Face-to-face banking still a preferred method for Japanese
FOR bank analyst Mac Salman, the Bank of Tokyo-Mitsubishi flagship branch in Tokyo is so majestic that he brings friends and family there when they visit Japan.
First, there is the brightly lit panelled ceiling, the plush peach carpet and marble counter staffed by row after row of polite, uniformed tellers unencumbered by bulletproof glass to block cheerful interactions with customers. Then there’s the crew of ushers who patrol the floor, ready to guide every customer with an eager “May I help you”?
“It’s like something out of a Bond movie,” said Salman, the head of research on Japanese financial firms at Jefferies Group in Tokyo. “You certainly feel very looked-after when you go to do even the simplest of transactions.”
The luxurious branches help to explain why Japan, birthplace of the Walkman and PlayStation, falls behind even India and Nigeria in the use of cellphones for banking. With its still-heavy reliance on cash for transactions, Japan has the lowest usage of cellphone banking among 18 nations, mainly because physical outlets and ATMs can do more than phone apps, according to a UBS Group study.
Going mobile
That may start to change as online lenders such as Jibun Bank, which is in fact a joint venture of Bank of Tokyo-Mitsubishi UFJ, try to persuade more Japanese to go mobile.
“Management commitment to mobile banking isn’t that strong in Japan compared to other countries,” UBS analyst Shinichi Ina, who co-wrote the July report, said.
“There are still a lot of customers who like branches, and I think that’s part of the reason for the lack of urgency.”
That’s potentially a missed opportunity for Japanese banks to not only save the costs of running branches and ATMs but also change with the times. Cellphone banking users worldwide are expected to more than double to 1.8 billion people by 2019, Juniper Re- search and KPMG data show in a separate report compiled with UBS. Younger clients in particular are more inclined to use phones for banking.
ATMs
In Japan, ATMs allow users to transfer money to people and update transaction records by inserting their passbooks, making them more popular than branches, according to an April study by Fujitsu Research Institute. About two-thirds of customers use the machines at least once a month, while 21 percent visit branches, the report shows.
Fujitsu found even fewer Japanese using their phones for banking than UBS’s survey.
“Customers are satisfied with using ATMs and cash at the moment,” said Hiroaki Ishiyama, who wrote the report. “Consumers want to continue with the cash and passbook system with banks that they’ve trusted for decades.” – Bloomberg