INTERNATIONAL banking news
‘Data defines
the customer’
Japan’s Rakuten Bank pulled off an
impressive recovery by introducing
a fee-based business model and
leveraging on the strengths of
Rakuten Group.
I
nternet banking
veteran and former
Vice-President of
Tokyo-based Rakuten
Bank, Akihito Nohara,
attributes the bank’s
remarkable recovery
to profitability to the
introduction of a feebased business model.
Through the introduction
Akihito Nohara, former Viceof service fees for various
President of Tokyo-based
banking services such
Rakuten Bank.
as ATM withdrawals and
online funds remittances, he created an important and
stable source of fee income for the banking business. He
revamped the bank’s fee structure to reflect the costs of
its diversified product lineup. In today’s tightening interest
margin environment, the ability to generate fee-based
income has become even more critical.
Rakuten Group is the largest internet services company
in Japan. It provides a wide range of services via the
internet, including e-commerce, e-books, portal and media
services, travel, telecommunications, securities, credit card
and e-wallet/virtual currency. Its e-commerce subsidiary,
Rakuten Ichiba, is Japan’s largest internet shopping mall,
with over 83 million registered members and more than
41 000 merchants.
In contrast, eBank, which was set up in 2000 in the midst
of the dotcom and stand-alone internet banking rush,
was close to collapsing when it was acquired by Rakuten.
It specialised in micropayments, gathered deposits for
settlement, but did not do any lending. Instead, it deployed
its funds through its treasury operations which traded in
high-risk securities and assets. The business model was
doomed when global financial markets froze during the
global financial crisis.
The first order of business for Nohara and his team
following the takeover was to transform the bank’s business
model. He quickly identified three key areas – the synergies
that the diversified businesses of the Rakuten Group
provided, the introduction of fee-based income and the
need to drastically reduce costs.
Nohara also expanded the bank’s consumer loan business
as he brought Rakuten Mortgage and Rakuten Credit into the
bank. He employed advance data analysis and developed a
credit risk assessment model to better manage and mitigate
default risks as he grew the loan business.
‘The e-commerce business is about massive data that helps
us to define the customer. The customer segmentation analysis
that we do is one of our treasures,’ he says.
The bank has maintained its status as the most profitable
internet bank in the last two years. It posted a net income
of JPY 11.81 billion ($120 million), a return on equity of
23.83% and a return on assets of 0.9% in the 2012 fiscal
year. By Foo Boon Ping
Shanghai
Free Trade Zone
launch is a stepping
stone to financial
reforms in China
S
ince its inception in July (2013), the Shanghai Free
Trade Zone (FTZ) has attracted global attention.
Through its launch, the Chinese government
aims to further liberalise convertability of the
renminbi and free market-oriented interest rates. ‘Under
the pre-condition that risk can be controlled, convertibility
of the renminbi on the capital account will be conducted in
the zone, the first to carry out and test [it],’ according to an
internal Chinese government document on the FTZ.
The first Hong Kong-like free trade zone in mainland
China, Shanghai FTZ was personally endorsed by
Premier Li Keqiang. Pointing out that further reforms were
necessary to stimulate domestic demand, Li said that
Shanghai was the perfect venue to conduct such a project,
given that the trade volume of Shanghai’s tariff-free zones
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2013/10/15 12:34 PM