To encourage more customers to go digital, Japan’s largest bank is offering depositors who give up their paper bankbooks a ¥1,000 reward.
In a campaign that kicked off Friday, MUFG Bank will pay 100,000 customers ¥1,000 if they go fully digital. The ¥100 million reward campaign, which will run through March 15, will be operated on a first-come-first-served basis.
Younger generations are more familiar with online banking, while many elderly people are still accustomed to using the physical passbooks to monitor their accounts. On top of encouraging use of online banking, another motive behind the move is to reduce the costs associated with servicing paper bankbooks. According to the lender, it has to shoulder a nearly ¥200 annual stamp duty for each passbook account.
MUFG Bank has 34 million individual customers, many of whom use the paper bankbooks, meaning the stamp tax adds up to billions of yen each year. There are other costs as well, such as for the ink used to record transactions at ATMs, an MUFG Bank spokesman explained.
The spokesman added that the bank has encouraged users to go digital in the past using financial incentives, but that the scale of the reward is much bigger this time around.
Streamlining operational costs and digital transformation are now top priorities for traditional megabanks as fully online-based banks and fintech startups have been boosting their industry presences, firing up competition.
Last June, MUFG Bank, a subsidiary of Mitsubishi UFJ Financial Group Inc., began issuing paper passbooks to new users only if they requested one.
Mitsubishi UFJ Financial Group’s commitment to embracing a digital shift is also reflected in a recent top managerial change. Last week, the firm announced that Chief Digital Transformation Officer Hironori Kamezawa will take the helm of the company from April.
The appointment is widely considered unconventional, as he will reportedly be the first CEO of a Japanese megabank with an educational background in the sciences. The move represents a break in the traditional promotional ladder that usually leads to the selection of a top executive based on seniority.