Daiwa Bank and IBM Japan Ltd. said Monday they have agreed to form a joint venture that will develop and operate information systems for the commercial bank.
The two companies will sign a 10-year outsourcing contract under which IBM Japan and the joint venture will operate the bank's information systems, they said. The joint venture company is to be capitalized at 100 million yen, with Daiwa owning 65 percent and IBM the rest, according to the officials.
To prepare for the coming "Big Bang" of financial liberalization, financial firms are focusing their investments on areas where they believe they are competitive, while streamlining operations in other sectors. Officials of the bank said the deal will help it introduce sophisticated information technology and save 50 billion yen in costs over the next 10 years, thereby helping it concentrate on its core business.
Daiwa's decision is the first case for a Japanese commercial bank to outsource its entire computer system to a nonaffiliate. But other banks may follow suit now that they are being forced to streamline operations under the huge burden of disposing nonperforming loans, industry analysts say.