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

ost of us are familiar with today. Diner’s Club, Inc. introduced the first credit card that could be used at a variety of stores and businesses. Advantages of this card immediately took notice of many people. In 1960, Bank of American introduced its own bankcard, the BankAmericard. In 1966, fourteen United States banks formed Interbank, a new association with the ability to exchange information on credit card transactions. The following year, 1967, four California banks changed their named from the California Bankcard Association to the Western States Bankcard Association (WSBA). The new WSBA licensed Interbank to use the MasterCharge name and logo. In the late 1960s, numerous financial institutions became MasterCharge (Interbank) members to compete with BankAmericard. Eventually, financial institutions interested in issuing cards in the U.S. became members of either BankAmericard or MasterCharge. In 1977, BankAmericard became Visa USA/ Visa International. In 1979, MasterCharge changed its name to MasterCard to reflect its expanded services. At the present time, the leaders in the bankcard systems are Visa, Master Card, Amex and JCB. Payment by bankcard quickly becomes popularity in other countries. In 1960, the first plastic card was used in Japan marked the beginning of bankcard in Asia. The first plastic card of Barcaly Bank issued in 1966 also highlighted a new period of development of bankcard in Europe. In Vietnam, the first card was accepted in 1990. It was the starting point for card’s products and services in Vietnam. Nowadays, bankcard presents all over the world in diversified forms to meet every demand of cardholders. Banks and financial institutions always try to improve bankcard to reach a friendly and convenient payment method for customers. 1.1.2. Concept and classification Everyday millions of people all around the globe are using bankcards for making credit card payments for their purchases. However, the fact that not every cardholders know concept of a bankcard * Concept: In simple terms: A bankcard can be described as a plastic card issued by a bank or a financial institution which the cardholder can gain access to the financial resources of the bank as a line of credit. * Classification: There are many types of cards that can be used as alternative forms of payment. Financial institutions issue some and bank issues others. Many allow the balance to be paid in full each month. Some take the payment directly from the cardholder’s bank account while others require that the cardholder send payment to the issuer. Herein, I list some popular ways to divide bankcards. Figure 1 - Types of bankcards Debit card Payment method Area of Using card International card Technical Feature Issuer Credit card Magnetic stripe card Smart card Bankcards Travel and Entertainment cards Domestic card Cash card Cards * Payment method: - Debit card: A plastic card used to initiate a debit transaction. In general, these transactions are used primarily to purchase goods and services and to obtain cash, for which the cardholder's asset account is debited by the issuer Debit card consist of two basic types: + On-line debit card: An online-debit card deducts funds from the bank account immediately, as soon as the card is used. There is no delay for processing the transaction + Off-line debit card: An off-line debit card does not deduct funds from the checking account immediately. Transactions are processed like a regular credit card and the funds are not deducted for 24-72 hours. Most issuers of debit cards are moving to this type of card rather than on-line debit card - Credit card: A plastic card bearing an account number assigned to a cardholder with a credit limit that can be used to purchase goods and services and to obtain cash disbursements on credit, for which a cardholder is subsequently billed by an issuer for repayment of the credit extended at once or on an installment basis  - Cash card: Cash cards are similar to pre-paid phone cards. The card is worth a certain amount of cash and the retailer must use a special cash card reader to debit the card. Each purchase is deducted from the value left on the card until the pre-paid amount is spent. These cards are just like cash – if lost or stolen, there is no way to retrieve the money on the card. * Technical feature: - Magnetic stripe card: The magnetic stripe on the bankcard plastic was encoded; this stripe contains information pertinent to the cardholder account - Smart card: The smart card, also known as the chip card, contains a computer chip embedded in the plastic. When read by a special terminal designed to interact with the embedded chip, the card can perform a number of functions or access data stored in the chip. These cards can be used as cash cards or as credit cards with a preset credit limit. * Issuer: - Bankcards: Banks, financial institutions around the world distribute cards. A cardholder borrows money against a credit line and repays those funds with interest if the balance is carried over from month to month. These cards are used all around the world, such as: Visa USA, MasterCard… - Travel and entertainment cards: travel and entertainment corporations distribute their own cards so they are not considered bankcards since they are not issued by a financial institution. These cards are widely used by business for their travel and entertainment expenses, such as American Express (AMEX), Dinners Club… * Area of using card: - Domestic card: Card is used in domestic only with legal tender of that nation. - International card: Card is used around the world, used strong currencies in transactions. 1.2. Cards’ activities in commercial banks 1.2.1. Entities join card activities Figure 2 - Participants in bankcard transactions The issuing members International card organization The acquiring members Merchant Cardholders The figure shows 5 entities joining a bankcard transaction. * International card organizations: (ICO) For example MasterCard or Visa International/Visa USA, they are worldwide payment service organization composed of member institutions. They set and enforce rules and regulations governing operational procedures, interchange procedures, and graphic design approval of their cards… These organizations do not have a direct relationship with cardholders and merchants. Any bank has international card must be a member of an ICO * The issuing members: The cardholder’s financial institution (usually called the issuing member or issuer) is a licensed member of an ICO. The issuer directly issues the card to the approved cardholder. The issuer may also benefit from services of a third party processor and/or association in processing information and payments. * The acquiring members: The acquiring members, or acquirer, solicits screens and accepts merchants into its bankcard program. The acquirer is also a member of an ICO, and holds a written agreement with the merchant to: - accept the merchant sales drafts - provide the merchant with credit card authorization terminals, instructions, and contracted support services - handle and process the credit card transactions The acquirer usually charges the merchant a merchant discount for handling the transactions. The acquirer is licensed by an ICO agrees to follow the operating rules and regulations of the two associations. In fact, many banks and financial institutions are both issuers and acquirers. As issuers, they maintain the cardholder relationship. As acquirers, they maintain the merchant relationship. * Cardholders: The customer to whom a card has been issued or the individual authorized to use the card .  The cardholder uses the bankcard either to purchase goods and services from a merchant, or to obtain a cash advance from a member for which the cardholder receives a monthly bill from the issuer. * Merchants: The merchant can be virtually any company which meets the qualification standards of an ICO and an acquirer. The ICO usually requires that the merchant must be financially responsible and has a good repute. The merchant has a written agreement with the acquirer to accept the bankcards as a payment and to abide by the terms of the agreement. 1.2.2. Transaction process * Issuing: Figure 3 - Procedure of issuing bankcard Customer Application Approval Guide of using Handing card and PIN over Receiving new card and PIN from centre Registration of issuing + Customers - Customers fulfill and sign on the application and credit card agreement - Required documents: photograph 3x4 or 4x6, Copies of Identity card, copies of passport, visa or residence permit… - Types of guarantee for card payment. + Issuing banks - Checking customer’s application, then decide to approve or not - Approving - Sending their requests of opening a new card to the card centre - Receiving new card and personal identity number (PIN) from the card centre - Handing new card and PIN over customers - Guiding the customer to use card + The Card centre - In responsibility of receiving information of customers from issuing banks - Produce a new card - Deliver cards to issuing banks * Acquiring: Figure 4 - Procedure of acquiring cards (4) (3) (2) (1) Cardholder Issuing Member International Card Organization Merchant Acquiring Member (5) (6) The acquiring procedure begins with the cardholder: (1) - The cardholder purchases goods or services from 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 concentrate and operate its business. In addition, there are foreign banks which are strong rivals in term of finance, management, and technology participating in domestic market. Commercial banks compete not only in market share, products, services, kinds of fee, utilities, and added value of bankcard, but also human resource. To exist and develop in such a competitive environment, domestic commercial banks are required to try to enhance its competitive capacity by modern products and services with high quality, value for money. Habit of using cash in paying for goods and service is still very popular in societies. At the present time, The State Bank of Vietnam has not allowed commercial bank to charge fee at ATM transactions. This is a big difficulty for commercial banks in meeting the cost which they have to invest and maintain devices in order to promote quality of services. Free of charge at ATM transactions also can not encourage commercial banks, branches to take care of development existing products and services as well as new services. 3.2. Marketing mix solutions to develop Agribank card 3.2.1. Study and set the target market As said above, market research is very important to all products and services in general, and to card products and services in particular. Businesses have three ways to bring a new product or service to customers, to use: Mass marketing: businesses mass produces, mass distributes, and mass promotes one product to all buyers. Product-variety marketing: the seller produces two or more products that have different features, styles, quality, sizes, and so on. Target marketing: producers identify market segments, select one or more of them, and develop products and marketing mixes tailors to each. Today’s businesses are moving away from mass marketing and products-variety marketing and toward target marketing. Target marketing can better help businesses find their marketing opportunities. Producers can develop the right product for each target market and adjust their prices, distribution channels, and advertising to reach the target market efficiently. Vietnam is a developing country with more than 70% population living in rural areas and near 80% agriculture work-force. This population has low and unstable income, so this part of population is not the target customer of Agribank card products and services. In cities, population parts are more diversified. Furthermore, there are now more and more international companies, joint-stock companies, private companies in Vietnam. The work-force works in fields which have high and stable income such as petroleum, banking, telecommunication, aviation and private businesses increasingly make up bigger population. They have high income and stable and also have needs and enough conditions in transactions with super market, hotels, tourism, planes frequently. These are potential customers which the bank should concentrate on. Other group of customers, who are quite crowded, also have real need of using card products and services, are foreigners. Although this group often use cards issued by foreign countries, the bank has suitable policies to advertise, promote and have good reputation, this is also an important customers. In addition, the great numbers of students at universities, colleges and vocational schools in cities have already been customers of the bank. This group may not bring much profit at present; however, the bank should have policies to keep relationship. In near future, after graduating and having stable jobs these customers will bring a lot of profit to the bank. To Thanh Xuan branch, card products and services now have certain features such as types of products or services, fee. The services and the branch also have their own customers. To develop existing products and services or produce a new product is not a simple task that can be done in short time. It required efforts of all the leaders and staff in long term plans. First of all, the branch has set target objectives and then step by step tries to complete them in the best way. Objectives: To change the thought and perception of leaders, staff in the branch about the development of card products and services in the new circumstance. To take its advantages, continue confirming and continuously extend market share, affirm trademark and position of Agribank in card business. To study and set strategic plan in order to develop card products and services in period of 2010-2015. To study, develop new kinds of distinguish products, and then add value, functions, utilities to new products which can compete in the market. About the market share: in 2010, the branch strives to issue more 3,500 cards. About the network of acceptance cards: the branch and all dealing rooms try to use existing ATM, EDC/POS effectively and to extend acceptance card’s network. 3.2.2. Marketing mix solutions to develop Agribank cards Agribank Thanh Xuan has strengths, opportunities, as well as weaknesses and challenges. It is important to study how to combine these factors to develop strengths and opportunities and how to reduce weaknesses and challenges. Through internship time at Agribank Thanh Xuan, by studying, researching data, information of the branch as well as second data, information from internet, here are some suggested solutions. 3.2.2.1. Product policies At the present time, the bank provides 11 products of cards. They are international debit, credit cards of Visa, MasterCard, domestic debit card – Success, Agribank card combined with Vietnam Bank for Social Policies (VBSP) – Lap Nghiep, card combined with academies, universities, colleges, vocational schools.. We can say that products of Agribank cards are quite diversified. Today, there are three ways of issuing domestic card: - Vietnam Card Association (VCA) leads bank members issuing domestic card which is used at all bank members. All transactions by cards are used Vietnam Dong and concentrated payments through Association. These transactions do not charge fee in sending or receiving data between domestic banks and international card organizations. - Some bank members of VCA have agreement to issue one domestic card product and then it can be used among these bank members and in domestic market only. This card is similar to the first one; however, it is accepted by only a group of members, not all banks. Card transactions are not carried out through VCA but directly are settlement and clearing among members. - Domestic card of one bank member issues, uses in domestic area only. This card is used at agencies, branches of that issuing bank. Firstly, the branch can think of developing existing card products and services. The branch can issue a debit card for customers who have banking account at Agribank. The cash limit of cardholder depends on balance of his banking account at the bank. Each time, customers pay for goods or services or withdraw cash; information of transactions will be sent back to centre to be approved and deducted the money in banking account of cardholder at the bank. This card will both help customer manage their purchasing and limit settlement risk for the bank in the case customer is not able to settle their payment. This card will be a good match to customers who do not have demand of using card frequently, but they use card in going travel, on business, etc. With this card, the bank still pays customers interest in their banking account and charge fee on transactions done. This will bring profit to the bank instead of free of charge with current domestic card. Besides activity of issuing more debit cards and development of existing combined card with Vietnam Bank for Social Policies, universities, the branch can produce new cards which combined with other organizations or associations. For example, Petrolimex Group Joint-stock Commercial Bank (PG Bank) with Flexicard – customers can buy petrol with Flexicard, or Bank for Investment and Development of Vietnam (BIDV) combine BIDV card services with Jetstar Pacific, Vietnam International Bank (VIB) combine VIB card services with Mobivi company, Viettravel Company, etc. The bank should develop combined card with other commercial centers, taxi groups, Aviation companies, hotels, etc. Combined card brings profit for all participants. Using combined cards, all members have advantages. To customers, they can get discount at partners of the bank. Companies and banks will have added customers from partners. The bank can contribute in promoting partners’ business, on contrary; companies also advertise card services of the banks. In addition, for each group of customers, the branch needs to identify which features of a card that attracts each group of customers most. Then, the branch has specific policy to recommend which card products best fit these group. Combined card tend to be a good product to reach different groups of customers. In fact, for recent time, Marketing Department has already had plans to develop combined card with more universities and supermarkets in city and District. These plans need effort of all staff of Marketing Department as well as the branch, and specific strategies. 3.2.2.2. Price policies As said above, one of drawback of branch is that the branch has to follow the regulations and rules of Agribank, so it is clearly that the branch does not have much choice. Besides, Agribank now does not have specific price, fee policy. However, in the branch, it can take survey of itself with existing customers and other entities, institutions. Based on findings, the branch may build suitable price, fee, and customer policies. Then, these policies can be handed over Head quarter for approval. Agribank Thanh Xuan also can take advantages of free issuing card to attract more customers. Every year, Agribank always has periods of time when the bank issues Agribank card for customers free of charge, for example, for new students. In these period, the banks always issues Agribank cards in a great quantity. However, free of charge, the bank can take advantages of the minimum balance in these new cards. This way helps to increase total quantity of cards. Furthermore, this activity also helps promote the image and the trademark of the bank to more customers. Furthermore, the branch has to have clear and exact customer policies, fee and price policies of products and services. Then the branch also has professional staff to present these policies to customers. 3.2.2.3. Promotion policies In order to reach more groups of target customers, the branch has to develop advertisement and recommend to customers about the convenience, safety, and many other advantages of card products and services. Besides suitable segmentation of customers, the bank has to carefully apply promotion strategy to each group in suitable ways. Traditional advertisement in press, television, radio, newspaper or banners of restaurants, hotels, supermarket, buses is an essential step. However, the cost of these activities is not cheap. The branch can combine advertisement with cash disbursement points. In this way, both the branch and cash disbursement points can save costs and the branch still promote its services and image. Besides, the branch can organize presentations which introduce and recommend card products and services at target corporate, institutions. At these presentations, the branch will introduce about its card products and services, customer care, discount, etc. To do this, it is required staff with presentation skill, good qualification, experiences, etc. At the present time, the Director of the branch has already had plan to train general knowledge of banking operation for all staff of branch. The Director requires that all staff have to have good knowledge of their operation and general knowledge about banking. This is a good starting point. 3.2.2.4. Place policies Agibank has a large network nationwide, and good reputation, prestige, it is very good base to develop cash disbursement points. In fact, the bank installs ATM, EDC/POS free of charge, so agencies do not protect these devices. In the past couple of weeks, a child died because of Agribank ATM leaky. This accident strongly affected Agribank’s reputation, so protection and maintenance this device is a very essential and important task. Besides of maintenance existing devices, the branch should have plans to use them effectively and plans to extend more cash disbursement points. Expanding cash disbursement points is very expensive. To develop acceptance card network, the branch has to find ways to keep good relationship with these agencies, gives them favour in transactions with the bank. CONCLUSION Bankcard is a modern, convenient payment method and become more and more popular in Vietnam as well as all over the world. Bankcards directly push “Non-cash payment scheme” of Government into operation. It helps reduce cash pressure and it is a necessary tool to reach non-cash society. Card operation increasingly develops and plays a more important role in bank business. As a result, bankcard products and services are very important businesses of banks, contribute to revenue increasingly, and help to diversify banking products and services. Vietnam card is a great potential market. Joining bankcard market later than many other commercial banks, however, Agribank takes advantages of a nationwide network, good prestige and reputation. So over six years of development of Agribank card, Agribank now ranks the 2nd in the card market. The time of operation is quite short, so Agribank Thanh Xuan has coped with many difficulties and challenges. However, by suitable business strategies, efforts of the branch, and support from Agribank, we believe that Agribank Thanh Xuan can get positive results to bring card products and services to more customers. Card services will become one of the top services and also confirm Agribank’s trademark and its position in Vietnam card’s market in the near future By analyzing, evaluating of actual state of card operation at Agribank Thanh Xuan, the report suggests some opinions, solutions in contributing to improve and develop card operation at the branch. 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