Special Feature: CEO Message
In order to be a financial group that stays a step ahead,
we continue to endeavor to maximize the Shinsei Bank Group's strengths and management resources to address unmet customer needs arising from social changes and further evolve the Group's unique business model.
Social Issues & Environmental Changes Surrounding the Financial Industry
Operating conditions surrounding financial institutions are changing in a period of sweeping change in a variety of social, economic and financial areas. In light of difficult earnings conditions in the traditional businesses and rapid technological development, the search for areas that can generate new customer value is an issue as well as an opportunity faced by the entire financial industry, and differentiation in business models is starting to arise from this trend.
Labor shortages caused by the aging population along with widening social disparity are social issues facing Japan. Consequently, with employment flexibility and acceleration of diversity, freelancing, second jobs and other new work styles are on the rise. At the same time, the number of foreign workers in Japan has reached an all-time high. Against this backdrop, the Shinsei Bank Group is providing financial support to address unmet needs within latent customer segments to which conventional approaches have been unable to fully deliver financial products and services. To address worldwide environmental and energy issues, the Shinsei Bank Group is breaking new ground by financing projects to meet the need to adopt renewable energy in Japan following the Great East Japan Earthquake.
Financial Environmental Changes
Three major changes are occurring in the financial industry.
First, the traditional commercial bank business model consisting solely of accumulating deposits and providing lending is no longer able to generate significant additional value following the adoption of a negative interest rate policy by the Bank of Japan and the emergence of FinTech, a phenomenon that is integrating financial and IT functions on a highly sophisticated level.
Second, we are seeing changes from the development of FinTech and new entrants from relevant outside sectors. Financial institutions are now facing competition from companies that use data collected from entry points out side of the financial industry. In addition, the entry of new players from non-financial sectors could pose a major threat to financial institutions, as regulations make it difficult for them to enter non-financial sectors. Nevertheless, the fact remains that financial institutions themselves have high expectations for FinTech to drive innovation in terms of providing never-seen-before value to existing customers while identifying and supporting the increase in value for new customer segments with unmet needs by entering ecosystems that leverage FinTech.
Third, geopolitical risks mainly overseas have heightened. With domestic and overseas financial institutions being connected by networks, there is a lack of clear financial regulations in areas such as virtual currency, where value storage and payment methods that can easily cross borders have appeared on the scene. Similar to the collapse of Lehman Brothers, the fear that an issue arising in a particular country could quickly spread worldwide has definitely not eased. Rather, such risks are on the rise in different forms.