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Japan's megabanks all-in on automation to save labor, cut costs

As persistently low interest rates and other business conditions continue to weigh on banks' performances, three of Japan's biggest financial institutions are turning to computer systems to take over relatively simple paperwork from human employees -- a process called robotic process automation, or RPA.

Japanese financial titans Sumitomo Mitsui Financial Group Inc. (SMFG), Mitsubishi UFJ Financial Group Inc. (MUFG), and Mizuho Financial Group Inc. (MHFG) all hope the move will prove decisive to save labor and cut operational costs.

SMFG's Sumitomo Mitsui Banking Corp. began introducing RPA systems last year. In just the first half of the 2017 business year, RPA reduced human tasks by 400,000 hours, equivalent to an entire year's work for 200 people. The firm is aiming to ramp the system up to save some 3 million human work hours annually by March 2020, equivalent to the annual workload of 1,500 employees.

From April this year, the Sumitomo Mitsui RPA will automatically collect all of a client's investment and asset data by the morning of any day that client has an appointment at the bank. The system will then send that information package to the banker in charge of the client's file. The bank has also begun training courses to help promote the use of RPA among its staff.

"With the introduction of RPA, our bank employees can now confirm whether there is any unnecessary work being done across the entire business," said Kei Yamamoto, deputy head of SMFG's Productivity Management Department.

MUFG's Bank of Tokyo-Mitsubishi UFJ introduced RPA systems starting in 2014. In May 2017, it created a digital strategy unit, and has sped up application of the technology. By the end of fiscal 2017, the firm plans to have about 100 tasks being performed by RPA. And in the six years starting from fiscal 2018, the bank plans to apply RPA to some 2,000 tasks.

A dedicated team is examining the bank's operations, and choosing which tasks can be automated. System developers then create programs that can do the selected tasks efficiently. For the time being, RPA will be employed for work related to checking home loan application documents, interbank transactions, and international remittances, among other functions.

"Even tasks that take just 10 minutes a day, if thousands of people are doing that task, then we can get significant results by automating it with RPA," Yoshiaki Nishita, chief analyst with Tokyo-Mitsubishi UFJ's digital strategic planning unit, told the Mainichi Shimbun. "That way, we can expand duties that require a relatively high degree of specialization."

Mizuho Financial Group, meanwhile, is also looking to have RPA take over 100 tasks once performed by people by the end of this fiscal year, saving 300,000 work hours annually, equivalent to the load on 150 employees. The group's Mizuho Bank Ltd. already uses RPA in the process of opening investment trusts, automating tasks that had taken human employees four to five minutes and compressing them to a few dozen seconds.

The Bank of Japan's negative interest policy has worsened banks' bottom lines, and all three of the country's megabanks have plans to cut staff and branch numbers. RPA is expected to improve the efficiency of the institutions' core business processes.

Use of RPA is also expected to expand beyond the banking sector. According to Tokyo-based RPA Technologies Inc., a major supplier of RPA software, the market for the technology is expected to grow to some 20 trillion yen in the near future.

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