Two industries going through major changes worldwide are financial services and information technology (IT). While banks, insurance companies, and, security companies see consolidation as a way to expand the client base, software companies and a new breed of Internet based financial institutions are trying to grab clients away from traditional banks and security companies. The Internet, along with deregulation and globalization of financial systems, is creating new opportunities for financial institutions and also new innovations in banking products and services, in Asia Pacific and all over the world. Online banking first came to use in the early 80’s when states like US and UK brought it to practical use. However, Japan got its first ever Internet bank in 2000. The emergence of Net banking in Japan started a new trend in the banking industry. The people in Japan could then sit at home or work or elsewhere, and easily operate their accounts. These online banks are extremely user-friendly.
On October 12, 2001 the Japan Net Bank was set up. It serves as the first ever Japanese bank to provide Internet facilities to the residents of the country. Gradually it became popular with its increasing access to the common man and today almost two-thirds of the entire bank users in Japan operate their accounts online. Nevertheless, the online banks in Japan have to face a lot of difficulties before they can establish themselves as functional online banks. High rates of foreign exchange, government restriction and huge savings from postal checks are some of these. Also, the online banks in Japan, unlike American banks are confined to domestic markets only. Thus, they cannot be used by anyone who isn’t in Japan. Though some international banks are open to the Japanese users, these aren’t of Japanese origin. The Japanese banks which are operational online are of quite good standards.
The first cyber bank of Japan, the Japan Net Bank (JNB), was established in October 2000 by the grouping of Sakura Bank, Fujitsu Limited, Nippon Life Insurance Company, and Sumitomo Bank. JNB operates over the Internet without a physical branch. The JNB offers savings accounts, time deposit, money transfer and consumer loans, mutual fund accounts, mortgages, fund transfer, and insurance (Fujitsu 2001). Physical withdrawal can be made at over 100,000 automated tellers across Japan. In June 2001, Sony, better known for its brand name electronic products, opened Sony Bank as the second online bank in the country. The bank provides comprehensive personal banking services via the Internet, including foreign currency deposit accounts, credit cards and mortgages. Bank customers have access to 7600 ATMs owned by Sumitomo Mitsui Banking. At present, JNB and Sony Bank are the two major stand-alone Internet banks in Japan, but they have two minor competitors: eBank and IY Bank. Ebank is owned by 40 non-bank corporations including Japan Telecom and Itochu Company, and IY Bank is owned by a major Japanese retailer, Ito-Yokato Co., and its subsidiary Seven-Eleven Japan.
Tips and comments:
Online banking is something of a miracle to the Japanese, as it has revolutionized their economic world and made it extremely competent. If I was in Japan, I would have opted for none of the local banks, instead I would choose one of the international banks e.g. HSBC or Citibank as they promise more security than the local ones. These are banks of good repute, which offer much more facilities to their users of international standards. According to me, banks in Japan still need to work harder on their management and security.
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