Luận văn Marketing mix solutions to develop Agribank cards at Vietnam Bank for Agriculture and Rural Development – Thanh Xuan branch

the merchant (2), (3) - The merchant, in effect, sells the transaction to the acquire and is reimbursed the amount of the sales ticket by the acquirer (4) - The acquirer then summits the ticket to the issuer for payment, via the ICO interchange and settlement system. (5) - The issuer bills the cardholder (6) - Finally, the cardholder repays the issuer for the goods or services originally purchased from the merchant. ICO are at the centre of the transaction process, maintaining the flow of funds and information between issuing and acquiring members. The exchange of financial information is called clearing. The exchange of the actual funds for the transaction and the fees associated with them is called settlement. The term used to refer to the clearing and settlement system as a whole is interchange. CHAPTER II. THE ROLE OF MARKETING ACTIVITIES TO BANKCARD AND ACTUAL STATE OF AGRIBANK CARDS 2.1. Introduction of Vietnam Bank for Agriculture and Rural Development (Agribank) - Thanh Xuan branch 2.1.1. Foundation and development of Agribank Thanh Xuan In 2007, Vietnam Bank for Agriculture Development - Thanh Xuan branch was founded under Decision No 1292/QĐ/HĐQT/TCCB dated November 29th, 2007 by the Board of Directors of Agribank with the primary staff of 36 people. Located in 90 Lang Street, Thanh Xuan District, a vast residential area with many convenient economic conditions, Agribank Thanh Xuan has many advantages to do business effectively. Thanh Xuan branch operates its business mainly on Thanh Xuan District and other Districts in Hanoi. Being in the strategy of organization network development of Agribank, Agribank Thanh Xuan has played an important part in improvimg business performance of Agribank, as well as contributed to shift economic structure, promoted the further economic-social development of Thanh Xuan District in a comprehensive and sustainable way. Since its establishment, Agribank Thanh Xuan has continuously extended trading networks, diversified items of business, currency, and credit, promoted capital sources. The branch is also focusing on improving the qualification of staff both in professional knowledge, skills and foreign languages. Thanh Xuan branch concerns not only stabilizing and expanding the network but also the living conditions of employees. Facilities are modernized, especially information technology, to serve the business better. From its establishment, the branch always makes profits, the revenue is higher year after year, contributing to the State budgets increasingly, creating credibility with customers. Figure 5 – Education of staff Source: Administration Department of Agribank Thanh Xuan The pie chart shows the education degree of staff in the branch. Staff and employees in the branch have high education degree - 86% of bachelor, major in economics, banking or financial field. With the workforce have high education degree; it is one of the most important advantages to build a strong and sustainable branch. Continuously developed and widened, the staff and employees in the branch have raised to 72 people at the present time. 2.1.2. Organization structure Through years of operation, Agribank Thanh Xuan has developed widely, at the present time it has a business network of five dealing rooms. They are: Thirty two (32), thirty three (33), thirty four (34), forty six (46) and Cat Linh dealing room.. Agribank Thanh Xuan is organized under the model of a supervisor Board of Management including a General Director and two Deputy Directors. Organization structure of Agribank Thanh Xuan is divided into functional blocks as follows: Figure 6 - Organization Chart Services & Marketing Department Administration Department Cát Linh Deputy Director D 46 34 33 32 General Director Internal Supervision Deputy Director Plan & Business Department Accounting & Treasury Department Dealing Rooms Source: Administration Department of Agribank Thanh Xuan 2.1.3. Products and services Agribank has been made an effort in developing traditional services as well as other modern and valued added services. This has enabled Agribank to diversify its own products suitable to each segment of customers. At the present time, Agribank becomes the leading bank in developing products: Mobile banking, SMS banking, VNTop up, SMS remittance (A transfer service), etc. To Agribank Thanh Xuan, inherited reputation and successes of Agribank, the branch has its decisions, policies to precede those successes. Agribank Thanh Xuan posts in the account dependently, has its own seals, organizes and operates under Regulation on organization and operation of Agribank. Agribank Thanh Xuan provides products and services which serve: - Personal customers: They are individual, households join transactions in the branch. The branch provide these customers: Individual account, loans, savings and investment, remittance, Agribank card, foreign exchange - Corporate customers: They are target customers of the branch. Money flows often in a great number. They are organizations, corporate… Services and products include: guarantee service, international payment, account, lending, check services, valuable notes, payment, border payment, saving deposit, leasing, foreign exchange, factoring - Financial institutions: Agribank hope to “provide various services in order to satisfy customers coming from financial institution sectors”. These services are: retail banking, foreign exchange, treasuring, financial trading, project based lending. 2.2. Marketing activities at Agribank Thanh Xuan 2.2.1. Organization of Services and Marketing Department Figure 7 - Services and Marketing Department Head of Department International Payment Section Card Section Source: Administration Department Services and Marketing Department has 6 staff with separate tasks and roles in their own working field: - Head of Department: is directly responsible for the work and plans of department to the Director, makes plans and assigns tasks to the staff to complete objects of Department and the branch. - Marketing staff: 4 employees are in charge of Card section and 1 staff is responsible for International payment Section. Establishment of Marketing Department helps the branch to carry out marketing activities more professionally, exactly and effectively. It is not like many other branches which do not have a marketing department. Instead of that marketing activities are carried out under Business Department or hired expertise from outside. At Agribank Thanh Xuan, the Department is specialized in marketing operation. This establishment is also a success of the branch. 2.2.2. Current marketing activities The most important function of the department is to research and then bring banking services of the branch to more and more customers. Services and Marketing Department provides banking services to customers: remittance, opening new banking account, foreign exchange, mobile banking, factoring, international payment…. + Card Section: introduce and issue card, develop existing cards and research, create new types of cards + Marketing: Marketing role is to carry out strategies, advertise programmes… to promote the image of Agribank as well as the branch, new products and services, promotion activities…to public. + International payment Section: the section realizes operations related to international transactions: foreign exchange, factoring, international payment by SWIFT… The work-force of the department is all young, creative, skillful and enthusiastic. This is the advantage for the department to develop business. The department has not been established for a long time; however, it gains certain success: Table 1 - Total profit of services (VND million) Operation October November December Accumulation of 12 months 1 Guarantee 119.5 208 290.2 3,465 2 Payment services 192 213.4 280.4 2,376.9 Total 311.5 421.4 570.6 5,841.9 Source: Report on performance of Services and Marketing Department in the 4th quarter, 2009 The table shows the total profit from operation of services in Services and Marketing Department in three month and accumulation of 12 months. Figures are given in VND million. As can be seen in the table, the total profit of services had steadily increased in all period. In particular, the total profit of November and December went up sharply, at 35.3% and 35.4% respectively, contributed directly to big accumulation of 12 months. The growth of total profit showed that the Department has continuously made an effort to diversify the variety of services to meet and satisfy better customers’ needs and demands. 2.2.3. The role of marketing to Agribank cards. Tasks of Marketing Department were ruled in Decision No 107/QĐ/NHNo – HCNS dated August 25th, 2009 by the Director of the branch. The decision ruled some major tasks of Services and Marketing Department as follow: - Doing transactions with customers, marketing and introducing banking products and services; receiving feedback from customers about services, give ideas, guides to improve services in order to best serve customers. - Giving opinions plans to the Director of branch about: policies to develop new banking products and services, to improve procedure’s transactions, to build marketing plans, to enhance promotion, advertisements, etc. - Serving activities related to marketing, promotion, press, medium…, activities related to marketing, promotion of organization of Party, Union, or Youth Union at the branch. - Carrying out marketing activities at the branch, as well as local area - Directly handling international payments, foreign exchange, remittance, etc. - Managing, controlling issuing and acquiring card operation at the branch followed rules of Agribank - Directly organizing, developing card business of the branch in the working area followed the rules of Agribank Marketing plays an important role in developing modern banking activities in general and in card services in particular. In general, marketing activities, promotion new products and services have been increasingly concerned and invested. - Card products and services of Agribank have been advertised in media channels: television, radio, newspapers, banners in buses, left leaves, etc. - 24/24 supporting customer services on telephone from Card centre - Service of Finding ATM/EDC by website, SMS. (Service of finding ATM/EDC by SMS has applied by all most mobile network: Viettel, MobiFone, Vinaphone, EVN, VietnamMobile) - In addition, to be sponsor of some programmes on television, game shows, and charity activities...plays a significant role in advertising trademark of Agribank, helps the branch reach more and more customers. 2.3. Bankcard activities in the branch 2.3.1. Introduction of Agibank cards Agribank joined the bankcard market since 2003, after six years, its card service now has reached all 63 cities and provinces with about 4,000 ATM/POS nationwide in the 2nd quarter of 2009. In July, 2009, more than 26,200 institutions, corporate and organizations applied Agribank cards to pay salary for employees, with the people received salary were nearly 1.32 million people that was increased over twice compared with the first half of 2008. Joining card market later than many other commercial banks, however, Agibank has taken advantage of learning entrepreneur’s lessons. So card products and services of the bank have been improved disadvantages of other cards and also added value on its own. In order to better and better satisfy customers’ card payment demand, at the same time bring about ultimate convenience to customers, Agribank has continuously modernized its technology as well as diversified services and products supplied. Agribank is one of the biggest commercial banks in Vietnam which has been connected to Visa and Banknet. All the card products which labeled Visa and Banknet logo will be accepted for payment at any ATM/POS bearing logo of Agribank, Visa and Banknet in both domestic and overseas. Connecting to Visa, Banknet is the perforce development step of Agribank in the process of integration to enhance Agribank competitiveness and its position in Vietnam bankcard market At the present time, Agribank Thanh Xuan provides following types of cards: Figure 8 - Types of Agribank Card Types Local Card Classic Gold Platinum International Debit Card International Card International Credit Card Card Grade Source: Marketing Department of Agribank Thanh Xuan - Local Debit Card: - Success Debit card which is issued by Agribank, allows cardholders to use the card within demand deposit account balance and/or overdraft for payments of merchandises or services or for cash withdrawal/advance and other services at ATM/EDC and other cash disbursement points in domestic area. - International Card: + International Debit Card: means debit card bearing Visa/MasterCard trademarks issued by Agribank, allowing cardholders to use the card within demand deposit account balance and/or overdraft for payments of merchandises or services or for cash withdrawal/advance and other services at ATM/EDC and other cash disbursement points all over the world + International Credit Card: means credit card bearing Visa/MasterCard trademarks issued by Agribank, allowing cardholders to use the card within granted credit limit for payments of merchandises or services or cash advance and other services at ATM/EDC and other cash disbursement points all over the world 2.3.2. Actual state of Agribank card in the branch 2.3.2.1. Some results of development Agribank card The Board of Directors has made plans, decisions and increasingly invested into card operation. In addition, all staff have made an effort to develop card business so through the time card operation has gained breakthrough and outstanding achievement, such as success in connecting to international payments of Visa, MasterCard, connection to Smartlink card system, issuing international Visa, MasterCard, and related devices and application, etc. Its speed of card growth has always been higher than average speed of card growth in the card market of Vietnam. Especially, in 2009, the rate of Agribank card growth was 3 times higher than the common one of Vietnam card market. At the present time, Agribank issues over 4.2 million cards, ranks the 2nd in the card market. Besides developing quantity of cards, Agribank always concerns to enhance quality of products and services, ensure customers’ security. Except for HSBC, Agribank was the only commercial bank in Vietnam which invested and carried out measures to prevent copying cardholders’ information at 100% ATM. In the recent years, Agribank took special notice of investing modern devices, upgrading network system, and standardization procedure of operation to develop card business. Agribank has proceeded many plans and investment: buys two issuing systems which are the most modern in Vietnam, can produce 1,500 cards per hour; invests ATM, EDC/POS system at more than 2,300 branches, dealing rooms nationwide,etc. Agribank is also regarded by Banknet and international card organization as the bank handles customers’ complaint quickly and in time. These achievements have played an important role in affirming Agribank card’s position in Vietnam market. To the branch, the time of operation is quite short; however, card business still has certain successes. * Issuing operation: Table 2 - Result of issuing cards Unit: card/VND million Types of card Quantity Profit Balance Collected Service fee 1 Local Debit Card 2,763 6,452 1,425 145 2 International Card 46 505 2.7 2.1 Debit Card 29 310 2.2 Credit Card 17 195 402 3 Total 2,819 6,957 147.7 Source: 2009 Income statement of branch - Local Debit Card: Total cards issued were 2,819 cards, went up 52.8% (1,892 cards) compared with December 31st, 2008. Average rate of issuing card was 230 cards per month, profit of transactions was nearly VND 7 billion, and balance of call deposit account was VND 1,425 million. Collected service fee of the last quarter of the year was zero because of free issuing card in this period. However, accumulate of 12 months was VND 147.7 million, still increased 44.4% (VND 102.3 million) compared with December 31st, 2008. - International Visa, MasterCard In September, 2008, Agribank issued international Visa Card widely, issued two new card products: Agribank Visa Debit – Success and Agribank Visa Credit – Golden Key. As a result, cardholders can use cards for payments of merchandises or services at over 20,000 cash disbursement points and other services at 4,800 ATM labeled Visa in domestic area, for cash withdrawal/advance and other services at 25 million cash disbursement points and one million ATM/EDCs in more than 150 countries all over the world. In February, 2009, the bank began issuing some products of international MasterCard. These were events which marked outstanding milestone of the bank in diversifying products and services of cards in order to enhance Agribank’s prestige and its trademark in Vietnam market. Furthermore, association with Agriculture Bank Insurance Joint – Stock Corporation (ABIC), the bank provides insurance services for cardholders of international card. This service adds more value for customers. The rate of issuing international cards also increased 53.3%, 46 international cards (compared with 30 cards in December 31st, 2008) In addition, the branch also has taken notice of developing existing services, products and related applications in order to best serve customers. All networks of Agribank carry out printing PIN in Card Centre. This was the result of applying technology in banking card operation. In the past, printing PIN for card was carried out solely in each branch so PIN code was not secured. At the present time, all PIN codes of cards are printed at Card Center with specialized material and high secure. This shows profession of providing card products and services. * Acquiring cards Besides issuing card, acquiring card operation plays an important part in success of card business of the bank. Agribank has advantage of network nation-wide, so acquiring operation has been developed, gained good result and brought significant profit to the bank. Table 3 - Devices of acquiring card of Agribank Devices Quantity Profit 1 ATM 1,202 27,912,561 2 Total EDC include: - EDC at Counters - EDC at Cash disbursement points 1,868 1,664 204 57,783 57,102 681 Source: Report on result of 2009 card products and services At the present time, Agribank has 1702 ATM (2nd quarter of 2009 Agribank added more 500 ATM) and that is 20% market share and the highest quantity of ATM in Vietnam market. The bank also expends thousands of EDC/POS at counters and cash disbursement points. The bank has 1981 EDC/POS. In order to use ATM, EDC/POS effectively, Agribank extends payment acceptance to 18 commercial banks in Vietnam, and Agribank is now the only bank which accepts payment by China Union Pay card on Banknet at 100% ATM. Diagram - Quantity of ATM, EDC Source: Report on result of 2009 card products and services The graph shows the quantity of ATM, EDC changing over the period of four years. In 2007, the quantity of EDC is lesser than ATM, however, it then increased dramatically and followings of 3 years, EDC has passed ATM in quantity. At the branch and in each dealing room all have its own ATM. 2.3.2.2. Existing problems and difficulties. Besides successes achieved, card products and services also had drawbacks. Firstly, research target market was inefficient. Researching market and finding out who is the potential customer play a strategic role in developing card products and services. Whether the branch should develop a new product or service, add value for customers, set a fee or price policy… all depend on the findings of target market study. Various methods of market research are used to find out information about markets, target markets and their needs, competitors, market trends, customer satisfaction with products and services, etc. Businesses can learn a great deal about customers, their needs, how to meet those needs and how the business is doing to meet those needs. Businesses do not need to be experts at methods of research either. However, researching, collecting, and studying information of card services have not synchronized and collection activities have not carried out frequently. Market research has just studied mainly at card centre by collecting information on websites, The State Bank of Vietnam, banking card association, press…As a result, at branches, researching market for card products and services coped with many difficulties. Secondly, it is drawbacks of functions, utilities and quality of services. Although total quantity of issued cards was quite high and continuously increased, quality of card products and services has limitation. At the present time, domestic card is mainly used to withdraw cash at ATM; transactions for payments at EDC/POS are very few. About the quality of services, errors in network, suspension service still occurred. These errors affect negatively to prestige, trademark of Agribank as well as branch. Thirdly, the price and customer policy were still not flexible. The branch follows the rules of Agibank. The bank has not had its specific strategy and programme to calculate exactly fee for each type of card products and services. Therefore, defining fee of services did not evaluate exactly core, effectiveness and quality of services and products. Defining fee of services now still bases on the fee of other commercial banks in the market. Fourthly, marketing activities were not inadequate. Advertisement, promotion activities for products and services in general, and for card ones in particular have not done methodically in a long-term plan. There were not many marketing activities and effectiveness of them was still not high. Advertising leaflets, panels, images… were not diversified, distinct and have not attracted customers well. In addition, current network of card products and services of the bank distributed basically at counters of branch. Whereas some commercial banks began distributing their products and services by modern ways such as on Internet, by issuing agencies, in restaurants, and in shops, etc Last but not least, that is the degree of comprehension, knowledge, degree, and many skills of marketing staff. Average age of marketing staff is quite young; this is a strong point of work-force. On the other hand, it also has disadvantage. Marketing staff is young; the branch was established for short time so sometimes operation lacks professional skills. So as to develop card operations of the branch, affirm a worth position and importance in the overall operation of a modern commercial bank in the 21st century, all above problems and difficulties must be addressed and overcome by Agribank Thanh Xuan as well as Agribank. CHAPTER III. SOLUTIONS TO DEVELOP AGRIBANK CARDS AT AGRIBANK THANH XUAN 3.1. Advantages and disadvantages in developing bankcards 3.1.1. Advantages Vietnam has big population and average per capita income increasingly go up. This is a potential market for banks in providing modern products and services. Non – cash payment scheme, period 2006 – 2010 and orientation to 2020 were approved by the Prime Minister. The Government, The State Bank of Vietnam published some legal documents related; this is the legal foundation for banks to operate their card products and services. These services directly contribute to proceed non – cash payment scheme in the society. According to statistics of The State Bank of Vietnam, up to the 1st quarter of 2010, non – cash payment made up 85% of total banking payments (in 2007 – 83%) Modern science and technology are key factors in developing new types of cards, products and services related. Bankcards gradually become a popular payment method in societies with more than 22 million cards of 47 organizations which provide payment services (in June, 2009, 17 million cards, 41 organizations), debit card make up 96.76%, credit card 1.59% and others 1.65% of total cards. Statistics of The State Bank of Vietnam also shows that facilities served card operation are continued being improved, upgraded with 9,000 ATM, and more than 35,000 EDC/POS (In June, 2009, 8,800 ATM, 28,300 EDC/POS) All organizations which provide payment services have made an effort in giving customers new products and services with more utilities, safety and effectiveness. 3.1.2. Disadvantages Nowadays, card business is a keen competition, especially at big cities where economy develops, urbanization speed is fast and many commercial banks