Banks jazzing up branches to appeal to younger clientele

The Yomiuri Shimbun

Customers spend time at Sumitomo Mitsui Banking Corp.’s Shiodome sub-branch in Minato Ward, Tokyo.

The Yomiuri ShimbunBanks are trying to make their branches more convenient and customer-friendly as their profitability falls due to a declining number of visitors.

One bank has introduced a free space for customers at a branch, while another began opening some branches on Saturdays and Sundays so customers can open an account on weekends. Banks are aiming to increase their transactions by attracting more young people.

About 30 chairs and tables can be found in a space at Sumitomo Mitsui Banking Corp.’s Shiodome sub-branch in an office block in Minato Ward, Tokyo. Here customers have access to free Wi-Fi and power for charging devices. On a recent day, a woman was eating her bento lunch box there while also charging the battery of her smartphone, and a number of men were working on their computers. Customers who have a debit card from the bank can have one free drink per day from a vending machine on the floor. The seats are often full during lunch time.

More than 90 percent of visitors to the sub-branch that opened in July are young people or company employees.

“We want to expand the system to our other branches in office blocks,” Akio Uemura, who is in charge of retail and information technology strategy, said.

Risona Bank, Ltd. has been gradually increasing the number of branches open on Saturdays and Sundays since 2012, calling them Seven Days Plazas. Currently, there are 22 such branches at three banks under the wing of Risona Holdings, Inc.

More than 80 percent of the branches’ users are yet to turn 60, unlike other branches, which have an under-60 percentage of about 30 percent to 40 percent.

Since opening the Seven Days Plaza near the Hankyu-Umeda Station in Osaka in April, and letting customers open accounts on Saturdays and Sundays, the new branch is getting many busy customers from double-income households.

Kiyo Bank, Ltd., a regional bank based in Wakayama, opened a new type of branch inside a Namba Station terminal building on the Nankai Line in Osaka in June. FM radio programs are played, and works by young artists are introduced through the pictures and designs on the wall. The bank is trying to change the existing image of a bank branch in cooperation with a local FM broadcaster, and also holds joint events with the radio station.

Those banks are going through a process of trial and error to define their branches, as it is increasingly difficult for them to improve the profitability of the branches as the center of their business.

Due to the falling population and the spread of internet banking, bank branches are losing the ability to draw customers. The number of people visiting mega bank branches has decreased by about 30 percent to 40 percent in the past 10 years.

MUFG Bank, Ltd. posted a loss of ¥43 billion in the business year ending March 2018, reflecting the fall in its branches’ profitability in the value of its assets. Other banks, such as Fukushima Bank and Shimane Bank, are also in the process of writing off the losses from branches.

Banks are closing and merging unprofitable branches while also trying to broaden the customers they target, to improve earning power.

“Bank branches are valuable pillars of the banks’ advertising. With the right tactics, they should be able to attract new customers,” said Monex, Inc. Chief Analyst Nana Otsuki.

Among the mega banks, MUFG Bank is planning to start a new type of branch called MUFG NEXT, which will be installed with video phones, high-tech automated tellers and other facilities. Mizuho Financial Group, Inc. has opened next-generation branches in Tokyo that combine bank, trust and security services on the same floor.Speech

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