Japan Post Bank

Organizational history

The postal savings system in Japan was started in 1875 by Maejima Hisoka, who is known as "the father of the Japanese postal system." In 1871, four years before he founded the postal system, Maejima had spent time observing the postal system of the United Kingdom and was impressed by its offering of postal savings services. Adoption by the public was rapid, with 10,000 customers within the first three years of operation.

After World War II, in 1949 the postal savings system was relaunched under the newly formed Ministry of Posts and Telecommunications. As the economy recovered, postal savings grew to tremendous sums, reaching ¥1 trillion in 1960 and ¥100 trillion in 1985. In 2001, the postal savings system came under the jurisdiction of the Postal Services Agency, which soon reorganized into Japan Post in 2003.

Through all these organizational changes, the postal savings services were managed by a single government-owned company that also handled significant postal and insurance divisions. In 2006, Japan Post Holdings was founded as a government-owned holding company in preparation for the division of these responsibilities into separate companies with partial private ownership, a reorganization which occurred on 1 October 2007. On 3 November 2015, the shares of Japan Post Bank Company debuted for the first time on the Tokyo Stock Exchange, with about 10% of shares listed.

Historical role in economic development

The importance of the Japanese postal banking system lies not just in providing a savings vehicle and financial services to the people of Japan, but also in the use of the saved funds to promote economic development throughout modern Japan's history.

Founding through World War II

Postal savings were first deposited at Dai-Ichi National Bank, a private bank of issue, but starting in 1878 deposits were made to Ministry of Finance, which became the exclusive destination for deposits in 1884.

This was during the Meiji era, when the Japanese government was focused on encouraging economic and military modernization and avoid foreign debt to remain independent during a period of Western colonialism. A particular concern was foreign debt, as observers in Japan saw indebtedness in countries like China and Egypt leading to their subordination to their creditors.

However, this transformation required large amounts of capital to finance as railways, communications systems and industrial development in a country with a low savings rate because a large majority did not see money as something to be saved and invested. Postal banking became a success, and by 1885 it had 1.25 million depositors who could make financial transactions at around 4500 post office branches.

At the beginning, deposits were lent exclusively to the government through the purchase of government bonds. In the 1890s, the government starting creating several banks that could offer industrial loans backed by these deposits. However, this type of lending only became notable after 1912, and only by the 1930s did it become the type of system which would become important after the war that lent funds to specific institutions to achieve developmental objectives.

In 2019, Japan Post Bank was managing ¥205 trillion of assets. It oversaw approximately 120 million customer accounts, who had access to services in almost 24,000 branches across Japan, most of which are contracted post offices officially belonging to the Japan Post Service. The bank offers a variety of financial products, including deposit accounts, credit cards and loans, investment products, time deposits, and pension accounts.

The bank also provides an important social benefit through making financial services available to rural areas. In parts of Japan where the population is shrinking or has a high proportion of elderly people, Japan Post Bank operating out of a post office may be the only financial institution available.

The bank also manages almost 30,000 ATMs across Japan. Since many transactions in Japan are still conducted with cash, Japan Post Bank also plays an important role in making ATMs available where other bank branches are encouraging cashless payment or reducing their ATM numbers.

In May 2019, Japan Post Bank launched Yucho, a smartphone-based payment service that pays a participating store directly from the user's bank account. The service initially launched with approximately 10,000 customers, and also allows for payment or withdrawals through scanning QR codes.