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Banking digitalisation in Japan: The time is now

This year 2020, the lifestyles of people all over the world have had to change. Digitalisation has, in many ways, happened “overnight”. This has affected everyone: from large companies to SMEs to public institutions and, of course, people of all ages and in all countrie

Banks have witnessed these shifts around the world. They were the ones in charge of keeping the economy moving in the midst of lockdowns everywhere. According to the guest speakers in one of our recent webinars, in Latin America, companies such as Banco Pichincha, Bancolombia, and BBVA reported an increase of over 30% in the use of digital channels during the lockdown. This jump in uptake was only made possible because the tools were ready and the COVID-19 crisis simply provided the trigger to get people using the tools.

On the other hand, there is the case of Japan; a country I admire a lot, and that I have been working with for the last 17 years. There, digitalisation in banking has been slowed by the continued widespread use of cash (over 80% of payments are made in cash [1]), and by industry inertia. In this context, the distribution of economic relief to all citizens during the pandemic, announced in April by the Japanese government, faced delays due to the absence of digital banking channels.

But all this is about to change for good.

A few days ago, we hosted the webinar “Digital banking has exploded during COVID-19. Where to next?”, together with the Spanish Chamber of Commerce in Japan. One of our keynote speakers was Noriko Saeki-Rzonca, Sony Bank’s Executive Director of Marketing Science, Data Analytics, and CX Design, and she asked a very short but deep question: “Digital Banking in Japan: If not now? When?”. I believe the answer is now.

Japan’s Financial Services Agency (FSA) has already put digitalisation at the heart of its priorities for 2020-21. And the new Prime Minister Yoshihide Suga has instructed his digital transformation minister to speed up the establishment of a government agency to lead the efforts for digitalising society.

What comes next?

To successfully implement digitalisation in the sector, Japanese banks should heed three principles.

First of all, manage expectations. Digital transformation takes time. This is usually because of the human aspect. The cultural shift required within companies to become “digital” takes longer than the technological implementation. COVID-19 has helped companies in this shift. But the process, though it may start now, will take time to complete.

Secondly, digital tools must be developed from a customer-centric perspective and meet real customer needs. The good news is that Japanese banks can quickly learn from the past mistakes of other banks around the world that are further along in the process. Japanese banks should know upfront that digital tools must empower customers to do more, with less effort.

And finally, don’t forget about the physical: aim for phygital. Remember that digital has to be part of an omnichannel strategy, giving the customer the ability and freedom to choose how, when, and where they want to interact.

[1] https://www.statista.com/chart/19868/share-of-cash-payments-in-different-countries/

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