Our Group
Omer ShahzadMB-12-08
Zeshan AhmadMB-12-09
M. SaleemMB-12-23
Khizer BhuttaMB-12-33
Ali AsgharMB-12-34
Babar HussainMB-12-54
Points to be discussed:
• Aim
• Shareholders
• Business Principles
• Services
• Organizational Structure
• System at JNB
Points to be discussed:
• Targets
• Competitors
• Comparison with USA
• Alliances
• Scalability v/s Investment
• Conclusion
Overview
• Idea was given by YOSHIYUKI MIYAI
• The first internet-only bank of JAPAN
• Had no Physical Branch
• Established on September 26, 2000 with capital of ¥ 20 Billion
• Had 5 Directors and 1 President in Senior Management
• Had a Flexible, Flat and Team-like structure
• Mostly supervised by IT department staff
• Also became the official bank of Yahoo! Japan
President Profile
• Was the manager at Sakura Bank Headquarters
• Worked to plan mass-retail corporate business promotions and construction of DBMS at Sakura Bank
• Became the president of JNB on September 2000
• Was the youngest and lowest paid president in Japan Banking Industry
Focus of JNB
• Customer Satisfaction
• Convenient access to accounts
• Competitive rates
• Customization
• Secure transmission of information over internet
• Team-like structure and small workforce
• Aim to build up its own Brand name
Shareholders Profile
50%
10%
10%
10%
5%
5%5% 5%
Sakura Bank Summitomo Bank
Fujitsu Ltd. Nippon Life Insurance
Mitsui & Co. NTT East
NTTDoCoMo Inc. Tokyo Electric Power Co.
Shareholders Profile
60%
10%
10%
5%
5%5% 5%
Sumitomo Mitsui Banking Corp.
Fujitsu Ltd.
Nippon Life Insurance
Mitsui & Co.
NTT East
NTTDoCoMo Inc.
Tokyo Electric Power Co.
Shareholders Profile
Sumitomo Mitsui Banking Corp.
• Was formed by a merger between Sakura Bank & Sumitomo Bank
• Assets exceeding to $940 Billion
• Deposits amounting to $590 Billion
• Had 27 million accounts, 578 branches & 7600 ATMs
Fujitsu Limited
• Japan’s top PC maker company
• Also involved in making information systems and electronic components
• Had revenues of ¥5.48 trillion till 2001
• Had 517 consolidated subsidiaries in more than 100 countries
Shareholders Profile
Nippon Life Insurance
• World’s 3rd largest insurance company
• Revenues ranged to $82 billion
• Was a partner with Deutsche Bank & SMBC
• Had almost 13 million clients
Mitsui & Co.
• Japan’s largest trading company
• Had a global network of 549 subsidiaries in Japan and Abroad
• Also owned 13.2% shares of DoCoMo Aol
Shareholders Profile
NTT East Corp.
• A regional telephone company of Japan
• Hold by one of the largest telecommunication group NTT Corp.
• Had sales reaching app $98 billion
NTT DoCoMo Inc.
• Established by NTT Corp in 1991
• Had 32 million mobile phone subscribers
• Offered paging, maritime, in-flight phone services, wireless internet service
• Pioneer of 3G service in Japan
• By 2000, sales figures reached $30 billion
Shareholders Profile
Tokyo Electric Power Co., Inc.
• World’s largest electric power company
• Had 26 million clients
• TEPCOs revenues reached $40 billion till March 2000
Organizational Structure President
Full-Time Staff
Planning Information Technology Sales
Part-Time Staff
Call Centre
• Flexible, Flat & Team-like structure
• Single physical office with no other branch
• Small & young workforce
• Low cost based
• Approximately 100 employees
System @ JNB
Information Systems
National Banking
Information System
Managerial Information
System
Multiple Channel
Customer Interface
Services & Access
Services Provided
• Ordinary & term deposits
• Money transfers
• Small-size consumer loans
• Cash card & credit card
Access
• Dial-up
• Mail order
• Internet
• Telephone
• ATMs
• NTT DoCoMo’s i-mode mobile internet
US Comparison
First Internet-only bank in the world was Security First Network Bank in USA
It failed to achieve its targets due to:
• Time consuming to use
• Poor customer service
• Massive advertisement fees
• Less Value-added services
Internet Banking
Advantages
• 24-7 availability
• Saves operating costs
• Reduces the inefficiencies
• Small workforce
• High interest rates
• No physical branches
• Can be accessed via mobile internet
Disadvantages
• Lack of brand recognition
• No physical presence
• Security & Privacy issues
• Time consuming
Banking in Japan
• Japanese have their assets deposited with private banks and postal savings accounts
• Low interest rates were offered on ordinary & term deposits(0.02% & 0.1% respectively)
• Japanese preferred to use cash on credit so the ATMs in Japan installed approximately were 130,000
• Online banking was also available with Sumitomo Bank & Sakura Bank but to some extent
Targets
• Acquire 1 million accounts till 2002
• ¥ 1 trillion of deposits
• ¥ 84 billion of loan balances
• Earn maximum profit by 2002
• Efficient modes of money transfer
• Installation of ATMs throughout Japan
Customers Profile of JNB
Below 20 20-29 30-39 40-49 50-59 60-69 Above 690%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Distribution in terms of Age
24%
32%
44%
Distribution in terms of Access Hour
0:00-9:00
9:00-17:00
17:00-24:00
75%
25%
Distribution in terms of Sex
Male Female
Competitors
Bricks-and-Mortar Banks
• Major competitor of JNB
• Variety of Value-added financial services
• Dominant use of ATMs
• Traditional banking culture
• Limited online banking services
Sony Bank
• An Internet-only bank established in mid of 2001
• Had a greater investment ¥37.5 billion
• Strategies were of lower workforce, higher interest rates and no physical branch
• Free ATMs in Japan
• Provided online shopping service
Competitors
IY Bank
• An internet-only bank which started working in May 2001
• It had an ATM based network with 9 city banks called BANCS
• It had linked-up ATMs with Sanwa Bank, Asahi Bank, Shizuoka Bank & Yokohama Bank
eBank
• An internet-only bank which started its operations in June 2001
• It provided small-value online purchases
• Easily accessible 24/7
Banks
JNB Sony Bank IY Bank eBank
Criteria
Starting date of Operations
October, 2000 June, 2001 May, 2001 June, 2001
Major Shareholders
SMBC 60%, Fujitsu Inc., 10%, Nippon Life Insurance 10%
Sony Corp., 80%, SMBC 16% IY Bank 51%, Seven-Eleven Japan 49%
Japan Telecom, Yamato Transport, Ericsson Holding International
Starting Capital ¥20 billion ¥37.5 billion ¥20.3 billion ¥4.4 billion
Starting Services Ordinary & Term deposit, Money transfer, Small-size consumer loans, Cash & Credit card
Deposits, Card loans, Bank payments
ATM-based services Settlement of payments
Business Targets 1 million accounts, ¥1 trillion deposits, ¥84 biillion of loan balance
¥500,000 billion in 3 years, ¥1 trillion in 5 years, customers: 400,000 in 3 years and 600,000 in 5 years
¥60 billion in a year, 10 million customers per day, profitability in 2 years
No information
Strategies higher rates, lower fees, small workforce, no physical branches
higher rates, lower fees, small workforce, no physical branches
24/7 ATMs, low cost operations, loan and card business focused
No information
Survey Results 6.3% 9.8% 16.8% 3.7%
Alliances
• Yoshiyuki Miyai had a vision.“It is possible to start a bank without alliances. But it would have been difficult to expanding the business by leveraging the alliances’ customer bases.”
• JNB had two kind of alliances.1. Shareholding Alliances2. Non-shareholding Alliances
Scalability v/s Investment
• Scalability was a major concern with JNB• Customer behavior was rather unpredictable• Demand might surge dramatically
• In order to cope with sudden demand changes• Operations should be scalable to limits for above average• Need to make accurate demand forecasts• Need to build infrastructure
Schwab-A scalability case
• Online brokerage firms illustrated scalability problem in US
• Such market leader was Schwab
• Online customer assets were $418 billion till March 2000
• Schwab suffered 4 site crashes even after upgrading its systems in 1999
• In 2001 US economy slowed down and Schwab suffered 30% fall in its trading volume
• Schwab had to layoff its staff and to senior managers have to receive salary cuts
• Company spent $800 million to upgrade the systems and to better its business
• The company was caught in the dilemma of scalability versus investment
Conclusion
• Yoshiyuki Miyai was a man of vision & believed that success cannot be achieved in days
• He kept eye on IT systems and HR to respond to ups & downs in the market
• He has to make well use of the consolidated alliances
• JNB can become successful if it grasps opportunities and overcome all the obstacles
• JNB can become the 21st century winning model of Japan only if the company faces the rise & fall efficiently