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The Honolulu Advertiser

Posted on: Friday, May 11, 2001

Sony to offer online banking

Associated Press

TOKYO — Japan's notoriously inefficient and indebted banks are getting competition from an unlikely rival: Sony Corp.

The electronics giant enters banking June 11, offering long-term loans, money management advice and automated teller machines at convenience stores.

Sony will be going against much of Japanese banking tradition. Instead of branches that close their doors after office hours, Sony Bank will be strictly an Internet bank. Its slogan: "Do it your style."

Sony Bank officials acknowledged yesterday that they aren't counting on turning profits for the first couple of years.

They say Sony's entry into banking is aimed at changing the way Japanese save and invest — and perhaps even getting the economy growing again after a decade-long slowdown.

Japanese are among the world's biggest savers with about $11 trillion in savings, bonds and other assets. But few see putting their savings in banks as much better than hoarding it under the futon used for sleeping.

Banks here offer 0.02 percent in annual interest on regular accounts, drag-

ged down by a policy for near-zero interest rates that the government adopted to help spur the economy.

Interest rates at Sony Bank won't be much higher at 0.05 percent. But Sony says its knowledge about consumer tastes will be a big plus in reaching out to a new breed of cyber-savvy Japanese eager to learn about wise long-term, low-risk investments that offer a better return.

That will require breaking new ground.

Japanese have a deep distrust toward investment trust funds and stock trading.

"Japanese in the past have viewed banks as no more than a safe," Sony Bank President Shigeru Ishii said. "We want people to start thinking about banking services."

If Sony can persuade Japanese to put their money in investment trust funds — which work like mutual funds — it could funnel the country's wealth now stored away in low-rate savings accounts into the stock market.

A strong stock market would go a long way in buoying sentiment among consumers, whose reluctance to spend has hindered growth.

Japanese banks also are suffering serious image problems for taking years to clean up their bad debts estimated at $393 billion.

Sony Bank software called "MoneyKit" is set up with icons to click for customer service, loans or money management advice.

For money management, asset allocation and other financial knowledge, Sony will be relying on J.P. Morgan, which owns 4 percent of Sony Bank. Sony Corp. owns 80 percent, with the remaining 16 percent held by Sumitomo Mitsui Banking Corp.

Another nonbanking business, Ito-Yokado, which runs 7-Eleven stores, opened IY Bank this week at five locations.