Japan Net Bank: Japan’s First Internet-Only Bank

15th Bled Electronic Commerce Conference eReality: Constructing the eEconomy

Bled, Slovenia, June 17 - 19, 2002

Japan Net Bank:
Japan’s First Internet-Only Bank – A Teaching Case
Ali F. Farhoomand
Centre for Asian Business Cases, University of Hong Kong,
Hong Kong
[e-mail]

Vincent Mak
University of Hong Kong,
Hong Kong
[e-mail]

Abstract
Japan Net Bank (JNB), Japan’s first Internet bank without physical branches, began operation in October 2000. It attracted mainly young customers looking for convenient, round-the-clock bank services with much more competitive interest rates and transaction charges than traditional Japanese banks. Its access channels included the mobile Internet service i-mode and fixed-line Internet. JNB relied on flexible, open computer systems and a young workforce of only 100 people to minimise operational costs. Its stakeholders, including parent company Sumitomo
Mitsui Banking Corporation (SMBC) and NTT DoCoMo (provider of i-mode), were all big companies from different industry sectors. This stakeholder base gave JNB market exposure and access to their established customer bases. By April 2001 JNB had 130,000 customers. It aimed at winning one million accounts and ¥1 trillion deposits and becoming profitable by the financial year 2002. But it needed to resolve a number of issues before being able to achieve long-term success in the face of strong competition from bricks-and-mortar banks and new Internet-only banks. One of those issues was about how to meet with wide fluctuations in usage without over-investing; the other was alliance management, i.e., how to co-operate with alliance partners to achieve competitive advantage.
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Japan Net Bank: Japan’s First Internet-Only Bank – A Teaching Case

1.

Introduction

Yoshiyuki Miyai had a vision. He wanted to establish a completely new standard of banking in Japan – that of Internet-only banking. As president of Japan

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