As we celebrate the start of 2018, I would like to share my message for the beginning of the New Year.
While we still need to pay close attention to overseas political and economic uncertainties as well as geopolitical risk, Japanese economy has been demonstrating steady growth, with private corporate sector performance remaining strong. However, the banking sector is likely to continue to experience declining revenue in traditional financial intermediary services due to structural problems in Japan, such as the declining birthrate and an aging society resulting in negative population growth as well as the impact of negative interest rate. Under such an environment, we believe that the banking industry must proactively pursue future-oriented reforms in order to achieve sustainable growth.
Against this backdrop, the Japanese Bankers Association (the “JBA”) regarded 2017 as “a year in which we contribute to the sustainable growth of Japan and implement initiatives to adapt ourselves to various changes” and had been undertaking activities to achieve this. In 2018, we will continue to focus on the three pillars established as our activity goals, and make every effort to enhance our contribution.
Under the first pillar (“enhancing our contribution to Japan’s economic growth strategy”), a number of banks have published their policy on the implementation of customer-oriented business practices and an increasing number of banks have also established related KPIs, with a view to realizing long-term stable asset accumulation for households. We will continue to undertake our initiatives in order to enable banks to implement such policies and achieve their KPIs. With regard to dissemination and marketing activities to promote the use of newly introduced tax incentive schemes, such as the new NISA scheme (Dollar-Cost Averaging NISA), we would like to encourage the public to utilize such schemes.
Individual banks have been working on developing a new financial intermediary business model that focuses on the business and potential growth of small and medium-sized enterprises. In this initiative, banks are providing credit facilities that are not excessively reliant on collateral and guarantees by promoting the use of the “Guidelines on Management Guarantee,” thereby offering high-quality financial services.
We are also undertaking ESG (Environment, Social and Governance) and SDGs (Sustainable Development Goals) -oriented initiatives and seek to further promote such efforts in 2018.
For bank card loan services, we have been reviewing business operations (i.e. approaches for marketing/advertisement and credit assessment) and have conducted activities including the publication of related figures and the establishment of a dedicated consumer help desk. We will further promote these activities to develop a sound consumer finance market, while closely monitoring its future developments.
As part of the initiatives relating to the second pillar (“developing and enhancing convenient, reliable, and secure financial infrastructure incorporating IT innovations”), we have been taking actions for enhancing Japanese payment systems, such as working on open APIs, preparing for the transition to XML messaging and testing Proofs of Concept (PoC) on Collaborative Blockchain Platform. In 2018, we will accelerate these initiatives and promote the use of such technology in practice. In addition, with a view to reducing costs across entire society and addressing labor shortage issues, we will discuss the digitalization of bill/check and e-payment of tax/utilities with related ministries and agencies.
We will also continue our activities for combating financial crime, and raising the level of security by, for example, establishing a Business Continuity Plan (BCP) framework, developing a cooperative framework between the public and private sectors via Capability for Engineering of Protection, Technical Operation, Analysis and Response (CEPTOAR) for banks and encouraging participation in cross-industry cybersecurity exercises. For the purpose of financial and economic education, we will contribute to the improvement of the public financial literacy by, among other things, creating common educational materials used across industries in collaboration with the Bank of Japan and other organizations so as to realize stable, long-term asset accumulation in line with the goals of the first pillar.
Finally, in relation to the third pillar (“maintaining and developing a fair, robust financial system”), TIBOR reform has been implemented since July 2017 in order to further enhance the transparency and integrity of TIBOR. With respect to regulations, including Basel III reforms, we have been providing our comments to overseas authorities and other relevant organizations. Owing to joint efforts by the public and private sectors, such regulatory reforms have finally reached agreement.
As noted above, the banking sector as a whole has been working on various initiatives for its future growth. 2018 is the year of tuchinoe or inu (dog) in the context of the Chinese zodiac. In light of the meaning of each of these words in Chinese characters, this year could be interpreted as “a year requiring bold decision-making and actions towards various issues and challenges for making a further leap forward.” While the banking sector continues to face severe environments and numerous challenges, we, as the banking sector, will maintain close cooperation with the government and the Bank of Japan, work on each and every challenge thoroughly, support Japan’s economy and contribute to all customers to realize their stable, long-term asset accumulation, companies’ sustainable growth and revitalization of the regional economy so that 2018 will become “a year to open the way to the future and realize sustainable growth.”
Last but not least, I hope that 2018 will be a year of significant progress for all of you.