UNIVERSITY OF ECONOMICS
HO CHI MINH CITY
VIETNAM

INSTITUTE OF SOCIAL STUDIES
THE HAGUE
THE NETHERLANDS

VIETNAM- NETHERLANDS
PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

THE DETERMINANTS OF CUSTOMER SATISFACTION ON
BANKING SERVICES: THE CASE OF COMMERCIAL
BANKS IN HO CHI MINH CITY

By

NGUYEN THANH NIEN

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, MAY 2011

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UNIVERSITY OF ECONOMICS
HO CHI MINH CITY
VIETNAM

INSTITUTE OF SOCIAL STUDIES

for conducting reliability, factor and regression analysis through SPSS software.
Research findings show that the most important factors influencing customer
satisfaction on banking services are the environment of bank and employee
competence, convenience and transaction cost.
However, this research still has some limitations. First of all, data collection is
restricted within a few commercial banks in Ho Chi Minh City only. Secondly,
according to the result of survey, majority of respondents are only from 30 to 50
years old, may be fail to represent for total the actual situation. Finally, this research
determined the basic factors affecting customer satisfaction on banking services, but
there are still lacked of other factors not be identified.

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TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION ........................................................................... !

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I

1.1
1.2
1.3
1.4
1.5

Problem statement. ................................................................................................... I
Research objectives .................................................................................................. 2
Research questions ................................................................................................... 2
Research scope ........................................................................................................ 2

3.9 One-way ANOVA ................................................................................................. 26
3.10 Summary ............................................................................................................... 27

CHAPTER 4: DATA ANALYSIS AND RESEARCH RESULTS ..................... 28
4.1 General information of respondents ...................................................................... 28
4.1.1 Type of contact with the bank .......................................................................... 28
4 .1.2 Age group of customers ................................................................................... 29
4.1.3 Gender of customer .......................................................................................... 30
4 .1.4 Type of ownership of the bank ........................................................................ 31

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.

1

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4.1.5 The number of bank's operation year from the foundation day ...................... 32
4.2 The results of pilot survey ........................................... ~ ......................................... 33
4.2.1 Descriptive statistics ........................................................................................ 33
4.2.2 Results ofthe scale testing ............................................................................... 35
4.2.3 Factor analysis ................................................................................................. 36
4.2.3.1 Criteria of factor analysis ........................................................................... 36
4.2.3.2 Results of factor analysis (pilot survey) .................................................... 37
4.3 The results of main survey ..................................................................................... 39
4.3.1 Reliability analysis ........................................................................................... 39

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LIST OF TABLES

.,

Table 2.1 Literature review summary on customer satisfaction .............................. 10
Table 3.1 Measurement scales ................................................................................. 21
Table 4.1 Frequency of respondents' type of contact with the bank ....................... 29
Table 4.2 Frequency of respondents' age group ...................................................... 29
Table 4.3 Frequency of respondents' gender ............................... ,........................... 30
Table 4.4 Frequency ofbanks' type ofownership ................................................... 31
Table 4.5 Frequency of number of bank's operation year from the foundation day ........ .32
Table 4.6 Descriptive statistics ................................................................................ 34
Table 4.7 Summary of the Cronbach's alpha result (pilot survey) .......................... 36
Table 4.8 Factor analysis of independent variables ................................................. 3 8
Table 4.9 Factor analysis of customer satisfaction on banking services ................. 39
Table 4.10 Result of reliability analysis ................................................................... 40
Table 4.11 Factor analysis of independent variables (EB5 excluded) .................... .41
Table 4.12 Factor analysis of independent variables (EB5 and TC2 excluded) ..... .42
Table 4.13 Factor analysis of the customer satisfaction criteria ............................. .44
Tabie 4.14 KMO and Bartlett's Test of independent variables .............................. .44
Table 4.15 KMO and Bartlett's Test of customer satisfaction on banking services .... .45
Table 4.16 Adjusted measurement scales ............................................................... .45
Table 4.17 Model summary ..................................................................................... 46
Table 4.18 ANOVA ................................................................................................. 46
Table 4.19 Result of coefficients ............................................................................. 47
Table 4.20 Summary of hypotheses testing ............................................................. 49
Table 4.21 Determinants of customer satisfaction on banking services .................. 49


HSBC

: HSBC Bank Vietnam Limited

ANZ

: Australia and Newzealand Bank

Shinhan

: Shinhan Vietnam Bank Limited

Hong Leong

: Hong Leong Bank Vietnam Limited

IVB

: Indovina Bank Limited

VIDPB

: VID Public Bank

I~

SVB

: ShinhanVina Bank


: Short Message Service

POS

: Point of Sale

VND

:Vietnam Dong

L/C

: Letter of Credit

CAD

: Cash Against Documents

KMO

: Kaiser-Meyer-Olkin

CFA

:Confirmatory Factor Analysis

SPSS

: Statistical Package for Social Science

Nowadays as globalization and liberalization of financial institutions accelerate,
competition among banks becomes more intense. Therefore, in order to face with
that fif!rce competition, commercial banks in Vietnam in general and Ho Chi Minh
City in particular always strive to improve access through expansion of Automatic
Teller Machines (ATMs) and branch network; introduce new features for both
deposit and loan products at attractive rate; and develop new electronic banking
facilities like telephone banking, home banking, SMS banking and Internet banking.
From that, banks expect to meet the various needs of customers and bring them the
best satisfaction.
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Howe"er, in reality, there are so many complaints of customers related to the
products and services of banks as well as the way of service of bank's employees
such as the continual failure of ATMs, too high loan interest rate, too low deposit
interest rate, too high cost of service, complex procedures, the rudeness of
employees, etc. Those show the dissatisfaction of customers, lead to losing
customers and cause negative effect on the market share and the profitability of
commercial banks. Hence it is very necessary for commercial banks to focus on
learning the demand of customers, studying the factors influencing their
satisfaction. Banks must consider satisfying customers as a vital task.
Currently, there are not many researches on the determinants of customer
satisfaction on banking services at the commercial banks in Ho Chi Minh City.
Therefore, this paper will contribute to find out the factors that significantly impact
on customer satisfaction at the commercial banks in Ho Chi Minh City. The result
of this study is crucial for management of commercial banks in Vietnam in general

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Research questions

This research will focus on answering the following questions:
Which factors affect customer satisfaction on banking services?
What are criteria of customer satisfaction?
Which factors are most strong?
What recommendations for banks to improve customer satisfaction?

1.4.

Research scope

The investigated objects of this research are just focused on individuals. Ho Chi
Minh City is selected as research place. Moreover, the research is carried out in
2011.

1.5.

Research structure

Given the research purpose, the paper is structured into 5 chapters.
First chapter begins with introduction, referring problem statement, research
objectives, research questions, research scope.

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The determinants ofcustomer satisfaction on banking services: The case ofcommercial banks in Ho Chi Minh City


I-

I.
II"

This chapter starts with definitions of key concepts related to this research such as
customer satisfaction, banking services. Secondly, literature review of customer
satisfaction is introduced. Thirdly, the overview of commercial banks in Ho Chi
Minh City and the present main banking services are presented. Finally, the
summary of literature review concludes the chapter.
2.1.

Concepts

This section contains the definitions of key concepts related to the research such as
customer satisfaction and banking services.
Customer satisfaction

l

Customer satisfaction, a business term, is a measurement of how a company
supplies products and services satisfy or surpass the expectation of customers. In the
context of a highly competitive market economy, enterprises always have to
compete fiercely to attract more customer especially new customers and potential
customers. Hence customer satisfaction has become an extremely important
component in the business strategy of any company because it is considered as the
main aifferentiator.
Banking services

The concept of banking services is very extensive. It refers to a variety of service

(greater than or equal to 25 years old) in a shopping mall in a major metropolitan
area in the Southwest of the United States. From the discrepancy be.tween the
expectations and perceptions of consumers of services, they measured the level of
consumer satisfaction.
However, in a research of the correlations between servtce quality, customer
satisfaction and purchase intentions in 1992 through analyzing 660 questionnaires
gathered from customers of four different service industries (fast food, pest control,
banking, and dry cleaning) in a medium-sized city in the Southeast of the United
States, Cronin and Taylor focused on measuring the quality of service based on the

~

actual performance to assess the level of customer satisfaction instead of comparing
the perception and expectations.

II

~,

Anderson and Sullivan (1993) used the database of a survey with 22,300 customers
via telephone from 1989 to 1990 at 57 firms in Sweden in order to determine the

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The determinants ofcustomer satisfaction on banking services: The case of commercial banks in Ho Chi Minh City

antecedents and consequences of customer satisfaction. These firms belonged to
many various service industries such as supermarkets, banks, insurance, airlines,
gas stations, cars, etc. Alternative hypotheses were also tested on the basis of the


The determinants of customer satisfaction on banking services: The case ofcommercial banks in Ho Chi Minh City

staff, quality of the facilities, communication with patients, the demeanor of the
staff, and perceived costs.
An another research conducted by Ribiere et al. (1999) also in the health care

service sector in the United States, focused on analyzing the data gathered from a
survey of internal customers (physicians, pharmacists, nurses, quality department,
and laboratory technologists). And they revealed that accuracy, timeliness, and
completeness were major determinants of customer satisfaction on hospital
information systems.
Sonne ( 1999) executed an empirical research with the aim of finding out the main
factors influencing on the satisfaction of customers of Norwegian Institute of
Fisheries and Aquaculture Ltd with consultant services in Tromso, Norway. The
customers of institute were asked about their perception and assessment on different
facets for finished projects through the questionnaire with the Likert scale of seven.
Threugh factor analysis on the basis of collected data, her study showed that the
competence of consultants and technical reliability had substantial effect on
1

1

customer satisfaction.
In the tourism industry, a research was done by Ekinci aimed at investigating
factors affecting customer satisfaction in 2003. Through using the structural
equation modeling, ten various hypotheses were tested. The results identified that
the satisfaction of tourists was mostly influenced by service quality.
Meanwhile, Jamal and Naser (2003) undertook a study on the main determinants of


Also in the public transportation service industry, Agarwal attempted to provide a
model of six major factors affecting consumer's satisfaction on the railway services
in India in 2008. Simultaneously, she concentrated on analyzing the database of 500
respondents who came from Lucknow City according to the survey method. And
then she determined the satisfactory level of consumers through understanding their
perceptions towards the performance quality of proposed factors closely.
The analytical results showed that all six factors had positive impact on overall
customer satisfaction. Among them, employee behavior and customer-oriented
basic platform services were two most important factors. The remaining factors
included reservation counters, services on trains, tangible platform amenities, and
the availability of trains and tickets.
Especially, a recent research of customer satisfaction with the performance of banks

.

was done by Jham and Khan in the retail banking sector of India in 2008. Through
the systematic methodology, they analyzed the data of 555 respondents gathered
from five Indian banks (two national banks and three private banks). In their study,
the level of customer satisfaction was assessed through measuring the satisfactory
degree with the quality of services, the satisfactory degree with the transaction of

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The

dete~minants

ofcustomer satisfaction on banking services: The case ofcommercial banks in Ho Chi Minh City




The determinants ofcustomer satisfaction on banking sen, ices: The case ofcommercial banks in Ho Chi Minh City

Table 2.1 provides a summary of researches on the determinants affecting customer
satisfaction in the context of many various services. The heterogeneous service
contexts are taken for developing a sound theoretical base for the present research.

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r

Table 2.1: Literature Review Summary on Customer Satisfaction
Sector

Factors affecting Customer Satisfaction

Authors

Andaleeb (1998)

Health care

Competence of the staff, quality of the facilities,
communication with patients, the demeanor of the
staff, and perceived costs
Accuracy, timeliness, and completeness of hospital
information system

Ribiere et al. ( 1999)


(2007)

Agarwal (2008)

Levesque and McDougall
(1996)

Reliability, assurance, empathy and responsiveness

Jamal and Naser (2003)

facilities),
traditional
(or
facilities
Basic
for
transactions
(convenient
convenience
customers), the behavior of employees, and the bank
environment

Jham and Khan (2008)

To sum up, there are many factors affecting customer satisfaction in the banking
sector such as service problems, service recovery, products, service features, service
quality dimensions,

basic facilities

2009 due to high inflation and the impacts of global economic depression. The
capital mobilization growth rate decreased to 20% in 2008 and to 10% in 2009.
Details are showed in Figure 2.1 .

•

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The determinants of customer satisfaction on banking services: The case of commercial banks in Ho Chi Minh City

Capital mobilization growth rate(%)
60.0

53.9

50.0
40.0
30.0
20.0
10.0

10

0.0
2005

2006

2007

50
40
30

20
11.2

10

0+-------~--------r-------~------~--------~------~

2004

2005

2006

2007

2008

2009

Figure 2.2: Credit operation status of commercial banks from 2004 to 2009

Source: State Bank of Vietnam (2010)

Beside the banking services related to capital mobilization and lending

activiti~s,

processing speed aimed at encouraging people enhance card payment, restrict the
use of cash.
Especially, the system of commercial banks has enhanced an important role in
administrating monetary policy of the State Bank, from that affecting the economy.

2.4.

Summary

The literature review of customer satisfaction in various service industries was
presented in this chapter. In there, service problems, service recovery, products,
service features, service quality dimensions, basic facilities (or traditional facilities),
convenience (convenient transactions for customers no need to go to the bank), the
behavior of employees, and the environment of bank are main factors affecting
customer satisfaction in the banking sector. The next chapter will present the
analytical framework, research methodology and set up the questionnaire to conduct
a survey with customers of their evaluation on banking services.

1

Source: Annual Report 2010, State Bank ofVietnam

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The

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satisfaction on banking services in Ho Chi Minh City. The model can be described
as follows:
- Dependent variable: Customer satisfaction

It is measured by the Likert scale with five-point (similar to the paper of Jham and
Khan, 2008)
- Independent variables: basic facilities, convemence, employee competence
(behavior of employees), the environment of bank (similar to the paper of Jham and

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