After the law makers in Taiwan passed the bills of “Act of Financial Holding Company” in 2000, the banking industry has been facing tremendous challenges, threats and opportunities caused by internal and external micro economical changes.
By applying Michael Porter’s “Five Forces Analysis”, every participant including commercial banks, investment banks, and securities, insurance companies and financial institutions, and stakeholders including regulators, foreign financial institutions, scholars as well as system service providers, has realized that this industry has been changed; the state of the situation will only evolve faster and reinforced tighter in the future.
The internal market changes are influenced by the rapid mergers and acquisitions. 14 Financial Holding Companies (FHC) have established since early 2001 in Taiwan. The evidence of saturation can be seen from the number of existing FHCs, when it is compared with the market size in both Japan and the United States and their number of FHCs, the density is too high to create the scale of economy. FHC does understand that the essential target is to compete in global financial business. If every FHC’s mission and definition to the “globe competence” is to be the leading financial services company in world only for Chinese society, unfortunately, China, the most risky but last potential emerging market, denied it due to political issues, it is not possible to build a globe competence capabilities like Taiwan’s IT manufacturing does. The base market is too small to sustain these 14 competitors, there is no significant segmentation in market, product and services difference, consequently, only competes in price.
The external threats are from top Fortune 100 companies, which include numerous of the largest financial companies in the world; such as Citigroup, HSBC, ABN AMRO Bank, Credit Suisse First Bank (CSFB). These influential banks can take WTO and financial market deregulations into their advantages in order to penetrate into any countries they are interested including Taiwan. If under no regulatory issues and obstacles, these companies may buy out targeted local banks easily. Subsequently, they can deploy their new products more quickly through the acquired local channels. They can deploy their existing advanced systems in the bases of the bank’s Assets Book which is in compliance with Basel II.
To adequately utilize a minimal amount of capital and allocate properly the risk-weighted economical capital, the banking book addresses new applications in core banking system and the trading book requires sophistic STP systems. This will have a tremendous impact over local bankers, who are eager to start on business reforming and reengineering, and can work in alliance with world-class consulting and technology management firms, such as Accenture and McKinsey. However, there is a trend that consulting firms usually deliver almost identical solutions to all of their clients, because in order to provide clients with a quick solution, firms tend to use the existing business models as the solution. Therefore, reengineering organization structure is based on Citibank or other large financial institutions, and their new plans for investment in technology and assets are also being copied by these banks.
As for building a new core competence in the future, FHCs have made similar strategies. However, one has to ask that does this new core competence have differentiated their services? The answer is no. In the lower margin of the competitive market, banks and FHCs are struggling to develop a new fee-based business which has to be in alignment of goals, and give incentives with adequate business workflow. However, there will be no fruitful yields to the bank, if the top executives’ decision is to acquire a system which has been used in the world-class banks or recruiting an executive officer who may have the expertise and experience working with foreign banks.
The purpose of this paper is trying to analyze an existing solution provider, which will be called “A” company. “A” company has been faced with rapid changes and uncertainties brought by FHCs. A new set of strategies, business objectives and business models have to be developed simultaneously. It is very hard since “A” company’s current core competence has become its core rigidity. “A” company realizes that it needs to prove that it is capable of delivering their tomorrow needs sooner in today. How to develop a new core competence within an existing organization? Although this new core competence aligns with the new organization, new technology, new business flow and new customers, “A” company proceeds to take on the Bills Online Clearing and Settlement Systems (BOSS) to build its next generation business model. According to pervious references and documents, if any initiatives were to project as innovations in the company, it could not be successful unless separating this project from the core business. It seems the uncertain result to be merely expected its return. There are lots of problems in front of the project, a loosely couple project-based matrix organization, unfamiliar technology and an often change specifications and so on, that are all new to “A” company..
“A” company’s challenge is that they knew it is not an incremental, but a radical, business innovation; nevertheless they had no other alternatives. This story describes the mission and vision they have, and how the BOSS project may affect the implementation of their strategies in each phase. Also, to show how the implementation which includes monitoring and check points align with their strategic objectives through the BOSS project.
The final section is to apply the Economy Value-added (EVA) to survey this proceeded project and to see what tangible and intangible values this project brought to the company.
| Identifer | oai:union.ndltd.org:CHENGCHI/G0091932904 |
| Creators | 呂克毅 |
| Publisher | 國立政治大學 |
| Source Sets | National Chengchi University Libraries |
| Language | 中文 |
| Detected Language | English |
| Type | text |
| Rights | Copyright © nccu library on behalf of the copyright holders |
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