TOKYO (Reuters) – Japan’s Mitsubishi UFJ Financial Group Inc (MUFG) plans to automate 30 percent of operations at its core banking unit by 2024, using software robots and artificial intelligence for paperwork that would otherwise take 9,500 employees to process.
Automation would free bankers to better serve Bank of Tokyo-Mitsubishi UFJ Ltd’s [MTFGTU.UL] wealthier clients, where there are opportunities such as estate management, said Kanetsugu Mike, the unit’s chief executive since June.
“Branch officials spend 50 to 60 percent of their time processing customer documents,” Mike said in an interview. “We can free up that time with robotics technology so more time can be spent with customers.”
The comments come as Japanese banks turn to automation under an efficiency drive aimed at blunting the impact of the central bank’s negative interest rates on profit margins, stricter capital requirements and a shrinking population.
Japanese banks have been slow to eliminate paper-based documentation compared with major global peers, partly because many forms require customers’ personal ink stamps – Japan’s official method of identification – rather than signatures.
Having fallen behind, they are now scrambling to reform processes – such as introducing stamp-free accounts – and employ new technology to fend off potential threats from their more tech-savvy competitors.
Mizuho Financial Group Inc, Japan’s second-biggest financial group after MUFG, last year set up joint venture J.Score Co with SoftBank Group Corp, using artificial intelligence to calculate individuals’ creditworthiness.
At MUFG, Mike said “robotics process automation” will handle half of branch operations by the end of the business year to March 2024, or 30 percent of the bank’s total. By the time of full installation, the automation would have handled the equivalent of 9,500 employee’s workload, he said.
Freeing up staff will allow for increased focus particularly on 1.2 million clients with assets over 100 million yen ($ 890,000), currently served by only 2,600 bankers, Mike said.
“We need more bankers, so we don’t have much of an excess workforce to begin with,” he said, dismissing any connection between automation and headcount.
Mike, who has spent nearly half of his 38-year MUFG career outside Japan, also said overseas business will continue to be a growth-driver, and that further acquisitions are likely in Asia and the United States.
He said the rate of expansion will not be as fast as in recent years given constraints such as higher capital requirements. MUFG’s assets grew nearly $ 1 trillion over the past decade to $ 2.7 trillion at the end of June.
“Our growth so far has been led by balance sheet expansion, especially after the global financial crisis,” he said. “We need to use our balance sheet more prudently now.”
Reporting by Taiga Uranaka; Editing by Clara Ferreira Marques and Christopher Cushing