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Japanese chat app operator Line is leveraging its huge popularity among young Asians to expand into financial services across the region.   © Getty Images

Japan's online banks gain ground on their conventional counterparts

Unshackled by huge costs, digital lenders woo customers with better rates and new services

MITSURU OBE, Nikkei staff writer | South Korea

TOKYO -- The most popular mortgage lender in Japan is not one of its big established banks, but an online-only company known as SBI Sumishin Net Bank.

The reason: low mortgage rates. SBI Sumishin can afford to lend at very low rates -- a 10-year fixed-rate home loan carries an interest rate of 1.17%, compared with the average rate of 1.28% for major banks -- because it has a lean cost structure and no branch network. SBI Sumishin also offers other benefits, such as free mortgage insurance and refinancing.

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