Special Feature: CEO Message
Shinsei Bank Group Business Strategies and Strengths
Being in a unique position that differentiates it from both megabanks and regional banks, the Shinsei Bank Group leverages its technological strengths in both IT and finance to be first in identifying and meeting "unmet customer needs."
- Society (S): Respond to financial needs that are not met by existing products and services
- Environment (E): Become the market leader in the renewable energy field
- Seek growth opportunities in Southeast Asia
The Shinsei Bank Group's originality lies in providing highly specialized products, services and solutions that leverage both IT and financial technologies to meet actual customer-oriented demand. The Group aims to create added value for customers by identifying business opportunities from needs not met by existing products and services along with those needs that remain under the surface, while pioneering initiatives in businesses expected to see high margins and market growth.
Combining IT and financial technologies had specifically involved establishing SecondXight, Inc. as a FinTech joint venture with a company specializing in data analysis in order to utilize AI and Big Data. In addition, the Group has been upgrading tools to provide such new services as an integrated Group customer database that goes online in fiscal 2018. Through these initiatives, various Group management resources will be organically linked, while simultaneously identifying what kinds of latent needs will emerge and in what forms for which customers and then employing these resources to find the best way to address them. Effectively matching customer needs with Group functions is an area where the Shinsei Bank Group can provide value to address social issues and it serves as the starting point to build our original business model.
A specific example of this is the approach to freelance personnel. Although we expect freelancers to top 20 million in 2030, conventional financial institutions that depended on previously stable cash flow are unable to sufficiently meet freelance financing needs. However, the ecosystem in which freelancers operate shows significant promise for unique financial institutions like us that are experts in small loans while using Big Data and AI. In 2017, Shinsei Bank established a capital/business alliance with a crowdsourcing major player, Lancers, Inc., aimed at developing financial products and services for free- lance personnel. With our presence rising in the freelance labor market, we will penetrate ecosystems in which freelancers operate and provide solutions for customers who had been previously overlooked, thereby creating a virtuous circle within this ecosystem.
The Group has positioned its financial technologies in growth fields, focusing on structured finance as a means to provide high-value-added financial services. Particularly in project finance, we boast an abundant track record in the field of renewable energy by leveraging our accumulated financial expertise based on cash flows generated from operating activities. Environment and energy are important social issues. As a market leader in project finance for renewable energy, the Shinsei Bank Group is contributing to the stable growth of renewable energy and to the solution of social problems through these business activities.
The Shinsei Bank Group will develop its small loan businesses overseas by forming alliances with local financial institutions that have customer bases centered on Southeast Asia, which displays high growth potential. In Vietnam, we have already established a consumer finance joint venture with a major private-sector commercial bank, enabling a steady rise in customers there. The Shinsei Bank Group aims to expand its businesses by providing services that package together our consumer finance experience and expertise, personnel and financial technologies accumulated to date to contribute to growth in Southeast Asia.
Management Infrastructure to Realize a Business Model That Is a Step Ahead
The ability to adapt to changing conditions is important for remaining a step ahead. As a means to identify business opportunities and meet social needs amid these changing conditions, the Shinsei Bank Group aims to identify methods for combining business functions not limited to particular business models as well as integrating personnel from different companies.
- Governance (G): Enhance sophistication of integration of administrative functions in the Shinsei Bank and its Group
- Generate greater dynamism through business integration with other business categories inside and outside the Group
Strength from Flexible Organizations
In order to sufficiently meet changing customer needs, it is important not only to just attract talented personnel but also supplement any insufficiencies from both inside and outside the Group. In other words, it is vital to be able to grasp the roots of customer needs rather than taking a rigid sector-focused approach as well as have the dynamic creativity to optimally meet these needs. We are working to integrate the Group as one of the strategies in the Third Medium-Term Management Plan (3rd MTMP).
In April 2017, we established a virtual Group Head Quarters within Shinsei Bank in order mainly to concentrate and increase the sophistication of headquarters functions and establish a foundation for organically linking administrative functions. In so doing, we have integrated indirect Group company headquarters-related functions in the areas of personnel, finance and general affairs. Beyond enhancing the Group's corporate governance structure, raising the sophistication of indirect administrative functions and increasing productivity and efficiency through integration, the aim of the virtual Group Headquarters further out is to reorganize the Group's overall business functions in order to provide optimal solutions for customer needs.
In general, financial institutions seek to avoid new risks, but being insensitive to familiar risks is hardwired into their DNA. With a major paradigm shift occurring and the pace of change accelerating, however, it is becoming evident that those who are not the first to change will find themselves left out in the cold.
When tackling new ideas, traditional financial institutions lack an agile approach for improving through repeated trial and error. They start by making sure that all conceivable risks have been thoroughly eliminated. As this approach is the hallmark of financial institutions, any attempt to alter this would be nearly tantamount to changing their conceptual foundation and corporate culture. As a catalyst for changing the corporate culture, an important matter is how to take better advantage of the diversity within the Shinsei Bank Group. With this in mind, we are promoting the role of women in the work- place as one important theme.
Over and above the obvious appointment of women to managerial level positions, we recognize the need to make each and every employee, regardless of gender, feel that their work is worthwhile by creating a work environment that allows for healthy competition and provides opportunities for employees to use their abilities to the fullest extent possible. Foremost, we encourage employees to have the desire to attain both personal and organizational growth. In this sense, management must be committed to making the most of innovation, and therefore diversity, which is the wellspring of corporate value creation, and implement appropriate measures to facilitate this. Examples of Group initiatives are the formation of the Committee on Promoting the Role of Group Women in the Workplace and the removal of restrictions on diverse work styles.
The Shinsei Bank Group is taking on the challenge of changing its way of thinking by undertaking initiatives on a trial-and-error basis that involve organizational integration through the establishment of the virtual Group Headquarters and operational integration across business lines both within and outside the Group. We are gradually seeing the fruits of these efforts.