Japanese Banks Introduce and Raise Fees One After Another... What About Domestic Banks?

Korea Institute of Finance Report... Number of Financial Institutions Raising or Introducing Fees in 2017 Increased by 38.8% Year-on-Year

[Asia Economy Reporter Kwon Haeyoung] Recently, major Japanese banks have been introducing new fees or raising existing fees. With domestic banks expected to see profit declines due to low interest rates, there is a forecast that, in the long term, domestic banks may follow Japan's example.

According to the report "Discussion on the Fee System Reform in the Japanese Banking Industry" released on the 9th by the Korea Institute of Finance, the Bank of Japan surveyed regional banks and credit unions, finding that in the 2017 fiscal year, the number of financial institutions that raised or introduced fees totaled 111, a 38.8% increase compared to the previous year (80 institutions).

Looking at the categories, the largest number was 50 cases of deposit and remittance fee increases or introductions. This was followed by 48 cases of certificate issuance fees, 47 cases of foreign exchange-related fees, 24 cases of loan repayment fees, and 22 cases of real estate collateral-related fees.

Regarding account management fees, many banks abolished them after customer backlash, but recently, there has been a movement to introduce them, mainly among large Japanese banks. Mitsui Sumitomo Bank plans to suspend transactions on accounts with balances under 1,000 yen that have had no activity for five years starting January 2019, and is considering introducing account management fees for inactive accounts that impose a burden on the bank. Mitsubishi UFJ Bank will charge an annual account fee of 1,200 yen for new accounts opened from October 2020 if there is no transaction for two years. It is also reported that they are considering charging for paper passbooks.

The Korea Institute of Finance stated, "Operating profits of Japanese banks in the 2018 fiscal year plummeted to half the level of the peak year 2005," adding, "Along with fee system reforms, it is necessary to rebuild business models to maintain stable management in the long term by strengthening fee-based businesses such as introducing account management fees."

In Korea, there is a strong social perception that 'service = free,' leading to negative views on banks charging fees. However, as the low interest rate trend accelerates, there is speculation that, in the mid to long term, fee introduction may spread similarly to Japan, Europe, and North America.

This content was produced with the assistance of AI translation services.