;The Credit Card Insolvency Crisis of 2005 caused a two-year revenue deficit for the credit card industry in Taiwan. The banks painfully paid a price for it. Revolving Interest and Cash Advance used to be two main sources of revenue for the banks in Taiwan; however, they were no longer making such profit after the crisis. The primary reason was that consumers gradually realized that credit cards were actually “payment tools” but not “financial instruments”. In 2007, the total revenue for the credit card industry in Taiwan was 59.4 billion New Taiwan Dollars, which was a 40 percent reducing compare to 2005.
During the late period of Credit Card Insolvency Crisis, the marketing strategies and management of the credit card industry were slightly different from the ones before. This research started by emphasizing on the causes and effects of the Credit Card Insolvency Crisis in Taiwan. Later, it provided an outline on the industry competition which was conducted by two methods of industry analysis- Five Strength of Analysis and Industry Life Cycle. The purpose for using these two analysis methods was to comprehend the structure and competition of the industry, and to have a better understanding on the characteristics of its industry life cycle.
According to the findings from Five Strength Analysis, the main threat in the competition was within the industry. In addition, due to the global characteristic of credit card, trades in any industries could all be done through credit cards. Currently, there were no threats of replacement from other industries. As for industry life cycle, credit card industry in Taiwan had entered the Decline Maturity Stage, which meant consumers’ paying preferences and habits were firmly established and the market was hard to grow by a wide margin due to stabilization. As a whole, the future of credit card in Taiwan was still bullish if the banks truly learned a lesson from the crisis.
For locating the future of credit card industry in the later period of Credit Card Insolvency Crisis, the research analyzed it from two points of view: the overall environment analysis and the individual condition analysis. In the overall environment analysis, it focused on the environmental factors, such as economy, politics, society and technology. In the individual condition analysis, however, the focus was turned to factors like bank culture, personnel management, information system, distribution channel…and so on. To sum up, it provided some case studies on Target Marketing and Marketing Mix along with the professional interviews through which we would have a closer look on the background of its strategy development.
The conclusions drown from the findings were as follows: 1. Merger between the banks would continue to be the trend, 2. Customer Relationship Management would be the main task for most banks, 3. The market of balance transfer would be more competitive than ever, 4. Credit card would become an important medium between consumers and suppliers, 5. The concept of User Charge would be rebuilt, and 6. New technologies would continue to be invented and applied. Aside from the above, some suggestions were also made in the thesis statement: 1.The banks shall improve their credit risk management and their early warning ability when credit risk occurred, 2.For the dysfunctional institutions, resolution procedures shall be made. 3. Since the banks had already experienced the complete life cycle of the credit card industry, globalization was highly recommended for creating a brand new “Blue Ocean”.