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  • Japan's Financial Institutions to Move Towards E-Commerce
  • September 28, 1998 (TOKYO) -- Japanese financial institutions such as banks, securities companies and insurance companies are seriously tackling electronic commerce.
    They are targeting individual investors in response to the Japanese version of a financial "Big Bang," a sweeping reform that has hit its stride.

    In the securities industry, various home trading services are appearing in rapid succession to make it possible to trade over the Internet. Even in the insurance industry, which has hitherto been slightly behind in offering such technology, Mitsui Mutual Life Insurance Co. launched network marketing of personal pensions in July.

    Banks are focusing on providing electronic payment services linked to Internet banking in view of the lifting of the ban of over-the-counter sales of investment trusts scheduled in December 1998.

    It is likely that efforts to realize EC by financial institutions will out pace those of corporations in other industries and accelerate at a great force.

    Securities: More Products to Trade over the Internet

    The securities industry shows the greatest movement. With the new participants in home trading services, there are all sorts of services imaginable (See table).

    The most outstanding of are the mid- to small-scale securities companies that offer unique services by making the most of their expertise.

    Matsui Securities Co., Ltd., for example, will reduce the brokerage fees for securities trading in return for limiting the services to brokerage for stocks and index options only. The company is reportedly to discount the brokerage fee for the home trading users up to as much as 70 percent when regulation on handling fees is completely liberalized in 1999. This is a move towards becoming a discount broker.

    Leading securities companies that have been providing stock brokerage services on the Internet for some time are also concentrating on expanding and improving their services.

    In July, Nomura Securities Co., Ltd., the largest securities company, significantly increased the number of investment trust issues that can be ordered over the Internet to 15.

    Daiwa Securities Co., Ltd., a leading securities company, started home trading in April 1996. It has observed a month-on-month increase in the number of participants of around 10 percent since the beginning of 1998, and is reported to have obtained more than 10,000 accounts.

    Life Insurance, Nonlife Insurance: Online Sales

    Compared to the securities industry, EC in the insurance industry has only just emerged. Active players are limited to a few advanced corporations at present. This is due to the diversity of insurance products by type as well as complexity in what they have to offer, depending on incidental conditions such as special requirements that alter the insurance premium.

    Leading life insurance company Mitsui Mutual Life Insurance began to market personal pension insurance over the Internet in July 1998 for the first time. Sony Life Insurance Co., Ltd. has been marketing education endowment insurance over the Internet since April.

    Both companies realized online sales of insurance products are relatively simple. They use electronic payment systems for collecting the insurance premium.

    With regards to the nonlife insurance industry, the London Insurance in Japan uses its home page to accept applications for traffic accident liability insurance and home asset insurance. It is also possible to pay the insurance premium by credit card via the home page.

    Nippon Life Insurance Co., Japan's largest life insurance company, uses the Internet in a different way. It's Internet ATM launched in April enables users to check the balance of insurance premiums and accumulated dividends. Furthermore, it allows users to apply for a loan over the Internet. By applying for cash withdrawal on a Web browser, the fund will be transferred to the user's designated account.

    Banks: Providing Services for Mobile Users

    Banks have been spending more effort in Internet banking as well. Japan's major city banks, including Sumitomo Bank Ltd. and Sanwa Bank Ltd., made Internet banking available in January 1997 and February 1998, respectively. Aside from Japanese banks, U.S.-based Citibank plans to start Internet banking in Japan in November 1998.

    It seems likely that Internet banking will accommodate mobile computing. It has been confirmed that six major city banks, including Sumitomo Bank, Sanwa Bank, Sakura Bank Ltd. and Bank of Tokyo-Mitsubishi Ltd., will participate in a mobile banking service slated to start in December 1998 by NTT Mobile Communications Network Inc. (NTT DoCoMo). The service offers various facilities such as money transfer and bank balance collation via the Internet using a mobile telephone with a text-based Web browser.

    In addition to the above, NTT DoCoMo plans to start in March 1999 an Internet banking service called "ANSER-WEB" compatible with mobile banking. Currently, ANSER-WEB is offered to over 100 financial institutions including regional banks, and it will be utilized for mobile telephones as an automatic teller's machine (ATM) terminal for individuals at many banks.

    As Internet banking becomes dynamic, electronic payment services for EC are taking hold.

    For example, Sanwa Bank opened a cyber mall called "EC Direct" on the Internet in July. It is planned that by the end of September, it will become compatible with a system called Secure Electronic Commerce Environment (SECE), a payment standard jointly developed by Fujitsu Ltd., Hitachi Ltd. and NEC Corp.

    Easing regulations will enable banks to handle investment trusts over the counter in December 1998. That is expected to free banks to perform online sales of such products as well as online payments.

    Table: Financial products provided over the Internet by securities companies

    Listed stocks, Over-the-counter stocks

    Convertible bond

    Stock 'mini' investment

    MMMF/Mid-term government securities fund

    Foreign currency MMMF

    Stock investment fund

    Margin trading/Trading of stock index option

    Nomura

    Securities

    yes

    yes

    yes

    yes

    yes

    yes

    no

    Daiwa

    Securities

    yes

    no

    yes

    yes

    yes

    yes

    no

    Nikko Securities

    yes

    yes

    yes

    yes

    no

    no

    no

    Matsui

    Securities

    yes

    no

    no

    no

    no

    no

    yes

    Imagawa Securities

    yes

    no

    yes

    yes

    no

    no

    no


    TARGET="_blank">News Japan Securities

    yes

    yes

    no

    yes

    no

    yes

    no

    Okasan

    Securities

    yes

    yes

    no

    yes

    no

    yes

    no

    Wako

    Securities

    yes

    yes

    no

    yes

    no

    yes

    no

    Dai-Ichi Securities

    yes

    no

    no

    yes

    no

    no

    no


    (return to news)

    (Manabu Nagai, Staff editor, Nikkei Multimedia)


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    Updated: Fri Sep 25 20:11:21 1998 PDT