Minna Bank was established as a new standalone subsidiary of the Fukuoka Financial Group (FFG) in January 2021, going live in May, as Japan's first-ever smartphone-only bank that is aimed at digital natives. As such it won the Best Retail Bank in Japan category at the virtual Retail Banker International (RBI): Asia Trailblazer Awards 2021 for its innovative targeting and digital offering. Its pioneering use of the cloud and innovative Google Cloud-based core system also saw it awarded the Best Core Banking Initiative.
Japan's digital natives currently comprise a third of the working-age population and will double to more than 60% by 2030. Over 80% say their banking experiences are inferior to that of other industries. Losing them means losing customer bases, so FFG decided to act by setting up Minna Bank.
The aim of Minna Bank is to blend with the lives of digitally-native customers for all their finanical and non-financial needs and to deliver a Banking-as-a-Service (BaaS) model, which is embedded into their consumer and social lives allowing easy connections to shop or app partners, via the use of open application programming interfaces (APIs). Great customer experiences (CX), frictionless transactions and personalized data-driven 24x7 services is the aim for purchases, credit, loyalty programs, wealth management, banking and so on.
FFG also wanted to counter newcomer fintech disruptors that are targeting the marketplace, protect its existing Kyushu local base, and to grow easily nationwide without branches, legacy IT, or expensive static infrastructure. Minna Bank recorded 200,000 downloads of its smartphone app and 100,000 new accounts two months after its May 2021 launch. There is electronic Know Your Customer (eKYC) account opening capabilities 24 hours a day, 365 days a year, with customers able to scan drivers licence or other photo identification and then confirm their identity using video. The initial offering spans:
- current and savings accounts,
- cash withdrawals and deposits via a smartphone,
- a virtual debit card;
- & account-to-account transfers.
Working with the MoneyForward Japanese fintech, customers are also able to see their aggregated account activity across multiple banks in one place. For premium service clients, there are interest-free credit lines and 1% cashback for debit card usage.
There is a mobile wallet, with deposit or withdrawal cash transfers via a QR code and four digit number. Cash handling itself is not something the new bank wants to get into. A ‘box’ function lets customers assign savings to particular goals, and spending records can be organised via hashtags. In future, other services will be added including sophisticated lending and wealth management products and more data-driven customer insights.
The award-winning core banking system, delivered on a microservices architecture, was developed in partnership with Accenture. But the bank retains the source code and development expertise in-house for the future, thereby avoiding vendor lock-in and the unecessary branch-based functionality of traditional providers.
Automated operation and a flexible API architecture were priorities, as was cloud-based operational IT. Google Cloud was the system deployed. Each service application was developed with a Google Kubernetes Engine (GKE) on top of it. This provides a managed environment for deploying, running, and scaling containerized applications using Google infrastructure. The GKE environment consists of multiple machines (specifically, Compute Engine instances) grouped together to form a cluster. Google’s BigQuery and Cloud Spanner tools also provide unique core banking system functionality to operate the bank safely and efficiently, without compromising its focus on data, connectivity, and CX.
For other services and hosting capabilities, Minna took a multi-cloud approach leveraging Amazon Web Services (AWS), Azure, and Oracle where needed in its operations. All data is stored in Japan.
The project was implemented in about 20 months, with a peak of 400 members and a total man-hour commitment of 6,500 months. Modern application development techniques like the agile methodology and a test first approach were used.
Design-wise Google Cloud is obviously at the core with a Software-as-a-Service (SaaS) and Platform (PaaS) approach adopted for the configuration. The Banking (BaaS) model is the aim with Google’s Apigee X tool, which is a platform for developing and managing APIs, the target.
Minna Bank’s aim is to achieve 1.2 million customer accounts, JPY220 billion in deposits, and JPY80bn in consumer loan balances, and a positive single-year profit by the third year of its operation in 2023. It is well on the way towards reaching its goal.