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July 2006 – As more Japanese consumers find it easier and cheaper to trade and conduct transactions online, Japanese banks, securities firms and exchanges are rushing to make more transactions available over the Internet and through mobile phones.  In helping these companies expand their online offerings, U.S. companies are generating new sources of revenue by contributing their technologies and services to these efforts. 

Banks go online
Sony Bank and eBank have been around since 2001, but they enjoyed their first year of profitability in fiscal 2005.  Sony Bank earned a parent-only net profit of 3.2 billion yen, up from the 1.6 billion yen net loss of fiscal 2004, while eBank reported a net profit of 1 billion yen against the 500 million yen net loss of fiscal 2004.  Both online banks pointed to a surge in customer accounts as a factor in lifting profits.

This increase in demand for online banking services over the past few years has led a wave of other companies to move online:

• October 2005:  Sumitomo Trust & Banking and SBI Holdings agreed to form on online banking joint venture.  The companies plan to start operations by September 2007, providing online services including taking deposits, making loans and selling securities.

• November 2005:  Online bank eBank began marketing an investment trust that manages assets via multiple overseas hedge funds, which is the bank's first product for which principal is at-risk

• February 2006:  eBank partnered with two securities firms to enable customers to transfer money using their cell phone and plans to introduce a fund-of-funds that incorporates real estate investment trusts. 

• February 2006:  Japan Net Bank partnered with 18 institutions, including E*Trade Securities Co., Nomura Securities Co. and Nikko Cordial Securities Inc. to offer online fund transfer services.  The Bank has also made arrangements with five brokerage partners to allow customers to transfer money using their cell phones.

• April 2006:  KDDI and Bank of Tokyo-Mitsubishi UFJ announced plans to establish an internet bank by early 2007 that offers financial services via mobile phones, including opening bank accounts, transferring money, and applying for consumer loans.  Customers will also be able to pay for goods and services traded via the Internet.