Banks in Japan are becoming both fewer in number and larger in size, sparking concern that financial institutions are increasingly less personal and accountable to those they serve.
Earlier this month, the $834 million Unitus Community Credit Union in Portland, Ore., shared its ideas and success stories with Satoshi Uchida of Ibaraki University, a prominent Japanese banking expert.
Uchida met with Unitus President/ CEO Patricia Smith and other Unitus officers at Unitus Plaza in Portland. In his letter requesting Unitus' participation, Uchida said he chose Unitus for its 75-year history of service and reputation and for maintaining a strong commitment to members' financial well-being.
According to Uchida, lack of personal connection and community identity are growing problems and potentially undermine public confidence in Japan's banking system. America credit unions have experienced a renaissance in the wake of the most recent financial crisis, he noted. As local models of success, they are of particular interest in Japan, which lacks a robust local banking industry. Unitus Community CU was selected to participate in a study on the importance of relationship banking because Japanese leaders fear they are losing the connection to individuals and local communities.
Part of the problem is that Japan is largely a cash-based society. The vast majority of the population either does not have credit or debit cards, a problem in a country where many people, especially elderly ones, still hide their cash at home. According to one estimate, about $350 billion worth of yen doesn't circulate. The term for this hidden money in Japanese: tansu yokin. Or literally, wardrobe savings.
Not only do the Japanese people mistrust banks, but in the 2000s, a succession of mergers and integrations occurred over a short period of time to create mega-banking groups such as the Mizuho Financial Group, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group. These mergers and integrations were made possible by the provision of the legal and tax system, which enable banks to undergo large-scale organizational transformations, in addition to the drastic changes in the management environment requiring banks to deal with nonperforming loan problems and cope with international competition. These industrywide reorganizations were not limited to major banks but also spread to regional banks, resulting in the establishment of holding companies in some cases which cover regions broader than before.
"It was a pleasure to meet with Dr. Uchida and share the Unitus vision for building, strengthening and enhancing the lives of those who live and work in the communities we serve," Smith said. "Unitus has grown from 11 founding members in 1937 to approximately 80,000 members today. Along the way, we've learned a great deal about making sure growth benefits our members and does not compromise our core values as a member-owned credit union."
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