Quality of noncredit services in sogiaodich1 branch, bank for investment and development of vietnam JSC

ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

ĐẶNG THỊ THUỲ TRANG

QUALITY OF NONCREDIT SERVICES IN
SOGIAODICH1 BRANCH, BANK FOR INVESTMENT
AND DEVELOPMENT OF VIETNAM JSC
CHẤT LƯỢNG DỊCH VỤ PHI TÍN DỤNG TẠI CHI
NHÁNH SỞ GIAO DỊCH 1 NGÂN HÀNG TMCP ĐẦU
TƯ VÀ PHÁT TRIỂN VIỆT NAM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2021


ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

ĐẶNG THỊ THUỲ TRANG

QUALITY OF NONCREDIT SERVICES IN SOGIAODICH1
BRANCH, BANK FOR INVESTMENT AND DEVELOPMENT
OF VIETNAM JSC
CHẤT LƯỢNG DỊCH VỤ PHI TÍN DỤNG TẠI CHI NHÁNH
SỞ GIAO DỊCH 1 NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT
TRIỂN VIỆT NAM

Chuyên ngành: Quản trị kinh doanh
Mã số: 8340101.01
LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS. Đỗ Xuân Trường

HÀ NỘI - 2021


COMMITMENT

The author undertakes that the research results in this thesis are the results of
the author's own labor obtained mainly during the time of study and research and
have not been published in any other research program.
The results of other people's research and data used in this thesis have been
agreed and specifically cited by the authors.
I am fully accountable to the thesis defense council, the Faculty of Business
Administration and the state law for the above commitments.


ACKNOWLEDGEMENT

The author would like to sincerely thanks for the guidance, dedicated,
responsible and effective help of Dr. Do Xuan Truong during the research and
completion of the Thesis.
The author would also like to express gratitude to the teachers of the Faculty
of Business Administration, Hanoi National University for their dedicated help,
teaching and knowledge transmission.
Sincerely thanks the Board of Directors and staffs of Joint Stock Commercial
Bank for Investment and Development of Vietnam, Sogiaodich1 Branch for

facilitating and assisting the author in the process of completing this thesis.


TABLE OF CONTENTS

LIST OF TABLES ......................................................................................................v
LIST OF FIGURES................................................................................................... vi
INTRODUCTION .......................................................................................................1
CHAPTER 1: BASIC THEORY ON QUALITY OF NONCREDIT SERVICE OF
COMMERCIAL BANK ...........................................................................................12
1.1. An overview of the commercial bank's non-credit services ..........................12
1.1.1. The definition and characteristics of the non-credit service of
commercial banks .............................................................................................12
1.1.2. The major non-credit services of commercial banks .............................15
1.2. Quality of non-credit service of commercial banks .......................................20
1.2.1. The definition of non-credit service quality ...........................................20
1.2.2. Models for measuring the quality of non-credit services of
commercial banks ...........................................................................................21
1.3. Research model and design research on the quality of non-credit services at
commercial banks ..................................................................................................24
1.3.1. Model of non-credit service quality research at Vietnam Joint Stock
Commercial Bank for Investment and Development, Sogiaodich1 Branch ....24
1.3.2. Scale Creations .......................................................................................27
1.3.3. Questionnaire design ..............................................................................28
1.3.4. Research sample design..........................................................................29
CHAPTER 2. ANALYSIS OF THE QUALITY OF NONCREDIT SERVICES AT
VIETNAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND
DEVELOPMENT – SOGIAODICH1 BRANCH.....................................................31
2.1. An overview of the Vietnam Joint Stock commercial bank for Investment
and Development – Sogiaodich1 Branch ..............................................................31

2.1.1. History and development........................................................................31
2.1.2. Organizational structure .........................................................................33
2.1.3. Business performance results .................................................................33


2.2. Analysis of the current status of non-credit operations at Vietnam Joint Stock
Commercial Bank for Investment and Development, Sogiaodich1 Branch .........37
2.3. Analysis of the current status of non-credit service quality at Vietnam Joint Stock
Commercial Bank for Investment and Development, Sogiaodich1 Branch ...............40
2.3.1. Descriptive statistics ...............................................................................40
2.3.2. Analyze the reliability of the scale .........................................................42
2.3.3. Exploratory factor analysis .....................................................................44
2.3.4. Regression analysis ................................................................................47
2.3.5. Analyze the current status of non-credit service quality at BIDV –
Sogiaodich1 Branch .........................................................................................55
CHAPTER 3. SOLUTIONS TO IMPROVE THE QUALITY OF NON-CREDIT
SERVICES AT VIET NAM JOINT STOCK COMMERCIAL BANK FOR
INVESTMENT AND DEVELOPMENT .................................................................61
– SOGIAODICH1 BRANCH ...................................................................................61
3.1. Oriented development of non-credit services at Joint Stock Commercial
Bank for Investment and Development of Vietnam – Sogiaodich1 Branch .........61
3.2. Solutions to improve the quality of non-credit services at Vietnam Joint Stock
Commercial Bank for Investment and Development – Sogiaodich1 Branch .............62
3.2.1. Improve the quality of staffs dealing directly with customers ...............62
3.2.2. Increase the reliability of non-credit services at BIDV – Sogiaodich1
Branch...............................................................................................................64
3.2.3. Increase information to customers .........................................................66
3.2.4. Increase product utility for customers ....................................................66
3.2.5. Adjust service fees to be reasonable and competitive with other banks 67
CONCLUSION .........................................................................................................69

REFERENCES ..........................................................................................................70
APPENDIX


LIST OF TABLES
Table

Page

Table 1.1. Groups of factors scale .............................................................................27
Table 2.1. Business performance of BIDV – Sogiaodich1 Branch ..........................36
Table 2.2: Results of net service revenue of BIDV – Sogiaodich1 Branch ..............39
Table 2.3. Descriptive statistics of research samples ................................................42
Table 2.4: Analysis results of Cronbach'sAlpha .......................................................43
Table 2.5: KMO and Bartlett's Test ..........................................................................44
Table 2.6: Results of EFA of the independent variable ............................................45
Table 2.7: Groups of factors after performing the exploratory factor analysis ........47
Table 2.8: Correlation coefficient matrix ..................................................................48
Table 2.9: Testing of regression model appropriateness...........................................50
Table 2.10: Multicollinearity test ..............................................................................51
Table 2.11: Regression analysis result ......................................................................53
Table 2.12. The level of customer satisfaction about staff .......................................55
Table 2.13. Level of customer satisfaction with the utility of the non-credit service .........56
Table 2.14. Level of customer satisfaction with non-credit products and services ..57
Table 2.15. The level of customer satisfaction on the reliability of the non-credit
service........................................................................................................................58
Table 2.16. The level of customer satisfaction about Information factor .................59
Table 2.17. Customer satisfaction with non-credit services at BIDV – Sogiaodich1
Branch .......................................................................................................................60

v


LIST OF FIGURES
Figures

Page

Figure 1.1. Nordic quality model by Gronroos .........................................................22
Figure 1.2: Proposed research model ........................................................................26
Figure 2.1. Organizational structure of BIDV – Sogiaodich1 Branch ......................33
Figure 2.2. Capital mobilization and average capital mobilization of BIDV –
Sogiaodich1 Branch for the period of 2017 - 2019 ...................................................34
Figure 2.3. Credit balance at BIDV – Sogiaodich1 Branch for the period of 2017 2019 ...........................................................................................................................35
Figure 2.4. Net service revenue ratio in the total profit before tax of BIDV –
Sogiaodich1 Branch ..................................................................................................38
Figure 2.5. The structure of net service revenues by types of non-credit services in
2019 ...........................................................................................................................40
Figure 2.6: Normalized residual scatter plot .............................................................51
Figure 2.7: Frequency graph of normalized residuals ...............................................52

vi


INTRODUCTION
1. The urgency of the topic.
In recent years, the credit environment has faced many difficulties, the level
of risks is still high, the State Bank of Vietnam has strictly managed the growth of
the annual loan balance of commercial banks in order to control inflation; the
income from lending activities for customers has slowed down, so it can be seen

that non-credit services provide a fairly stable source of income for most of
Vietnam's commercial banks in the period of 2017 - 2019, if any commercial bank
having reduced, the reduction will not be much fluctuation, unusual fluctuations
such as foreign exchange trading, securities trading, ... Therefore, the strategy to
increase the proportion of non-credit service is still being concentrated by
Vietnamese commercial banks.
In the context of the 4.0 revolution, the application of Fintech and
Blockchain technology, use of mobile devices and the development of digital
technology; the project of non-cash payment under the Prime Minister's Decision is
approved and strengthened the direction and strongly promoted by The State Bank
of Vietnam; the Vietnamese commercial banks have also increasingly competed,
increased investment in financial resources, human resources, and developed,
improved non-credit services, especially modern services, such as internet banking,
digital banking, using QR codes, e-wallets ... Commercial banks have also
expanded cooperation with the taxation, customs, state treasury, social insurance,
payment companies, organizations providing public services such as electricity,
telecommunications, cable TV, clean water, hospitals, gasoline, road transportation
and railway, airlines, traffic registration stations, universities and colleges,
vocational training,…; labor export companies, travel agencies; supermarkets, trade
centers, insurance companies, ... The provision of non-credit services also helps
Vietnamese commercial banks cross-sell products such as deposits, overdrafts, ...
In the context of fierce competition among commercial banks in non-credit
services, the products and fees of banks are almost close to each other. The price
competition becomes less meaningful in the current context. Instead, improving the
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quality of non-credit services is becoming a very effective competitive tool for
commercial banks. Therefore, it is very necessary to research to improve the quality
of non-credit services of commercial banks.

Facing that trend, BIDV in general and Sogiaodich1 Branch have
concentrated resources and finance to develop non-credit services and brought
positive results such as revenue and income from non-credit service is increasing in
both absolute value and proportion in total revenue, the number of customers using
non-credit services at the Branch also increases strongly in the period of 2017 2019 with rapid rate growth is over 10%. In addition to the achieved results, the
quality of non-credit services is still limited, such as: the staff is still limited in
quantity and professional qualifications. Many customers have complained about
the working attitude of staff at the transaction center Branch 1. Non-credit products
and services do not have many associated benefits, the fee for using non-credit
services is even higher. compared with other joint stock commercial banks. The
limitations on the quality of non-credit services have a great impact on the growth
and development of non-credit services at BIDV - the transaction center Branch 1.
Great effects on competitiveness and accounting for market share of the Exchange
1. Despite having 60 years of experience in the banking sector, strong financial
capacity and huge number of current customers, BIDV's non-credit services is still
not appreciated compared to Techcombank, Vietcombank and Tien Phong Bank.
Therefore, in order to increase competitiveness in the current context, it is very
urgent to improve the quality of non-credit services at BIDV – Sogiaodich1 Branch.
From the above reasons, the author chose the topic "Quality of non-credit
services in Sogiaodich I Branch of the Joint Stock Commercial Bank for Investment
and Development of Vietnam" for master thesis.
2. Research overview
There have been a number of studies on non-credit services and non-credit
service quality of commercial banks. In which, the author mentioned a number of
typical research as follows:

2


In recent years, Vietnamese commercial banks have made great efforts to

improve non-credit services, but these efforts have not yet achieved much.
Therefore, finding solutions to develop non-credit services is a strategic significance
for the bank's operations. This issue has received great attention from researchers,
and is divided into two main groups: one group focuses on macro strategies to
improve the general non-credit services of all banks in Vietnam while the other
group goes towards improving non-credit services in a particular bank.
About the first group which focus on the noncredit services in general of all
the commercial banks in Vietnam, in 2012, the author Dao Le Kieu Oanh and Pham
Oanh Thuy have published an article about the role of developing noncredit services
in Vietnamese commercial banks on Phat Trien va Hoi Nhap Magazine. In this
article, the authors emphasized on the role of noncredit services and how to develop
them in banks. They also improved that the noncredit services brought benefits not
only for the banks and the customers but all the society, from that they pushed up
economic development.
In 2013, in PHD thesis of developing noncredit services of commercial
banks in Vietnam, author Pham Anh Thuy wrote about some experiences in the
noncredit service development of foreign bank, through which the author composed
of eight key valuable lessons for commercial banks in Vietnam. The author also
assessed the current state of noncredit service development of Vietnamese
commercial banks by combining two research methods including qualitative and
quantitative methods. From the findings of the research, the thesis summarized the
strategy of developing banking noncredit services of Vietnamese commercial banks
by 2015 and the vision of 2020.
The most famous thesis about this issue belongs to PHD Thesis of Phan Thi
Linh: “Developing noncredit services of Stated-own commercial banks in Vietnam”
in 2015. The author provided definitions, characteristics, classification and role of
noncredit services in banks. From the theory as the secondary data collected from
four stated – own commercial banks, Phan Thi Linh identified the limitation for
noncredit services widening, the positive affect of noncredit services to the whole
3

business’ efficiency. The thesis was also focused on clarifying the factors affecting
the development of non-credit service of the commercial banks, including: The
internal and external factors. Firstly, through analysis and evaluation of secondary
source on investment cost of non-credit service in the period of 2000 -2015, the
author uses regression analysis using SPSS software to make regression function
representing the variation in investment cost of non-credit service of the banking
profit. The survey results show that if the annual investment cost in non-credit
service is at 30%, the bank will gain maximum profitability at 34%. Secondly,
through analysis and evaluation of secondary source and survey results from bank
staffs about the factors affecting the development of non-credit service such as bank
resources; Networks of distribution channels; Quality of Service; Customer policies;
Advertising and marketing activities,; Reputation and brand of the banks;
Management capacity; Goals and strategies of the development, these factors can
positively impact on the development of non-credit service.
Do Quang Tri (2018) with the article: “The trend of increasing the scale and
the proportion of income from non-credit services in the total income of commercial
banks in Vietnam” published in Banking Review No. 23/2018 researched and
analysed data in the financial statements of the end of the third quarter of 2018 on
income from service and income proportion of joint stock commercial banks on the
Vietnamese stock market, on that basis, made a number of comments and
recommendations.
The second group which focuses on noncredit service of a particular bank
also has received great concern from the researchers. Accordingly, Le Nguyen Anh
Dao (2013) has studied the development of the noncredit services at The Bank of
Foreign Trade of Vietnam, Da Nang branch. In the theorical basis, the author has
developed the evaluation criteria, so that the author can evaluate the development of
the noncredit situation at Vietcombank Da Nang from 2009 to 2011. In addition, the
author has conducted an actual survey on the noncredit services delivery at

Vietcombank Da Nang branch, which has provided an assessment of the
development of the quality of the provision of the service in recent years. Finally,
4


based on the development objectives of Vietcombank and actual situation of the
branch, he author has proposed solutions to develop noncredit services in the future.
Nguyen Thi Thanh Huyen (2013) with her master's thesis "Improving the
quality of non-credit services at Military Joint Stock Commercial Bank" of the
National Economics University. The thesis systematized the theoretical basis of
non-credit services and the quality of non-credit services of commercial banks. The
author used a set of Rater service quality assessment criteria and Serperf model to
evaluate service quality. On the basis of the systemized theory, the author has
deeply analyzed the current status of non-credit service quality at MB in the period
2008 - 2012 according to two contents: (i) Assessing the status of factors MB's noncredit service quality impacts include: Banking facilities; Human resources to
provide non-credit services; Organizational and management work; managing
transaction counters at MB; (ii) Assessment of service quality through customer
satisfaction survey results. On that basis, evaluate the results achieved, the
limitations and the reasons for the limitation. From there, proposing specific
solutions to improve the quality of non-credit services at MB.
Nhu Thuy Linh (2015) has a research “Solutions to improve the quality of
non-credit services at Vietnam Joint Stock Commercial Bank for Industry and Trade
- Hai Ba Trung Branch”. The research has codified the theoretical basis of the
quality of non-credit services of commercial banks. From studying the current
situation of the quality of non-credit services at Vietinbank - Hai Ba Trung branch
to draw out the advantages and limitations in non-credit services and find out the
causes of those aspects. From there, contribute to improving the quality of noncredit services, thereby attracting and expanding many types of customers. Optimal
response to the needs of the economy, contributing to consolidating the growth and
enhancing BIDV's reputation and position in the economy. Distributing risks for the
bank, bringing a stable source of income for the bank, increasing the bank's profit.

Based on the research results, the thesis proposes a number of solutions and
recommendations to improve the quality of non-credit services at Vietinbank - Hai
Ba Trung branch in the period 2016-2020.
5


Do Minh Thuy (2018) with the subject of his master's thesis "Improving the
quality of non-credit services at the Joint Stock Commercial Bank of Industry and
Trade of Vietnam - Luu Xa branch" of Thai Nguyen University. The thesis
systematized the theoretical basis of non-credit services and non-credit service
quality. On the basis of the built theory, the thesis goes into depth analysis of the
quality of non-credit services at Vietinbnak - Luu Xa branch through the following
contents: Non-credit service quality is assessed through evaluation criteria; Analysis
of factors affecting the quality of non-credit service at Vietinbank - Luu Xa branch.
On that basis, evaluate the achieved results, limitations and causes of limitations
and propose some solutions to improve the quality of non-credit services at Vietnam
Joint Stock Commercial Bank for Industry and Trade - spending Luu Xa branch.
Nguyen Hoang Tung (2019) with Master Thesis “Development of non-credit
services at Saigon Thuong Tin Commercial Joint Stock Bank, Quang Binh branch”
of Hue University of Economics. Research has systematized the theoretical basis of
the development of non-credit services at commercial banks. In depth analysis of
the development of non-credit services at Sacombank Joint Stock Commercial
Bank, Quang Binh branch in the 2016-2018 period through the following contents:
Analyze and assess the development of Treasury services; Analyze and evaluate the
current situation of the guarantee services development; Analyze and evaluate the
current status of the international payment service development; Analyze and
evaluate the current status of the domestic payment service development; Analyze
and assess the development of non-credit services; Analyze and evaluate other
service development status. At the same time, research and evaluate customer
satisfaction with the quality of non-credit service provision at Sacombank. Based on

the research results, the author has proposed a number of solutions to develop noncredit services at Saigon Thuong Tin Commercial Joint Stock Bank, Quang Binh
branch until 2025.
There have been many scientific research, articles as well as dissertations on
non-credit services with many diverse aspects and methods at different times.
Therefore, this thesis will research the quality of non-credit services at the Joint
6


Stock Commercial Bank for Investment and Development of Vietnam, Sogiaodich 1
Branch, is completely not the same with the previous aspects.
Service quality is an important area to academicians because of its relevancy
to service companies and therefore many researchers have tried to develop various
models to measure it, even though some claim it is hard to measure because of its
intangibility which is hard to quantify (Eshghi et al., 2008, p.121); (Douglas & Connor,
2003, p.171). This is why as services are intangible in nature, evaluating the customer’s
perception of quality can be done through the interaction with the personnel offering
services, (Magi & Julander, 1996, p.35). From their suggestion, interaction between
consumer and service provider is very important when measuring service quality
because through that interaction, the service provider could easily understand the
consumer better and identify what he/she exactly wants. Knowing the theory about
service quality, the author uses SERVQUAL MODEL (Parasuraman, 1988) to assess
the determinants of quality of bank noncredit services of BIDV Sogiaodich1 branch
then give solution to improve the service quality.
3. Aims of research
3.1 Objectives of the study
On the basis of analyzing the current status of non-credit service quality at
BIDV, Sogiaodich 1 Branch, the author proposes solutions to improve the quality of
non-credit services at BIDV – Sogiaodich 1 Branch in the period of 2020 - 2025.
3.2 Research mission
- Systemize the theoretical basis of the quality of non-credit services at

commercial banks.
- Analyze the current status of quality of non-credit service at BIDVSogiaodich1 Branch.
- Propose solutions to improve the quality of non-credit services at BIDV Sogiaodich1 Branch.
3.3. Research question
- What is the quality of non-credit service? Which model is used to measure
the quality of non-credit service?
7


- What is the reality of the quality of non-credit services at BIDV Sogiaodich1 Branch?
- In order to improve the quality of non-credit services at BIDV - what
solutions should the Branch of Transaction 1 take?
4. Objects of research
- Research object of the topic: quality of non-credit services at BIDV Sogiaodich1 Branch.
- Subjects of survey: customers using non-credit services at BIDV Sogiaodich1 Branch.
5. Scope of research
- Scope of study: Bank for Investment and Development of Vietnam
Sogiaodich 1 branch.
- Scope of time: Research and assess the current status of non-credit service
quality at BIDV – Sogiaodich1 Branch for the period of 2017 - 2019, solutions to
improve the quality of non-credit services for the period 2020 - 2025. Customer
survey is implemented from June 2019 to the end of December 2019.
6. Research methodology
6.1. Data collection methods
Collecting secondary data:
Secondary data is collected from the following sources:
- Financial statements of BIDV – Sogiaodich1 Branch from 2017 - 2019
- Summary report of BIDV – Sogiaodich1 Branch from 2017 - 2019
- Summary report on service development of BIDV – Sogiaodich1 Branch
from 2017 - 2019

- Internal reports of BIDV – Sogiaodich1 Branch
Secondary data is collected to analyze some main business results of the
Branch and the current status of non-credit services and quality of non-credit
services at BIDV – Sogiaodich1 Branch.
Collecting primary data:
Primary data was collected through the survey
8


- Objective: Customers using service at BIDV – Sogiaodich1 Branch in 2019.
- Survey content: Assessment of non-credit service quality by subjects such
as: Staff, utility; Reliability; Information; Counter services and general customer
satisfaction with non-credit services at BIDV – Sogiaodich1 Branch.
- The purpose of the survey: Analyze the real situation of non-credit service
quality; Analyzing the factors affecting the quality of non-credit services at BIDV –
Sogiaodich1 Branch.
- Sample size: The author conducts a survey of 250 customers using noncredit services at BIDV - Sogiaodich1 Branch in 2019.
- Sample selection method: The author uses a convenience sampling
selection method - conduct a survey of customers willing to answer all the questions
in the survey.
6.2. Analytical method
Descriptive statistics method
The author uses the descriptive statistical method to describe the non-credit
service business situation at BIDV - Sogiaodich1 Branch. Perform statistics to
describe the indicators such as the number of customers using, the number of
transactions, revenue, profit from non-credit services and descriptive statistics of
mean, standard deviation, maximum value, and minimum value of customer
reviews for the non-credit service of BIDV - Sogiaodich1 Branch.
Comparative method
In the research, the author uses the vertical and horizontal comparative

method. The author conducted a vertical comparison to see the development trend
of non-credit services over the years. Horizontal comparison to see the development
of non-credit service of BIDV - Sogiaodich1 Branch compared to other bank
branches in the same area.
Evaluate the reliability of the scale
The assessment of the reliability and value of the scale is done by Cronbach
alpha reliability coefficient and exploratory factor analysis (EFA) through SPSS

9


20.0 processing software to screen and remove observe variables that does not meet
the reliability standard.
Exploratory Factor Analysis EFA
Exploratory Factor Analysis (EFA) criteria included:
+ The Bartlett standard and the KMO coefficient are used to evaluate the
suitability of EFA. Accordingly, the Ho hypothesis (variables that are not correlated
in the population) are rejected and therefore EFA is considered appropriate when:
0.5 ≤ KMO ≤ 1 and Sig <0.05 (Hoang Trong and Chu Nguyen Mong Ngoc, 2008).
- The factor extraction criteria include the Engenvalue index (which
represents the amount of variation explained by the factors) and the Cumulative
index (the sum of the variance extracted shows how many % and % of the factor
analysis can explain the factor is lost). In which, Engenvalue> 1 and accepted when
the total variance extracted ≥ 50%.
- Factor loadings criteria denote single correlations between variables and
factors, which are used to evaluate significance of EFA. According to Hair and
CTG, Factor loading> 0.3 is considered the minimum; Factor loading> 0.4 is
considered important; Factor loading> 0.5 is considered of practical significance. In
addition, the case of variables with Factor loading is extracted to different factors
whose weight difference is very small (researchers usually do not accept <0.3), that

is, it does not make a difference to represent a factor, then that variable is also
eliminated and the remaining variables will be grouped into the corresponding
factor extracted on the sample martrix (Pattern Matrix).
Multiple linear regression analysis
The linear regression analysis is done through steps:
Step 1: Check the correlation between the independent variables with each
other and with the dependent variable through the correlation coefficient matrix.
Step 2: Building and testing regression models
- Selection of variables included in the regression model.
- Evaluate the suitability of the model by the coefficient R squared.
However, R square will increase if there are many independent variables. So,

10


Adjusted R Square will not replace R square in evaluating the suitability of the
multiple regression model
- Verify the suitability of the model to choose the optimal model using
ANOVA analysis method to test the R-squared hypothesis
- Determine the coefficients of the regression equation
Step 3: Check for violation of regression assumptions
The regression model is considered appropriate for the total research when it
does not violate assumptions. Therefore, after building a regression equation, the
following necessary assumptions must be checked:
- There are linear relationships between the independent variables and the
dependent variable.
- The remaining of the dependent variable has a normal distribution
- The variance of the error is constant
- No correlation between residues (independence of the errors)
- No correlation between independent variables (no multicollinearity

phenomenon).
7. Thesis structure
Apart from the introduction, conclusion, list of abbreviations, table of content, list
of table, list of figures, the main thesis contains three main chapters as follow:
Chapter 1: Basic Theory on quality of noncredit service of commercial bank.
Chapter 2: Assessing the current quality of noncredit service at BIDV –
Soogiaodich1 Branch.
Chapter 3: Solutions to enhance the quality of noncredit services at BIDV
Sogiaodich1 Branch.

11


CHAPTER 1: BASIC THEORY ON QUALITY OF NONCREDIT SERVICE
OF COMMERCIAL BANK

1.1. An overview of the commercial bank's non-credit services
1.1.1. The definition and characteristics of the non-credit service of commercial banks
1.1.1.1. Definition
- Banking service definition
In the world, banking services are understood in a broad sense, including all
monetary activities, credit, payment, foreign exchange ... of the Bank with
individuals and organizations.
According to the National Assembly (2010), “Banking operations are money
trading and banking services with the regular content of receiving deposits and using this
money for the purpose of providing credit and providing payment services”
According to the Law on State Bank No. 46/2010/QH12 issued June 16,
2010 (Clause 1, Article 6) stipulates that “Banking operation is the regular provision
of one of the following operations: (a) take the deposit; (b) Credit extension; (c)
Providing payment services via account ”.

Thus in Vietnam, the definition of banking services have not been official
yet. There are many opinions that all operations of commercial banks (monetary
operations, credit, foreign exchange ...) are called banking services. This point of
view is formed from the world, when banking services are understood in a broad
sense, include monetary activities, credit, foreign exchange, payment ... of
individuals and organizations.
- Definition of non-credit service concept of commercial banks
Similar to parallel views on services, non-credit services of banks also have
many different expressions.
According to Barron Educational Publisher's dictionary, 5th edition of
Thomas P. Fitch defines non-credit services: Non-credit banking services are
banking services base on fee which is not related to credit extensions that the bank
offers to correspondent banks or corporate customers. Income from non-credit
12


services can be a significant source of income for banks and financial institutions.
Examples of non-credit services include trust and revenues related to investments,
global cash management, and foreign currency exchanges.
According to the project “Survey and evaluate non-credit banking services in
Vietnam” of Deloitte Touche Tohmatsu organization, the documents presented
clearly that non-credit service is any service or product provided by financial
intermediaries in the market that are not credit services. Non-credit service is a
service provided by a bank to a customer in order to bring a bank a certain income
directly or indirectly without including credit service to meet customers' needs.
Thus, non-credit services are all banking services excluding credit services, it
also has full features of banking services. The main difference between credit
services and non-credit services is that when performing non-credit services, banks
do not collect interest but collect fees from the services. In order to simplify the
understanding, it is possible to rely on two basic features of non-credit services to

distinguish from credit services:
Firstly, non-credit services do not require customers to use capital in
transactions.
Secondly, the non-credit service is only provided when the customer pays a
fee to the bank. This fee is determined by the bank, or depends on the service
agreement. At this point, the bank's income is come from fees instead of interests.
However, in the process of service provision, non-credit services may arise
concurrently with the operation of credit services (mobilizing capital and providing
capital) of commercial banks to meet the demand of deposits and loans from
customers. Besides, there are many other non-credit services that operate
independently from credit activities.
In general, the author's opinion on non-credit services is as follows: “Noncredit service is a service provided by a bank to customers to meet the financial and
monetary needs of customers as well as directly or indirectly bring to the bank an
income equal to specified fees collected from customers, excluding credit services”

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1.1.1.2. Characteristics
Service activities have many different characteristics in comparision with
ordinary physical products such as intangibility, indissolubility, instability and
difficulty to determine, two-way information flow or diversity and constantly
evolving. Non-credit services of banks are also a high-level service activity, with
more and more unique characteristics. With its own characteristics, the non-credit
services can be easily distinguished from other services:
- Firstly, the non-credit service activity is a fee-based activity.
Unlike interest-collecting credit operations, non-credit services are
characterized by fees collected from customers during service provision. Fee
collected by agreement between the service provider and the user corresponding to
each type of service.

- Secondly, non-credit services are not monopoly.
Creating a new banking product requires a complicated, costly research
process. However, products created on the market are usually not long-life due to
the changing of customers’s need. Besides, banking products and services are
created that are easy to imitate and have no monopoly, so copying products from
each other is inevitable. Meanwhile, there is no way to catabolize products and
services between providers. This requires forced competition among institutions
through quality of service, image competition and even price competition. Service
quality is considered the core of the product.
- Thirdly, non-credit services in particular as well as other financial services
in general require integration on a high-tech platform.
Technology is considered as the premise for the diversified development of
banking services. There are many types of non-credit services born and developed with
the help of information technology. Customers do not need to go to the bank but can sit
at home to perform transactions through modern transaction channels such as: EBanking, Home Banking ... Thus, the requirement of technology usage set up is not only
in the Bank but also to the bank's customers. The bank's non-credit products and services
have been replicated through normal distribution channels.
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- Fourth, the ability to combine non-credit banking services with many other
financial services thanks to synchronous development.
This is an important feature that helps banks to diversify their products. The
bank's non-credit services are closely linked and highly supportive. The existence
and development of this service is associated with other services. Therefore, the
bank's non-credit services require synchronous development in order to diversify
types of supply. Thanks to the development of this integrated contract, the noncredit service can integrate many different features and design to suit different
needs and income characteristics of customer. The ability to offer highly compatible
products for each customer creates the maximum satisfaction of each consumer.
1.1.2. The major non-credit services of commercial banks

1.1.2.1. Card service
Card service is a modern banking service aimed at individual customers.
Banks are constantly adding new features to the cards, such as ATM has been
upgraded to debitit cards, connecting directly to customers’ deposit accounts.
Customers can overdraw the balance on their account after signing the limit contract
with the bank. Cardholders not only use for traditional services, but can gradually
use this card to pay electricity, water, telephone, internet bills and meet the needs of
shopping, even using payment for services and goods and no interest is charged in a
certain period of time. In addition, banks also issue international card payment
agents such as Visa, Mastercard.
- Domestic cards: are cards issued by domestic banks and used by customers
to pay for goods-service transactions, deposit or withdraw cash at ATM. Despite
issuing a debit card, many banks also provide an overdraft limit to create
convenience and diversify benefits for customers using the service.
- International payment card: is a card that can be circulated around the
world, is considered as a modern way of payment without using cash to minimize
the risk in the process of using cash. Typical international cards are being circulated
at most banks such as Visa; JCB; or MasterCard.

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1.1.2.2. E-banking services
This is the combination of banking services with utilities in the information
technology field to create modern, diverse transaction. The bank providing banking
services through supporting tools such as Internet services, telephones, computers,
network services and transmission lines that customers can transact anytime,
without directly coming to the bank. The bank is required to provide the customer
with username and access code, and the customer is responsible for protecting the
name and access code provided by the bank.

- Internet banking: is a service through the internet connection that can
provide information about banking products and services automatically. After
accessing the bank's website at any place or at any time, customers can be provided
with necessary information and instructions to conduct transactions with just a
personal computer.
This service helps customers to control the operation or fluctuation of
accounts and make transfers on the network. To participate in transactions,
customers access the bank's website, then query for necessary information or
perform financial transactions on demand. Customers can also make purchases at
many different websites after accessing and making payment. All transaction
information of customers is provided in detail and program information is
applicable to customers of the bank. However, the biggest limitation of banks in
Vietnam at the moment is the security of transactions in order to respond effectively
to major risks threatening not only domestic but also international. Because the
more modern the technology, the higher the risk, the banks need to focus on
investing in security systems.
- Homebanking: is considered as a service to help customers perform most
bank transfers and payments while staying at home or at the company through the
network and specialized application that the bank has installed for the customer.
With home banking, through the bank's own intranet system, customers can make
transactions with the bank. Thanks to Homebanking, customers can perform many
different types of transactions such as transaction statistics, exchange rate access,
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interest rate access,.... Thus, to be able to use this service, customers only need a
computer connected phone line. Therefore, the customer's phone number must be
registered and absolutely can only be used to perform services with the bank.
- Phone banking: is the 24/24 answering system of commercial banks.
Customers use their phones to listen to information about products, banking

services, and account information. When the customer presses the necessary keys
on the mobile phone according to the code specified by the Bank, the system will
answer itself according to the customer's request. Only information that has been
pre-programmed in a bank's information system is answerwed automatically.
Therefore, various information related to financial markets such as exchange rate
information, securities, interest rates or information related to individual customers
such as transactions with accounts, notices to customers are predefined
automatically. If the customer requests to send faxes, automatic SMS of information
needed in the supply list, they can be easily responded by the system. Moreover,
through phone banking, thanks to the development of technology, customers not
only are provided with information of the end of the previous day but also receive
updated information immediately.
- Mobile banking: is one of the growing services of commercial banks which
are implemented through mobile phones. Via a customer's message with a
predetermined syntax sent to the Bank's service phone number, the customer will be
sent a reply by the Bank to satisfy the request. There are many transaction requests
that can be met through command syntax such as personal account information,
transactions to pay bills, or more complex actions such as delivery transaction on
stock market or gold. A transaction via mobile banking with a very large frequency
of implementation is internal or even interbank transfer.
For transactions which are automatically set up or have small payment
transaction value, mobile banking appears to be seen as an effective problem
solving solution. Customers register to join official membership through their
mobile number, personal payment account number used to make transactions.
Service provider provides customers with an identification number (ID), which is
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