Mitsubishi UFJ Financial Group Inc. will start charging new customers for a bank passbook, joining other Japanese lenders that are pushing clients to kick the 150-year-old habit for the sake of the environment.
The country’s largest bank will require new clients to pay 550 yen ($4.83) a year for a passbook, encouraging them to embrace digital services, people familiar with the matter said. The measure will take effect April 1, and is also aimed at cutting expenses. A bank spokesman said the firm is considering a passbook fee for new customers, although no final decision has been made.
The Japanese industry’s paper-driven way of doing business is shifting as the global movement to fight climate change puts pressure on lenders to conserve resources. The banks are also trying to modernise services and appeal to a younger, digital-savvy generation as the country’s rock-bottom interest rates continue to weigh on profits.
While passbooks are being phased out around the world, they are still commonly used in Japan, along with banknotes and personal seals to sign documents. Even automated teller machines have slots for passbooks.
Japanese depositors have enjoyed free books for 150 years, allowing them to have their account activity and balances updated — by hand many years ago, and more recently using printers.
Banks not only have to cover production costs to print the books, they also pay taxes of 200 yen a year for each account with a passbook, a burden for firms managing tens of millions of accounts.
Sumitomo Mitsui Financial Group, Japan’s second-largest lender, began charging for passbooks last April, following the lead of Mizuho Financial Group. Some regional banks including Bank of Yokohama Ltd. have taken similar steps.
The measures appear to be working. Sumitomo Mitsui’s flagship banking subsidiary said nine out of 10 new clients are passing on the passbooks. Four in 10 had opted for a book before the company introduced fees.
At Mizuho’s banking arm, about 75% of those who open accounts say they don’t want a passbook, said Toru Arakawa, a deputy general manager in the personal business department. That exceeds the lender’s internal forecast for 70%.
“We feel it’s working,” Arakawa said.