Online banking in Japan - statistics & facts
Digital banking services have only recently gained momentum among Japanese customers, despite the early appearance of direct banks in the 2000s. New players are challenging traditional banks with an expanding customer base. Rakuten Bank was the first direct bank in Japan to surpass 10 million customers in 2020. It was one of two internet banks that went public in 2023.
Online banking has been slow to gain traction in Japan. However, the emergence of new players on the market and the need to become digital during the pandemic has changed things. Online banks are growing their customer base and threatening traditional players in the banking industry. All of this is happening in an environment of increased cashless payment usage.
Early emergence of online banking
Commercial internet services in Japan spread in the 1990s, paving the way for the first Japanese bank to launch an online banking service in 1997. In 2000, Japan’s first direct bank, Japan Net (later PayPay Bank), started operations. In the following years, two types of new banks emerged in the shadow of the traditional big players as a result of deregulation in the banking sector: direct banks without physical branches and banks established by large retail groups such as AEON, Seven & i Holdings, and Lawson that mainly offer their services online and operate a large network of ATMs in their stores.Expanding digital customer base
Despite the early appearance of online-only banks, online banking has only recently gained a greater presence in Japan’s banking industry. Traditional banks operate an extensive network of branches all over Japan and have been slow to digitalize their services. However, direct banks have seen their customer base expand significantly since the outbreak of the coronavirus (COVID-19) pandemic. A subsidiary of e-commerce group Rakuten, Rakuten Bank was the first direct bank to surpass 10 million bank accounts in 2020. Rakuten Bank and SBI Sumishin Net Bank, Japan’s largest online banks by deposits, both went public in 2023.Challenge for traditional banks
This development threatens traditional banks. In contrast to direct banks, they bear the cost of a large network of branches. In response to the ongoing changes, they have accelerated their digital transformation efforts, cut the number of physical branches, and promoted new digital services and banking apps. MUFG Bank, Japan’s largest bank, recorded over 10 million customers using its online banking service Mitsubishi UFJ Direct in 2024. Alongside these efforts, traditional banks have invested in or launched their own digital banking projects. In May 2021, Japan's first digital bank, Minna Bank, began operations.Online banking has been slow to gain traction in Japan. However, the emergence of new players on the market and the need to become digital during the pandemic has changed things. Online banks are growing their customer base and threatening traditional players in the banking industry. All of this is happening in an environment of increased cashless payment usage.
