Japanese financial group Mizuho Financial Group Inc. (bank) will sell information on consumer spending habits. And also other aggregate data in an effort to expand its traditional lending business (customer data)
“We will offer data services to corporate clients,” said Koji Fujiwara. He is chief executive of Mizuho’s main banking unit in an interview reported by The Japan Times, Tuesday (10/11/2020).
The move will be the first in the history of a bank in Japan to sell customer data.
“We have a large amount of data, such as accounts, transactions, and loan information,” said Fujiwara.
Data will be collected anonymously
He stressed that data will be in the form of anonymous. Moreover, bank will never share personal details.
Lenders around the world start from Bank of America Corp. until Lloyds Banking Group Plc found a way to monetize their customer information, such as technology giant Facebook Inc. and Alphabet Inc.
While this practice makes them take firm steps to protect their privacy.
Accenture has estimated that banks can earn a revenue gain of at least 1% to 2% if they can harness the value in sharing that data.
Aiming to support the banking industry
In Japan, it is possible for banks to run new business models due to deregulation. And aimed at sustaining the banking industry in the current difficult situation. Previously, bank activity was restricted, and it is now being given greater freedom. It is from the impact of low interest rates and weak loan demand.
Data and digital technology are new business fields for Mizuho and its Japanese competitors in search of new sources of growth.
Earlier this year, Mitsubishi UFJ Financial Group Inc. agreed to invest US $ 700 million in Singapore’s ride-hailing giant Grab Holdings Inc., while Sumitomo Mitsui Financial Group Inc. buy shares in the Japanese medical information application provider.
Target: more than 100 users in three years
Fujiwara did not provide a target for revenue or fees that would result from the service. But Mizuho said it targeted more than 100 users in three years. For example, it may be useful for retailers and restaurant operators to select a prime location based on population income, expenses and other lifestyle statistics.
Banks have started sharing customer data with financial technology companies through the government’s so-called open banking initiative. It differs from aggregation in that it involves account information being provided with the customer’s consent to enable them to manage online finances more effectively, such as by running budgeting and accounting applications.
“As a core function of banks, financial intermediation remains very important, but it is not enough,” said Fujiwara.
“We need to go beyond that and offer new value by including non-financial services,” he continued.
Japanese banks are expecting more business opportunities from digitization, thanks to Prime Minister Yoshihide Suga’s pledge to overhaul an outdated paper-based process.
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