dc.description.abstract | In recent years, the banking industry, following the trend of liberalization and globalization, entered an age of fierce international competition, especially after 2002 when Taiwan entered the WTO. Since then, many well-known stock companies and investment banks have entered Taiwan’s financial markets. Foreign banks have utilized their international and scale advantages, to create a great challenge to the operation of domestic enterprises. The drastic changes to the banking industry’s financial situation include:
1. The development of large financial holding companies, which have placed pressure on other financial institutions’ survival.
2. The proliferation of financial institutions, leading to fierce market competition.
3. Taiwan banks’ return on assets and return on equity being relatively low, with the interest rate margin narrowing every year.
4. The fast growth of direct financing which falls in companies’ reliance on indirect financing.
Facing fierce competitive pressure, independent banks which have not entered into the financial holding companies must create new operating and service models, think strategically, undertake large-scale transformation, and upgrade their businesses. At this same time, the market operating environment and internal operating conditions have also seen drastic changes.
This case study analysis methodology, with individual bank operation strategy and business development as the main research contents, will discuss the advantages and disadvantages of industrial bankings’ transformations into investment banking and financial holding companies, and examine competitive strategy theory, and the match with government strategy and regulations. It will also examine, the key success factors of industrial bankings’ transformations into investment banking, and analyse the obstacles faced by industrial banking in their transformation into investment banking. The study will use this to provide advice on appropriate development strategies for individual bank in the process of transformation.
Currently, Taiwan’s banking industry suffers from problems of overbanking, high
level of product similarity, small operating scale, and stalled lending growth. Because of this, operating a bank becomes a difficult task and with relatively high overdue loan rate. In order to be able to survive in this type of environment, “change” is essential. From a competition analysis of the banking industry to research on the competitive advantages of individual bank transformations, this research shows:
1. The domestic financial institutions must urgently be transformed.
2. Middle and small investment banks can only survive in niche markets.
3. Individual bank transforms into investment banks should adopt an incremental approach of progress.
4. Development into Asian and international markets should be undertaken with a thorough unification of investment and strategy decisions.
Through this research, discussion of individual banks’ operating visions, present operating situations and future means of regularization show that industrial banking are more better placed to develop into investment banking of all financial institutions, After examining the key success factors of well known foreign investment banks, the study deduces nine suggested strategies for successfully transforming individual bank into investment bank:
1. Develop investment banking organisational structure and enterprise culture.
2. Strengthen existing operations
3. Develop core operations and expand scale economies.
4. Transform short debt structure to middle and long term debt
5. Develop expert financial human resources.
6. Speed up internationalisation and build a linked international network
7. Sino-market development strategy
8. Develop new financial products
9. Establish risk control(management) systems. | en_US |