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According to statistics provided by Central Bank of the Republic of China (Taiwan), there were no less than 40 domestic banks in Taiwan as of February 2017, showing the fierce competition among banks. Nowadays, Taiwanese banks face higher business risks due to many competitors, difficult economic environment and lower profits from interest rate spreads. They cannot shore up their capital base and grow profits accordingly. Furthermore, they are being increasingly threatened by ICT and E-commerce since the rise of FinTech has forced them to rethink their strategies in respond to cross-industry competition. Therefore, the focus of this study was to investigate traditional banks’ competitive strategies, how banking entities transform their operations and how traditional banks transform and innovate in their business models.
The study was based on case studies and introduced the service–profit chain (SPC) theory as primary theoretical base. It was covered the sample banks’ current service standards, transformation strategies and current business situation. Since Starbucks was acknowledged as a best example of the SPC model, a comparison of Starbucks and the sample banks was conducted in order to find out weak areas of these banks. Besides, Michael Porter′s five forces and SWOT analysis were applied to discuss the sample banks’ strategic directions. Some strategies and suggestions for the banks’ physical outlets and transformation journey were provided by interviewing with related bank employees. It is concluded the following points:
1.) Enlist local and international talents to enhance competitiveness of banks.
2.) Strengthen their support system; provide sufficient resources; improve
internal services quality
3.) Continue to maintain existing market share; expand cross-border foreign
exchange business; create effective market segmentation
4.) Leverage their own resources; invest heavily in digital, FinTech and the
future bank; develop new business and market
5.) Aggressively ramp up overseas expansion by mergers and acquisitions and/or participation shares prudently.
The study also offers direct insight into how to improve internal service quality, how to transform physical outlet service, and how traditional banks transform, innovate and make a creative working environment. It is expected that Taiwanese banks with higher internal service quality will create a better value chain, differentiation service and values for making market segmentations (unlike other banks) as well as enhancing their competitive edge. | en_US |