2.Internet banking in Japan.3
2.1.Conservative consumer banking behavior3
2.1.1.Low level of credit card usage3
2.1.2.The availability of ATMs for cash withdrawals3
2.2.Internet usage in Japan3
2.3.The competitive situation4
2.3.1.Competition from traditional banks4
2.3.2.Competition from domestic Internet banks4
2.3.3.Competition from international Internet banks4
3.Japan Net Bank’s competitive advantages5
3.2.Competitive interest rate5
3.4.Confidentiality of usage5
3.5.Flexible organization and IT system6
4.Strategic alliances to develop6
4.2.Global strategic alliances6
This report was commissioned by Japan Net Bank (JNB) senior managers to gather comprehensive data about the present market situation in the Japanese banking sector, regarding the Internet-only model of retail banking, and to provide recommendations of how to consolidate and further develop Japan Net Bank’ position as the first Internet-only- bank in Japan.
The banking market, especially Internet-only bank sector, in Japan was going through a period of rapid growth after the Japanese government initiated the famous “Big Bang” deregulation of the financial market. JNB, which began operation in October 2000, aimed at winning one million accounts and one trillion yen deposits and becoming profitable by the financial year 2002. However, in order to achieve that long-term success, it needed to resolved a number of issues and strengthen its competitive position in face of stiff competition from brick-and-mortar banks and new Internet-only banks.
Therefore, this report focuses on the following three issues: • An assessment of the present situation in Japan regarding the Internet-only model of retail banking, • An analysis of JNB's competitive advantages,
• Recommendations of what alliance strategies to develop to overcome competition from traditional and other online banks.
The data in this report was collected by assessing the information of the case “Japan Net Bank: Japan’ First Internet-only Bank” by Vincent Mark and Pauline Ng under the supervision of Dr.AH F.Farhoomand and surveying relevant materials from the Internet.
I have divided my report into three main sections. Firstly, we would assess the potential for Internet-only model of retail banking in Japan. Secondly, we present and analyze JNB’s competitive advantages meticulously in this particular Japanese market. Finally, we would suggest some viable propositions of what alliance strategies that JNB should develop to surpass and obtain the market leader.
Internet banking in Japan.
4 Conservative consumer banking behavior
5 Low level of credit card usage
Japan did not use credit cards a great deal. By 2001, credit card purchases accounted for just eight per cent of consumer spending in Japan, compared with 14 percent in Europe and 21 percent in the US (The Economist, 2001). Borrowing was considered shameful in a culture much bound by traditional concept, so paying by credit card in public could be an embarrassment. In many cases, credit card users could only repay in one-go or in fixed installments. Therefore, such the culture preferred repaying card debt s in one-go quickly if they could afford it. Card companies’ lack of good marketing accentuated the problem: although there were schemes involving credit cards points, customers could only use their points to redeem low-quality gifts. In contrast, the consumer loan market in Japan was doing much better since it was worth 7 trillion yen by early 2001, double the market size of credit card.
6 The availability of ATMs for cash withdrawals
Japanese consumers generally preferred to pay by cash or money transfers. A survey conducted in summer 2000 asked respondents...