1.

Are there any regulatory issues or constraints affecting deposit pricing and
product offerings in Vietnam's banking sector? How do banks navigate these
challenges?e
- Yes, there are some regulatory issues and constraints that affect deposit pricing and
product offerings in Vietnam's banking sector:x
+ Limited autonomy over pricing: The State Bank of Vietnam plays a role in setting
benchmark interest rates. This can limit banks' ability to offer highly competitive
deposit rates, especially during periods of high liquidity or competition.
+ Prudential oversight: Regulations are in place to ensure the stability of the banking
system. This can sometimes lead to stricter requirements for banks offering high-
interest deposit products, making them less attractive.
- Navigation strategies banks can apply:
+ Product differentiation: Banks can't just compete solely on interest rates. They offer a
variety of deposit products with different features like minimum deposit amounts, term
lengths, and bundled benefits (loyalty programs, insurance). This caters to different
customer needs and risk profiles.
+ CASA focus: Banks try to attract and retain low-cost Current Account Savings Account
(CASA) deposits. These offer lower interest rates but are a more stable source of
funding compared to term deposits that can be withdrawn prematurely.
+ Service and convenience: Banks compete on the overall customer experience. This
includes offering online banking, mobile apps, and a network of branches for easy
access and account management.
+ Targeting specific segments: Some banks might target specific customer segments
with more attractive rates, like high-net-worth individuals or those saving for a
particular goal (e.g., education, homeownership).
By strategically navigating these limitations, Vietnamese banks can still offer competitive
deposit products and attract customers in a regulated environment.

2. Why are small and medium enterprises the main subjects to open deposit accounts
at most banks? Besides, is the interest rate on business deposit accounts any
different from people's accounts? Name the bank with the most deposit accounts of
small and medium enterprises
- The reason why SMEs are included in the target for deposit accounts at banks in
Vietnam is:
+ Higher Transaction Volume: SMEs tend to have a higher volume of daily transactions
compared to individuals. It can be understood that more fees for the bank, making them
a profitable customer segment.
 + Growth Potential: SMEs have the potential to grow into larger businesses, becoming
even more valuable clients for the bank in the long run.
+ Loan Opportunities: By establishing a relationship with an SME through a deposit
account, banks can position themselves to offer them credit products like loans and lines
of credit in the future.
- Interest Rates on Business Accounts vs. Personal Accounts:
+ Risk Profile: Businesses are generally considered riskier borrowers than individuals.
To compensate for this risk, banks might offer slightly lower interest rates on business
deposits.
+ Minimum Deposit Amounts: Business accounts often have higher minimum deposit
requirements compared to personal accounts. This allows banks to offer slightly better
rates for larger deposits.
+ Negotiation Power: Larger SMEs might have more bargaining power when negotiating
interest rates on their deposits compared to individual customers.
- Identifying the Top Bank for SME Deposits in Viet Nam:
● Vietcombank (VCB)
● Techcombank (TCB)
● Sacombank (STB)
● VPBank (VPB)
● ACB (Asia Commercial Bank)
These banks typically offer a range of deposit products tailored to the needs of SMEs, along
with other services like cash management and trade finance solutions.
3. How did the decline in interest rates and the weakness of credit growth contribute
to the significant increase in total deposits witnessed in 2023 amidst the
fluctuations in investment channels like real estate and stocks?
The significant increase in total deposits witnessed in 2023 was largely influenced by
the interplay of declining interest rates and subdued credit growth. As interest rates
decreased, the opportunity cost of holding cash in deposit accounts diminished,
prompting investors to reassess their investment strategies. In light of the uncertainties
and fluctuations in investment channels such as real estate and stocks, individuals and
businesses exhibited a heightened risk aversion. This cautious sentiment, coupled with
weakened demand for loans due to economic uncertainties, led to a preference for safer
investment options. Deposit accounts, perceived as stable and secure amidst market
volatility, emerged as a favored choice for parking funds. Consequently, the
combination of lower interest rates, sluggish credit growth, and the perceived stability
of deposit accounts incentivized investors to allocate their funds towards deposits,
driving the notable increase in total deposits observed in 2023.
4. Are there any risks when depositing money in banks that customers need to be
aware of? And what solutions do banks provide to minimize these risks?
There are several risks associated with depositing money in banks that customers should
be aware of:

- Credit Risk: There's a risk that the bank may become insolvent or default on its
obligations, leading to loss of deposited funds. This risk is generally mitigated by
regulatory measures such as deposit insurance schemes that protect depositors up to a
certain amount.
- Interest Rate Risk: Depositors face the risk of fluctuations in interest rates, which can
affect the returns on their deposits. For example, if interest rates decrease, the interest
earned on savings accounts or fixed deposits may be lower, impacting depositors'
earnings.
- Liquidity Risk: Banks may face liquidity shortages, making it difficult for depositors to
withdraw their funds when needed. However, most banks maintain liquidity reserves
and access to central bank facilities to manage this risk.
- Inflation Risk: If the inflation rate exceeds the interest rate earned on deposits, the
purchasing power of deposited funds may decrease over time. This risk is particularly
relevant for deposits with low-interest rates.

To minimize these risks, banks offer various solutions:

- Deposit Insurance: Many countries have deposit insurance schemes that protect
depositors' funds up to a certain amount in the event of bank failure. This provides
customers with a safety net and helps maintain confidence in the banking system.
- Diversification: Banks often diversify their loan portfolios and investments to mitigate
credit risk. By lending to a diverse range of borrowers and investing in different asset
classes, banks reduce their exposure to any single borrower or investment.
- Regulatory Compliance: Banks are subject to regulatory oversight and are required to
meet capital adequacy requirements to ensure they can withstand financial shocks.
Regulatory authorities also monitor banks' risk management practices to minimize the
likelihood of failure.
- Transparency and Disclosure: Banks provide customers with clear information about
the risks associated with different types of deposits and investment products. This helps
customers make informed decisions about where to place their funds.

5. Should banks in Vietnam focus more on developing deposit products tailored to specific
customer segments, such as SMEs, students, and foreigners, or should they prioritize
offering universal deposit services accessible to all customers?
 In Vietnam, banks face a choice between offering tailored deposit products for specific
customer segments or prioritizing universal deposit services accessible to all customers.
Tailored products can attract niche markets like SMEs, students, and foreigners, but
require resources and market research. Universal services simplify operations and
promote inclusivity but may miss out on meeting diverse needs and facing competition.
A balanced strategy may be ideal, combining both approaches to cater to specific
segments while maintaining broad accessibility.

6. To what extent do the benefits of time deposits, such as higher interest rates and
guaranteed returns, offset the lack of liquidity compared to a regular savings account?
What types of investors might prioritize the tradeoffs differently?

The benefits of time deposits, like higher interest rates and guaranteed returns, can
offset their lack of liquidity compared to regular savings accounts. Conservative and
income-oriented investors may prioritize these benefits, while short-term savers may
value liquidity more. Long-term investors might prefer time deposits for their potential
returns, and risk-tolerant investors may seek higher returns elsewhere. Ultimately,
individual financial goals and risk tolerance determine how investors weigh these
tradeoffs.

7. How does the measurement unit (hours, days, weeks, years) for the term of a deposit
product impact the interest rate offered by the credit institution?

The measurement unit (hours, days, weeks, years) for the term of a deposit product
significantly impacts the interest rate offered by the credit institution. Here's why:

Interest accrual: Banks use deposited funds to provide loans and other financial
products. Longer terms allow them to lend the money for longer periods, typically at
higher interest rates. Since they earn more from these longer-term loans, they can offer
you a higher interest rate on your deposit if you commit your funds for a longer period.

Predictability of cash flow: For banks, knowing they have access to your funds for a
fixed term helps them manage their cash flow more effectively. This predictability
allows them to offer you a better interest rate as an incentive for choosing a longer-term
deposit.
 Early withdrawal penalties: Many banks impose penalties if you withdraw your money
before the deposit term ends. This discourages early withdrawals and incentivizes you
to keep your money with them for the entire term. Since they are more confident you
won't withdraw early with a longer term, they can offer a higher interest rate.

8. The group mentioned three types of demand deposits used for different purposes. How
does the level of liquidity differ between checking accounts, savings accounts, and
money market accounts? Are there any ways to store your money other than the three
types of demand deposit accounts mentioned above?

Liquidity:

Checking Account: Highest Liquidity - Designed for everyday transactions. You can
easily access your money through checks, debit cards, ATMs, and online banking for
bill payments and transfers.

Savings Account: Moderate Liquidity - Ideal for saving money and earning some
interest. Transactions are generally limited compared to checking accounts.
Withdrawals might be limited to a certain number per month, and some banks may
charge fees for exceeding those limits. Online transfers are usually allowed.

Money Market Account (MMA): Moderate to Low Liquidity - Offers a higher interest
rate than a typical savings account but with some limitations on access. MMAs often
come with a minimum balance requirement and may limit withdrawals to a certain
number per month, similar to savings accounts. However, some MMAs offer debit
cards for limited transactions.

Alternative Storage Options for Your Money:

Cash: Most accessible but offers no interest and carries security risks.

Stocks, Bonds, and Mutual Funds: Investment options offering potentially higher
returns but also carrying greater risk of loss. Not suitable for short-term needs or
emergency funds.

9. Both Agribank and VPBank offer savings accounts with early withdrawal options. What
are the details regarding penalties for early withdrawal between these banks?
 Agribank: Early withdrawal penalty is forfeiture of interest for the entire term.
VPBank: Penalty varies depending on withdrawal amount and account type. In
summary, Agribank imposes a harsher penalty by taking away all the interest you've
earned for the entire term if you withdraw early. VPBank offers more flexibility but the
penalty depends on the specifics of your account and withdrawal. It's always best to
check the fine print before making an early withdrawal.

10. Many Vietnamese citizens, particularly in rural areas, remain unbanked. Do deposit
products offered by Vietnamese commercial banks address the needs of this
underbanked population? Are there specific product features or pricing strategies that
could promote financial inclusion in Vietnam?

A significant portion of Vietnamese citizens, especially in rural areas, lack access to

traditional banking services. Traditional deposit products offered by commercial banks
often fall short for the unbanked population for a few reasons:

● Limited access to physical branches: Rural areas might have limited bank branches,
making physical deposits and withdrawals inconvenient.
● High minimum balance requirements: Some accounts have minimum balance
requirements that can be a barrier for those with low incomes.
● Complex account structures: Traditional accounts can have confusing terms and fees,
discouraging participation from those unfamiliar with banking.
Here are some product features and pricing strategies that could promote financial inclusion
in Vietnam:

● Mobile Money and E-Wallets: Leverage the high mobile phone penetration rate
in Vietnam. Partner with mobile network operators to offer mobile money
accounts for basic deposit, transfer, and bill payment functionalities.
● Agent Banking: Partner with local retailers or businesses to act as banking
agents. These agents can provide basic banking services like deposits,
withdrawals, and account inquiries in rural areas.
● Simplified Accounts: Offer "no-frills" accounts with minimal fees, low or no
minimum balance requirements, and clear, easy-to-understand terms.
● Micro-savings Products: Cater to the saving habits of the unbanked by offering
accounts with low minimum deposits and frequent deposit options.
● Financial Literacy Programs: Educate the unbanked population on the benefits
of saving and using formal financial services.
 ● Incentives: Offer rewards programs or interest rate tiers that encourage
consistent saving habits.
Examples of existing initiatives:
● Viettel Money and Momo are popular mobile money platforms in Vietnam.
● The State Bank of Vietnam (SBV) has a national financial inclusion strategy that
promotes agent banking and mobile money.
By focusing on these strategies, Vietnamese banks and financial institutions can create
deposit products that are more accessible, affordable, and user-friendly for the unbanked
population. This will promote financial inclusion and bring more Vietnamese citizens
into the formal financial system.

11. Given the increasing popularity of digital banking services, should traditional banks
invest more in enhancing online and mobile banking features for deposit products, or
should they maintain a balance between digital and physical branch services?
Traditional banks should definitely invest more in enhancing online and mobile
banking features for deposit products, but it doesn't necessarily mean abandoning
physical branches entirely. Enhanced Digital Banking Features for Deposit Products is a
Win-Win for Banks and Customers. The digital revolution has transformed the banking
landscape, with customers increasingly embracing online and mobile banking platforms
for their financial needs. This shift presents a compelling opportunity for traditional
banks to adapt and thrive by investing in enhanced digital features for deposit products.
Reasons to invest in digital:
● Catering to Customer Demand: Today's customers are tech-savvy and demand
seamless, convenient banking experiences. Digital banking platforms provide
24/7 access, enabling customers to manage their finances anytime, anywhere.
This aligns perfectly with the fast-paced, on-the-go lifestyles of modern
consumers. Convenience and 24/7 access are key drivers.
● Driving Cost Efficiency: Digital banking channels are significantly more cost-
effective to operate compared to traditional brick-and-mortar branches. Reduced
overhead costs translate into potential benefits for customers, such as higher
interest rates on deposit products and lower fees.
● Enhancing Operational Efficiency: Digital banking streamlines processes,
automating repetitive tasks, and freeing up bank staff to focus on more complex
customer interactions. This leads to improved customer service, faster transaction
processing, and reduced errors.
Real-World Examples: Agribank and VPBank Embrace Digital Transformation
Agribank: Vietnam's largest agricultural bank has recognized the importance of digital
banking, launching the Agribank Mobile app in 2018. The app offers a comprehensive
suite of features, including account management, bill payments, money transfers, and
even loan applications. This digital transformation has significantly enhanced customer
convenience and satisfaction.
VPBank: A leading commercial bank in Vietnam, VPBank has been at the forefront of
digital innovation. Their VPBank NEO app provides a personalized and user-friendly
banking experience, featuring real-time transaction notifications, financial insights, and
even investment opportunities. VPBank's commitment to digital banking has
contributed to their strong customer base and market position.

Why branches still matter:

● Addressing the Needs of Non-Digital Customers: Not all customers are
comfortable or fully equipped to utilize digital banking platforms. This includes
older demographics, individuals with limited internet access, and those who
prefer face-to-face interactions. Physical branches provide a welcoming and
accessible environment for these customers to conduct their banking transactions
and receive personalized assistance.
● Facilitating Complex Transactions: Certain banking transactions, such as
opening new accounts, applying for loans, or discussing complex financial plans,
are better suited for in-person interactions. Physical branches provide a secure
and private setting for these sensitive matters, allowing customers to engage in
detailed discussions with knowledgeable bank representatives.
● Building Trust and Relationships: Physical branches serve as a physical
manifestation of a bank's brand and commitment to the community. They
provide a platform for building trust and relationships with customers, fostering a
sense of loyalty and confidence. This human connection is particularly valuable
in an increasingly digital world.
Real-World Examples: Agribank and VPBank's Branch Network Strategies
Agribank: Despite its digital advancements, Agribank recognizes the importance of its
extensive branch network, particularly in rural areas with limited internet access. The
bank has implemented initiatives to modernize its branches, incorporating technology
while retaining the personal touch.
VPBank: VPBank has adopted a strategic approach to its branch network, focusing on
high-traffic locations and transforming branches into "experience centers." These
centers offer a blend of digital and personal services, catering to the diverse needs of
their customer base.
Striking a Balance: The Hybrid Banking Model for the Future
Banks should:
● Embracing Digital Excellence:
○ Seamless account management: Easy account opening, online statements,
and transaction tracking.
○ Convenient deposit products: High-interest savings accounts, money
market accounts, and certificates of deposit with competitive rates.
○ Empowering financial tools: Budgeting tools, financial planning
calculators, and investment options.
○ Secure and personalized experiences: Strong authentication measures,
personalized financial insights, and proactive customer support.
● Optimize branch experience:
○ Strategic branch placement: Focusing on high-traffic locations and areas
with limited digital access.
○ Modernized branch design: Incorporating technology, such as digital
kiosks and interactive displays, while maintaining a welcoming ambiance.
○ Specialized staff: Training branch staff to provide expert advice on
complex financial matters and personalized service.
○ Hybrid interactions: Enabling seamless transitions between digital and
physical channels, allowing customers to start tasks online and complete
them in-branch or vice versa.
Real-World Examples: Agribank and VPBank's Hybrid Banking Strategies
Agribank: Agribank is expanding its digital capabilities while maintaining its extensive
branch network. They are introducing digital kiosks in branches, enabling customers to
conduct basic transactions without waiting in line. Additionally, they are training branch
staff to provide digital support and guidance.
VPBank: VPBank's "experience centers" exemplify the hybrid model. These branches
offer a blend of digital and personal services, allowing customers to open accounts,
apply for loans, or receive financial advice using technology or interacting with
knowledgeable staff.

Conclusion:
Investing in enhanced digital banking features for deposit products is not just a trend;
it's a necessity for traditional banks to remain competitive and relevant in the digital age.
By catering to both digital natives and those who prefer a physical touch, traditional
banks can stay relevant in the face of growing digital competition.
12. When making decisions about where to deposit money, some customers, especially
individual customers, may prioritize external factors other than account features.
Besides the range of deposit account features offered by both Agribank and VP Bank
that your group mentioned above, what external factors may influence customers'
choice between Agribank and VP Bank? Why?
While deposit account features are crucial, several external factors can influence
individual customers' decisions between Agribank and VPBank in Vietnam:
Agribank VPBank

Bank As a state-owned bank with a VPBank has a reputation for

Reputation long history, Agribank is innovation and a customer-
and Brand perceived as a safe and reliable centric approach, attracting tech-
Image option, especially for older savvy individuals who value a
demographics who value modern experience.
stability.

Branch Boasts an extensive branch Focuses on strategically placed

Network and network, particularly in rural
Accessibility areas. This is convenient for
individuals who prefer face-to-
face interactions or live in areas
with limited internet access.
branches in urban areas and
"experience centers." This might
be less convenient for rural
customers but provides a more
modern and efficient experience
for urban dwellers.

Interest Rates Traditionally known for offering
and Fees competitive interest rates on
deposit accounts, especially for
savings accounts targeting rural
customers.
May offer promotions and
competitive rates on specific
deposit products but might have
higher fees associated with some
accounts.

Customer Customer service perceptions Focuses on a more personalized

Service can vary depending on location
Perception and branch. However, some
might perceive it as less
personalized compared to
VPBank.
customer service experience,
potentially attracting individuals
who value dedicated relationship
managers or responsive online
support.
 These factors influence customer choice because they cater to different needs
and preferences. Because:
● Risk Aversion: Customers prioritizing security might choose Agribank for its
perceived stability.
● Tech-Savvy Users: Individuals comfortable with technology might prefer
VPBank's digital focus and "experience centers".
● Location and Convenience: Rural customers might choose Agribank due to
branch accessibility, while urban dwellers might favor VPBank's strategic
locations.
● Value-Seeking Customers: Individuals looking for high-interest rates might
choose Agribank, while those seeking specific promotions or features might opt
for VPBank.

Conclusion:
By understanding these external factors, both Agribank and VPBank can cater to
diverse customer segments. Agribank could leverage its extensive network and security
perception to attract risk-averse and rural customers. VPBank can capitalize on its
innovative approach and personalized service to attract tech-savvy and urban customers.
Ultimately, the "best" bank depends on individual priorities and needs.