As one of the most banked populations in the world, currently at 96.9% according to GlobalData, the market is huge. The largest Japanese banks are in constant competition to gain, and keep, customers. The key to this is technology.
With a population of 125.7 million, Japan is a market with a large amount of potential.
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The annual value of card transactions is $518bn. Each inhabitant has around 5.6 cards on average. The closest regional competitor is South Korea with 5.2. However, Taiwan exceeds it with 5.9.
In addition, smartphone penetration is 44% and online banking penetration is 52%.
However, cash still plays an important part with 78.1% of overall payment volume in 2017 through it.
While a number of foreign banks are present in Japan, the homegrown banks still dominate the market. They achieve this through the utilisation of technology, from AI to robotics to overhauling the back-end.
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By GlobalDataThe largest Japanese banks
Mitsubishi UFJ Financial Group (MUFG) is often stated to be the largest bank in Japan. It’s hard to argue when in 2017 it earned profits of ¥989.6bn ($8.9bn). This was an increase of ¥63.2bn compared to FY16.
Its total assets after full year results in 2017 was a staggering ¥306,937.4bn.
This year alone, MUFG has taken a huge step into blockchain. The massive conglomerate has launched blockchain-enabled micropayments in 2018. In addition, it created a dedicated unit to harness AI.
Another of the largest Japanese banks is Japan Post Bank. In March 2018, it held ¥210,629bn in assets.
For the fiscal year ended March 31 2018, Mizuho Bank’s assets totalled ¥205,028bn. However, at the end of 2017, it announced massive slashes to jobs and offices.
Mizuho is set to cut 19,000 jobs by 2017 and reduce its office count by 100 to around 400. The bank stated to was in an attempt to remain competitive and stay profitable.
The Sumitomo group is one of the largest in Japan and delves into banking. The Sumitomo Mitsui Banking Corporation (SMBC) held assets valued at ¥199,049bn in March 2018.
Its technology is wide and varied with it entering into a Swift cross-border payments trial as well as new AI data analysis solutions.
Moreover, it has proposed a merger with BTPN in Indonesia. SMBC is already the largest shareholder in the bank and wants to expand further into the Indonesia financial services market.
Overall, the largest Japanese banks have seen multiple things go their way and they remain ahead of the curve. On the other hand, they may be risks going forward. As seen with the large cuts from Mizuho, some of them may need to make difficult decision to keep their profitable positions.
