Banking on Mobile
Japan’s virtual Jibun Bank Uses Oracle to focus on wireless customers.
by Molly Rose Teuke, November 2009
With global financial institutions rethinking their operations in a precarious economy, a new Japanese bank has built an unprecedented model from the ground up. Jibun Bank—the name means “personal bank”—is a virtual bank designed from inception to be a customer-centric, user-friendly financial institution open for business anytime, anywhere. Its primary branch is in the palm of a customer’s hand.
Many traditional institutions offer internet banking, and some offer mobile access, but only Jibun Bank is designed specifically for mobile phone access—and it’s paying off with consumers. Licensed on June 17, 2008, Jibun Bank quickly attracted nearly 500,000 account holders. President and CEO Takeo Tohara projects an account base of 2.4 million within three years and 3.4 million within five.
As a joint venture between Bank of Tokyo-Mitsubishi UFJ (BTMU), Japan’s largest commercial bank, and KDDI, a leading Japanese telecommunications company, Jibun’s initial success isn’t surprising. Leveraging the strengths of the equal equity partners (each of which is a 50 percent shareholder), Jibun Bank represents a fusion of mobile communications technology and deep financial services expertise, not to mention a ready customer base among BTMU’s 40 million account holders and KDDI’s 30 million customers.
The timing was right, says Tohara, who notes that Japan is the most advanced country in the world for 3G mobile penetration and that mobile handsets in Japan are highly sophisticated. According to a 2008 telecommunications usage trend survey by the Japanese Ministry of Internal Affairs, mobile has become the standard channel for internet access. “The cell phone is largely proliferated in Japan, both volumewise and functionwise,” says Tohara. “It has already become a part of citizens’ lifestyle, not only for voice communications but for data communications such as music, video, and commercial transactions. We thought it was the right timing to introduce financial transactions as part of this usage.” The result is a virtual bank with a complete lifecycle of services available via mobile phone, including account opening, account transfers, ordinary and timed savings yen deposits, and foreign exchange (forex) accounts.
Driving New Business
Both joint venture partners benefit from creating a new banking model. By joining forces with a major bank, KDDI is able to strengthen its customer base in the over-30 demographic, where the company has a weaker share relative to its mobile phone service competitors. Adding a banking component enables the company to enrich its content while gaining new revenue from a noncommunication line of business. At the same time, BTMU gains access to the younger demographic. “Contact is largely limited to the senior segment in conventional banks, because their business hours are 9 a.m. to 3 p.m., when younger, working people cannot come to the branch offices,” says Tohara. “All major banks have similar issues in not being able to approach the active segment. A mobile bank is one of the ways we thought we could realize a more direct transaction strategy with the customers.” Transactions at Jibun Bank peak before morning office hours, at noon, and after work in the evening, and again from 11 p.m. to 1 a.m., underscoring the need for an alternative to traditional banking hours.
Instantaneous communication with customers is another edge Jibun Bank has over its more-conventional counterparts, where only a very small percentage of customers are available via e-mail, and then only via a PC. Most conventional banks are limited to communicating with customers through direct mail, in the bank, or over the telephone, where customer response rates can be quite low. Tohara says Jibun’s customers benefit from instant updates about interest rates or confirmations about deposit or withdrawal transactions. “We are able to access 100 percent of our customers instantly by e-mail at their mobile terminals, and the reading ratio is quite high,” says Tohara. “In that sense, we have a superiority in marketing.
And Jibun Bank is looking to take advantage of this competitive differentiator. For example, exchange rates can impact the length of time it takes to open a foreign exchange account. If the yen is appreciated, the process can take a while to complete. Or a customer, looking to open an account after hours via PC, may not like the currency rate available at that time. Jibun Bank allows customers to set a target rate of exchange—for example, ¥92 and US$1. Once that target rate is hit, the customer receives an e-mail notification and can open the account in two or three touches over the mobile terminal. “So, although we provide the same instruments as conventional banks, we have been creative, and the ways the customer can use and leverage these instruments is quite different,” says Tohara.