Although Customer Relationship Management (CRM) is arguable the most important area of concern to enterprises in an era of electronic commerce (EC), few studies have explored it from an industry-specific perspective to develop usable action plans. The banking industry is one of the major beneficiaries of the 'explosion' in CRM across all sectors of the economy, but there is an absence of information and support for it in Taiwan. Embracing CRM requires changes in many aspects of enterprises. This paper employs a four-strategic framework; of contact channel management, enterprise-wide management, customer data management, and information technology management, in its review of what constitutes best practice in the leading banks in Taiwan with respect to CRM. It is argued that if Taiwan's banking industry adopts this framework it should be able to respond effectively to the various internal and external challenges identified in this study as well as to develop its own CRM initiatives.
1. Customer Relationships in the Banking Industry
The banking industry in the United States and Europe is at the forefront in responding to opportunities provided by the Internet. These responses are coming to fruition in the way they deal with customer-oriented challenges emanating from E-commerce. For instance, a study in the U.S. banking industry reported that those banks that develop a customer-oriented strategy in this area obtain higher profits (Lamparello, 2000). Other studies have shown that banks with 'good' CRM retain their substantial competitiveness in the market place (Gandy, 2000; Melnick, Nayyar, Pinedo, & Seshadri, 2000). Although domestic banks in Taiwan are now grappling with some of the issues involved, they do not yet face worldwide competition. Because of this and the lack of sophisticated applications and professional support in the area, their adoption of CRM is progressing at a slower pace than that of foreign banks (NICI, 2004, p. 198; Liu, 2003).
The performance of Taiwan's banking industry was worse than before in 2002, with most banks having lower ROE and EPS than foreign banks. In 2003 and 2004 Taiwan's economic condition was better than in previous years, with foreign banks still doing better their Taiwanese rivals (TBIPR, 2004, 2005). It has been shown that the strength of foreign banks is in the extent of their front-office and back-office automation, in their integration, customer segmentation and service (Shive, 2005), all of which are activities that are related to CRM.
2. Exploiting Customer Relationship Management
Achieving 'customer intimacy' is an essential strategy in EC, with CRM being the key means of achieving this goal (Reynolds, 2002, p. 2; Tracy & Wiersma, 1997: chap. 8). The concept of CRM was derived from "contact management' in the 1980s, with its emphasis on collecting all possible information about customers when-at the time-customers come in contact with companies. Although there is no one widely accepted definition of CRM (Knox, Maklan, Peppard, & Ryals, 2003, p.l), for our purposes it can be regarded as the business strategies, processes and information technology that enable a company to optimize revenue and increase value through understanding and satisfying the individual customer's needs. Local, small-town stores provide a CRM-like service, anticipating the needs of customers based on their intimate knowledge of the customers' circumstances and preferences, and treating different customers in different ways. CRM is the driving force that enables the delineation of customers and an increase in the value attached to customers. If done correctly CRM enables enterprises to retain the loyalty of their customers. CRM is about more than simply managing customers and monitoring their behavior. It has the potential to change a customer's relationship with a company and increase revenue as well (Dyché, 2002, p. 4). In many industries, CRM is not only one of the most important applications of E-commerce but also the 'key driver' in the success of many enterprises (Badgett, Ballou, & LaValle, 2004; Bielski, 2000; Knox et al. …