<h3><b>Companies&#8217; banking services continue to emerge from JAL, Yamada Denki, Hokkaido Nippon-Ham Fighters, and more.</b></h3>
<h3><span style="font-weight: 400;">JR East&#8217;s banking service,</span><b> [JRE BANK]</b><span style="font-weight: 400;">, is attracting attention. Although it is called a &#8220;bank,&#8221; JR East is a bank agency, belonging to the same category as banking services provided by JAL and Yamada Denki. So, why is JRE BANK gaining attention when other companies&#8217; services are not making much of an impact? What exactly is a bank agency, and what benefits does it offer? An expert explains.</span></h3>
<figure id="attachment_377641" class="wp-caption alignnone" style="width: 2023px;" aria-describedby="caption-attachment-377641"><a href="#" data-ident_hash="89cfeb86"><img src="https://res.cloudinary.com/fridaydigital/image/private/t_article_image/wpmedia/2024/06/f3ccdd27d2000e3f9255a7e3e2c48800.jpg" alt=""></a><figcaption id="caption-attachment-377641" class="wp-caption-text"><span style="font-weight: 400;">Shinkansen fares are 40% off. With shareholder benefit-level services, JR East&#8217;s [JRE BANK] had to temporarily limit applications. (PHOTO: From JRE BANK&#8217;s website)</span></figcaption></figure>
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<h3><b>“Shinkansen fares are 40% off&#8221; An exceptional campaign unique to a railway company.</b></h3>
<p><span style="font-weight: 400;">Right after this year&#8217;s Golden Week ended, JR East&#8217;s </span><b>[JRE BANK]</b><span style="font-weight: 400;"> opened. The service details were announced in advance, including the impactful offer of &#8220;Shinkansen fares being 40% off,&#8221; which attracted not only railway enthusiasts but also general users, leading to a rush of applications and a temporary limitation on acceptance.</span></p>
<p><span style="font-weight: 400;">The &#8220;40% off Shinkansen&#8221; offer refers to the JRE BANK discount voucher, which provides a 40% discount on both one-way fares and one-way charges within JR East&#8217;s network. This exceptional benefit applies not only to the &#8220;fare&#8221; of the ticket but also to the &#8220;charges&#8221; for limited express tickets and Green Car tickets. Customers can receive two of these vouchers per year by meeting relatively low requirements. Additionally, the account opening campaign offers 4,000 points under lenient conditions (an extra 2,000 points if the account is used for salary deposits). There are also various other benefits, making this a remarkably generous offering after a long time.</span></p>
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<h3><b>JRE BANK is a branch of Rakuten Bank.</b></h3>
<p><span style="font-weight: 400;">JRE BANK is not operated by JR East itself, obtaining a banking license and conducting business. Instead, its subsidiary Viewcard borrows Rakuten Bank&#8217;s platform to act as a &#8220;bank agency&#8221; and provide banking services. Therefore, in reality, it exists as an online branch of Rakuten Bank. Currently, there are three branches: JRE Hayabusa Branch, Toki Branch, and Komachi Branch.</span></p>
<h3><span style="font-weight: 400;">In fact, there are already several such bank agencies. The earliest to start was Japan Airlines&#8217; </span><b>[JAL NEOBANK]</b><span style="font-weight: 400;"> in April 2020. Since then, companies from various industries such as </span><b>Yamada Denki, Takashimaya, Tempstaff</b><span style="font-weight: 400;">, and the </span><b>Hokkaido Nippon-Ham Fighters </b><span style="font-weight: 400;">of professional baseball have continued to enter the market, and now there are more than 30 operators. Yamada Denki and Takashimaya borrow the platform of Sumishin SBI Net Bank, so they exist as Sumishin SBI Net Bank&#8217;s JAL Branch and Yamada Neo Bank Branch.</span></h3>
<div data-friday-nextpage-lead="The &quot;Neobank&quot; boom on a global scale..."></div>
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<h3><b>USA, Europe, Asia &#8211; The Global &#8216;Neobank&#8217; Boom.</b></h3>
<p><span style="font-weight: 400;">Companies providing banking services without holding a banking license are called &#8220;neobanks&#8221; overseas.</span></p>
<p><span style="font-weight: 400;">Neobanks appeared in the US around 2010 and have now spread to Europe, Asia, Africa, and Latin America. In Japan, they were finally recognized by the amended Banking Act, which came into effect in 2018, with JAL NEOBANK starting as the first one. Although the number of neobanks has increased over the past few years, none has made a significant impact. Then, JRE BANK became a major topic as a notable neobank after a long time.</span></p>
<p><span style="font-weight: 400;">So, why did JRE BANK attract attention while other neobanks did not? The reason is simple: as mentioned earlier, the benefits it offers are exceptionally advantageous, far beyond what conventional neobanks provide.</span></p>
<figure id="attachment_377642" class="wp-caption alignnone" style="width: 7875px;" aria-describedby="caption-attachment-377642"><a href="#" data-ident_hash="b91d80a4"><img src="https://res.cloudinary.com/fridaydigital/image/private/t_article_image/wpmedia/2024/06/49ff2eb4d6d8e098e1c024d538cc8617.jpg" alt=""></a><figcaption id="caption-attachment-377642" class="wp-caption-text"><span style="font-weight: 400;">With a home loan at the same interest rate as SBI Sumishin Net Bank, JAL NEOBANK offers up to 80,000 miles based on the borrowing balance. Points from the newly launched JAL Life Status program this year are also awarded (PHOTO: Afro).</span></figcaption></figure>
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<h3><b>Miles awarded, plus a home loan with a ¥50,000 cash back if you win. Unique services from a neobank.</b></h3>
<p><span style="font-weight: 400;">It&#8217;s often misunderstood, but a neobank isn&#8217;t a &#8220;downgraded&#8221; version of the bank providing the platform. </span><b>It offers basic services like deposits, loans, withdrawals, transfers, and remittances with equivalent functionality. On top of that, each operator introduces distinctive services tailored to their business.</b></p>
<p><span style="font-weight: 400;">For example,</span><b> [JAL NEOBANK] offers a perk where borrowers can receive up to 80,000 miles based on their home loan balance. The home loan interest rates are the same as those offered by SBI Sumishin Net Bank.</b><span style="font-weight: 400;"> It&#8217;s heard that quite a few people borrow JAL home loans using JAL miles. At Keio Electric Railway </span><b>[Keio NEOBANK]</b><span style="font-weight: 400;">, borrowers can earn up to 120,000 points in &#8216;Keio Points&#8217; based on their home loan balance.</span></p>
<p><span style="font-weight: 400;">In </span><b>[Yamada NEOBANK]</b><span style="font-weight: 400;">, funds for purchasing home electronics, furniture, or electric vehicles (EVs) can be included in the home loan, making it possible to purchase at significantly lower interest rates than regular shopping loans if borrowed at a variable rate. As a curveball, </span><b>Hokkaido Nippon-Ham Fighters [F NEOBANK] </b><span style="font-weight: 400;">offers a cashback benefit linked to regular season rankings for five years following borrowing, with a first-place finish resulting in ¥50,000, amounting to ¥250,000 over five years.</span></p>
<p><span style="font-weight: 400;">Existing neobanks offer users perks and services that leverage their core businesses. For those who meet the conditions, it may be worthwhile to use.</span></p>
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<div data-friday-nextpage-lead="The challenge is benefits beyond the point economy area."></div>
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<h3><b>Invisible Neobanks in the Point Economy Competition.</b></h3>
<p><span style="font-weight: 400;">However, generally speaking, while there are certain merits, they often fail to resonate with users. One reason behind this is the significant shift in the environment where financial services, including banks, are placed.</span></p>
<p><span style="font-weight: 400;">Recently, amid competition focused on capturing customers through point-based services, financial services are transitioning into a position of significant content for expanding influence. Even if a single company launches attractive benefits, they may pale in comparison to the overall advantages enjoyed by more powerful economic spheres. Without standout perks like those of JRE BANK, users may lose interest.</span></p>
<figure id="attachment_377878" class="wp-caption alignnone" style="width: 1606px;" aria-describedby="caption-attachment-377878"><a href="#" data-ident_hash="fa8d35e9"><img src="https://res.cloudinary.com/fridaydigital/image/private/t_article_image/wpmedia/2024/06/bb052652551396e066ed6dae5d7c509d-1.jpg" alt=""></a><figcaption id="caption-attachment-377878" class="wp-caption-text"><span style="font-weight: 400;">&#8220;Major Neobanks Known for Unique Benefits&#8221;. JRE BANK is affiliated with Rakuten Bank, known for its distinctive perks. Other neobanks are affiliated with SBI Sumishin Net Bank, Ltd.</span></figcaption></figure>
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<h3><b>The strengths of neobanks are weakening due to existing banks&#8217; digital enhancements.</b></h3>
<p><span style="font-weight: 400;">There&#8217;s another factor at play. Currently, there are four banks providing banking platforms to general companies: SBI Sumishin Net Bank, Rakuten Bank, Minna no Bank, and GMO Aozora Net Bank. Among them, Minna no Bank appeals as Japan&#8217;s first digital bank, highlighting convenience and boasting branches such as Tempstaff, Pixiv, and E-Design Insurance.</span></p>
<p><span style="font-weight: 400;">Certainly, users associated with each company find it easier to perform transactions such as deposits and transfers, but existing online banks and major banks&#8217; online banking systems are increasingly superior in functionality. This makes it less enticing to open an account deliberately. This factor contributes to the neobanks becoming overshadowed.</span></p>
<p><span style="font-weight: 400;">Minna no Bank is facing a critical moment after suggestions of potential withdrawal by its parent company, Fukuoka Financial Group (although management has clearly denied withdrawal plans). The slowdown in growth of its card loan business, once considered a main revenue stream, has been noted. The business model, which aimed to provide paid banking services for younger generations, seems unrealistic from the outset, especially with numerous free, highly convenient internet banking apps available.</span></p>
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<h3><b>The commoditization of banking services continues unabated.</b></h3>
<p><span style="font-weight: 400;">Neobanks themselves are likely to continue increasing in number. Consequently, the commoditization (i.e., generalization) of banking services will also progress. Already, opening a bank account can be completed entirely through a smartphone, akin to obtaining a loyalty card, and closing it just as easily. From the user&#8217;s perspective, taking advantage of advantageous services and campaigns would be a proactive approach.</span></p>


 After working as a money writer and financial planner/market analyst for a securities company, he became independent in 1996. He writes articles on finance and asset management mainly for business and economic magazines. Author of "A Textbook for the First Year of Robo-Advisor Investing" and "Understanding with Rich Illustrations! A book that will definitely benefit you with cashless payment".

 Kenji Matsuoka

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