Sakura and Fujitsu to Launch Internet Bank

Back to Contents of Issue: November 1999


In the Internet age, how can a bank-with no credit card service to call its own-tap into the online boom? Easy, says Sakura Bank, one of Japan's behemoths. The answer is to create a virtual bank.

by Tanya Clark

Sakura Bank President Akishige Okada (left) and Fujitsu's president Naoyuki Akikusa at the July press conference
In the Internet age, how can a bank-with no credit card service to call its own-tap into the online boom? Easy, says Sakura Bank, one of Japan's behemoths. The answer is to create a virtual bank.

Linking up with Fujitsu Ltd., a domestic high-tech solutions company (and the owner of Nifty Serve, an online information service), Sakura plans to build a virtual bank, where members of Nifty and participating merchants can exchange virtual cash online for goods and services.

The branch will be entirely virtual, and Nifty Serve members will be the only account holders, although Sakura is not ruling out links with other sites-eventually. But first Sakura, which has a 90% share in the bank, and Fujitsu (10%) will have to pass a few regulatory hurdles. Once the Ministry of Finance (MOF) gives the go-ahead, hopefully around April 2000, a name will be found and the virtual bank created, say officials for both companies.

Fujitsu's repositioning of Nifty Serve as @nifty-a bigger and better information provider and ISP-from November 1999, dovetails well with the move. It will also give Fujitsu a better understanding of how to work with banks online, says Scott Ikeda, a spokesman for Fujitsu. The high-tech firm is looking to use the knowledge to create further outsourcing businesses related to online banks. A low cost, Net banking service is bound to attract customers, says Hiroshi Kawasaki, a spokesman for Sakura Bank, explaining the bank's ration-ale. Sakura is initially targeting one million accounts, and transactions, which will include liquid deposits, time deposits, remittances, and transfers as well as small loans, will also be available by mail, telephone, and fax.

Sakura aims to use the online environment to learn how to cut transaction costs, Kawasaki says. The new bank is capitalized at ¥20 billion. Sakura plans to staff the bank with only 20 of its employees plus some customer support staff.

A virtual bank makes sense for Sakura if it wants to tap into the online boom, especially as Sakura does not want to start its own credit card business. (The bank does issue a Sakura credit card, but it is linked to credit companies such as Visa or JCB.) And starting the bank with @nifty is logical, says Kawasaki, because it is Japan's largest information provider, with 2,760,000 subscribers as of late August 1999.

Online credit card transactions have had some success in Japan, but security concerns linger. Fujitsu and Sakura argue that it will not only be a lot easier to instruct only one bank to make virtual payments, but it will be more secure. Security protocols for the online bank have not yet been revealed.

The evolution of Japanese banks into online entities-comprising lower transaction charges and less tedious waiting while bank tellers process every transaction by hand-is just another indication of how much Japan needs the Internet to spur improvement in most service fields.



Tanya Clark is a Tokyo-based correspondent who contribues regularly to J@pan Inc.

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