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The Role of the Bank of Japan in the Development of the Financial Services Industry
October 27, 2022
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Fujitsu is losing ground in the battle for the bank's banking system. The new system being developed for its first user, Sony Bank, will not go live until fiscal 2023 or later. Fujitsu is also heavily burdened with dealing with Mizuho Bank and regional banks that are trying to recover from repeated system failures. Can Japan's IT industry leader rebound from adversity?
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Sony Bank is reexamining the entire system to ensure quality. Sony Bank explains the status of its new banking system, which is being developed with Fujitsu. The bank had hoped to have the system up and running by the end of FY2022, but cutover is expected to be delayed until FY2023 or later.
Major Background of Sony Bank's New Checking System
Time Outline
Late 2013 Started using public cloud "Amazon Web Services (AWS)" for internal and peripheral systems
October 2018 Fujitsu announces that it has begun development of FUJITSU Banking as a Service (FBaaS). Reveals that Sony Bank is considering adopting it as a first user.
October 2019 Migration of the financial accounting system, part of the accounting system, to AWS is completed.
December 2019 Decision made to make AWS available to all operations
From FY2023 onward (planned) New accounting system running on AWS goes live
FBaaS difficulties, inevitable revision of strategy
The new system being developed by Sony Bank and Fujitsu is an ambitious undertaking. No Japanese bank has yet fully implemented its banking system on the Amazon Web Services (AWS) public cloud.
The bank will use FUJITSU Banking as a Service (FBaaS), which is currently under development by Fujitsu, for business applications such as deposits, etc. FBaaS adopts a microservices architecture and was touted as being able to achieve both stable operation and development efficiency.
Fujitsu announced in October 2018 that it had begun development of FBaaS and was aiming to launch it in 2020. However, the project with Sony Bank has run into difficulties, and the launch date has been postponed. The company is still working diligently on the development of FBaaS," said Mr. Kuroda. However, we are refraining from giving details as this is a matter that concerns our customers," said a Fujitsu spokesperson.
FBaaS is a strategic service that will affect the future of Fujitsu's banking business. Fujitsu's strategy was to expand its customer base by offering FBaaS to other banks in addition to Sony Bank. If FBaaS can hold the core banking system, it will have an advantage in winning orders for peripheral systems. However, the company is struggling with the development of its core FBaaS system, and a review of its strategy is inevitable.
Regional Banks Using PROBANK Have Reduced to Zero
Sony Bank is not the only regional bank facing difficulties. Regional banks are also at a crossroads with their banking systems. The number of banks using PROBANK, the joint system that Fujitsu is developing for regional banks, is expected to drop to zero, and business expansion can no longer be expected. Fujitsu plans to shift its focus to supporting channel reforms at sales branches and other locations as well as lending business reforms, but with NTT Data, IBM Japan, and other firms having taken over the core banking system, it is difficult to see how far it can expand its business.
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Fujitsu's response to Mizuho is another difficult issue that the company cannot avoid. As one of the four major vendors that played a central role in the development of Mizuho's "MINORI" system, Fujitsu has a major role to play in ensuring the stable operation of MINORI.
On the other hand, some mid-level Fujitsu employees believe that "IBM's color is becoming stronger" with respect to Mizuho. In fact, IBM Japan has invested in MI Digital Services, which handles system operations for Mizuho, and its shareholding ratio has reached 65%. Furthermore, due to repeated system failures since February 2021, Masanori Shimono, who served as Executive Vice President and Director and Vice Chairman of the Board at IBM Japan, was appointed Group Executive Officer of the holding company as of April 1, 2022. He also serves as a non-executive director of the bank.
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IBM's Growing Coloration at Mizuho Tests New Group Executive Officer Shimono's Skills to Rebuild the Bank
What will Fujitsu focus on to expand its business for banks in Japan? A rethinking of its strategy is inevitable. If the company's position is not determined, it will fall into a state of shrinking equilibrium.
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