finance companies? Content, evaluation criteria and
factors affecting the development of consumer credit of the finance companies?
(2) Can international experiences in consumer credit development be applied to consumer credit
development practices of the finance companies in Vietnam?
(3) What is the current situation of consumer credit development of the finance companies? What are the
successes, limitations and causes of limitations?
(4) In the era of Industry 4.0, how do the finance companies in Vietnam need to determine how to develop
consumer credit? Opportunities and challenges for the finance companies in Vietnam in the digital age?
(5) What solutions are needed for the finance companies in Vietnam to overcome challenges and develop
consumer credit in the right direction?
5. NEW CONTRIBUTIONS OF THE THESIS

(1) In theory: Analyzing and clarifying characteristics of consumer credit of the finance companies in
the relationship of interests with parent commercial banks in terms of business strategy, business model,
development methods compared to independent finance companies. Establishing a theoretical framework for
developing consumer credit on two perspectives: quality development method and credit quality


3
management organization, establishing 08 groups of criteria to assess consumer credit development and
weak factors. Factors affecting consumer credit of the finance companies. To sum up and draw five valuable
lessons on consumer credit development of the finance companies in Vietnam from the experience of some
finance companies in the world.
(2) Regarding analysis, practical assessment: based on close association with the theoretical
framework and reliable database, the author has analyzed and assessed in detail the current situation of
consumer credit development of the finance companies in Vietnam during 2014-2019 and obtained research
results on consumer credit development as follows:
The successes: (i) The share of consumer credit of the finance companies is increasing, (ii)
contributing to the income of the finance companies, (iii) raising the position of parent commercial banks
and affirming the right direction of the commercial banks when deploying consumer credit model at the
finance companies, (iv) Risk management is approaching international practices and credit quality is
maintained in a safe and effective manner (v) actively contribute to the implementation of the policy of
restricting black credit under the direction of the Government. The above successes are achieved by four
main reasons: (i) the development strategy of the finance companies is linked to the general development
strategy of parent commercial banks; (ii) The finance companies are capable of developing basic consumer
credit (iii) the finance companies benefit from parent commercial banks when consumer consumer credit is
implemented (iv) consumer credit demand of individual customers grows strongly and (v) a favorable
business environment profit.
Limitations: From secondary information sources and primary data (through sociological survey with
293 customers of the finance companies), the consumer credit activity of the finance companies also have some
limitations such as: (i) consumer credit development methods have not kept up with consumer trends in the 4.0
era, (ii) consumer credit development activities of the finance companies are likely to affect the image and

some financial indicators of parent commercial banks, (iii) the principle of responsible lending has not been
properly considered. The main cause of the constraint comes from the finance companies 'internal resources
(unstable and unfaithful human resources; service quality does not meet consumers' expectations about the
professional and standards aspects of the company. employees of the finance companies; after-loan customer
service have not met expectations; internal documents on responsible lending and responsible lending action
programs have not been prioritized by the finance companies. information technology capacity has not yet met
the digital business method) and external factors stemming from parent commercial banks, knowledge of
borrowers and a number of regulations on consumer credit unclearly.
(3) Regarding solutions: Based on the development orientation of the finance companies and
consumer credit activities of these companies, limitations and causes of restrictions, lessons learned from
international experience, the author of the thesis proposed 3 groups of solutions and recommendations to
develop consumer credits of the finance companies operating in the market and the finance companies
preparing to enter the market in the near future. One main solution that the author focuses on analyzing and
interpreting including a group of digital shift solutions (products, distribution channels), a group of solutions
to improve the quality of consumer credit quality management (complete collection collecting and
processing customer data, managing customer data) and a group of solutions to protect the prestige and brand
of the finance companies.
6. THESIS STRUCTURE
In addition to the introduction and conclusion, the list of published studies, the list of references,
appendices, and the thesis consists of 04 chapters:
Chapter 1: Overview of research situation and research methods.
Chapter 2: Theoretical and practical basis for developing consumer credit of the finance companies.
Chapter 3: Current situation of consumer credit development of the finance companies s in Vietnam.
Chapter 4: Solutions for developing consumer credit by the finance companies in Vietnam.


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CHAPTER 1: OVERVIEW OF RESEARCH SITUATION AND RESEARCH METHODS
1.1. OVERVIEW OF THE STUDY RELATED TO THE THESIS
1.1.1. The study of consumer credit

- Author Gottfried Haberler (1942) studied the installment credit in the topic "Consumer Installement
Credit and Econimic Fluctuations", dividing installment credit into cash credit and purchase credit. Cash
credit or direct credit in which the borrower receives cash or transfers to the account from the lender to spend
on personal consumption. Purchase credit or indirect credit in which the lender will disburse indirectly into
the seller's account and the borrower will receive the goods from the seller.
- According to author Gloria M.Soto (2009) in the study “Study on the application of the annual
percentage rate of charge for consumer credit agreements”, there are two basic consumer credits including
installment and circulating (revolving) credit. The study also points out the characteristics consumer credit
products by each type of consumer credit in the market and the risks associated with consumer credit. The
study has scientific value to refer to the types of consumer credit, consumer credit products, and
characteristics of consumer credit when conducting thesis research.
- Ralph A. Young and Associates (2018), the authors point out in the study “Personal Finance Companies
and Their Credit Practices” that consumer installment lending activities usually focus on two groups of cash loans
and purchase finance loans. In addition, the study also shows the characteristics of consumer credit type of finance
companies compared to other credit institutions in several aspects: small-value loans, high lending rates compared
to commercial banks, customers are mostly individuals and have average income in the society, the content of
loans to pay for purchases of goods and services such as furniture, appliances etc.
1.1.2. Studies on consumer credit development
- Luisa Anderloni (2010), " The Profitability of the Consumer Credit Industry: Evidence from Europe". The
article focuses on the profitability of consumer credit industry in Europe. Results press strongly that, among
the decisive factors at the enterprise level, diversification of products and services in lending to households is
the biggest factor affecting the profitability. Regarding market-specific factors, the profitability of consumer
credit companies is positively affected by the size of the market and is negatively determined by the
level of household debt burden.
- In the study of author Vu Van Thuc (2014) "Developing consumer loans at Agribank ". According to
the author's study, Agribank's consumer lending activities are not commensurate with the available potentials
and competitive advantages. Developing consumer loans will help Agribank exploit full potential to expand
business, minimize risks and increase profits. In the theoretical basis of consumer lending development, the
author said that "consumer loan development is understood to increase both in size and quality of loans".
- Doctoral thesis of the author Phung Viet Ha (2015) "Developing credit services at finance companies

in Vietnam". The thesis has generalised the basic reasoning of the finance companies, credit and credit
services of finance companies, develop credit services of finance companies: concepts, classification finance
companies, the main activities, credit services, characteristics of finance companies services.
- Doctoral thesis of the author Nguyen Thi Huong Lan (2015) on "Research organizational model and
business operations of finance companies in Vietnam". The thesis has summarized the theoretical basis of
finance companies, organizational model and business operations of finance companies, affecting factors and
criteria to evaluate the effectiveness of finance companies. The study has synthesized experience from the
world finance companies such as finance companies of Samsung Group, finance companies GM Acceptance,
finance companies Sony International. However, the experience does not clarify the organizational model
that these finance companies are implementing.
- PWC (2015), the study "Consumer lending, undertanding the empowered borrower" was conducted with
the object of the study that is consumers' expectations for consumer loans and show that the borrower's
expectations are shaped by the development of technology. Research shows that many competitors are entering
the consumer credit market with better technology including mobile apps and personal financial management
tools, simplifying the loan process and providing an experience for quick loan that customers want. To stay ahead,
lenders need to adapt to customer expectations and new technology trends before new lenders appear.
- PWC (2015), "Getting a bang for your digital buck". That research shows many consumer lending
institutions have invested significantly to the transformation initiatives and digital technology - both inside
and outside, but very few people have managed to develop sustainable competitive advantage, long-term


5
from these investments. The study proposes a digital platform lending strategy to help consumer lending
institutions have a successful digital transformation.
- PWC (2015), in the study "Banking the under-banked: the Growing Demand for near-prime credit" refer
to the concept of customer subprime, subprime lending institutions. The risk of losing customers to competitors if
they do not meet customer needs, technology platforms help increase the level of success of the lender.
- The study of author Nguyen Ba Dung (2017) on "Application of Big Data in analyzing shopping and
consumer behaviors of customers in order to promote business activities at Mobifone Telecommunications
Corporation ". The study has generalized the theoretical basis of Big Data (concept, characteristics,

application necessity, benefits and overview of the technical system of Big Data application) and consumer
shopping behavior of Big Data. Customers as well as Big Data application trends in analyzing customer
behavior around the world and Vietnam.
- Author Bui Manh Cuong (2017) when studying "Credit risk management at Home Credit Vietnam
Co., Ltd." has clarified the theoretical basis for credit risk and credit risk management applied from the
perspective of finance companies including: concepts, characteristics, risk classification, evaluation
indicators, content and meaning of risk management, influencing factors and international practices on risk
management. Based on the assessment of the current situation of risk management at Home Credit through
assessment of credit structure, bad debt situation, causes of risks, risk management content and risk
management policies in the period 2014-2016, summarizing the successes and limitations of risk
management work at Home Credit.
- Doctoral thesis of the author Nguyen Thi Minh (2019) "Development of consumer credit products at
Vietnam Bank for Agriculture and Rural Development ". The thesis has established a system of commentary
on consumer credit products development at commercial banks quite fully, in which the author made a
scientific thesis about consumer credit products development as “an increase in scale, complete in terms of
product quality associated with improving community responsibility for the sustainable development of
consumer credit products”. However, the study applies to activities consumer credit of commercial banks,
the products consumer credit been studied and recommended for individuals to meet the loan conditions of
commercial banks, customers who have difficulty accessing consumer credit products of commercial banks
are not subjects of the study.
- Doctoral thesis of the author Phan Thi Hong Thao (2019), "Financial efficiency of the microfinance
institutions in Vietnam officially". The thesis general theory of financial efficiency, while building the
measurement criteria of financial efficiency, the model factors affecting financial efficiency of microfinance
institutions. The study has a reference meaning when developing evaluation criteria and factors affecting
consumer credit development in the thesis.
- Doctoral thesis of the author Nguyen Thu Ha (2019), "Improving the efficiency of business
operations at the Military Commercial Joint Stock Bank ". The thesis synthesizes ideals and business
efficiency in commercial banks: the concept, content, effective business operations on the perspective of the
commercial banks on the profitability, safety and on society viewpoint of the contribution to the socioeconomic development goals. The author of the thesis proposes a system of indicators to evaluate the
business performance of commercial banks in terms of safety assurance and to conduct analysis the impact of

the 4.0 revolution on efficiency of business operations of commercial banks is quite clear.
- Doctoral thesis of the author Dr. Tran Khanh Duong (2019) "Preventing and limiting credit risk in
BIDV". The thesis has built a systematic and updated theoretical framework on credit risk in the context that
commercial banks in Vietnam have been completing the credit risk governance framework under Basel II.
- Doctoral thesis of the author Le Thi Hanh (2019) on "Credit Risk management in Vietcombank
according to Basel II standards." In this thesis, the author has codified the theoretical basis of risks, credit
risks and credit risk management of commercial banks according to Basel II standards, especially the need to
meet Basel II standards of commercial banks.
1.1.3. Conclusions drawn from the overview of the research situation
From the overview of the research situation shows that, due to differences in topic, context, time,
space of research, published research works also have the following limitations and gaps:
- There has been no research to develop a theoretical framework about finance companies, consumer
credit and consumer credit development of the financial institutions for customer’s substandard,
characteristics of consumer credit according to finance companies model, advantages and disadvantages of
this model, factors affecting the consumer credit development of dependent finance companies to


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substandard customers. The necessary conditions for finance companies to perform the transformation of a
successful digital business model in the industrial 4.0.
- The peer-to-peer lending model of the finance companies, the conditions for the finance companies
successfully implement the peer-to-peer lending model and achieve the goal of developing safe and
sustainable consumer credit have not been studied yet.
- There has been no in-depth study of consumer credit development of finance companies. The
dissertation-level studies on the development of consumer credit services of finance companies and other
credit institutions in Vietnam for individual customers are relatively few. A number of studies on the
development of consumer credit of finance companies in Vietnam have been studied a long time ago, so the
conclusions may no longer be suitable with current practical conditions.
Based on the limitations and research gaps, in my thesis, the author focuses on the following
issues: Building a theoretical framework on consumer credit and developing consumer credit of finance

companies, evaluation criteria and factors affecting to consumer credit development of finance companies for
substandard customers. Learn experience lessons on the development of consumer credit from finance companies
around the world, state management lessons on consumer credit development for Vietnam from the experience of
EU countries and Japan. Analyze the current situation of the development of consumer credit of finance
companies in Vietnam in the period of 2014-2019, draw conclusions about the successes and limitations, the
causes of the success and the limitations in the consumer credit development of finance companies in Vietnam.
Analyze the opportunities and challenges that finance companies have face, forecast the trend and the orientation
of consumer credit development of the finance companies in Vietnam in the industrial 4.0. Proposing solutions
and recommendations to develop safe and sustainable consumer credit on digital platforms in the industrial 4.0.
1.2. Research method of the thesis topic
1.2.1. Data collection methods
For the purpose of collecting research information, the author uses the following data collection methods:
- Desk study: In order to assess the current situation consumer credit development of finance
companies, the
author collected
and
synthesized
data
in
the
period
of
2014-2018
from professional reports. The author also references a number of legal documents, orientations consumer
credit development of law agencies related to consumer credit activity. In addition, the author also uses
information collected from the internet, newspapers, and publications of FE Credit, Mcredit, HD Saison, and
SHB Finance to serve the research at the table.
- Expert method: In order to assess the level of consumer credit development and some factors
affecting consumer credit development of the finance companies, the author conducted in-depth interviews
with professional staff of finance companies.

- Methods of sociological investigation: To assess the impact of a number of factors (service quality,
customer knowledge...) on the consumer credit development of the finance companies, the author has
conducted the survey collected opinions from individual customers who are using consumer credit products
of 4 finance companies in large areas such as Ho Chi Minh City and Hanoi. To deploy survey individual
customers, the author conducted to build a Likert scale. Based on the survey results, the author will assess
the level of agreement of individual customers on the survey questions the author raises.
1.2.2. Methods of aggregating and processing information
For secondary information such as financial data of finance companies including consumer credit
outstanding loans, profit, bad debt ratio, capital adequacy ratio over years, the author processed the data in
the study in the form of tables and performed a comparative analysis of data between years to see the level of
credit growth during 2014-2019. For the information collected from the method of expert interviews,
sociological surveys, the author analyzes compares and deduces to assess the level of consumer credit
development and the factors affecting the consumer credit development of finance companies.

CHAPTER 2: THEORETICAL AND PRACTICAL BASIS ON CONSUMER CREDIT
DEVELOPMENT OF FINANCE COMPANIES UNDER COMMERCIAL BANK
2.1 CONSUMER CREDIT OF FINANCE COMPANIES UNDER COMMERCIAL BANK
2.1.1 The finance companies, classification and key activities
2.1.1.1 The concept of finance companies under the commercial bank


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Within the scope of this doctoral thesis, the author uses the concept consumer credit finance company
in Decree No. 16/2019/NĐ-CP as a basis for concepts finance companies under the commercial bank (and
then, it will be call “the finance companies”): “The finance companies is a finance company operating in the
field of consumption, invested by commercial banks in the form of capital contribution, share purchase in
order to gain control of enterprises.
2.1.1.2 Classification of the finance companies
Based on the legal form, the finance companies are classified as follows: single-member financial limited
liability companies, limited liability companies with two or more members, or joint-stock finance companies.

2.1.1.3 Key activities of the finance companies
The principal activities of the finance companies include issuing certificates of deposits, promissory
notes, treasury bills and bonds to raise capital from the organization; borrowing capital from domestic and
foreign credit institutions and financial institutions; borrowing from the Central Bank in the form of
refinancing; consumer loans; issue a credit card.
2.1.2 Consumer credit of the finance companies
2.1.2.1 The concept of Consumer credit
Within the scope of this doctoral thesis, the author uses the concept: “Consumer credit of the finance
companies is a financial company providing consumer loans and issuing credit cards in Vietnam dong for
science and technology in order to meet the capital needs to buy and use goods and services for consumption
purposes” as a basis for Study the next content in the thesis.
2.1.2.2 Features of consumer credit activities of the finance companies
a. Characteristics of consumer credit activities of finance companies
- Consumer loans are mainly individual customers who are difficult to access loans from commercial banks.
- Credit extensions are often small compared to consumer credits issued by commercial banks.
- Credit standards are often lower than commercial bank borrowers.
- Credit interest rate is usually much higher than that of commercial banks.
- Traditional distribution channels are different from commercial banks.
b. Features of consumer credit activities of the finance companies
The finance companies has all the operational characteristics of the financial institution in general
mentioned above and has some specific characteristics that lead to differences in business model, obligations
and responsibilities for the parent bank, and with borrowers
- Consumer credit activities of the finance companies have a close relationship with the brand
reputation of the parent bank.
- The consumer credit development strategy, guided by the parent bank, helps the financecompany
develop long-term instead of short-term benefits.
- The finance companies have the capacity to organize the development and management of products
thanks to the support of their parent banks.
- Sharing the existing customer set between the parent bank and the financial company.
- Credit risk management capacity is an advantage of the finance companies that helps control bad

debt and ensure operational safety.
2.1.3 Consumer credit classification of Finance companies under the commercial bank
2.1.3.1 Based on the method of refund
- Installment consumer credit: is a method of lending in which when an individual customer borrows a
loan, a financial company and an individual customer determine and agree on the amount of loan interest to
be paid and the principal amount divided to repay the loan with many terms within the agreed lending period.
This method usually applies to loans that are unable to pay off the loan at one time.
- Non-circulating consumer credit: is a method of lending in which when an individual customer
borrows a loan, the financial company and individual customer determine and agree on the interest of the
loan to be paid and the principal amount to be paid 1 times only within the agreed loan term. This method
usually applies to accounts that can fully pay off the loan at one time.
- Circulating consumer credit (revolving): is a lending method in which the financial company agrees
in writing to allow individual customers to use credit cards or checks to make spending or overspending
amount of money on individual account's payment account for a certain period of time and limit. Only when
an individual customer uses a credit card or exceeds the amount of money does an interest and loan balance
arise. Unlike individual loans or installment loans, individual customers are disbursed multiple times with
different spending purposes within the loan limit and repayment within the agreed-upon limited loan period
with the finance companies.
2.1.3.2 Based on product strategy and consumption purposes
- Basic consumer credit product group: Finance companies only provide basic consumer credit
products for consumer purposes including cash loans, loans for transportation, and durable goods loans and
plastic credit cards.


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- Digital consumer credit products group: Finance companies provide digital consumer credit products for
consumer purposes including online consumer loans, virtual credit cards, e-wallets, peer-to-peer lending etc.
- Mixed consumer credit product category: is a combination of traditional consumer credit and digital
consumer credit, the financial company provides customers with consumer credit products under the credit
group consumer spending and digital consumer credit products.

2.1.4 The role of consumer credit activities of the finance companies
2.1.4.1 For commercial banks
According to international practice, the parent bank usually owns wholly or dominates the finance
companies for the following purposes: Increase the position of the parent bank thanks to the rapid growth in
the size of outstanding consumer credit and efficiency (for commercial banks with small-scale starting
points). Increase the efficiency of the parent bank thanks to the higher consumer credit margin compared to
the standard consumer credit segment. Reduce operational management pressure Sub-standard consumer
credit for all units of the risk management model in the parent bank. Creating flexibility and increasing
competitiveness for sub-standard consumer credit activities with finance companies, Fintech companies etc.
2.1.4.2 For customers
Based on the Consumer Credit, individual customers, instead of spending only within the family they
earn, now have access to a new type of financial service, allowing individual customers to use consumer
products rich and modern, enjoy life-like utilities such as travel, education or use loans for urgent purposes
like health care. Consumer credit is also a big motivation for young people who are just starting to work or
also known as the group of start-up individual customers, helping them to stabilize their life as soon as they
graduate. In addition to providing consumer credit products such as independent finance companies, the
finance companies are always at the forefront of researching and deploying digital consumer credit products,
helping customers Customers can experience value-added digital products and enjoy services based on the
latest technology.
2.1.4.3 For economy
Socially, based on the increase in domestic purchasing demand, the contribution to the structure of
gross domestic product has increased, leading to a reduction in the dependence on foreign demand. As a
result, Consumer Credit contributes to the promotion of more sustainable economic development. Consumer
credit is a positive factor "limiting black credit" by bringing consumer credit activities from civil transactions
into safe and transparent legal transactions for borrowers, protecting rights of borrowers and against the
negative in society
2.2 CONSUMER CREDIT DEVELOPMENT OF FINANCE COMPANIES UNDER COMMERCIAL BANK
2.2.1 Consumer credit development concept of the finance companies
Applying the above views on development and application with credit activities of the finance
companies, the author said: “Developing credit thinking of the finance companies is the process of growth in

quantity (scale, quantity), and ensure quality of credit operations”. From the viewpoint of approaching from
the field of commercial business, the development of credit thinking in quantity is done through the
following methods: products, distribution channels, markets, prices ... At the same time, to ensure the quality
of credit and credit institutions under their management should implement appropriate risk management
model and method to ensure credit safety.
2.2.2 The content of consumer credit development of the finance companies
2.2.2.1 Develop consumer credit on quantity
To develope consumer credit in size and quantity, there are many different ways. From a commercial
business perspective, the five main modes commonly used by the finance companies in developing consumer
credit include: consumer credit products, distribution channels, markets, sales promotion, loans and interest
rates. Depending on specific conditions and characteristics in each development stage and specific strategies,
each attached financial company may arrange the above modes in different priority order.
- Consumer credit products: depending on the size and strategy of the parent bank, finance
companies may choose to develop consumer credit with the following consumer credit product groups:
+ Developing Consumer credit by product groups Basic consumer credit: focusing on the basic
consumer product groups that still have a lot of room for development including cash loans, vehicle loans
loans, durable goods and plastic credit cards. Development signs of consumer credit through products The
basic consumer credit of the finance companies is shown in the capacity to fully implement the list of basic
consumer credit products
+ Developing Consumer Credit with digital consumer credit products: focusing on digital consumer
credit products such as virtual credit cards, online loans, IPS, P2P peer lending products etc. Finance
companies under the development of digital consumer credit products should have the capacity to organize
the implementation of digital consumer credit products.
+ Developing Consumer Credit by Products Mixed consumer credit including basic Consumer Credit
and Digital Consumer Credit products: development signs are recognized when finance companies are on


9
duty. The company has successfully deployed basic consumer credit products and is gradually shifting to
digital consumer credit products. The successful implementation of one or two digital consumer credit

products is the result of the digital consumer credit product strategy in the short term.
- Distribution channel: the finance companies can achieve the increase in scale through the
development of traditional and modern distribution channels depending on the deployment capacity and
deployed consumer credit products.
+ Group of traditional distribution channels: is the distribution channels of consumer credit products to
finance companies' customers with human support including Service Introduction Point (POS), consultants
credit (DSA), telesales, etc. The most important of which are POS.
+ Group of modern distribution channels: including channels of distributing consumer credit products
to customers of finance companies without human support, but based on a digital platform. Some existing
sales channels are deployed on either the Web platform or the mobile APP. Signs of successful
transformation of the modern distribution channel of the financial company are reflected in the capacity to
deploy one or all modern distribution channels.
- Market: the finance companies may select the market development forms according to
administrative geographic criteria and target customer groups in order to plan and organize the deployment
of Consumer Credit products to Invidual Customers. By geographical area, the Financial Company will
determine the market in which it wants to conduct business and deploy service introduction points. The
geographic market development will bring great development to the finance companies. In terms of customer
development, the financial company diversifies its customers by classifying customer segments into small
segments.
- Sales promotion: Sales promotion is an activity in marketing mix used by the finance companies in
developing consumer credit. Sales promotion subjects are individual customers. Content and form of sales
promotion have certain differences depending on the promotion channel and program. Some sales promotion
channels of the finance companies include: sales promotion via POS channel, sales promotion via DSA
channel, sales promotion through Telesales channel, sales promotion via SMS channel, promotion sales
promotion via magazines, paper newspapers, and electronic newspapers Sales promotion via mobile APP
channels, sales promotion program to promote sales and create loyal customers.
- Lending interest rate: Consumer finance companies are the legal entities providing consumer credit
with the highest lending rate in the market, much higher than the commercial lending interest rate of
commercial banks. Financial Company Consumer Loans also have interest spreads, with interest rates on
installment loans often lower than cash and credit card loans. Finance companies can also develop business

programs that apply lower lending rates to online lending products by reducing facilities and operating costs.
Depending on input costs and risk provisions, the finance companies will set the lending interest rate to meet
the expected profit in each period.
2.1.2.2. Develop consumer credit on quality
The development of the consumer credit in terms of the quality of the financial company for the
purpose of developing safe and effective consumer credit is shown in the following contents: implementing
an effective and effective credit risk management model, credit policies and credit process.
- Credit risk management model: According to international practices, there are two common
models being applied by finance companies, including centralized risk management model and differential
risk management model. The centralized risk management model is a model that clearly separates the
business and risk management functions with the main advantage of systematic risk management on a
company-wide scale, ensuring competitiveness Long-term competition, establishing and maintaining a
synchronous risk management environment, consistent with the management process associated with the
operation of business departments, improving capacity of risk monitoring and measurement, policy
development unified risk management for the whole system. The distributed risk management model does
not have a separation between business and risk management, in which the Business Center fully implements
all stages of the loan from appraisal, disbursement, and control to settlement debt relief. This model, thanks
to its simplicity and simplicity, has been adopted by independent, small-sized finance companies.
- Credit policy: In order to ensure that consumer credit activities are implemented according to the
risk management model and business strategy from the Board of Members / Board of Directors of Finance
Companies, the finance companies should develop and implement a credit policy and a series of internal
documents to coordinate and control the activities of consumer credit activities of finance companies.
- Credit process: Regulating all principles and operational flow of professional divisions of the
financial company from the time of accessing loan application of Invidual Customers until deciding to lend,
disburse or collect money debt and contract liquidation. The credit process is built according to an end-toend standard and has full of control points in the direction of automation to help the financial company
ensure that there are no omissions in the lending process, helping defining the functions of professional units


10
in the financial company participating in the credit flow flow is transparent, clear, understanding the method

of coordination and fully grasping its roles and responsibilities.
- Credit policy: In order to ensure that the Consumer Credit operation is implemented according to
the risk management model and business strategy from the Board of Members / Board of Directors of The
finance companies, directly under The finance companies need to develop and enact credit policies and a
series of internal regulations to coordinate and control the activities of consumer credit of The finance
companies .
- Credit process: regulates all principles and workflow of the operational departments of Consumer
Finance Companies from the time of approaching loan application of Individual Customers until lending
decision, disbursment, debt collection and contract liquidation. The credit process is built according to an
end-to-end standard having full of automatic control stages to help the the finance companies ensure that
there is no fault in the lending process, helping to define functions of the operational departments
participating in the credit flow is apparent, explicit, understanding the method of coordination and fully
perceiving their roles and responsibilities.
2.1.3. Criteria to assess consumer credit development level of the finance company
2.1.3.1. Indicators for development of consumer credit in quantity
- Consumer credit products’s annual growth.
- Consumer credit distribution channels’s annual growth.
- Customer volume’s annual growth
- Consumer credit market’s annual growth.
- Growth rate of annual consumer credit outstanding.
- Growth rate of consumer credit market share.
- Growth rate of profit.
2.1.3.2. Indicators for development of consumer credit in quanlity
NPL (bad debts) ratio
Balance of NPL Consumer Credit year n
NPL ratio in year n =
x 100%
Total Balance of Consumer Credit in year n
Minimum Capital Adequacy Ratio
Equity

CAR
=
Total assets at risk
In addition, the development of the finance companies’ consumer credit is also evaluated through the
contribution of companies to the results, position, prestige ... parent commercial bank, in implementing the
goal of limiting black credit in the national socio-economic development strategy etc.
2.1.4. Factors affecting the development of the finance companies
2.4.1.1. Factors belong to the finance companies
- Development strategy.
- Organizing product development capacity.
- Human Resources.
- Information technology capacity.
- Responsible lending factor.
- Service Quality.
2.1.4.2. Factors belong to commercial banks owning finance company
For the finance companies, factors belonging to parent comercial banks have certain implications for
the development of consumer credit. The following are factors of a commercial bank that owns a finance
company that impacts on the development of consumer credit of the finance companies: Development
strategy of commercial banks, prestige and brands of commercial banks.
2.1.4.3. Factors belong to borrowers
Factors that belong to borrowers include customer needs, ethical risks, customer insights and customer
information.
2.1.4.4. The elements belong to the business environment
- Economic, legal, and political environment.
- Competitors: the finance companies are under impact of the competitors directly including banks
and consumer finance companies in Vietnam, Fintech Company (platform peer lending), other lending
institutions are not recognized by law.
2.3. INTERNATIONAL EXPERIENCE ON CONSUMER CREDIT DEVELOPMETN AND
LESSION LEARNED FOR VIETNAM
2.3.1. International experience on consumer credit development

2.3.1.1. About ways to develop consumer credit


11
- Santander Consumer Finance Company: the leading company was established in 1963, is active in
15 countries in Europe. Santander is owned by Banco Santander Bank, one of the largest banks in the world by
market capitalization. Santander provides a wide range of basic consumer credit products such as unsecured cash
loans, installment loans and credit cards. Because Santander focuses strongly on installment loan products, the
company mainly uses traditional distribution channels to provide services including service introduction places,
branches, telesales centers and receiving loan requests via website. So far, Santander has been serving 20 million
customers with 130,000 service introduction places in cooperation with retail partners in many countries and
15,300 employees.
- Capital Car Finance: Capital One Group is a US-owned commercial bank, listed on the New
York Stock Exchange. Ranked by Forbes in 2017, on the activities of consumer credit consolidation, Capital
One was ranked second behind American Express among the world’s top 10 largest consumer finance
companies according to 4 combined criteria including revenue, profit, asset and market value. In 2001,
Capital One Group acquired PeopleFirst Finance LLC and changed its name to Capital One Car Finance
(hereinafter referred to as Capital One) in 2003. For auto loan segment, Capital One provides installment
loan products for buying new cars and used cars or refinancing customers' car loans provided from other
financial institutions. Capital One implements the Auto Navigator system, which allows potential borrowers
to apply for a loan and view a vehicle in the same application on Capital One's website or APP. Thus,
although Capital One provides consumer CREDIT product which is basically car installment loan, it has
applied technology to receive and process documents online, combined with traditional distribution channel dealers - to complete providing loan to customers.
2.3.1.2. Development strategy
- APLUS FINANCIAL Co., Ltd of Shinsei Bank, Japan: Shinsei Bank is one of Japan's leading
financial institutions, formerly The Long-Term Credit Bank of Japan, Ltd owned by Japanese Government. In
2000, Shinsei Bank was privatized and sold to an American company and renamed Shinsei Bank. Shinsei Bank
issued shares to the public in 2014 and collected 230 billion yen. Shinsei Bank's operations focus on three main
areas of activity including retail banking, wholesale banking and consumer finance. Based on the science and
technology database that has been used for payments or loans for many years, Shinsei Bank has cross-sold its

existing customer base with consumer demand for loans to Aplus via digital platform.
2.3.1.3. State management of Consumer Credit development by Consumer Finance Companies
- Experience of Japan : Before 2006, the market of consumer credit witnessed the strong growth
peaked in 1990 with credit size reached 12.000 billion yen to 14,000 companies operating in the field of
lending, interest rates peaked in the cap of 109 , 5 % according to Capital Registered Law. By 2007, the
Japanese Government decided to increase the penalties for borrowing at high interest rates while increasing
requirements for control and complementary properties with consumer finance companies. These tight
control measures in Japan have led to a negative impact on the domestic consumer credit market. As a result,
in the period 2007-2009, the number of domestic Consumer Finace Company decreased sharply, many
foreign consumer finance companies such as Citi Group, GE, etc. leave Japan one by one. The market exits
of consumer finance companies bring enormous business opportunities for black credit. The state could not
solve the problems caused to consumers from illegal lending activities, and also faced the problem of
unemployment and declining tax revenues when consumer finance companies leave the market.
- Experiences from countries in Community General Europe: Interest rate restriction is the solution to
be recognized and applied in different countries in the EU. According to the results of a European Commission
survey on interest rate restriction in the EU, there are 3 countries including Greece, Ireland and Malta are still
applying interest rate restriction completely, there are 12 countries applying Use interest rate restriction relatively
and 13 countries do not apply interest rate restrictions. Survey on a large scale has been undertaken to assess the
impact of interest restriction to the development of consumer credit and obtained the following results: It leads to
limited access to consumer credit, the size of consumer credit decreased in countries where the interest rate
restriction was applied and fell sharply in the countries where the absolute interest rate was applied, consumer
finance companies restricted their operation or gradually exited from the loan market.
2.3.2. Lessons learned for Vietnam
2.3.2.1. Lessons for finance companies
Firstly, the finance companies need to exploit individual customers’ profiles that are in relationships
with parent banks. This is the fast and effective solution for the finance companies to introduce and
constantly update consumer loan products to customers trading and using services of commercial banks APP
mother. Customers
who
are

using
the
APP
are
also
the
channels
to
introduce potential consumer credit products of subsidiary the finance companies when customers know the
products and introduce the products to their relatives and friends.
Secondly, the finance companies should choose the business model with the consumer credit và
channel distribution accordingly, constantly improve the utilities of the products of consumer credit to
maintain existing customers and attract new customers. Besides the strategic diversification of consumer


12
credit products, the finance companies should focus on a number of consumer credit products with
advantages, creating added value on products such as create a loan and receive online applications, notify
loan results of emails, loan queries on mobile applications etc. Clarifed product strategy also helps the
the finance companies to develop righteous and effective distribution channels, contributing to sustainable
of consumer credit growth.
Thirdly, the finance companies need to build a modern information technology system to provide
credit to individuals conveniently and effectively. Thereby providing credit products applied new technologies
to encourage and attract customers.
2.3.2.2. Lesson for state management on consumer credit development
Firstly, consumer credit activity should be considered in correlation with consumer credit demands
of individual customers, the Government when developing consumer restriction tools should be carefully
evaluated to ensure consumer credit limitations not lead to a black credit boom, affecting low-income
subjects but in need of consumer loans.
Secondly, the restriction of consumer credit should be flexibly applied to each of the finance

companies which have clear applying conditions. The finance companies have financial potential, ability to
control risks better and ensure that the targets set by government regulations such as the Capital Adequacy
Ratio, bad debt ratio, capital minimum charter etc should be encouraged to grow consumer Credit at a higher
rate than those do not meet the requirements for credit growth. Thus, the finance companies can maximize the
role of funding for consumers with low incomes and become a tool of positive black society credit restrictions.


13
CHAPTER 3: REAL SITUATION OF CONSUMER CREDIT DEVELOPMENT OF FINANCE
COMPANIES UNDER COMMERCIAL BANK IN VIETNAM
3.1. OVERVIEW OF THE FINANCE COMPANIES IN VIETNAM
3.1.1. Establishment and development process of the finance companies in Vietnam
The period 2007-2010 is a period with a strong participation in credit operations of a type of non-bank
credit institutions as a financial company. There were 3 foreign finance companies and 9 domestic finance
companies licensed to establish in this period. As of December 31, 2019, there are 16 finance companies in
Vietnam, including 4 finance companies with 100% foreign capital, 6 finance companies under commercial
banks and 6 finance companies under economic groups. and other shareholders. 6 finance companies under
commercial banks including Community One-member Finance Company, Post and Telecommunication
Finance Company, Vietnam Fe Credit, HD Saison, and MCredit, SHB Finance.
3.1.2. Management and organizational model of finance companies under commercial banks
The finance companies all have relatively similar organizational structures, including the Members'
Council, the Supervisory Board, the General Director, the Business/business Center Division, Risk
Management Division, Internal Auditing Department, Legal Department, Operations Division, Human
Resources Division, Financial Accounting Department, Treasury Department, Information Technology
Center. Depending on the model of the finance companies and the size of personnel in each unit, the names
of functional units will be specified in the form of Block or Board or Center.
3.2. CURRENT SITUATION OF CONSUMER CREDIT DEVELOPMENT IN VIETNAM
3.2.1. Current situation of implementing consumer credit development methods
3.2.1.1 Actual situation of developing consumer credit products
Table 3.1 The development of new consumer credit products by the finance companies

Number of consumer credit
No.
2014
2015
2016
2017
2018
2019
product groups
1
FE Credit
3
3
4
4
5
6
2
HD Saison
3
3
3
3
3
3
3
MCredit
N/A
N/A
N/A

3
3
3
4
SHB Finance
N/A
N/A
N/A
N/A
1
1
Source: Fiingroup
In the 2014-2019 period, the finance companies focused on deploying basic consumer credit product groups to
meet the consumer loan needs of individual customers. FE Credit is the only financial company providing FE Credit Plus
+ Master Card in the market. FE Credit is also a pioneer finance company deploying digital consumer credit products. In
the period of 2014-2019, HD Saison only focused on deepening customers and expanding lending purposes under 03
basic consumer credit product groups but not deploying credit cards, and digital consumer credit products. MCredit and
SHB Finance also focus on basic consumer credit products right from the official operation phase and not further
development, in which MCredit deploys 03 consumer credit products similar to HD Saison in In the period of 2017-2019,
SHB Finance only focused on cash loans in the period of 2018-2019. Thus, consumer credit development through the
method of consumer credit products has the differences between the 4 finance companies under the commercial banks in
the period of 2014-2019 as follows: FE Credit implements the development of consumer credit by a mixed consumer
credit product category including basic consumer credit products and numbers but with a focus on the basic consumer
credit product group. The remaining finance companies are focusing on developing consumer credit by the group of basic
consumer credit products, there has not been a shift to digital consumer credit products.
3.2.1.2. Current situation of development of distribution channels
Table 3.2 Development of distribution channels during 2014-2019
Number of
No.
2014

2015
2016
2017
2018
2019
distribution channels
1
FE Credit
4
4
4
4
5
5
2
HD Saison
4
4
4
4
4
4
3
MCredit
N/A
N/A
N/A
4
4
4

4
SHB Finance
N/A
N/A
N/A
N/A
4
4
Source: Fiingroup
In the period 2014-2019, all the finance companies have deployed basic distribution channels
including POS, Telesales, DSA, and Partners. FE Credit grew one more distribution channel in 2018 thanks
to the deployment of loan application and automatic approval on mobile APP. In fact, although most of the


14
distribution channels are implemented by the finance companies, the differences between the finance
companies are reflected in the number of POS and DSA that the financial firms provide. subordinate has
grown. Developing the number of POS and DSA distribution channels, either qualitatively or quantitatively,
has a positive impact on the growth of consumer credit of finance companies. In general, in the period of
2014-2019, the finance companies implemented the strategy of developing traditional distribution channels,
focusing resources on developing POS / DSA channels and developing diversified distribution channels.
Other, step by step developing a new distribution channel through the parent bank.
3.2.1.3. Market share
Table 3.3. Level of market growth geographically during 2014-2019
% Average
No.
SL TT TDTD
2014
2015
2016

2017
2018
2019
growth
1
FE Credit
63
63
63
63
63
63
0%
2
HD Saison
43
51
63
63
63
63
8%
3
MCredit
N/A
N/A
N/A
36
53
63

33%
4
SHB Finance
N/A
N/A
N/A
N/A
33
37
22%
Source: Fiingroup
Geographic market development plays an important role in the development of consumer credit and has
been well-aware and strategically covered by finance companies in the short time since its establishment.
3.2.1.4. Sales promotion
Until the end of 2017, FE Credit and HD Saison focused on promoting and introducing consumer credit
products to customers through the POS network and retail partners that have signed cooperation contracts.
However, with the emergence of partners providing intermediary payment services and online payment platforms
and e-wallets, the finance companies are tending to gradually shift marketing activities through platforms. linking
and reducing targeted marketing campaigns via POS as before. According to the results of interviews with
professional officials of the finance companies, sales promotion activities were implemented by the finance
companies during 2014-2019 including: POS, DSA, Telesales, SMS , magazines, headquarters and affiliates,
media, Website, and Mobile APP (FE FE only), other promotion programs. Newly joined finance companies such
as SHB Finance and MCredit are also implementing these programs.
3.2.1.5. Current situation of lending interest rates of finance companies under commercial banks
Depending on the policy of each financial company, the lending interest rate is either published
according to the basic consumer credit product or the interest rate announced by the consumer consumer
credit products. Lending interest rates of the finance companies range from 29.99% -64.99% / year. Thus,
compared with the interest rate for individual customers of some parent commercial banks for the purposes
of buying houses and cars with the lending interest rates ranging from 12% -14% / year, the target credit
interest rate is Use rate is quite high compared to the lending interest rate of commercial banks. Currently,

most finance companies have not implemented online lending products, so there is no clear difference in
interest rates of traditional lending products and online lending products.
3.2.2. The situation of consumer credit quality management of the finance companies in Vietnam
3.2.2.1. Actual situation of credit risk management model
Currently in Vietnam, a popular consumer credit risk management model that has been chosen by
the finance companies is a risk management model similar to the centralized risk management model of domestic
commercial banks, in which the model has a clear separation of risk management functions and business
functions. The following is a typical consumer credit risk management organization structure of the finance
companies built to ensure the quality of consumer credit: Member Council, Risk Management Committee, Board
of Directors control, Executive Board, Credit Risk Council, Risk Management Division, Legal Department,
Agency or Internal Control Department, Internal Audit Department. In terms of operational history and annual
financial indicators, FE Credit and HD Saison are currently two finance companies that have implemented
consumer credit risk management organization models. use professionally and effectively, in accordance with the
model and common risk management policies of the parent bank. For finance companies in the early stages of
business establishment and implementation such as MCredit and SHB Finance, immediately deploy a professional
risk management model with full of specialized functional units such as FE Credit. and HD Saison is not the best
choice. However, with the development strategies of SHB Finance and Mcredit, both towards the Top 5 safe and
effective consumer finance companies, these finance companies are in the process of completion and
standardization of in-depth risk management model in which strong investment in systems and resources for


15
successful implementation of risk management projects is indispensable.
3.2.2.2. Actual situation of credit policy, credit process
 Credit policy
For the finance companies, credit policies or credit risk management policies are issued annually by
the Board of Members according to the same standards as the parent commercial banks. The purpose of
issuance is to guide credit operations at finance companies, to agree on basic principles to identify, measure,
monitor, control and minimize credit risks for the loan portfolio. and each loan, assigning tasks and defining
roles and responsibilities of units at the finance companies in credit risk management. With an effective

safety development strategy, credit policies of the finance companies are also built to ensure that consumer
credit development is accompanied by strict control of credit limits for customers. Bank, the authorities
decide in credit activities and monitor the capital adequacy ratio continuously and promptly with adjustments
in the lending scale to ensure the capital adequacy ratio as prescribed by the State Bank.
 Credit processes
In general, the consumer credit process of the finance companies is often simpler than the credit
process of commercial banks stemming from the nature of the loan and the borrower. According to the
results of interviews with the experts of the finance companies and information from the websites of the
finance companies, the standard credit process of typical finance companies such as FE Credit and HD
Saison is applying to customers including 5 steps including: Loan information consultancy - Collecting loan
documents - Loan evaluation and approval - Disbursement - Tracking loans and loan recovery. With regard
to the requirement of compliance with the credit process in the lending process, most of the officers of the
finance companies fully comply with the steps of the credit process when conducting consumer credit
activities. There are still cases when the bank has not fully complied with or implemented the lending step
but the behavior with individual customers is still not standard. For other complaints that arise from the fact
that the consultants at POS do not provide sufficient information or misleading information, especially in the
case of interest rates, most of the finance companies are encountered.
3.2.3. The results of consumer credit development of the finance companies in Vietnam
In addition to data on products, distribution channels, markets, sales promotion and lending rates
presented in section 3.2.1, the level of consumer credit development of the finance companies is also
expressed through the following quantitative indicators:
3.2.3.1. The growth rate of consumer credit outstanding of finance companies under the 2014-2019 period
Table 3.4 Size and growth rate of consumer credit outstanding credit in the period of 2014-2019
Calculation unit: VND billion
Outstanding consumer
No.
2014
2015
2016
2017

2018
2019
credit for individuals
1
FE Credit
3.635
20.208
32,105
44.797
49.944
60.594
Growth rate (%)
N/A
455,93
58,87
39,53
11,49
21,32
2
HD Saison
2.329
4.696
8.055
9.449
10.653
12.581
3
4

Growth rate (%)

N/A

101,63

71,53

17,31

12,74

18,10

MCredit
Growth rate (%)
SHB Finance
Growth rate (%)
Total outstanding credit of
finance companies

N/A
N/A
N/A
N/A

N/A
N/A
N/A
N/A

N/A
N/A
N/A
N/A

1.549
N/A
N/A
N/A

5.480
253,78
514
N/A

8.500
55,11
3.692
618,29

23.611

44.239

66.354

91.616

105.635

114.000

Source: 2014-2018 (Fiingroup), 2019 (author calculated)
In the period 2014-2019, the scale of consumer credit debt in Vietnam has grown strongly with a
compound growth rate of 37% / year, of which nearly VND 114,000 billion in 2019. The object of consumer
credit is targeted at individual, middle-income and low-income individuals who do not have access to bank
loans, accounting for 48% of Vietnam's total population. Finance companies such as FE Credit and HD
Saison have experienced impressive growth in consumer credit balance. The above situation shows that in
the initial stage of changing the owner to the parent bank with a clear development strategy, the finance
companies have quite good resilience and achieved impressive scale of outstanding loans compared to other
independence finance companies. Thus, the model of commercial banks owning the majority or the whole
has contributed significantly to the transformation and dominate the strong consumer credit market of the


16
finance companies in the 3-5 year business cycle head.
3.2.3.2. The growth of market share of finance companies is under the 2014-2019 period
The finance companies is gradually dominating the consumer credit market share in the Vietnam market in
the period of 2014 - 2019, in which FE Credit maintains its leading position in the market. and maintained market
share, followed by Home Credit and HD Saison. With the starting point of market share of 11.3% in 2014, FE Credit
has become the largest financial institution in the market in 2016. In the period of 2017-2019, FE Credit’s market
share was continuously consolidated near the 50% mark and surpassed milestones in 2019, reaching 53%. With a
market share of more than half of the consumer credit market, FE Credit is also the company with the largest market
share of every consumer credit product being implemented. HD Saison, although ranked third in terms of market
share in the industry, has a growing gap compared to MCredit due to no improvement in market share over the years.
The leading position in the market for vehicle loan products belonged to HD Saison with 32% in 2017, having been
overtaken by FE Credit in 2018, reaching 22% in 2018.
3.2.3.3. The level of profit growth of finance companies in the period of 2014-2019
Table 3.5 Profits and profit growth levels for the period of 2014-2019
Unit: VND billion

No.
Profit after tax
2014
2015
2016
2017
2018
2019
FE Credit
80
975,7
2.001
3.358
3.294
3.590
1
Growth rate (%)
N/A
1119
105,08
67,82
(1,91)
8,99
HD Saison
135
236
353
416
719
831

2
Growth rate (%)
N/A
74,81
49,58
17,85
72,84
15,58
MCredit
N/A
N/A
N/A
N/A
256
155.2
3
Growth rate (%)
N/A
N/A
N/A
N/A
N/A
(39,38)
SHB Finance
N/A
N/A
N/A
N/A
8,8
153,6

4
Growth rate (%)
N/A
N/A
N/A
N/A
N/A
1645
Source: 2014-2018 (Fiingroup), 2019 (author calculated)
3.2.3.4. NPL ratio
Table 3.6 NPL ratio in 2014-2019 period
Unit: %
No. NPL ratio
2014
2015
2016
2017
2018
2019
1
4
4,05
6
5
5,98
6
FE Credit
2
3
4,6

5,18
5,73
6,3
6,21
HD Saison
3
N/A
N/A
N/A
N/A
5,93
7,9
MCredit
4
N/A
N/A
N/A
N/A
2,29
3,52
SHB Finance
Source: 2014-2018 (Fiingroup), 2019 (author calculated)
3.2.3.5. Minimum capital adequacy ratio
Table 3.7 CAR capital adequacy ratio in the period of 2014-2019
Unit: %
No.
Capital adequacy ratio
2014
2015
2016

2017
2018
2019
1
13
11
12
13,2
16,1
16,3
FE Credit
2
15,1
10,2
9,1
12,5
19,7
17,7
HD Saison
3
N/A
N/A
N/A
N/A
13,6
12,0
MCredit
4
N/A
N/A

N/A
N/A
84,7
22,2
SHB Finance
Source: 2014-2018 (Fiingroup), 2019 (author calculated)
In the period of 2014-2019, the minimum capital adequacy ratio of finance companies is always high
compared to commercial banks. This shows the safety level of the assets of finance companies in the face of
potential risks in business activities, especially in the current uncertain economic conditions.
3.3. Assess the situation of consumer credit development of finance companies under commercial
banks in Vietnam.
3.3.1. Achievements and causes
3.3.1.1 These achievements
- The finance companies under commercial banks successfully apply traditional credit development
methods suitable to the characteristics of credit market in the period of 2014-2019.
- Contribute to the main income of the finance companies.
- Risk management is gradually approaching international practices; the quality of consumer credit is
maintained in the direction of safety and efficiency.


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- Enhancing the position of the parent commercial banks, confirming the right direction of
commercial banks when implementing the consumer credit model at the finance companies.
- Contributing actively in implementing the policy of restricting black credit under the direction of
the Government.
3.3.1.2. Cause of success
- Development strategy of the finance companies is associated with the general development strategy
of the parent bank.
- The finance companies has the capacity to develop basic consumer credit products
- The finance companies can benefit from parent banks when implementing consumer credit

- Consumer credit demand of individual customers grew strongly
- Favorable business environment
3.3.2. Limitations and reasons
3.3.2.1. Limit
- The mode of developing consumer credit has not kept up with the consumption trend in the 4.0 era
- Development of consumer credit activities of finance companies is likely to affect the image and
adversely affect some financial indicators of the parent commercial bank
- Principle of responsible lending has not been properly considered
3.3.2.2. Reason
a. Group of causes from finance companies
- Unstable and unfaithful human resources
- The quality of service does not meet the expectations of consumers about the standard and
professional aspects of their finance companies, post-loan customer service.
- Internal documents on responsible lending and responsible lending action programs have not been
prioritized by their finance companies.
- Information technology capacity has not yet met the digital business mode
b. Group of causes from the parent bank
According to interviews with managers of the Executive Board of a number of finance companies,
the parent bank usually takes about 3-5 years to implement a digital transformation strategy and takes 2-3
years to deploy a new business model. Finance companies will benefit from future conversion results but will
need a certain roadmap.
c. The cause is from customers
Most customers know about consumer credit products of finance companies only after a loan needs
arises. Clients often do not know their ability to borrow with the finance companies leading to the difference
in monthly repayments compared to their solvency. A lack of understanding of personal financial
management risks both the finance companies and the customers themselves. Many cases of complaints or
risks of information stem from customers' understanding of consumer lending activities.
d. Cause from the legal environment
There is no clear law on the responsibility of a finance companies to borrowers in the period of
2014-2019: Until December 31, 2019, Circular 43 stipulates the responsibility of the finance companies for

interpreting the contract for Consumer loans to borrowers are still quite general, debt collection principles
are quite primitive, not including all the consequences that occurred during the actual implementation of
finance companies.


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CHAPTER 4: SOLUTIONS FOR CONSUMER CREDIT DEVELOPMENT OF FINANCE
COMPANIES UNDER THE COMMERCIAL BANK IN VIETNAM
4.1. CONSUMER CREDIT DEVELOPMENT ORIENTATION OF THE FINANCE COMPANIES IN
VIETNAM

4.1.1. SWOT analysis of the finance companies in consumer credit development in the period of 2020-2025

4.1.1.1. Strength
The finance companies have many advantages in developing consumer credit derived from internal
factors as follows: Basic consumer credit products are diverse, suitable for many consumer needs of
customers; diversified and widespread traditional distribution network; the geographical market has been
covered; advantage of shifting to digital business, the risk management system is well-built and in
accordance with international practice.
4.1.1.2. Weakness
In addition to the strengths, the finance companies also have a number of weaknesses affecting
consumer credit development as follows: the level of business flexibility is less than that of independent
finance companies; Uneven and stable human resources; Taste risks more closely than independent finance
companies.
4.1.1.3. Opportunity
Opportunities to help the finance companies develop consumer credit include: stable political and legal
environment; favorable macro environment; people's income is increasing and the population structure is young.
4.1.2.4. Challenge
The finance companies are faced with the challenges stemming from the SBV's credit growth
constraints, the challenge from a sketchy customer information system, as most customers do not have a

credit history and the challenge comes from electronic finance.
4.1.2. Forecast of development trends of the finance companies in Vietnam in the period of 2020-2025 and
development orientation of consumer credit of the finance companies
The author proposes the general consumer credit development orientation of the finance companies
as follows:
- Regarding business strategy: Although consumer credit growth is still the priority target of the
finance companies in order to motivate the finance companies to achieve financial targets in the short term.
However, in the long term, the most important goal that the finance companies should aim for is efficiency
and sustainability.
- Regarding business model: continue to exploit an effective traditional business model, gradually
shift to a digital business model when having mastered technology and risk management capacity.
- Regarding consumer credit products: continue to deeply exploit customers with basic consumer
credit products with advantages, study and shift to digital consumer credit products.
- Regarding distribution channel: POS channel is still a traditional distribution channel that helps the
finance companies to maintain their brand in the new period but need to reduce the dependence of POS on
credit growth. Expanding and growing modern distribution channels through accelerating the association
with Fintech companies.
- Regarding the market: focusing on deepening individual customers in areas where finance
companies have the strength to exploit, attracting more young customers who love technology via mobile
applications to eliminate geographical distance.
In addition, the finance companies need to develop safe and sustainable consumer credit on the basis
of effective risk management, strengthen governance, inspection and control to ensure the safety of
consumer credit activities. use; strengthening financial capacity to contribute to safe and sustainable
consumer credit development; strictly control credit quality, implement solutions to recover and reduce bad
debt ratio.
4.2 SOLUTIONS TO DEVELOP CONSUMER CREDIT OF THE FINANCE COMPANIES
4.2.1 Digital business transformation solutions
4.2.1.1 Improving the capacity of developing digital consumer credit products
The solution of consumer credit products is one of the key solutions that need to be aken into
consideration by the finance companies in the development process. The product is a profit-making tool for

the finance companies; annual product strategy is effective measures to confirm the prestigious of the
company in the market, based on that customers perceive the difference between finance companies. Suitable
product strategy and product development and management capabilities are a prerequisite for expanding and
developi ng consumer credit. Therefore, the finance companies need to focus on researching solutions for
consumer credit products as follows:
 Improving the organization of developing and managing products


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The organization of of developing and managing products includes many stages such as: the
organizational model of product development, the process of product design and development, training and
communicating new products, product performance evaluation in each period. The product development
organization should be highly specialized and smoothly operated to save time of launching products to the
market, help the Executive Board of the Finance Companies to understand the level of product competing
capability on the market, help the product to keep high level of customer satisfation. The finance companies
should improve the organization of product development towards professionalization, specifically as follows:
a) Improve the model of product management organization
Because main customer of consumer credit is invidual, the product life cycle is usually short and
need to continuoustly adjusting according to market demand, and its effectiveness could cover possible risks.
The product department should be established independently of the Sales Divisions and under the CEO.
Close attention and direct guidance of the CEO help product to be issued in line with credit policy, business
strategy and business reality of the finance companies in each period, contribute to increase total results of
credit growth of the finance companies.
Establishing the Product Council to assist CEO in accelerating product development product and
ensuring product quality approval by qualified and specialized approval organization.
The product design stage deployed by professional groups to ensure the product is highly feasible in
information technology, to accelerate the introduction of products to the market.
b) Principles, methodology of product development and implementation
It is necessary to develop and deploy consumer credit products based on the principles of
"Responsible lending" in order to provide appropriate products to customers and ensure customer’s

interests. The finance companies can choose some or all of popular principles of responsible lending such as:
fair advertising and marketing, professional distribution channels, lending to customers potential with
sufficient information, lenders access reasonable credit documents, do not discriminate between different
borrowers of the same product, borrower information security, handling complaint, etc.
The finance companies also need to apply "Lean thinking" into product development, especially
digital products. Lean thinking focus on Complying time frame, Learn a lot but cost less, Test early and
respond. Lean thinking combines with the aforementioned product design model will be effective for
financial marketing in digital business transformation.
Complete documents on product development and management organization
The finance companies need to build Regulation on product development activities which set out the
principles in product development, standardization and unification of how to implement, including new
product concept researching, product content design, sales deployment, and product on-going monitoring.
The finance companies need to develop and complete a product design process to standardize
research steps, design product in groups, deploy product to customers. The product design process should
cover all stages from researching, launching and reviewing product.
Product strategy
The mixed consumer credit product strategy is a suitable choice for the finance companies in the
period from 2020 to 2025. In which the deployed product group include the basic credit products and the
gradual transition to digital products.
For basic consumer credit products: the finance companies continue to diversify according to deeper
customer classes, in which the customer characteristics of careers need to be focused on: age, gender, living
area, etc to design compatible products. Continuing to maintain basic consumer credit product groups helps
the finance companies to retain customers, develop new customers who do not tend to use digital channels
and create potential customers to exploit on digital channels.
For the group of digital consumer products: the transformation from basic products to digital products
requires a large invest capital in infrastructure construction but it’ll reduce operating costs afterwards. It is
necessary for the finance companies successfully built a digital platform to quickly deploy and issue digital
products to soon attract customers who prefer technology and online shopping/spending, focus on cash loan
products disbursed into electronic wallets. For the finance companies which do not immediately implement
online lending products, it is necessary to take advantage of the digital platform of the parent bank, gradually

introduce technology into basic lending products, reduce the initial contact step between clients and credit
counselors such as receiving online records. Early association with Fintech companies allows the finance
companies to soon enter the digital consumer market and make a mark in this market. In addition, the finance


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companies with technological competence can consider M&A to become Fintech Companies to have their own
customer database, thereby deploying digital products directly to consumers.
4.2.1.2. Developing distribution channel oriented digital business transformation
Common solution for the finance companies in 2020-2025 periods
The finance companies should focus on fully and diversifying 3 important basic distribution
channels successfully implemented in 2014-2019, including POS, DSA, Telesales, strongly deploying the
distribution channel through the parent bank, researching and deploying modern distribution channels
according to the business strategy and capacity.
+ For POS development: the finance companies need to establish a network of selling points in the
first place, quickly expand and diversify directly distribution channels. It is necessary to rely on the strengths
of the parent bank to focus on developing relationships with partners closely associated with the parent
commercial banks such as telecommunication corporations, electronic corporations to increase the power of
negotiation and achieve development goals of selling points each period. The finance companies should base
on financial resources and the support of the parent bank to reasonability distribute in building their
distribution network in each stage of development, avoiding overheating development to ensure the quality
of the company's operations.
+ For the distribution channel through the parent banks: the parent banks have a large network of
branches and transaction offices nationwide, having large amount customers with transaction relations. The
finance companies can take full advantage of the network of available transaction points of the parent
commercial bank to promote and sell their consumer credit products to customers of banks such as: Payroll
customers of banks with good credit score need to borrow unsecured cash loans with small amount but do not
have bank loan products; Current account customers of banks didn’t paid wage via bank and aren’t eligible to
borrow at banks but have demand for consumer loans; Customer group is not eligible for commercial banks,
but they are currently working in enterprises that have close relationships with commercial banks.

The method of distribution via a parent bank may include the following two methods: i) Traditional
delivery method: Financial subsidiaries are directly located at all branches / transaction offices of the parent
bank nationwide. ii) Method of online distribution: the finance companies are sold through APP of the parent
bank. The exploitation of the distribution channel through the parent commercial bank is the premise to help
the finance companies can quickly develop the network and create competition right from the first
development stage.
For modern distribution channels: Early research and development of modern distribution channels
will help the finance companies make appropriate investment decisions on infrastructure and technology
solutions to avoid erroneous investments in the infrastructure is cheap but the ability to connect to
independent product modules is not high, consuming a lot of resources in the future to complete the
infrastructure ..
Solutions for the finance companies with large market share of consumer credit products, focusing
on cash loan products, have successfully implemented several digital loan products and diversified
distribution channels.
For the finance companies with a market share of more than 10% of the total credit outstanding debt
for each basic credit product, in addition to studying the above proposed solutions for the financial
institutions, it is possible to research and deploy more the following solution:
- For distribution channels via POS: researching the following solutions to perfect effective
distribution channels and create solid relationships with partners who are placing POS, specifically as
follows:
+ Need to periodically and irregularly review all existing POS, evaluate the costs arising from the
POS and compare with the efficiency gained from the point of sale, thereby deciding: i) cutting off the POS
do not reach KPI and have incurred costs 30% higher than the average cost / point of sale but do not
guarantee minimum debt / selling points or do not guarantee minimum profit / selling points, ii) maintaining
and setting up challenging times, supporting sales points with incentive programs for customers combined
with solutions to improve service quality such as after-sales customer care, professional level improving sale
staff ...
+ Having a strategy to reduce the dependence on points of sale which located at unwholesome
partners or who tend to require higher rental fees/policies include many unfavorable conditions for the
companies. The finance companies should early screening of these partners and getting ready to eliminate

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the relationship because of cost issues and replace with other partners or other distribution channels more
effectively.
- For modern sales channels: it is necessary to focus on distributing strategic products via mobile
phones, websites and social networks, according to the following strategies:
+ Strategy to maintain a leading position in deploying modern distribution channels, especially mobile
APP. In fact, many finance companies are trending and starting to deploy this sales channel in the period of 20202025, keeping the leading position to help create a diverse and loyal customer base as soon as possible.
+ Strategy to capture market share of online distribution channels and increase the proportion of
wallets from online distribution channels: this is also one of the strategies to reduce reliance on POS through
sales promotion programs on channels such as refunding, loans, preferential interest rates, gift travel
vouchers, electronic products ... in order to attract maximum young technology-loving customers, leading in
creating a shift in user awareness, thereby increasing Loyalty rate from customer number. The finance
companies needs to develop an annual budget to implement a new sales model and gradually shift income
from traditional sales channels to digital channels, increasing operational efficiency by reducing point-of-sale
and operating costs.
Solution for the finance companies with strengths in loan products thanks to its large POS system
and potential customer ecosystem
- Solution of managing and developing the sales channel via POS: continue to maintain profitable
sales points and create target profits for financial statements; eliminate sales points that do not reach the goal
of scale and efficiency. With a large number of POSs, The finance companies have the advantage to purify
ineffective selling points without greatly affecting the operation scale. Because the increase of POS will lead
to an increase in operating costs and cost of premises, the finance companies should consider and evaluate
the correlation between the growth rate of outstanding loans, the rate of profit growth and the annual growth
rate of POS. If these ratios are similar, continue to look for new partners to establish selling points or
increase the number of selling points according to the partner's store size. The direct sales channel will still
be the best profit making channel in line with the capacity of the finance companies in this period.
- Solutions to combine traditional POS with modern sales channels: Because the business model is
different from cash lending activities, which are focused on installment lending, The finance companies

should not adopt a pioneering strategy and coverage strategy for online lending products on mobile phones
which should be based on the advantage of a wide network of car dealers, shopping malls, electronics centers
etc to select products using appropriate digital channels. "Navigator Shopping" is a solution that the finance
companies can refer to based on the implementation of the successful program "Auto Navigator" of Capital
One Finance Company, USA in many years to develop products on a mixed channel including modern sales
channels and traditional POS based on competitive advantages of the finance companies. The borrowing
process of Navigator Shopping program is as follows: customers choose the finance companies 's installment
products via website / mobile, select direct products with full information and price on website / mobile,
provide proof of income (if any) and identification documents using AI and OCR technology, the system will
automatically approve and email the loan amount with the lending interest rate to the registered customer
address, customer actualy needs purchase of the goods will bring the The finance companies's loan
confirmation to the place of purchase, provide the loan confirmation, identification documents and fill out
the loan application, due to a prior appraisal process staff of the finance companies at point of sale, only need
to reconcile information received from customers and information on the system to complete the loan step
with a time not exceeding 5 minutes.
This program is aimed to customers who want to buy installments, which are in the process of
changing their mindset from “the action must come to see the product before deciding to buy and study loan
policy of the financial institution” to "the action of searching for your favorite products on the internet before
having free time, then learn about the loan policy and loan interest rate offered by the finance companies and
then come to see the product directly", even customers have the loan confirmation can be used to negotiate
the selling price of products with points of sale or loan from other finance companies with interest rates and
lending limits that are more competitive with the reference from finance companies. The development of
similar programs in the period of 2020-2025 helps finance companies keep up with digital trends and retain
customers who are changing digital thinking. In addition, the finance companies can also attract potential
customers of other finance companies by providing a superior experience of purchasing and borrowing.
4.2.2. Group of solutions to improve the quality management capacity of consumer credit
4.2.2.1. Improve risk management model in accordance with international practices


22

In Vietnam, one of the models and risk management are some commercial bank successfully applied
and the international experts recommended widely applied, can apply to the financial company attached is a
model of 3 lines of defense or 3 rounds of protection and risk management throughout the system. The
advantage of the model of 3 lines of defense and risk management is that all members of the system must
participate in the risk management process. Therefore, this model ensures all risks in each of the financial
company's operations are identified, controlled and minimized. To be able to deploy a model risk management
above, it is also necessary for the finance companies to have a risk management strategy developed
and consolidated in the following directions: developing and applying a centralized, independent, standard and
comprehensive risk management system; standardization of the system of internal control, internal audit and
legislation; right credit standards manuals; apply advanced science and technology credit scoring system and
program it into electronic credit scoring system which integrates with the science and technology database in
order to make lending decisions and fraud risk management; developing and implementing a modern
management information system for active risk identification, measurement and management; build a report
system to monitor CAR capital adequacy ratio in credit activities to ensure the principle of automatic, timely
warning, reporting and alerting the right subjects, principles and decision-making authority when
overcoming Capital adequacy limit.
4.2.2.2. Complete the collection and processing of customer data
The finance companies need to develop and standardize customer data systems and apply Big Data
analysis techniques, solutions that help analyze customer data from open, formatted and structured
information sources. Diversified structure, difficult to collect-manage-store, difficult to analyze in order to
serve business activities, especially in credit risk management,
4.2.2.3. Completing customer data management system
Individual customer’s technology data management system is a software system established to allow
the management of individual customers and technology database and has outstanding features to help
provide and analyze scientific and behavioral individual customers and technology. Translation, products
provided or in accordance with science and technology to support sales operations of salespeople, are a tool
for salespeople to manage all sales activities in active and proactive tools for management levels to monitor,
evaluate and direct sales activities in accordance with the business strategy of the business. One of the main
features on the system administrator database of clients including: managing customers, managing the sales
force, management of customer potential, campaign manager of sales, managing sales activities row,

assigning and supervising sales, management of cross-selling products and services, manage product
information, consumer credit, reporting and analysis, alerts and utility etc.
4.2.2.4. Perfecting the capacity of customer information security in digital business
The deployment of business activities on the basis of, besides benefits offer guests every loan ons and an
optimal experience, the financial company attached should focus on overcoming potential threats occur in the
process, customers use APP to borrow capital such as information theft, attack on mobile applications, etc. The
main risks stemming from this information security may come from customers in the process of using a mobile
phone, comes from the finances companies and third party. One of the proactive information security solutions is
raising customer security awareness. The financial company attached to proactive risk communication on
Highway personal information, risk having customers and the security measures to customers. Some security
measures such as customers set a password for the phone, do not provide the APP application password to others,
periodically change the password, and avoid accessing the phone to websites at risk of virus infection.
high…
4.2.3. Group protection solutions and brand reputation the finance companies and commercial bank
4.2.3.1. Improve quality serving
Quality of service is still limited in some aspects such as after-sales care significantly affected the
reputation and brands the finance companies. To ensure product supply consumer credit to customers
professional, high quality, minimize complaints during and after the sales process, the financial company
attached to implement solutions follows: First, the need to change the perception and opinion of the finance
companies under the word " complete growth target consumer credit in terms of scale and achieve efficiency "
to " satisfy the maximum demand demanding customers with the best quality of services to achieve business
goals ”to ensure long-term sustainable development. Secondly, developing a set of service quality standards
with core values of brand image, facilities, customer comfort, trustworthiness, professional standards staff,
translation customer support services are available, ensuring operational efficiency.
4.2.3.2. Responsible lending solution
To protect the reputation and brand of parent commercial bank and the finance companies, the finance
companies should be in compliance with the responsibility of lenders to help customers understand loan products,
rights and responsibilities of the borrower etc, thereby reducing customer complaints and grievances against the
company. Here are some solutions for the responsible lending the finance companies should apply: Construction
of internal regulations on the responsibility of the lender; implement internal communication programs on