PALO ALTO, U.S. -- After nearly 200 years, Mitsubishi UFJ Financial Group, Japan's biggest lender, is slowly saying goodbye to the hanko, the carved personal stamps that Japanese customers have used in lieu of signing bank documents since the 1800s.
But phasing out the stamps leaves MUFG with a problem: a vast mountain of paper documents in need of digitizing. For this task, it has brought in California-based startup Ripcord and its army of AI-powered robots.
Ripcord announced on Tuesday that it has signed a five-year contract with the bank to scan and index millions of customer files, and says it has already deployed the machines to Japan.
MUFG currently stores over 100 million sheets of customer files in a central location that is not readily accessible from branches, according to Ripcord. When a customer does business at a branch office, a staff member will often have to call up the central location to retrieve his or her files, especially hanko-stamped documents, to verify customer information.
"This isn't just a problem with MUFG," said Ronald Sorisho, CFO and lead of international expansion at Ripcord. "This is a problem with the entire banking system in Japan."
With other businesses in Japan also looking to go digital, Ripcord sees the country as a promising market for expansion.
MUFG will use Ripcord's AI-powered machines to scan all of its related customer files. The bank will then input the captured customer information into a database, making them instantly accessible at all of its branches.
The move is part of MUFG's digital transformation plan announced in May 2017 to reform its current business model, hampered by persistently low interest rates. The country's lenders have also relied heavily on the traditional over-the-counter business model, which push up employee head counts and costs.
To address the overstaffing issue, MUFG in April decided to halve the number of employees working at its Tokyo headquarters.
The partnership with Ripcord is a step toward the bank's goal of automating more of its processes.
"MUFG is the first one out of the gate," Sorisho said. "They want to be seen in the eyes of the world, or at least in Japan, that they're innovators and they're embracing technology to transform their bank and embrace some of the more recent trends."
Ripcord's robots, the company says, are capable of pulling out staples and scanning documents around 10 times faster than humans. Nevertheless, it will take five years for them to process MUFG's huge piles of paper.
Due to the sensitivity and confidential nature of the documents, MUFG employees will feed files to the scanning robots, but Ripcord staff will also be on hand to make sure the machines run smoothly, according to Sorisho. After the customer files are scanned and captured, the images will be sent to a processing center where MUFG staff will input the information in the database.
"All the data are handled in MUFG's premises," Sorisho said. "We take data security very seriously."
Founded by CEO Alex Fielding in 2015, Ripcord has secured big-name clients like Coca-Cola. The company has also raised more than $74.5 million from leading Silicon Valley investors such as Google Venture, Kleiner Perkins, Legend Star and Apple co-founder Steve Wozniak.
Ripcord said it has kicked off its Series C fundraising round with hopes of raising $50 million to $100 million. Sorisho said the company sees big potential in Japan and hopes to attract Japanese investors as financial and strategic backers in the latest round.
"Organizations throughout Japan are looking for ways to digitize content and gain greater efficiencies in their business processes," Fielding said. "This partnership with MUFG will provide us with a strategic foothold to expand further into the country as a whole."