Sony's Internet bank off to a slow start

Associated Press

TOKYO — 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.

Hiroki Totoki, director general manager at Sony, displays his company's online bank's Web site at his office in Tokyo. Since its June inauguration, the bank has attracted just 28,000 depositors, mostly men in their 20s and 30s. Associated Press

This in a country where many banks still don't bother to provide 24-hour automatic-teller machines.

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."

Japanese are among the world's top savers, hoarding more than $10 trillion in savings. But they are just as notorious for stashing that hard-earned cash into bank accounts that yield little or no interest.

Sony Bank offers 0.4 percent interest for one-year time deposits from $840 and graduated rates after $8,400 that reach 0.55 percent for more than $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 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 U.S. financial companies such as Merrill Lynch, and buy them with a click of a mouse using money in their Sony Bank account.

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 $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 — $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."