Major banks are accelerating efforts to expand the use of online banking via the internet and smartphones apps.
Japanese banks have lagged behind Western banks in the rollout of net banking services. However, recommendations to avoid closed spaces, crowded places, and close-proximity settings to prevent the spread of the coronavirus have prompted Japan's leading banks to accelerate the shift of services from branches to digital banking services.
Sumitomo Mitsui Banking Corp. (SMBC) and MUFG Bank Ltd. in May launched campaigns pledging to make donations to medical organizations, with the amount determined by the usage of their digital banking services.
Mizuho Bank Ltd. is also considering cashback options or a donation system to encourage the use of its net banking services.
The aim of such incentives is to reduce the number of people in branches to lower the risk of coronavirus infections spreading among customers and employees.
Due to the expansion of telecommuting, some branches in residential areas have seen an increase in the number of customers since the coronavirus outbreak.
Going forward, there is a possibility of an increase in the number of consultations for financing at banks from small and medium-sized enterprises that suspended operations during the state of emergency.
Since April, the Japanese Bankers Association has been calling on people to carry out banking procedures online and avoid visiting branches for nonurgent transactions, and the use of net banking services has indeed increased in line with the spread of the coronavirus.
According to SMBC, the number of downloads of apps on which customers can carry out such procedures as money transfers totaled about 390,000 for the March-April period, up 25% from the January-February period.
The number of users of MUFG Bank's online services increased by 190,000 in April, more than double the number in the same month last year.
In April, Mizuho Bank also saw more than double the number of people opening bank accounts online compared to the same month last year.
In the rollout of online banking services, Japanese banks are behind banks in Western countries, where many customers use such services.
According to market research firm MyVoice Communications Inc., the use of net banking services stood at 64% as of January 2020, down more than 10 percentage points from 10 years ago.
Fears of fraud and unauthorized money transfers are thought to be the reason for the fall.
Hironori Kamezawa, president and Group CEO of Mitsubishi UFJ Financial Group Inc., said, "By seizing on the opportunity of the changes happening around the world, we will accelerate our response to the digital shifts in society."
A protracted period of low interest rates has kept bank profits stagnant.
Banks are trying to reduce the number of customers visiting branches by encouraging online transactions, which are less costly, while at the same time promoting structural reforms such as reviewing their networks of branches, which are expensive to maintain.
By the end of fiscal 2023, MUFG Bank plans to cut about 200 branches, which account for 40% of the total number in operation in fiscal 2017.
SMBC plans to replace 300 branches, or 75%, with small branches specializing in asset-management consultation services for non-business customers by fiscal 2022.
Mizuho Financial Group Inc. also plans to close about 130 branches by fiscal 2024.
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