Introduced with considerable fanfare to a nation accustomed to unfriendly banks and savings accounts with meager interest, Sony Corp's new Internet bank offered Japanese consumers a refreshing change.
Not only did Sony Bank entice potential investors with higher interest, its colorful Web site with a Monopoly game-like design also provided online investment advice, currency exchange rates and money transfer services.
This in a country where many banks still don't bother to provide 24-hour automatic-teller machines.
PHOTO AP
Yet, since its June inauguration, Sony Bank has attracted just 28,000 depositors -- most of them men in their 20s and 30s.
By launching an online bank, the entertainment and electronics conglomerate is gambling big on the potential for Internet Age-induced change in Japan's staid financial culture, acknowledges Sony Bank representative director Shigeru Ishii.
``Japanese people tend to recoil from risks,'' Ishii said in an interview at the bank's headquarters. ``Saving money hasn't really been about the management of assets but just about keeping it somewhere safe in case of an emergency.''
A modest operation of 100 workers, the bank is split between two tiny offices. One is a room in an apartment building, where about 20 people work at computer terminals.
Japanese are among the world's top savers, hoarding more than US10 trillion in savings. But they are just as notorious for stashing that hard-earned cash into bank accounts that yield little or no interest.
Until recently, Japan's banks were the darlings of government. All they had to do was carry out a simple but key duty -- provide money to big companies. Attractive services for ordinary people were an afterthought.
So it should come as no surprise that many Japanese shun stock investments as a risky gamble. Mutual funds are a novelty.
Sony Bank offers 0.4 percent interest for one-year time deposits from ?100,000 (US$840) and graduated rates after ?1 million that reach 0.55 percent for more than ?10 million (US$84,000). That compares very favorably to old-style banks, which generally offer no better than 0.05 percent for one-year deposits.
There's no inflation in Japan. Indeed, the economy is beset by deflation, pushing down corporate profits and workers' incomes.
Sony's foray into banking comes as several traditional banks begin to offer Net services of their own, and it is unclear how Sony will measure up.
Sumitomo Mitsui Banking Corp has attracted 350,000 people to its cyberbank, called Japan Net Bank, since it opened last year.
The allure of Net Bank is that users can make payments easily online such as on electronic auctions. But its one-year deposit rate stands at 0.1 percent, far below Sony's.
Sony Bank hardly invests in advertising and is not expecting to post a profit until the fiscal year ending in March 2004. It also has no immediate plans to expand overseas -- though bank officials say they are considering international partnerships for the future.
A bank card that arrives by mail after a combination of online and mail registration gives Sony Bank users access to about 2,000 automatic-teller machines nationwide at Sumitomo Mitsui branches and a convenience store chain.
Online, account holders have access to a Web site called MoneyKit that offers investment advice. They can also pick from an assortment of investment funds, mostly offered by US financial companies such as Merrill Lynch, and buy them with a click of a mouse using money in their Sony Bank account.
For parent Sony, a banking unit is a strategic plus.
Once Sony starts offering more Net businesses, such as downloads of music and films, Sony Bank will be ready with one-stop electronic shopping -- perhaps from a Sony Internet access device like the Airboard, now sold only in Japan, or even the PlayStation 2 video-game machine, which also is equipped for a Net connection.
So far, those opting for banking Sony-style are 87 percent male and 68 percent in their 20s and 30s. They include people like Minoru Wakiyama, an ad company worker with about ?2 million (US$17,000) saved in Sony Bank.
``It's not that I want to make a lot of money. I just want to protect my assets,'' he said. ``I chose it because of the better interest.''
One thing Sony Bank can count on is brand power at a time when the image of other banks is in tatters. With a couple of top banks failing in recent years, people are seriously starting to worry about the safety of their savings.
Despite a public bailout totaling billions of dollars, banks are still mired in masses of bad debts US$361 billion by conservative government estimates.
Ishii, the Sony Bank director, says his venture is all about a revolution in consumer choice.
``We are targeting the people,'' he said. ``There was no financial institution in the past that responded to individual needs as people inevitably move from a rigidly defined world to the free market.''
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