Japan’s Online-Only Banking Sector: Current State and Challenges for Future Growth

by KyongSun Kong, September 30, 2015
Industry Trends
Asia-Pacific

Abstract

The number of online-only bank accounts has topped 10 million and is still growing. Although they are still a fragment of the market, their profile is growing slowly but surely.

This report examines the current state of online-only banks in Japan based on Celent surveys and interviews. The unique attributes of online-only banks have attracted customers and helped them to grow. Banks have offered an array of models such as linking payment, loans, and brokerage accounts and services.

Online banks have strived to define themselves and carve out a niche market with distinct offerings that are beyond the reach of major banks. This has fueled account growth. But now account numbers are plateauing, and certain future challenges have gradually been thrust into relief. 

One challenge and desire cited uniformly by banks was to better emphasize their strengths. Indeed, online-only banks have their own batch of issues, including the following:

  • Enhancing face-to-face advisory services.
  • Clarifying and reassessing their target demographics.
  • Deploying new businesses.

“It is important that online banks competing for a piece of the pie realize that digitization is not the same as technological progress,” says KyongSun Kong, an analyst with Celent's Asian Financial Services practice and author of the report. ”Rather it is the creative application of technology.”

This report includes eight figures and one table.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

2

State of the Industry: By the Numbers

3

Business Models

5

 

Payment-Business Emphasis

5

 

Brokerage-Linked Accounts

7

 

Deposit-Business Emphasis

9

 

Ties with Parent Companies

10

Online-Only Banks and Digitization

12

Future Challenges

14

 

Enhancing Advisory Services

14

 

Opportunities in Ecommerce

14

 

Clarifying and Reassessing Customer Targets

14

 

Growing Business Among Small and Medium-Size Businesses

14

 

Foreign Currency Deposits: A Path to Differentiation

15

 

Anti-Fraud Measures

15

Conclusion

17

Leveraging Celent’s Expertise

18

 

Support for Financial Institutions

18

 

Support for Vendors

18

Related Celent Research

19

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