Ranking: 3

Table 1: About au Jibun Bank

Exploiting Japan’s evolving hi-tech banking landscape

au Jibun Bank has its foundation on a joint venture between Mitsubishi UFJ Bank, the largest commercial bank in Japan, and KDDI, the second-largest telecom carrier in Japan, operating under the brand name ‘au’. Having spotted an opportunity early to introduce mobile banking to an increasingly tech-savvy consumer base, au Jibun Bank has since reaped the rewards. It is now the largest and most profitable mobile bank in Japan. Despite lacking a branch network and limited staff, au Jibun Bank enjoys low costs of operation and high flexibility in developing new products and services. Its extensive expertise in digital solutions from KDDI has ensured that au Jibun Bank remains at the forefront of mobile banking in the country.

Product Strategy: Cutting-edge solutions for a new generation of consumers

au Jibun Bank has sought to exploit the growing mobile trend and the emergence of digital banking in Japan. It has identified that the major incumbent players of the banking industry there have secured the older and corporate market segment who prefer traditional banking channels. However, the younger demographic still presents itself as an area of opportunity. This group of consumers utilises mobile devices extensively and relies less on physical branches for banking. Hence, au Jibun Bank has focused on mobile banking, emphasising speed and convenience.

Despite being a joint 50-50 venture between KDDI and Bank of Tokyo-Mitsubishi UFJ (BTMU), au Jibun Bank has a separate core banking system from its parent bank, allowing more space and time to develop innovative features. While BTMU provides the financial expertise, KDDI ensures that au Jibun Bank is constantly updated with the latest technology to differentiate itself from competitors such as Softbank. KDDI is also able to utilise its extensive network to aggressively promote incentives for using Jibun products, both in online and offline spaces.

Having identified that Japanese households have little interest and understanding in investing in financial instruments, au Jibun Bank has turned its attention towards making investment accessible for consumers. It has spotted an opportunity to integrate Artificial Intelligence (AI) with its offerings to provide a uniquely pleasant customer experience in investing.

Overview of the product stack at au Jibun Bank

au Jibun Bank has shown a greater focus on its retail banking services over its business banking services. It also also offers various lending and payments functions on its platforms. It has developed its online marketplace and rewards schemes to complement it. It has yet to form many partnerships to integrate 3rd party services such as insurance, travel, entertainment, and utility bill payments onto its platform. au Jibun Bank excels in wealth management, where it can apply its expertise in AI to offer unique and powerful investment services.

3 Key Product Innovations

1. AI Foreign Currency Forecast/AI Foreign Currency Automatic Savings Plan

AI Foreign Currency Forecast is a service introduced in 2017 that predicts the future rates of foreign currencies to support a customer’s investment activities. It can predict the rate-to-come as quickly as under 24 hours. The service uses machine learning (ML) image feature extraction to analyse huge datasets of historical exchange rates. AI Foreign Currency Forecast ensures that forecasts are as up-to-date and as accurate as possible. The forecasts are in emoticons on the customers’ smartphone apps. In addition, users will also receive alert notifications when a foreign currency is likely to change with high probability.

au Jibun Bank introduced the AI Foreign Currency Automatic Saving Plan in 2018 to complement this feature. This service judges the timing at which the Japanese Yen appreciates against the most selected currency each month, and automatically deposits foreign currency with the amount set by the customer.

2. AI Japan Market Forecast

In 2020, au Jibun Bank followed up on its AI-powered forex tools by introducing the AI Japan Market Forecast. The capability combines economic indicator figures, stock market price index figures and AI technology into a simple user interface. This service covers five-day and one-month forecasts for the Japanese stock market (TOPIX) and provides daily and monthly updates through graphical representations. It uses AI to extract the characteristics from daily charts and searches for similar scenarios from the previous three years.

For daily forecasts, the feature calculates an average range of future returns for stock price increases or decreases after analysing ten similar scenarios. This prediction is then compared with a ten-year historical back data to determine the certainty levels of future stock prices for the next five days. The bank shows this information on a colour-coded bar chart UI. AI Japan Market Forecast boasts a daily forecast accuracy rate of 64% from October to December 2020.

For monthly forecasts, the engine analyses the most recent PMI index of the previous month. A simple indicator pie chart displays whether the PMI shows a no-change or neutral point as well as the percentage change of the monthly stock price, based on its closing price.

The AI Japan Market Forecast project won the Best Use of AI category at the Banking Tech Awards 2020.

3. Smartphone ATM

This feature allows users to deposit and withdraw cash from any affiliated bank ATM without the need for cash cards. Customers can do these transactions by reading the QR code displayed on the ATM screen with the au Jibun Bank smartphone app at any Lawson Bank ATM or Seven Bank ATM. As of 2020, one in ten au Jibun Bank customers use “smartphone ATMs” for transactions.

“Smartphone ATM” was awarded the “Best ATM Innovation Award” at the “Global Retail Banking Innovation Awards in 2020.

Table 2: Selected Partners

Recommendations

1. Create a unified platform for a variety of payment services

au Jibun Bank has the unique opportunity to create a sprawling payments ecosystem. The next steps will be to integrate its payment services further with the other services held by the KDDI group, such as au Denki.

In addition, au Jibun Bank should form partnerships with other merchants to expand its ecosystem and introduce new services, such as travel bookings and food deliveries. The end goal would be to transform the au Pay app into a one-stop platform, allowing users to perform all kinds of daily services.

2. Continue innovating in wealth management

In Japan, more people are investing in stocks and other financial instruments. This trend provides the perfect opportunity for au Jibun Bank to follow up on the success of its current AI-powered investment products and continue exploring AI solutions in wealth management.

au Jibun Bank is currently planning to implement a user-friendly AI-enabled feature, one which will help the bank’s app recommend investment trusts to its retail customers.

With the impressive growth of au Jibun Bank in recent years, it is clear that the tech-savvy clientele represents a significant opportunity that promises huge rewards for you. The success of the bank’s AI products has also shown that the sky is the limit on how you can harness AI to create ingenious products for your consumers.

Endnotes

au Jibun Bank, (n.d.). Smartphone ATM.

Fintech Futures, (2021, March 31). Banking Tech Awards 2020 Winner: au Jibun Bank – Best Use of AI.

KDDI Corporation, (2020, December 31). Group annual report.