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Business trends

Japan's megabanks study shared ATMs and more self-services

Cost-cutting paramount as nation shifts to cashless economy

People use Mizuho Bank ATMs in Tokyo. Mizuho is unlikely to join discussions on sharing ATMs with other major banks for now.   © Reuters

TOKYO -- Japan's three megabanks are trying to cut costs by reducing the number of ATMs and full-service branches as the country shifts to a cashless economy and the Bank of Japan's negative interest rate policy erodes profits.

With banks forced to pursue structural reforms without compromising customer convenience, Mitsubishi UFJ Financial Group President and CEO Nobuyuki Hirano on May 15 unveiled plans to increase the number of new self-service branches.

At such branches, called MUFG Next, most teller services will be automated by sophisticated ATMs. The group also wants to have more branches that specialize in face-to-face consulting.

"We want to increase points of contact with customers, including through internet banking," Hirano said.

The number of customers visiting MUFG branches has dropped by about 40% over the past decade. As a result, the company plans to cut the number of conventional branches by half by the fiscal through March 2024, from about 515 currently.

As some branches will be converted to MUFG Next, the cut to the total number of branches will be limited to about 20%.

Japan's government is keen to promote the greater use of cashless settlements, which accounted for 18.4% of financial transactions in 2015. That compares with 89.1% for South Korea and 60.0% for China, according to a recent report by the Ministry of Economy, Trade and Industry.

For the U.K., the ratio is 54.9% and for the U.S. it is 45.0%. Japan's figure is lower than that for India at 38.4%, but higher than that for Germany at 14.9%.

Meanwhile, the CEO of another megabank, Takeshi Kunibe of Sumitomo Mitsui Financial Group, said on May 14 he was positive about a proposal from MUFG Bank to share ATMs.

While there are many problems to be worked out before the two financial groups reach an agreement, they agree that sharing ATMs would be mutually beneficial.

It will be difficult for Japan's other megabank, Mizuho Financial Group, to join the discussion on ATM sharing for now, however, as it is scheduled to shift to a new banking systems soon. Still, president and CEO Tatsufumi Sakai said the company was open to all possibilities.

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